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Total term is the impasse on TPD issue

The Association of British Insurers’ decision to keep the term “total permanent disability” has divided the industry over whether this represents the best way to improve clarity for consumers.

Money Marketing revealed last week that the ABI’s updated statement of best practice for critical-illness cover, which is due early next year, will retain the TPD term but will include clearer definitions and headings about what TPD covers.

It follows three years of industry consultation and consumer research on how to improve the definitions after it was revealed that over half of TPD claims are declined.

Le Beau Visage managing director Peter Le Beau says: “My preference would have been to come up with a more useful name to give consumers greater understanding about what TPD is about. It would have been better to have a new name and a new product. To use the same name for existing customers is just confusing.”

Highclere Financial Services partner Alan Lakey (pictured) says the problem with TPD is the “T”, as policyholders do not have to be totally disabled in order to successfully claim.

He suggests it would have been better to simply replace TPD with the term “permanent disability.”

He says: “I find it disappointing. After all this time the ABI has spent looking at this it has not actually come up with any definitive answers. It is playing around the edges but not getting to the heart of the problem.”

But Zurich UK Life protection development manager Gerry Warner says: “Having thrashed out the alternatives, we believe TPD remains the most appropriate wording to convey what we are trying to achieve and the new statement of best practice will help provide more clarity for customers.”

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  1. Three years to come around full circle to this. I think the ABI need to take a long hard look at themselves. How much money has been wasted to date?

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