Two ASU policies - overinsured?

stottie_2

Hi, I have two ASU policies, at least one of which I've had since 2008 (what can I say, I'm a bit of a worrier!). I've never claimed on either although I have been made redundant twice since 2010. I've always informed them of any changes to address or job.

A friend says I can only have one and that both would refuse a claim since they would deem me overinsured. Is this right?

If I do need to cancel one, do any of the mis-selling rulings apply as I wasn't asked when I took out the second whether I already had this kind of cover.

Many thanks

dunstonh

A friend says I can only have one and that both would refuse a claim since they would deem me overinsured. Is this right?

No. You can have as many as you like as long as you do not exceed a figure that is greater than around 66% of your income (some providers cap at 60% - some older types may go higher). If you exceed that figure, then both will pay out up to their cap.

weejonnie

Just watch out that 66% - whilst this is fairly normal for mortgage-related ASU, stand alone ASU often have a limit of 50% (The good news is that this is of your GROSS (i.e. pre-tax) earnings.) If the total exceeds the 50% level then the total payouts from the two policies will not exceed that amount (the exact ratio depends on whether both policies exceed £1000 or not)

ACG

Gotta love friends, family and mates down the pub havnt you...

As Dunston says you could have 10 policies if you wanted, you could then make a claim on 1 or both but you couldnt exceed in total the payout that they offer - so if you have one at 50% and 60% it would make sense to claim with the 60% policy if possible.

Im not sure how it would work after one had stopped paying out if you were still off work, whether the second would kick in?

Effectively though if you are over insured, your paying for something you may not be able to claim on, so it is worth looking into and reviewing.