62% of the industry is concerned about short-term IP

The Protection Review survey asked advisers, life offices and reinsurers if they were concerned about the name of the general insurance cover and 62% said yes.

Kevin Carr, chief executive of the Protection Review, said: "There has been a gradual blurring of the lines when it comes to short term IP products in recent years and several firms have recently launched short term IP products, which aren't much different from typical ASU.

"Those who know the income protection market might suggest that STIP is a short term version of a proper IP plan -whereas those in the ASU/MPPI camp might say otherwise. Where exactly is the line drawn? When is ASU not short term IP and vice versa?"

Ben Heffer, insight analyst for life and protection at Defaqto, said the name of short term IP was problematic because it had associations with long-term income protection which was far superior.

He said: "Short term IP as a product is not merly a clinical name change and disguise for PPI as it covers a percentage of income as well as the loan payments.

"But it will be difficult for consumers to tell the difference, especially now they have been encouraged to shop around and compare products before purchase."

But Heffer added short term IP could be seen as a positive building block for long term IP, in that advisers could use short term IP to cover long term IP deferred periods.

"Short term IP is a good move and improvement on PPI but the industry really needs to be encouraging consumers to look at long term IP," he said.

According to the Competition Commission's (CC) final report on PPI misselling: "We concluded that short-term IP is a form of PPI, though we recognize that it can be used for alternative purposes.

It also concluded sale a short-term IP policy through a referral made during a credit sale would be sold in the same way as PPI and enjoyed the same advantages.

The CC said it gave rise to the same concerns as PPI sold at the point of sale.