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Petition for "fluffy" policy definitions to be scrapped
by Julia Bradshaw (FTAdviser)

Mr Lakey, partner for Highclere Financial Services, has been lobbying on the matter since 2006, and said insurance companies’ use of activities of daily living criteria, or ADLs, in income and critical illness policies, was wrong.
He said: “If someone comes to me and wants income protection or critical illness cover I only use own-occupation. Only offering activity-based ADL criteria is wrong.”
He said in some ADL policies, if a person were to go blind, he would not get a payout because he could still technically perform three out of six ADL tasks set out in the policy.
Mr Lakey said: “When you have a definition open to interpretation or subjectivity you can find a situation where a company that wants to can easily decline a claim because it doesn’t meet the policy definition.”
Only 10 people have signed the online petition so far on the HM Government website. Mr Lakey was the ninth and wants to see more names on it.
He said: “This is an important matter so it was something I felt I should put my name on. It’s a shame so few have signed it and other people who are involved in protection don’t look closely at this and consider what it means. What we want is for our clients to be paid out fairly when they should be.”
Matt Morris, senior policy adviser for London-based intermediary Lifesearch, said this was an issue that his company had looked at last year.
He said: “These types of income protection policies with an able workplace definition are not very good and we have said there should be alternatives offered.”
The petition, which was started by an anonymous person who claims to have waited two years to get a payout, states: “Income and critical ADL and ADW protection policies have fluffy definitions that have resulted in the FSA, Association of British Insurers and IFAs going on record at their frustrations with these policies yet they are still being sold.
“The definitions include being able to hold a pen in either hand, read 18-point print, speak and hear all with the use of assistance or aids. With 55 per cent of claims made against these policies refused, critically ill policyholders are left with no income and let down after paying premiums for many years.
“It’s about time all policyholders had fair definitions, fair claim handling and clear wording at what policies will pay out for.
“Please sign this petition and hopefully we can stop another family who bought one of these policies in good faith going through this and make the government stand up for consumers and end the sale of these policies.”