Industry reacts to Holloway Friendly’s decision to add exclusion for new income protection policies
On Friday, income protection provider Holloway Friendly added an exclusion for coronavirus to new applications for policies with a one-week deferred period.
The Income Protection Task Force (IPTF) said: "It is understandable that some insurers are beginning to apply exclusions for COVID-19 on new income protection policies, typically those with very short deferred periods, such as one week."
The IPTF said it important to remember that existing customers are not impacted - and added that as it stands the majority of new IP policies will also not be impacted as the deferred period will typically be one month or more.
"The virus has been around for a few months and during this time cover was widely available from all insurers without an exclusion, only now are some restrictions starting to be put in place," said the IPTF. "However, the situation is changing daily. We recommend advisers keep up to date with changes on a regular basis and that anyone considering buying cover acts as soon as possible. Income protection remains the best way for many people to protect their income against both short and long term illness if they cannot work."
‘Watch this space'
Alan Knowles, chair of the Protection Distributor's Group (PDG) and Cura managing director, said it was "only a matter of time" until providers started to add exclusions on short deferment periods, adding that he expects to see others to follow suit over the coming weeks.
He added, however, that: "It's absolutely vital that we don't let this put people off buying income protection, it's still an incredibly valuable policy and so far it's only the one-week deferment period which will carry the exclusion. Existing Holloway customers are not affected, and new customers with a four-week deferment or more are not affected."
Knowles told advisers to watch this space and keep an eye out for further changes. "Don't let it stop you from recommending cover," he added.
Five things to cling onto
As of Tuesday 17 March
Claims to be honoured for existing members
For new policies
For new applicants