ABI Publishes New Standard TPD Definitions

OshayAway

It's been a little while coming but the ABI has now published it's updated best practice for critical illness cover, including the new standard definitions for "Total Permanent Disability" (TPD) included in many critical illness plans automatically or chosen as an additional option on others.

A need for better understanding of TPD is apparent when you consider that TPD claims accounts for just 3% of overall claims but over half of these are declined owing to confusion about when a claim can be made and under what circumstances.

In November 2010 it was decided that the term "TPD" would not be changed, as originally suggested. This has been viewed as a missed opportunity by many who feel a more descriptive term would highlight the re-branding of this product.

The ABI press release can be found here: http://www.abi.org.uk/Media/Releases/2011/02/54762.pdf

This includes changes to "Children's Critical Illness Cover" and the definition for "Termainal Illness Cover."

pedro123456

And the charade goes on, another definition by the insurance company for the insurance company, only this time they can choose from 5 definitions, makes think of hyenas circling their prey :EasterBun

OshayAway

pedro123456 wrote: »

And the charade goes on, another definition by the insurance company for the insurance company, only this time they can choose from 5 definitions, makes think of hyenas circling their prey :EasterBun

I thought you would welcome more clarity Pedro?

pedro123456

5 definitions aid clarity OshayAway?.................glad I aint on your bus :rotfl::rotfl::rotfl:

OshayAway

pedro123456 wrote: »

5 definitions aid clarity OshayAway?.................glad I aint on your bus :rotfl::rotfl::rotfl:

Ah, ok I see where you are coming from now. Let me explain. The 'type' of TPD is specified at outset and shown in the terms offered once underwritten and the policy documents.

The definition "Total permanent disability - unable [before age x] to do your own occupation ever again" is the most valuable and preferable but it only applies to individuals with a low-risk occupation. Occupations are put into classes 1-4, (1 being the lowest) class 1 or 2 are eligible for own occupation TPD.

To expand the point further, a housewife can have TPD but obviously own occupation would not be suitable, in which case, the "unable to look after yourself ever again" type of TPD would be applied from outset, with the specific criteria needing to be satisfied for a valid claim.

Does that help?

pedro123456

Yes that helps OshayAway, it's clear to see that some of theses 5 definitions have more bells on than others.
Medical definitions with bells on are par for the course for the ABI, so no real surprises there ay?

OshayAway

pedro123456 wrote: »

Yes that helps OshayAway, it's clear to see that some of theses 5 definitions have more bells on than others.
Medical definitions with bells on are par for the course for the ABI, so no real surprises there ay?

Just out of interest, would you prefer to see TPD removed altogether from critical illness cover policies?

pedro123456

I would prefer for all definitions to be overseen by a independent medical body, so that definitions become less inclined to favor the IC, therefore reducing loopholes and get out clauses, that clearly favour the IC.
This may increase public confidence CI cover as the definitions could be marketed as having a more balanced perspective.

As for TPD.................it's definition has more loopholes/get out clauses than Bill Gates has Dollars, they ought to keep it but rename it the......... "yes but.no but.what about but.we aint paying syndrome"

pedro123456

Just out of interest for me OshayAway, do you think lack of public confidence in insurance products is being addressed? do you think lack of public confidence even exists?

OshayAway

pedro123456 wrote: »

Just out of interest for me OshayAway, do you think lack of public confidence in insurance products is being addressed? do you think lack of public confidence even exists?

My honest personal opinion is that broadly speaking, any lack of confidence in critical illness cover, on the part of the public and advisers, has been significantly reduced in recent years.

The improvements in the contracts which have greatly improved the declined claim statistics from circa 20% when first published in 2006 to less than half of that, in some cases as low as 5% in 2009. This speaks for itself.

Does that mean that everyone is an advocate of critical illness cover? Obviously not. Even if the policy paid out on 100% of claims, it would still have it's critics.

As it stands, there will always be individuals, like yourself, who have a claim turned down. Is that unfair? Well, that depends on the circumstances. If it is, there are options that can be pursued to ensure the insurance company has acted fairly, and if not, their decision can be overturned.

Reading between the lines, there seems to be a couple of issues here but the main sticking point for you as I see it is that you feel the insurance company's definitions are unfair. Clearly that view is based on your perception and experience. Without knowing specific details it would be impossible to make an educated comment on that. If you genuinely believe that every critical illness definition is unfair, without specific evidence to support that, I don't see how you can hope to achieve your aim of putting people off critical illness cover.

In my personal experience, I know 3 individuals personally (two personal friends and a colleague) who have had their mortgages cleared as a result of successful critical illness cover payouts. The oldest of these was 33 at claim and each one had over £100,000 paid quickly and simply. Would you ever convince them that they shouldn't have taken out their policy? Or for that matter any of the other 90%+ successful claimants from last year or anyone they know?

I have also seen the financial effect of serious illness where an individual did not have cover in place. Do they wish they had taken out cover? What do you think? In fact, most of the dealings I have with individuals looking for critical illness cover is those whose enquiry has been prompted by the experience of someone they know and seeing the value of having CI or the consequences of not taking out critical illness cover.

In relation to TPD, the figures clearly show that this the most problematic component of the critical illness contract. It accounts for only 3% of claims but 55% of these are declined (2009 figures). it's hardly surprising then that TPD accounts for 35% of CI related complaints to FOS.

I welcome these recently published changes and I am confident that these will have a further positive effect on claims statistics going forward and public confidence in critical illness cover as a whole.

pedro123456

[COLOR="rgb(65, 105, 225)"]So you agree that there is lack of public confidence, that’s a step in the right direction, although if we are offering opinions, I would say there is a lack of public confidence over the whole insurance industry, not just CI, it would include car insurance/home insurance etc.

And you think that if 100% claims are paid out people would still complain? Why? , what is the “claim rate” for CI?

The IC has got all their get out clause and loopholes piled up to the rafters, can a decision be over turned?, how many actually get overturned, not many I wouldn’t think, and of course there must be claims turned down that never get to the FOS.

I don’t “think” IC definitions are unfair at all I “know” they are.
Simply definitions by the IC for the IC, with no independent input from the medical profession (CI definitions)
Is my view bias? You refer to people you know that were grateful for CI cover, are you bias then? you also work within Insurance it in your interest to promote Insurance products another reason for bias maybe?


CI cover is a gamble, a gamble that you have to claim in the first place and a gamble that you get a settlement if a claim is put in, it is a gamble that favors the bookies (insurance company)


[COLOR="rgb(65, 105, 225)"]Well TPD would be the most problematic, by the time the IC have dissected/analyzed the meaning of total and permanent and disability individually, and then lumped them all together for an individual to meet, it a nigh on impossible definition to meet, full of loopholes.[/COLOR]

I welcome these recently published changes and I am confident that these will have a further positive effect on claims statistics going forward and public confidence in critical illness cover as a whole.

Sounds like a press statement

And as for this foolish comment “I don't see how you can hope to achieve your aim of putting people off critical illness cover”
[COLOR="rgb(65, 105, 225)"]Lets make this clear, people have choices as to have CI or not, that aint my concern, I just want to highlight the imbalance of power that the IC holds, and that the consumer has to look, how this power will affect their ability to get a settlement should they be unfortunate enough to have a CI.[/COLOR][/COLOR]