Lifesearch has renewed its campaign to encourage insurers to offer premium reductions on income protection policies where major exclusions are added.
The company first started lobbying insurers to cut premiums where exclusions apply last year. For critical-illness cover, the main exclusions are cancer and multiple sclerosis while for income protection, the main exclusions are spinal problems and mental health illnesses.
Lifesearch says there are now eight firms which offer reduced premiums on CI, where the major exclusions have been added, including Axa, Aviva, Fortis, Bupa, Zurich, PruProtect, LV= and Legal & General. But only three – Fortis, Aviva and Bupa – have applied the same reduction to IP.
Senior policy adviser Matt Morris says: “One of the biggest problems when selling IP is that clients drop out during the application process because they have an exclusion added. The comprehensiveness of the pol-icy is reduced but they still have to pay the same price.
“As spinal and mental problems are the two most common reasons for a claim, it seems fair that all insurers should cut premiums when these exclusions are added. This is a big issue for IP sales and Lifesearch is making a push to get more firms to offer IP premium reductions.”
Highclere Financial Services partner Alan Lakey says: “As we move towards the Consumer Protection and Markets Authority, there may come a stage where it becomes compulsory that insurers automatically offer a premium reduction on exclusions. But it is hard to pin down what the cost will be.
“If different companies offer different discounts, it will be hard for the regulator to say which level of discount is the appropriate one.”