Peter Hamilton, head of market management for Zurich, agrees: “There are a number of advantages to more comprehensive IP plans”.
He lists these as including:
- Pre-existing conditions won’t be excluded.
- Guaranteed rates mean certainty of cost and cover over the long-term.
- The level of benefits available will typically be higher, available for longer.
- IP cannot be cancelled by the insurer, as long as you pay the premiums.
- IP plans tend to have more options attached, flexibility in terms of cover levels, and changes in circumstances.
2) IP is also good for those in employment
Just because it might not contain unemployment cover or have it as an add-on, IP is still the most appropriate cover for most people in employment, according to Nick Homer, head of market management, corporate risk, for Zurich UK.
He says: “IP is the best solution to provide workers with financial protection in the event of prolonged illness or injury, provided they earn approximately £20,000 or more (typically - however, it depends on their circumstances)."
Mr Heffer agrees: “Limited payment plans provide a financial cushion for those suffering a financial hiatus due to sickness, accident or unemployment, but do not cater for those who experience long-term sickness or disability.
“On average, long-term IP claims can be as much as seven years. Under those circumstances, people with a short-term policy would need to downsize, sell their home and seek some other way of paying off their mortgage before the benefits payments stop.”
3) While ASU covers redundancy - it can be limited
According to Mr Devine, consumers will have to be wary about what exactly is covered under the ‘unemployment bit’ of an ASU policy.
He explains: “If you go on to a comparison website for a quote that includes unemployment you will be asked for your occupation. There is not supposed to be a blacklist of jobs but it is probably described as a watch list.
"Certain industries and jobs are considered higher risk than others and cover could be denied or heavily rated in terms of increased premiums.”
Therefore, according to Dean Mason, director and founder of Masons Financial Planning, it is definitely worth checking out whether an insurer’s IP policies do have an option to pay a waiver of premium to ensure payments are kept up if the client loses their job and some have the option to add unemployment cover.
He warns: “Any form of unemployment cover is usually more expensive than other covers because generally you are more likely to be made redundant or lose your job (through no fault of your own) than other events you can protect against.
"For that reason, the unemployment cover is attractive because people generally fear losing their income and in many cases this is more at the forefront of their mind than the fear of death or serious illness.”
Steps forward for ASU
ASU providers have, in recent years, sought to address some of these issues by creating simpler products and improving the terms of cover, as well as keeping costs low.
