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TPD confusion poses problems

Axa is working with the Association of British Insurers to address problems over total permanent disability insurance.

The company’s chief underwriter Mike Taylor says there is confusion over TPD, with consumers failing to fit the common conditions listed on the application form.

He said: “There are a number of options we could take, such as taking occupational basis out of it, looking at the most common conditions why people will not pay out for TPD, and moving it into critical-illness cover.

“There is quite a lot of work being done within the ABI now to look at those specific things but there is more to do.

Taylor believes the UK market should look to the US on handling of non-contestability and claims guarantees, something Axa has piloted to see whether people are prepared to pay more for a guarantee.

“This is the model that works in the States and it works very well. It does give some assurances on the guarantee so you know that once you have gone through the initial process that is the end of the story. It is as simple as it gets,” he said.

However, Sesame product research manager for protection Dale Tranter considers that bringing out a guaranteed payout product would be detrimental to the market.

He said: “From an industry point of view, if you are going to need to bring out a guaranteed payout product, aren’t you undermining the vast majority of products that you are selling? This is not going to encourage sales. We need to work on what we have.”

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