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IP dressed as MPPI

LV= launched a new protection product this week, which may, for once, be truly innovative.

The product, mortgage and lifestyle protection, is designed to replace mortgage payment protection insurance and touts itself as being MPPI-like in ease of application while income protection-esque in its quality of cover.

The product, which Money Marketing revealed LV= was developing last year, pays out until the policyholder goes back to work, the plan term ends or the policyholder dies. This is unlike most MPPI plans which are short term.

It has guaranteed premiums and bases disability definitions on own occupation, like most of the Friendlies, and covers all occupation classes.

It offers cover for accident, sickness and unemployment, with level mortgage payment protection and the choice of level or index-linked living expenses protection. The policyholder can claim as often as necessary and can alter their cover when their life circumstances change, for example if they move house, have children or get married.

Head of protection Chris McFarlane says: “Based on extensive research, we saw that the market needed a more flexible product that could be tailored to their client’s individual needs and that was easy to understand. We believe this will stimulate the market at a time when advisers really need quality protection products to satisfy their clients’ needs as well as supplement their income.”

Highclere Financial Services partner Alan Lakey says: “This seems an excellent product which will look to steal the middle ground between income protection and PPI and also the standard income protection plan. I’m led to believe the occupations it covers includes bricklayers, plasterers and the like. This will prove a major step forward in the designing of a fair and sensible income protection contract.”

In other news, the Law Commission is set to update Insurance Contract Law after its proposals to reform the outdated legislation won overwhelming support from the industry.

The Commission published proposals last summer for the law to be brought into line with the Financial Ombudsman Service’s approach. It feels the current position has overlapping layers of law, regulation and ombudsman discretion which are “needlessly complex, confusing and inaccessible”.

After brokers, insurers, consumer groups and the FOS submitted responses strongly supporting the proposals, the Commission will set about drafting new legislation as a matter of urgency. The new law will aim to abolish consumers’ legal duty to volunteer information, protect those who act honestly and reasonably and provide insurers with proportionate remedies for negligent misrepresentations.

The FOS response stated: “It is much easier to justify our decisions when they are consistent with the legal position and it is advantageous to all our potential users if our decisions can be predicted. We also take the view that it is logically and morally unjustified to hang on to old law if it is widely agreed that the law is bad and no longer serves any useful purpose. If the law was reformed, this would greatly increase the chances that consumers would not need to bring a complaint in order to be treated fairly.”

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