ASU PPI and MPPI

ASU Insurance – Will provide you with a monthly payment amount if you are unable to work for an extended period of time due to an Accident, Sickness or Unemployment.

PPI Insurance – Payment Protection Insurance can be taken out to cover your loans or debts in the event of you no longer being able to meet your financial commitments.  

MPPI Insurance – Mortgage Payment Protection Insurance is designed to cover the cost of your mortgage repayments for the maximum term of a year in the event of you not being able to work due to accident, sickness or unemployment. Mortgage Payment Protection Insurance is ideal if you do not have any savings to help you, should you find yourself in this situation.

If you become sick or are made redundant then ASU, PPI and MPPI plans are designed to help you to maintain any repayments you may be committed to. These plans can help to stop you defaulting on essential instalments and possibly ending up in financial ruin because of circumstances that have occurred that are beyond your control. These plans can offer a short term solution for you, until you are back on your feet. For long term sickness benefits, critical illness cover or income protection plans are generally more suitable.

What is ASU insurance?

ASU policies provide a monthly pay-out if you are unable to work due to an accident, sickness or unemployment. ASU insurance cover will only pay out on the unemployment element in the event of your redundancy.

Why do I need ASU cover?

One of the best days of the month is surely payday. We spend our time working out where all the money is going to go, all the important things such as the mortgage, the bills and food shopping but also all the fun things like holidays, nights out and things for the children. But what happens if that payday stops coming?

Should you lose your job or become unable to work due to sickness or an accident, then the ASU plan will help to cover your outgoings. The amount you can be covered for depends on if you have a mortgage and if you have a salary. It is also worth checking with your employer to see if you have any sickness cover at work.

What does ASU insurance pay out for?

An ASU plan will usually pay out for a maximum of 12 months; however the policy can be taken out for 24 months if required for a higher premium. Once the payout has reached its 12 or 24 month term, the ASU plan is complete as, once you have claimed on the plan, the cover will cease to exist.  After a claim, if you still require an ASU policy, then you would have to reapply for a brand new plan. Please note the new plan would take into account your current circumstances and recent claim and the new ASU plan could be subject to exclusions based on what you have previously claimed for. You can use the money received from your ASU policy to cover whatever expenses you deem appropriate while you are off work.

Mortgage, rent, food and bills are common things you may decide to use your ASU pay out for. This differs from a PPI pay-out or an MPI pay-out as these types of insurance will only cover debts, (in respect of PPI insurance cover) or mortgage payments (in respect of the MPPI insurance cover). With ASU you can normally get an extra 25% on top of the mortgage payments and with an ASU plan the money can be spent on whatever you deem appropriate. 

How long does an ASU policy last?

ASU plans are short term plans of either 12 or 24 months. ASU policies can only be claimed for a maximum of one or two years per claim and a two year plan will normally cost more than a 12 month contract. As ASU plans are general insurance plans they can be reviewed and renewed each month by your insurance company and with this you could find that the terms and conditions change on a yearly basis or are withdrawn completely after a year. If you claim on your plan the policy will end and if you still require cover you would need to reapply.

What are the other choices do I have other than ASU?

Income Protection will replace part of your income (tax free), if you are unable to work for a long period of time due to illness or disability and will usually continue to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner. An income protection plan is often the preferred option over the ASU plan as income protection will cover you long term rather than being limited to a period of 12 or 24 months. An income protection plan can also cover you until retirement and you are able to claim on the income protection plan more than once without the need to reapply. 

Why do I need MPPI cover?

Should you lose your job or become unable to work due to sickness or an accident then the MPPI plan helps cover your mortgage. The plan is normally limited to pay out for 12 months. 

The MPPI plans are normally sold on top of a mortgage. In the event that you are unable to work the loan would be protected by the plan. You can choose your preferred deferment period for your MPPI plan but it is worth taking into account that the sooner you would need the money from the MPPI plan to pay out, the more you would have to pay for your MPPI plan. An MPPI plan is restricted to the mortgage payment and up to 25% on top. 

What other choices do I have other than MPPI?

Critical illness insurance is a long term insurance policy designed to pay out a lump sum to clear your mortgage on the diagnosis of certain life-threatening or debilitating, (but not fatal), conditions such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs.

Why do I need PPI cover?

Should you lose your job or become unable to work due to sickness or accident then the PPI plan will help to cover your loan. The plan will normally pay out for 12 months.

PPI (Payment Protection Insurance) has recently been on the news and in the tabloids due to the mis-selling of the policy. PPI was mis-sold as the products were not suitable for everyone. Proadvice are very proud of our track record in this area, and we will never knowingly recommend a policy to you which is not suitable.

The PPI plans are normally sold in conjunction with a loan and sold on the on the basis that in the event of you being unable to work, the loan will be protected by the PPI plan. You are able to choose the deferment period of your plan in the event of a claim and the sooner you want the plan to pay out, the higher your premiums on your PPI plan will be.

This Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss if income. For impartial information about insurance, please visit the website at www.moneymadeclear.org.uk

What other choices do I have other than PPI?

Mortgage Life Cover

When you take out a mortgage, many people will take out life cover alongside the mortgage to cover the mortgage amount should they no longer be around to cover their mortgage repayments. Some mortgage lenders even insist that you take out life cover as they want to make sure that should anything happen to you and you pass away, the lender is able to reclaim the money they have loaned you. The mortgage lender could, in theory, reclaim your home however this is not always straight forward and can cause various problems for the lender, which they do not want so insist that you take out life cover so that in the event of your death they will receive a lump sum pay-out to clear your mortgage.

Interest Only

If you have an interest only mortgage, then a level term plan would be ideally suited to you. As the capital does not reduce over the term of your mortgage neither does the life insurance. This means that the sum assured that you take out when you start your mortgage will be exactly the same as on the last day. 

level term plan can also be used effectively if you have a repayment mortgage and in the event of your death you want to clear your mortgage and leave some extra money for your loved ones. If you are fortunate enough to be mortgage free, you can still apply for a policy and the level term life plan can still pay out a lump sum to your family in the event of your death. A level term plan is great as you know that no matter what happens the sum assured will always be the amount you agreed at the start of the plan.

A level term plan is also a favourable way of protecting a personal loan or car finance. By being able to leave a specific amount when you die the people left behind will be able to cover any debts or loans you may have.

Repayment Mortgage

A decreasing mortgage insurance plan will decrease throughout the term of your plan. The repayment mortgage plan is normally suited to people with repayment mortgages. The life insurance plan is the cheaper plan when compared to level term mortgage insurance. This is because the sum assured reduces throughout the term of the plan.

The premium for a decreasing mortgage plan is cheaper from the outset however over time your sum assured will decrease but your premium payment will remain the same, for example, if you take out a policy for £200,000 over a term of 20 years, your plan will pay out £200,000 if you were to die in the first year of having your policy. Ten years down the road your still paying the same premium however your cover would now only pay out approximately £100,000.

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