The ABI has produced a statement of best practice for individual income protection providers in a bi...
The ABI has produced a statement of best practice for individual income protection providers in a bid to improve consumer understanding of the products
Scheduled to be implemented by the end of next February, the statement has been designed to help potential buyers discriminate between policies and increase their knowledge of the contracts. Under the guidelines, key features documents will be introduced focusing on the aims of the policy, the policyholder's commitment and the risk factors that need to be considered. A brief guide will also to be presented in a question and answer format by providers
Policy terms and conditions are also to be clarified through guidance notes to explain eight of the most misunderstood terms. These will include definitions of incapacity, limitation of benefit and deferred period. For ease of comparison generic terms are also to be used in product literature. For example, 'deferred period' will be the sole term to describe the periods before benefits will be paid out, marking the removal of terms such as 'waiting period' and 'elimination period'. Likewise, the cover is to be referred to as income protection not permanent health insurance
The statement was prepared in response to the 1998 Office of Fair Trading's health insurance report
Andrew Smith, PR manager at UNUM, said the move will make it easier for advisers to explain the differences between plans making the sales process much easier. UNUM is hoping to be one of the first providers to issue new literature before the February deadline
But some industry experts remain sceptical. Paul Cowman, risk product manager at Guardian Financial Services, said: "If the consumer has more understanding of income protection as a result of this, then clearly I will endorse it, but I am not sure it addresses the problem people buy the product on the strength of the salesmen, not on the literature
