Frequently Asked Questions
Referred
to under differing names such as Mortgage Protection, Income Protection,
Mortgage Payments Protection Insurance (MPPI) etc. ASU policies provide
short-term income replacement in the event of disability through accident or
sickness with the added facility to cover the eventuality of unemployment. ASU
policies can either be bought as a package to cover both disability and
unemployment or separately
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Why the need for cover?
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State Benefits ?
Never mind - the State will
help. Will it indeed
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How can ASU policies help?
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Who is eligible for cover?
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How long can I claim for ?
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When will benefit
commence ?
-
waiting/exclusion/deferred periods
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What is NOT covered
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How much will it cost ?
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Why not leave cover with existing lender ?
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How to apply ?
Why is there a need to
cover your financial commitments? Consider this:
1.3
million people have been unable to work for the past two years because of
sickness
Every
adult in the UK is 5 times more likely to suffer a serious disability than to
die before the age of 60
Each
year c680,000 people under the age of 65 suffer a heart attack, cancer or
stroke - most of them survive
Almost
1 in 5 working age households (3.4 million) have someone who is unemployed.
Over
1 in 3 people aged between 25-34 have experienced unemployment for over a
month
The number
of unemployed people increased by 243,000 from December 2005 to June 2006
Every
day 500 people in the UK are made redundant. Of these, 60% of men and 45% of
women will be unemployed for 6 months or more
State Benefits Never mind - the State will help. Will it indeed
Only
30% of claimants are eligible for Income Support when they are unable to keep
up their mortgage repayments due to disability or unemployment
In
1998 alone, the introduction of new incapacity criteria resulted in 102,000
claimants being turned down for State Benefit. An independent doctor will
carry out your assessment and you must be capable of doing ANY WORK, not just
your normal job to qualify for Benefit
No
Income Support payments are made if your partner works more than 16 hours a
week
DSS
will not cover mortgage capital repayments or insurance costs
No
help is given for mortgage interest on the portion of a loan above £100,000
No
payment is made if the mortgage is for let property
For
mortgages taken out before 2 October 1995, you may be entitled to 50% of
interest paid after 8 weeks, rising to 100% of interest after 26 weeks
For
mortgages taken after 2 October 1995, you may be entitled to 100% of interest
paid only after 40 weeks.
Financial
hardship caused by disability or unemployment can take years to recover from,
restrict future credit lines and cause the cancellation of life policies at a
time when they are needed most
By
providing income if you or your partner are unable to work due to accident or
sickness (known as a Disability) or Unemployment. Cover can be for both
Mortgage Repayments and loss of income.
Benefit
paying periods can be up to 24 months.
Maximum
benefit is normally restricted to 75% of gross monthly income or the maximum
imposed by the individual policy providers. Most MPPI policies have a maximum
of whatever the mortgage payments are plus up to 25% for directly associated
costs with a maximum of £1,500.
Aged
between 18 & 64 years
Permanently
resident in UK
In permanent
employment or on contract and working at least 16 hours per week
In continuous
employment for at least 6 months
Most contracts have a maximum benefit period of 12 months
although there are a few that offer a 24 month period. Permanent Health
Insurance (PHI) income protection can pay income for periods up to Normal State
Retirement age (65)
Claims can be made after the waiting
period stipulated on the policy. This is normally 30 days but other periods are
available for reduced premiums, most commonly 60 days. Unemployment claims may
be further deferred at the commencement of the policy - referred to as the
exclusion period. This can vary dependent upon whether cover is for a new
mortgage or an existing one. The range of exclusion can be between 60 and 120
days - the average is 90 days. Some policies may impose an exclusion period on
the disability cover. Once the exclusion period has passed (only applicable at
the commencement of the policy), claims may be made and paid dependent upon the
scope of cover offered, which can be Standard or "Back to Day One"
Standard Cover
You will be entitled to an amount equal to 1/30th of the monthly benefit for
each continuous day you are unable to work as a result of an accident, sickness
or involuntary unemployment (if unemployment cover is selected) following the
initial waiting period (during which no benefit will be payable. Payments will
be monthly in arrears.
Back to Day One Cover
You will be entitled to the monthly benefit for each consecutive 30-day period
you are unable to work as a result of an accident, sickness or involuntary
unemployment (if unemployment cover is selected) i.e. benefit is paid for the
initial waiting period as though from the first day of disability/unemployment.
What is NOT covered
There
are some exclusions:
Disability (Accident & Sickness):
self
inflicted injuries, attempted suicide or treatment that is not medically
necessary e.g. cosmetic surgery
disability
due to stress, nervous disorder or backache unless a consultant certifies the
condition prevents you from working – some contracts are more stringent than
others and is mostly reflected in the premiums charged
disability
due to drugs, alcohol abuse or AIDS
Any
condition or disease which is known at the commencement date or for which
treatment has been received or advice given in the preceding 12 months
Unemployment:
you are made unemployed or are told that you
will be made unemployed within 60 days of the commencement date;
your work was seasonal, casual or temporary
or unemployment is a regular feature of your work
you resign or you accept voluntary
unemployment;
A full list of exclusions is provided in
the Key Feature Documents and policy wordings
How much will it cost ?
Premium rates will depend upon the
range of cover chosen (full ASU or Disability or Unemployment); the benefit
period, the waiting period and the exclusion period. Typically this can range
from £1.16 to £5.56. For a specific quote, go to the
Products Page
,select the appropriate contract which will give you the premium rate and access
to application.
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Why not leave cover with existing lender ?
This may be appropriate if you are
currently in a claim situation and would effectively be blocked from buying an
alternative contract. However, in normal circumstances, our research has shown
that lenders' insurances tend to be more expensive. In some cases up to twice as
much as those available via our sites. The problem of taking a new contract
could mean that because of initial exclusion periods imposed you would have to
pay double premiums whilst the exclusion period is seen out. This need not be
the case. Most products via ourselves offer a "free transfer" period to take on
existing policies so there is no break in cover. Alternatively we do offer
contracts that have a Free Premium Period of up to 6 months which means that no
extra outlay is incurred.
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How to apply ?
Go to the
Products Page
,select the appropriate contract which will give you the premium rate and access
to application.
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Copyright © 2001 [Incomeshield.co.uk].
All rights reserved.
Revised: 11/02/2008
