There have been calls for exclusions on income protection (IP) policies to be accompanied by discoun...
There have been calls for exclusions on income protection (IP) policies to be accompanied by discounted premiums, writes Peter Carvill.
Protection specialist LifeSearch said with underwriting for the product being "naturally harsher" than with other protection products, reduced comprehensiveness in cover should be matched by lower premiums for those customers forced to take policies with exclusions.
Matt Morris, senior policy adviser at the intermediary firm, claimed that the issue was one that many advisers had problems with. He said: "The problem with exclusions is that although comprehensiveness of cover is reduced, the premium is not, which many clients feel is unfair and as a result some decide not to go ahead with the policy. When the exclusion is for muscular skeletal, or mental illness, it is even harsher for the client as these are two of the most common causes of claims."
Roy McLoughlin, principal at Master Adviser, agreed but also advised that there were issues around underwriting that dictated why discounts could not be offered for those with exclusions.
He said: "I think in principle it is a good idea because exclusions seem to be on the increase and therefore it's a tad unfair that someone with something major excluded pays the same price as someone as who's being covered for everything."
Morris added: "To be fair, one provider, Fortis, has taken the brave and Treating Customers Fairly step of reducing the premium if they impose either of these exclusions, which appeals to clients and is good for advisers as fewer policies are 'not taken up'.
"All providers should follow suit in my opinion, but so far they haven't. They have no excuse for not doing this. There is obviously a fair amount of concern that not enough IP policies are being sold. This would be a good step to rectifying that."
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