We simplify all those essential financial decisions
THE EDUCATION SECTIONEvery month we look at a particular financial topic in a little more detail. This month it is Accident, Sickness & Unemployment (ASU) insurance.____________________________What is ASU?Accident, Sickness & Unemployment insurance (ASU) - also referred to as mortgage payment protection - provides you with an income to meet your outgoings if you are :ooff work sick ohave an accidentomade redundantIt pays out a monthly benefit to cover your mortgage and other related costs.You may choose the amount of benefit you would like to receive, although there are some limits on the maximum amount. The premium will be a percentage of the amount of monthly benefit you would like to receive and benefits are usually payable for a maximum of 12 months.You can start claiming your income protection typically after just 60 days of being off work through illness or an accident as certified by your doctor. You can select to cover typically any amount up to £2,500 per month. You can claim your daily income protection from just 60 days after you cannot work through sickness or an accident (or unemployment, if chosen) and continue to claim for up to a full year. As with other forms of personal protection insurances (e.g. life insurance, health insurance) premiums will gradually rise as you get older.Who is eligible for cover? Anyone can apply for an accident sickness & unemployment policy so long as you are over 18 and under 60 and you normally reside in the UK, Channel Islands or the Isle of Man. You must also be in employment or self-employment for at least 16 hours per week and have been so for the last 6 months.Pros•Worth taking out if you've taken out your mortgage or re-mortgage after October 1995, as you are unlikely to get any help from the state with your mortgage payments if you get into trouble.•A good idea if you think making your mortgage payments would be difficult if you were made redundant or too ill to work and you don't have any other protection to cover household bills.•May be useful to think about if you don't have a job which has sick pay or your self-employed Cons•It covers only a specific debt - your mortgage, so you won't have extra money to provide for other things like food, clothing etc.•Can be expensive.•These types of cover pays for a limited time period, typically 1 to 2 years or until you return to work.Why have it?Official figures released on the 15th February 2012, by the Office for National Statistics show that UK unemployment rose by 48,000 in the 3 months to December 2011 bringing the total number of unemployed to 2.67 million. The unemployment rate has not been higher since 1995.These latest figures, alongside the possibility of a double dip recession, paint a very bleak picture for hardworking Britons in 2012. With many still running scared after the personal loan PPI scandal, it is more important than ever for brokers to explain to clients that MPPI and Income Protection Insurance (IP) are entirely different products, and to emphasise the importance of professional research prior to buying. oFor redundancy & unemployment the State provides just £71.70 per week for the over 25’s (£56.80 if under 25) (Directgov) oIn the event of accident or sickness, most employers provide full sick pay for up to 30 days – what about yours? oThe standard weekly rate for State level of Statutory Sick Pay (SSP) is £86.70 a week. (Directgov) What if you don’t have this cover?oHow would you pay your mortgage?oWhat lifestyle choices would you need to make?oWould you be able to afford holidays?oetc, etc . . . What options are available?oUnemployment Protection up to £2,500 per monthoAge rated products providing some of the most competitive rates in the market starting from as little as £5.20 per month for £500 of unemployment cover.oMonthly Instalment facility oUnemployment Only option or full Accident / Sickness & Unemployment coveroIncome Protection cover for 2nd property mortgages, rent, car loans or any other outgoings.