This type of policy is designed to provide a short-term benefit towards the monthly income lost in the event of the policyholder’s earnings stopping as a result of an accident, illness or unemployment.
The policy benefits will only be paid in the event that the policyholder’s income is reduced/stops. It is not designed to pay a benefit if the policyholder continues to receive their full gross salary from their employer.
As an extension, the policy can sometimes pay a lump sum in respect of accidental death, permanent total disablement or loss of limbs, sight or hearing.
ASU Cover is not compulsory and like any insurance, you have to make a considered judgement about whether you think it is likely you will have to claim during the life of your loan. If the worst happens and you have to call on your insurance, then it can be money well spent.
The policies have a fixed-term of twelve months, and are reviewed annually by the insurer. At this point, it is normal for renewal terms to be issued and the insurer will write to the policyholder directly in this regard on each anniversary of the policy, offering the opportunity to alter the terms of the contract to suit their requirements.
The premiums can be reduced by accepting cover for only some eventualities, for example, opting to buy a certain type of cover e.g. unemployment only or disability only. This would only be prudent if the cover excluded was provided by another means.