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Income protection rip-off in the Public Sector

Term Life preferred to Whole Life insurance
Public Sector workers are ripped-off by protection insurance policies they cannot claim on due to the employee benefits they receive, according to Ant Insurance.
 
John Needham, Director of Ant Insurance, explains: “All lenders, including independent providers, are ripping off public sector customers.  We all know that the prices charged by high street lenders are astronomical, but they, and the cheaper standalone providers, are guilty of charging for cover that they know customers cannot claim on. They all offer one-size-fits-all ASU mortgage payment protection and income protection insurance policies that pay no regard to the benefits packages of public sector workers which are often very good, so public sector workers have to pay the same premiums as everyone else despite being unable to claim on the insurance for up to six months while they are receiving employer sick pay.  Some people may be unsympathetic, but this sector is often poorly paid and their benefit package is one of the few perks. The least insurers can do is to treat them fairly.”
 
In response, the company has unveiled its Public Service Workers Scheme - the first ASU (Accident, Sickness and Unemployment) income protection insurance and mortgage protection insurance products which take employer benefit periods into consideration and only charges workers for the cover they will be able to claim for.
 
Compared to ASU policies from other standalone providers, a public sector worker can be £44.52 better off a month under the new scheme. Compared to the high street lenders this figure can rise to an incredible £325.24 per month.
 
Ant Insurance is un-bundling the three elements of the cover of accident, sickness and unemployment, and introducing tailored deferment periods for accident and sickness.  This means that workers can select the deferment period which matches their existing employee benefit entitlement exactly and can still receive unemployment cover from day one.
 
Taking, for example, a public sector worker who has employee benefits that will cover her for accident or sickness for 6 months, but who wants to protect her income for 12 months in case she falls ill, has an accident or looses her job.  She can now defer her accident and sickness insurance benefit payments by six months, while still receiving unemployment insurance benefit from day one.  This makes her premiums cheaper and means she is no longer paying for cover she cannot claim for.  It also means that after 6 months of receiving full sick-pay benefit from her employer she can receive 75% of her income each month tax free from her income protection (ASU) policy as well as her half-pay entitlement from her employer for a further 6 months ö thatâs 125% of her usual monthly income.
 
Ant Insurance hopes that the additional 25% will be used to ease the financial burden that accident and sickness can create, for example paying for taxis to hospital, extra child care costs, etc.   This level of benefit has never before been available, and is not offered anywhere else.
 
Premiums start from 38p per £100 of cover.  A 25 year old public sector worker earning £1000 a month net salary, wanting to protect her mortgage payments of £500 per month should she fall ill or have an accident, would pay just £1.90 a month in premium. At this price, should she need to claim, she would receive £500 each month for 3 months.  Six and 12 month cover options are also available from Ant Insurance: if she wanted payments to continue for 12 months for example then the premium, including unemployment cover, would rise to £6.70 a month, compared to £29.50 a month from a building society at more than four times as much.
 
John Needham adds: ”As an ex-policeman myself, this is a subject very close to home, so  I am really proud that we have been able to design a product which finally gives public servants a fair deal."
 
Income protection news: 16/11/2007