From May, the Post Office is cutting the maximum monthly cover for new customers from £2,500 to £1,500 and delaying the first payment until 90 days after redundancy instead of 30 days.
Lifesearch senior policy advisers Matt Morris says: “I would expect to see more companies do this, which is bad news for consumers and the industry.”
Unleash Advice Partnership IFA Adrian Kidd says: “Insurers should be stepping up to the plate and providing coverage for people when they need it most but they are pulling out.”
A PO spokeswoman says: “The very tough economic climate in which we currently operate means that we have had to make adjustments to this product.”
The changes to the Post Office product, which is direct-only and underwritten by Axa, follow a similar move by Cardif Pinnacle, which asked policyholders to reduce monthly cover by £500 or face a 40 per cent rise in premiums, according to adviser correspondenceCardif Pinnacle was unavailable for comment.