When Is Income Protection Not Income Protection?
Posted by: Jason King
January 30th, 2007.
Income Protection (IP), Permanent Health Insurance (PHI), Accident Sickness & Unemployment (ASU), Mortgage Payment Protection Insurance (MPPI).
Consumers are forgiven for wondering what on earth these products do… the first two are especially confusing and if I didn’t work in the industry they would have me running for cover. Unsurprisingly (and quite correctly) people rarely buy what they don’t understand.
In actual fact the first two products are the same thing, as are the latter two. It is generally accepted by Torquil Clark Life Insurance, other advisers, ‘Which’ and the FSA that IP (PHI) can be a better product than MPPI (ASU), depending on your circumstances. This is because cover tends to be more comprehensive, there are fewer exclusions/small print, more claims are paid and it can sometimes be even be cheaper into the bargain!
Yet MPPI seems to be hugely more popular than IP. This is because MPPI seems simpler, is easier to sell (or buy) off the page and can offer excellent commissions to the person who sold it. IP on the other hand has a long application form, requires more specialist knowledge from the person selling it and costs more if you have a manual occupation or are a female or a smoker (smoking, female builders read on as there is some good news for you later).
However things are changing. ‘Which’ has put a ’super complaint’ to the FSA about MPPI products, the FSA has censured firms for inappropriate sales of MPPI and even the Office of Fair Trading in getting involved. We feel that the time is coming for IP to increase in popularity again.
At Torquil Clark Life Insurance we have for a long time campaigned to our clients on the benefit of IP and have a simple income protection guide that explains the differences between the two types of product. We are also encouraged by the re-emergence of specialist insurers that do not distinguish between occupation, gender or smoking status. You may not have heard of companies like Holloway, Pioneer, Cirencester or Dentists & General but they are mutual friendly societies that have been around for decades and offer affordable cover to those workers excluded by ‘mainstream’ insurers.
That is not to say that all MPPI is bad, it’s just that some MPPI products are awful and there are alternatives that should be considered as well.
Our advisers are happy to help you look at your options and decide what is best for you. As always there is no charge and all advice is given in a friendly & informative format. You can get in touch with us online or call us on 0800 068 5043.
This entry was posted on Tuesday, January 30th, 2007 at 11:17 am and is filed under Life Insurance.
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