What does Accident, Sickness and Unemployment Insurance cover?

Find out more about Accident, Sickness and Unemployment Insurance, to see how you could insure your income against the unexpected.

Accident, Sickness and Unemployment Insurance covers you if you lose your job or are unable to work because of an unforeseen accident, injury or illness.

Also known as ASU, this is the most comprehensive type of income protection on the market, and will pay out a tax-free sum (known as a monthly benefit amount) for up to 12 months in any one claim.

The amount of money you receive each month is dependent on how much you earn, but can be anything up to 65% of your gross monthly income.

Covering a proportion of your wages or salary, Accident, Sickness and Unemployment Insurance is a bit like a personal safety net, an emergency parachute, or an old-fashioned rainy day fund. Ideally, you won’t need to use it, but if something goes wrong, you’ll be very glad it’s there.

Being left without a regular income is one of the most stressful things that can happen to anyone – whether that’s due to involuntary redundancy or an unforeseen accident, injury or illness.

When you’re unwell, or faced with finding another job, the last thing you want to be worrying about is falling behind on bills, or being unable to put food on the table, particularly if you’ve got a family to support.

But unfortunately, without some kind of back up in place, this is this situation many people would find themselves in. In the past, the idea of ‘a job for life’ was quite common, but today, it’s pretty much unheard of.

Do I need Accident, Sickness and Unemployment Insurance?

According to recent research by the Office for National Statistics, as many as 41% of people in the UK will be made redundant, or need to take time off because of ill health during their working lifetime.

What’s even more concerning, is the lack of savings most people have to fall back on, as statistics show that a quarter of UK households have as little as £95 to keep them afloat.

If you do find yourself unemployed, you can claim Job Seeker’s Allowance. But at less than £75 per week, it’s likely that this wouldn’t be enough to cover even the bare essentials.

When it comes to accident or sickness, if you’re a UK resident working full-time, you’ll be entitled to Statutory Sick Pay (SSP) for up to 28 weeks, but again, at under £95 a week, this isn’t exactly going to leave you feeling flush.

Some employers do offer company sick pay, but many don’t, as it’s not a legal requirement, so it’s best to make sure where your place of work stands on this matter.

When you buy Accident, Sickness and Unemployment Insurance, you’ll need to choose a benefit amount, which means the amount you will receive each month if you make a claim. Although this can be up to 65% of your gross monthly salary, do bear in mind that you don’t have to opt for the maximum available to you.

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Accident, Sickness and Unemployment - Flexible benefits to suit your needs

Accident, Sickness and Unemployment policies are designed to cover a percentage of your income, but not all of it, so think carefully about your choice. You should choose an amount that is just enough to help you meet any essential financial commitments, such as bills, payment towards a mortgage, and of course, food and drink.

Most of our customers find that in situations where their income is reduced, they naturally cut back on their outgoings and are able to get by on much less than they usually would.

Some people use the monthly benefit to cover a loan payments, rent, or payments toward a vehicle, but because they money is tax-free and paid directly to you, it doesn’t need to be linked to a particular financial commitment.

When you buy Accident, Sickness and Unemployment Insurance, you’ll be asked to choose an excess period (also known as a deferred period or waiting period).

This term sometimes confuses people, but it simply refers to the amount of time you need to wait to receive the first payment when you make a claim.

The excess period options are 0, 30, 60, 90 and 120 days, and as a general rule, the shorter the excess period, the higher the cost of the monthly premium, so do keep this in mind when making your choice.

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Are there any exclusions I need to know about with Accident, Sickness and Unemployment Insurance?

If you need to make a claim for unemployment, you will also need to get past an Initial Exclusion Period (IEP). Like the excess period, this isn’t as complicated as it sounds; it simply means how long you must wait after purchasing a policy before a claim will be valid.

One crucial note on the Initial Exclusion Period, is that if you’re made aware that your job is at risk during this time, you’ll need to cancel the policy because any claim you make wouldn’t be valid.

The Initial Exclusion Period is in place to protect insurers against people taking out a policy when they are already aware that their job is at risk and making a claim straight away.

For more information about Accident, Sickness and Unemployment Insurance, we recommend speaking to one of our advisors. As dedicated Income Protection Specialists, they’ll do all the hard work for you, comparing quotes from the best insurers on the market to find the right policy for you at the most competitive price.

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