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Paper, pensions and PPI

The Income Protection Task Force believes its is one step closer to changing the sale and distribution of IP.

Last week’s IPTF meeting at the Chartered Insurance Institute in London, which saw new members HSBC, Savills and Canada Life attend, confirmed the group’s second white paper into IP sales will land at the door of Parliament in December.

Paper two comes two years after the IPTF issued its first document, which was open for inspection by Government, the ABI, and the industry.

Master Adviser IFA Roy McLoughlin, a member of the IPTF, says: “The paper is all about accentuating the sales and distribution of IP. It highlights reasons why IP isn’t selling and whose premise it is to get the sale of IP up.

“Hopefully the second paper will be read by everyone – the Government, the ABI, Which?, and all those operating in the insurance industry.”

The IPTF will now wait for industry-wide recommendations before progressing to its next stage.

Statistics released by Legal & General this week outlining how the proceeds from a CI policy could be used to make regular payments into a pension pot was an eye-opener.
The life and pensions company estimates that someone aged 30 would need to save £292 per month in order to live comfortably in retirement.

However, if the same person were to delay paying into a pension for 10 years as a result of a critical illness and drop in income, they would have to save £635 a month to achieve an equivalent pension.

Now, for a 30 year old at £292 gross a month, an average CI payout of £60,000 would provide two years worth of monthly pension savings and still leave over £50,000.

L&G protection product marketing director Bonnie Burns says: “It is well documented that many people do not save enough for their retirement. The earlier in your career you take out a policy, the cheaper it is and you can protect your most important years in terms of savings capacity.”

In other news, British Insurance is calling for the protection industry to help MPPI policyholders understand when they can claim on their policy, particularly carers.

Managing director Simon Burgess says providers should explain further to those clients who give up work to care for a relative that their mortgage costs can be met under a MPPI plan.

He says: “Over two million people start caring every year and I fear a number of them may have MPPI but do not realise they can claim on their policy. As a result, they’re missing out and suffering financial hardship.

“This type of cover could make a huge difference, so it’s vital people check their policies.”

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