Accident, Sickness and Unemployment insurance has had a bad rap since the PPI scandal took hold. Payment Protection Insurance is essentially the same type of policy but can be used to cover any debt. Hence many people with credit cards have claimed for mis-selling PPI.
ASU and IPI – Income Protection Insurance are very different.
- ASU covers just the mortgage payment plus associated insurances; IPI covers the salary.
- ASU typically protects for up to two years; IPI can cover until retirement, mine takes me to age 70
- ASU has a standard deferred period of one month before payments are made; IPI has options where the customer can choose – anything up to a year
- ASU covers in the event of redundancy from employment but has plenty of caveats – the customer mustn’t have known of any impending redundancy before they took out the plan, and usually they need to have a period of full employment before claiming. Plus they impose a period when the plan starts, where no customer can claim at all.
- ASU are general insurance policies, so they renew each year just like motor. IPI is permanent.
- ASU benefits are tax-free just like IPI, and both don’t allow tax relief on premiums like pensions. They are the same when employers take them out for their staff — the costs are offset against Corporation Tax for both plans.
So it’s ASU 2 – IPI 5!
