Accident Sickness And Unemployment Insurance

Heavily mis-sold and expensive, Accident Sickness and Unemployment cover is an ‘add-on’ that bumps up the cost of credit, sometimes to eye-watering levels.

The benefits of taking up Accident Sickness and Unemployment insurance is that if any of the events stated in the title happen during the course of the insurance, the insurer will some of your loan repayments.

Things that many people don’t realise about Accident Sickness and Unemployment insurance

Sometimes, accident sickness and unemployment cover does not kick in until after a set period – usually either one month or three months – and this is known as a ‘wait period’. This means that for many, by the time the insurer pays out, your mortgage or loan is already in default.

The cover is often short term – it can only last for 12 months in most instances.

Many accident sickness and unemployment insurers do not cover self-employed people.

By law, the chances of you obtaining a loan or a mortgage do not increase by taking out accident sickness and unemployment insurance.

The amount that the premiums add on to the cost of credit can be absolutely mind-blowing. Before you think about taking out accident sickness and employment insurance, you should ask the lender to show you the cost of credit with and without the insurance.

The commission rates on accident sickness and unemployment insurance that are paid to lenders are very high. Some lenders make more from their commissions on this insurance than they do from the interest margin.

There are often several exclusions in the policy itself which will stop an insurer from paying out. It is vital that if you take out this cover, you make sure you are happy with the wording.

Accident Sickness and Unemployment insurance is sometimes mis-sold and many lenders – including some of the UK’s largest – have been fined for mis-selling.

Wider criticism of accident sickness and unemployment cover

The Citizens Advice Bureau criticised Accident Sickness and Unemployment insurance in its report entitled ‘Daylight Robbery’. The CAB subsequently lodged a super-complaint to the Office of Fair Trading which labelled its response with the title ‘Protection Racket’.

The Competition Commission instigated an investigation and banned lenders from selling the insurance for a period.

The Consumers’ Association, publishers of Which magazine, has also criticised the mis-selling and cover provided by accident sickness and unemployment insurance.

Other names given to Accident Sickness and Unemployment Insurance

Sometimes abbreviated to ASU, the insurance goes by several other names including Payment Protection Insurance, Payment Insurance, Mortgage Protection and Disability Accident and Sickness insurance.

Alternatives to Accident Sickness and Unemployment insurance

Income protection cover is not loan specific and can be more flexible, but most of the above issues also arise.

Our verdict

We don’t give advice on insurance, we just present the facts. Based on the facts, accident sickness and unemployment insurance is always expensive, sometimes mis-sold and is widely criticised, especially for not giving the benefits that most people think it gives.