The maximum amount of cover consumers can have from May under the Post Office’s lifestyle product will fall from £2,500 a month to £1,500. They will also have to wait for 90 days after they have stopped working before they receive any money compared with the present limit of 30 days.
A spokesman for the ABI says: “Other insurers could do the same – it depends on whether it is allowed in their contracts.”
He says that although this makes the product less attractive it is a necessary sacrifice for the Post Office to stay in the market.
The Post Office says the difficult economic climate meant it had to make the adjustment.
A spokeswoman says: “We wrote to customers at the earliest oppor-tunity to ensure they were aware of the changes.
“We would like to stress that customers who are currently claiming will not be affected by these changes and that we have introduced a number of options to ensure that we can continue to offer the product rather than withdrawing it as many other providers have chosen to do.”