UK watchdog eases rules on protection insurance

LONDON, April 27 (Reuters) - Britain's financial watchdog plans to simplify rules for the sale of life, critical-illness and income-protection insurance where there is no investment, allowing policies to be sold under standard insurance rules.

The Financial Services Authority said on Friday it would lift age and term conditions from the definition of a protection contract, allowing all long-term insurance contracts without a surrender value -- which therefore do not qualify as investments -- to be sold under the lighter ICOB regulatory regime.

Cold calling, for example, would be allowed under the new rules but not under current regulation.

The new rules will come into effect from June 6.

The protection market is key for several British insurers including Friends Provident FP.L and Legal & General (LGEN.L).