Prudential and non-regulated network Enable are launching a mortgage protection plan in the summer designed to compete directly with ASU policies.
The Mortgage Protection Plan from the Pru offers extended sickness cover with guaranteed premiums, for the full mortgage term to a maximum of 65 years. Pru says sickness cover under ASU generally ceases to be paid after 12 months. Its product will also provide three months' cover from the start with an optional 12 months' unemployment cover.
The service will be available exclusively to advisers through the Enable Mortgage Insurance Network and its partners.
Enable managing director Michael Ward says: “The benefits provided by ASU and the terms and conditions of the market's existing leading products simply will not meet the need of customers or the adviser after regulation.
“It is not acceptable that policyholders and their advisers continue to depend on products where the sickness benefit can be paid for one year, which potentially equates to only one-twenty-fifth of the need on a 25-year mortgage.”
Prudential UK chief executive Mark Wood says: “For too long, as an industry we have accepted second best. Enable believes this product will significantly revolutionise the recommendations of brokers and will not only compete head to head with ASU but will ultimately replace it as the preferred product to offer.”