AXA says controversy surrounding the payment protection insurance (PPI) arena may harm sales of income protection (IP).
Stuart Lawson, protection marketing manager at AXA, says there is a possibility some consumers lacking financial education could confuse the two.
His call for clarity on the issue follows research conducted by LifeSearch in April suggesting several life offices, including Prudential and Swiss Re, wanted ABI clarification on the products.
The PPI industry has been subject to fierce criticism in recent months, particularly over complaints of mis-selling, a “lack of competition” in the market and banks’ tendency to sell it as an add-on to other credit products.
“The PPI investigation must not hinder IP,” Lawson says. “There is a chance that IP will be mistaken for PPI in the consumer’s mind.
“We need a clear distinction between the two for the benefit of the consumer.”
The issue of the difference between PPI and IP has been flagged by life offices previously. A number suggested the mis-selling of either product, but shorter-term PPI in particular, could prove disastrous for consumers and confidence in the industry.
Rod McKie, head of individual protection at AEGON Scottish Equitable, said: “There are some significant differences which are very important for consumers.
“For example, because PPI is shorter-term, if a client becomes incapacitated beyond the 12 months limit, he or she will not be able to make a claim.
“Anything the industry can do to make the distinction clearer is a good thing.”
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