Monday, August 8, 2011

Category Archives: Financial

Safeguarding against family debt with ASU insuranc

Homeowners who have taken on debts without life or income protection cover could be making false economies and leaving loved ones with huge financial problems if they die or cannot go on working.
For instance, in 2009, the Association of British Insurers (ABI) recorded 636,973 new mortgage-related life assurance policies were written, but the Council of Mortgage Lenders recorded 925,000 new mortgage advances.
Independent financial research firm Defaqto has revealed about a third (33%) of all new mortgages are not backed by insurance.
Defaqto report author Ben Heffer said: “In some cases there may be prevailing individual circumstances that dispense with the need for life cover. However, the figures suggest that there are many people taking on debt whose loved ones would have no means of paying it off for them if the worst happened.
“The protection gap does not just apply to life cover but is also a real problem when you look at income replacement products, with so little income protection being sold.”  
The report concludes that as the UK comes out of recession, many families have cut back on insurance to keep household bills down at the cost of providing for sickness, critical illness, medical expenses and loss of income.
Accident, sickness and unemployment (ASU) cover is relatively cheap insurance that takes care of family bills when the main breadwinner is not earning.
ASU policies are standalone – which means if an employer provides good sick cover in one area, like a sick pay scheme, this insurance can be reduced or cut out of the package.
One of the keys is starting cover sooner rather than later, because many unemployment products have exclusions that build in a delayed start of full cover for up to 120 days from inception of the policy.
Like all insurance, these policies have exclusions and many are not suitable for the self-employed.
Other exclusions mean payouts may be turned down if someone is made redundant or voluntarily gives up their job.

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