General insurance provider The Source is launching a new short term income replacement product, aimed at filling the hole left by the demise of payment protection insurance.
The product, which is aimed at replacing income or covering mortgage or rent, offers up to £5,000 of monthly cover.
The Source’s head of strategic relationships, Andrew Sajo, said it was offering a “market leading common policy wording that is customer friendly, flexible and offers a wide variety of coverage limits to suit individual customer needs which is competitively priced”.
Like PPI, the short term income replacement product will be available from IFAs when people take out mortgages and rental agreements.
While PPI insurance is still available, the product has been dogged by a mis-selling scandal.
However Alan Lakey, founder of CI Expert, said that despite PPI’s bad reputation, there was still a space in the market for insurance products that are sold at the time of taking on a big financial commitment.
He said: “We all know that income replacement (sick pay) is the most important yet least purchased insurance so any new product that assists in the take-up is welcome.
“These products are best sold when people take out mortgages (or rental agreements) and its important that a quick and easily understood product is available otherwise it may not work.
"PPI was such a product although its design was seriously flawed.”
He said that the Source policy, underwritten by Malta insurer Building Block, “appears to offer most of the essential requirements although, let’s be clear, it is not a substitute for a proper long-term income protection plan as it is an annually renewable product which does not provide certainty of long-term cover.”
rosie.murray-west@ft.com
