Accident, sickness and unemployment (ASU) cover has an unfairly tarnished reputation, but evolving product design means it now has the capacity to meet all of a client’s needs.
This is according to Ian Sawyer, commercial director at Howden Life and Health (pictured), who was speaking on the final day of Income Protection Action Week.
Unfairly tarnished
“ASU does have a bit of a chequered history in the sense that it is tarnished by the PPI mis-selling scandal,” Sawyer explained. “It is unfairly tarnished because that was delivered by banks, building societies, credit companies as an associated product.
“What we’re talking about is an independent product sold by advisers for meeting the needs of individual customers,” he added.
“So people think it’s a bad product. It is not.”
Meeting needs
Sawyer maintained that ASU cover can meet the needs of a great many, with claims paid out all of the time.
“It meets the needs of a great many,” Sawyers continued. “Claims are paid out all the time and satisfy many great needs.
“It’s low cost. It’s not complicated by medical underwriting, so it does the job for consumers or a job for consumers.”
Not complicated
Sawyer added that advisers tend to think of the cover as complicated as historically, there used to be mortgage products and income products and mortgage products were limited to the amount of the mortgage plus around 25%.
“Now that doesn’t meet the needs of many consumers,” he continued.
“Your mortgage is usually about 33% of your overall monthly expenditure when you think of bills, food, entertainment, just living life.
“So that does have varied limitations, but a mortgage risk is also considered a lower risk and therefore insurers give it a cheaper price.”
Evolving products
But he pointed out that product design has now moved on.
“So you have products where it caters for the mortgage, your bills and your additional income expenditure, so it’s much more flexible,” he continued.
“Advisers don’t have to get wrapped up with whether I sell a mortgage product because it’s cheaper and if I sell an income protection product, it’s more expensive.
“That’s melded together and satisfies all the client’s needs.”
