ABI unveils TPD name and definitions

Total and permanent disability (TPD) could soon be re-named irreversible life-changing disability if proposals from the Association of British Insurers are accepted.

Five new definitions for the subject will also be consulted on, while the definitions on four other illnesses have been amended and adopted.

The process is part of the final consultation paper in the review of the critical illness (CI) statement of best practice.

The five proposed definitions to come under the new irreversible life-changing disability title are:

• unable to do your own occupation ever again;
  
• unable to do a suited occupation ever again;
• unable to do any occupation at all ever again;
• unable to do three specified work tasks ever again;
• and unable to look after yourself ever again.

Nick Kirwan, assistant director of protection at the ABI, believes the new name and definitions would be clearer and more widely understood by advisers and clients.

"I think it is in consumer interest, and we've got to keep that in the back of our minds," he says.

"We have got a good evidence base that consumers really do get it if we explain it in this way.

"The language is plain and clear, and the research groups understood the difference between own occupation and any occupation, saying that own occupation is better so they would be looking for that," he adds.

The four illness definitions clarified relate to skin cancers, Parkinson's disease, the terminal illness definition, and the pre-existing condition exclusion used in children's cover.

Peter Lurie, director of Proactive medical and life, believes it's an improvement but still needs work.

"There should be a very basic understanding of how it works with cases examples," he says.

"I can't understand why it's not done with TPD when it is with medical insurance.

"Just a brief synopsis would suffice, it's so important to have case studies so people really understand it," he adds.

Alan Lakey, principal of Highclere Financial Services, took part in the discussion party in December but still has reservations.

"Perhaps I'm being overly harsh, but my initial gut feeling is it's a bit too wordy," he says.

"When we deal with the public we want simplicity and easily understood terminology, and I don't think that actually fits it.

"We do have some problems in the interpretation, and it's the legal interpretation that will decide whether or not a claim will be paid.

"I'm not sure that these changes will increase the rate of TPD claims paid because it's the interpretation, not the wording that is the problem," he adds.

Lakey was the only adviser to respond last time, and plans to do so again, although he is hopeful that fellow advisers will also join in.

The consultation will run until the end of June, after which the ABI will assess the responses and make amendments where necessary, before publishing the new statement of best practice later in the summer.