Berkeley Alexander has designed an accident, sickness and unemployment (ASU) mortgage protection plan called SecurityPLUS.
SecurityPLUS is available for homeowners between the ages of 18 and 60 and provides five-year cover for a single premium.
The single premium is three times the required monthly benefit. For example, homeowners requiring monthly benefit of £400 will pay a single premium of £1,200.
The maximum benefit available is £2,500 a month or 75 per cent of the borrower's monthly income. In the event of a claim, it is paid for 12 months after a deferred period of 30 days.
Figures from the Council of Mortgage Lenders show that the number of mortgages covered by ASU plans rose from £1,887,000 to 2,356,000 between 1998 and 2000, an increase of 25 per cent. But only 21 per cent of all mortgages are currently protected.
SecurityPLUS enables policyholders to pay once and then forget about it for five years. Most ASU policies are based on monthly premiums and as a single premium policy, SecurityPLUS distinguishes itself from the rest. However, many borrowers may be unlikely to pay up front for something they feel they will not need, on top of the typical costs of buying a home.
In addition, there is only one deferred period and unemployment only cover is not available, which limits choice for policyholders.