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Baigrie: Govt should treat IP payouts the same

LifeSearch chief executive Tom Baigrie has called on the Government to treat payouts from individual income protection policies the same as payouts from group IP when it comes to means-tested state benefits.

Writing in this week’s Money Marketing, Baigrie argues it is unfair that consumers receiving individual IP payments lose out on state benefits to a greater extent than those receiving payments from a group IP scheme.

He says: “Under universal credit a payment from an employer or group IP scheme will be treated as earned income in calculating welfare benefit entitlement, so for every £1 over your household earnings allowance you receive in IP benefit via your employer, 65 pence of state benefits is lost.

“What is wrong is that if the IP payment comes from a personal policy, it is treated as unearned income and £1 of benefits are lost for every £1 of IP pay out. This is madness. All the DWP needs to do to greatly reduce the chance of honest IP sellers doing anyone any harm is to treat income from personal and employer linked income protection insurance the same way.”

Swiss Re technical manager Ron Wheatcroft says: “People need to see the benefit of self-provision.

“An individual policy which replaces state benefits on a 1:1 ratio is a disincentive and that needs to be addressed.”

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