Protection adviser pledges ‘own occupation’ only

Protection adviser pledges ‘own occupation’ only

Protection adviser Lifesearch has launched a guarantee that it will only recommend ‘own occupation’ income protection cover that will pay out if the customer is unable to do their own job, following negative publicity of some insurance products.

The protection insurance adviser has promised that it will “not resort to lower levels of cover just to cut the price or cut corners on the application process”.

Known as ‘own occupation’, these policies are considerably more likely to see real claims being paid as they simply require evidence that the claimant is unable to do their own job.

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Alternatives offer less concrete definitions of a valid reason to claim, such as being unable to perform a number of routine occupations from a set list, of work tasks or ‘activities of daily life’, which might be tested by walking a certain distance or lifting a given weight.

Almost three years ago, Chris Hargreaves, winner of a Financial Ombudsman Service case against Scottish Provident over an ‘activities in daily life’ clause in his protection policy, launched an e-petition on HM Treasury to ban “fluffy definitions” in protection insurance policies.

This followed Mr Hargreaves’ two and a half year battle with the insurance giant over his income protection policy, which the firm had refused to pay out on saying that the terms had been “misunderstood”.

At the time, Roy McLoughlin, IFA for Master Adviser, said: “In a perfect world we should have own occupation as a standard definition. The problem with ADLs is that they rarely pay out.”

In October 2013, Aviva announced it will underwrite all individual income protection policies on an own occupation basis in a bid to “simplify income protection cover and ensure as many claims as possible are paid.”

The move follows recent changes of a similar nature from Bright Grey and Scottish Provident itself, now both under the Royal London umbrella.

Speaking to FTAdviser, Protection Review chief executive Kevin Carr, said: “Some insurers are still offering ADLs and work-tasked policies. There are a myriad of options out there for consumers; we are moving in the right direction but we are not 100 per cent there yet.”

Tom Baigrie, Lifesearch chief executive, said: “We promise that as long as you are working, we will only recommend an income protection policy that will pay out if you’re unable to do your own job.

“People need to know that products vary but that their salary is properly protected with the right cover.

He added: “On average more than 90 per cent of all IP claims are paid in the UK, however the public perception is that that number is much lower. This campaign aims to highlight the different types of cover as well as improving consumer trust in protection.”