Online income protection tool set to fuel backlash against ADLs

Developer says tool addresses confusion over IP occupation definitions

A London-based specialist financial adviser has launched an online tool designed to help consumers understand the different types of capacity definitions used by income protection (IP) insurance providers.

Drewberry Insurance, an appointed representative of Chase Templeton, said the new tool had been developed in response to the increasing controversy over IP products that are based on so-called “activities of daily living” (ADL) as opposed to “own occupation” cover.

Insurers have come under pressure to move away from ADLs which critics say affords little meaningful protection to consumers. IP policies underwritten on an ADL basis mean that claimants must prove they are unable to complete two or three basic physical tasks from a list, such as bending or walking.

Drewberry said its IP incapacity definition tool reports the likely definition used by insurers based on four key aspects of the individual's job. After a user inputs their occupation, amount of time spent undertaking manual work, business mileage and number of overseas business trips, the tool returns a likely occupation risk class, incapacity definition and suggests insurers that are likely to offer own occupation cover.

Tom Conner, head of protection at Drewberry Income Protection, said the tool has not been designed to replace advisers but rather to help to educate consumers, making product research easier and encouraging comparison based on more than just price.

He added that Drewberry is “firmly” behind the industry movement against the use of ADLs  and believes “anything less” than an own occupation incapacity definition causes confusion and can “really hurt consumer confidence in the product".

He added: "The purpose of IP is to pay out if someone is unable to work due to illness or injury but this really isn't the case when the activities definition is used. To a lesser extent this is also the case for policies using the suited occupation definition.”

Last month Aviva overhauled its IP policy, reviewing the list of jobs it will insure on an own occupation basis so that 95% of occupations will now be underwritten in this way rather than on a suited occupation basis or according to ADL or other list-based criteria.

However, the Association of British Insurance has told Health Insurance that it has no plans at present to alter its definitions or best practice guidelines for IP, and said that if providers were to stop offering ADL-based definitions altogether, certain groups of consumers would be excluded from taking out IP altogether.

Drewberry, whose online tool is available here, recently also launched an IP product comparison tool.

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