Accident, sickness and unemployment insurance

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What is accident, sickness and unemployment cover?

If you’re employed and unable to work, accident, sickness and unemployment (ASU) insurance is designed to cover a portion of your income while you get back on your feet.

It’s a type of income protection that offers short-term cover, with payments typically made for up to 12 months if you make a claim. This allows you to still pay your household bills if you suffer a serious illness or injury and cannot work.

When you buy ASU cover, you’ll decide how much income protection you need and pay a monthly premium to be insured.

Unemployment insurance can be brought as a standalone product, as can accident and sickness cover, so it’s worth thinking about whether you really need all three.

If you’re employed and are considering ASU, it’s important to first check what you employer offers in terms of sick pay and redundancy packages so you’re not buying something you don’t need.

What’s covered by accident, sickness and unemployment insurance?

ASU cover can help you and your family get through an often distressing and stressful time, providing you with financial support if you:

  • lose your job through no fault of your own
  • fall ill and are too sick to work for an extended period of time
  • get injured and need to take time off work

If you make a successful claim, your provider will pay you a tax-free percentage of your income, typically for up to 12 months. This is known as a monthly benefit amount and can be used to help cover your outgoings.

Some ASU policies are directly linked to mortgage or loan repayments. Mortgage payment protection insurance and payment protection insurance are designed to cover your repayments on a specific debt, for example a mortgage, loan or credit card.

Be aware that if you take out a policy and don’t make a claim, you won’t get any of your money back.

What’s not covered by accident, sickness and unemployment insurance?

As with all types of insurance, it’s important to find out what you’re not covered for so there won’t be any nasty surprises if you make a claim. ASU insurance generally won’t pay out if you:

  • get sacked from your job, quit voluntarily or deliberately take out an ASU policy knowing you’re about to be made redundant
  • have a pre-existing medical condition
  • take time off work because of back problems or stress and anxiety

If you make a claim, you’ll usually have to wait at least a month before receiving a payout.

It’s also worth noting that if you’re aged over 65 or have been in your current job for fewer than six months, you might find it difficult to get ASU cover.

Do I need accident, sickness and unemployment insurance?

If you’re self-employed you won’t have an employer to provide sick pay, so the accident and sickness elements of ASU insurance could be very helpful. However, you can’t make yourself redundant, so will only want insurance that covers you if you have an accident or become ill.

You’re unlikely to need ASU insurance if you have plenty of savings to fall back on or you’re employed by a company that offers generous sick pay and redundancy packages. However, if your employer pays only the statutory sick pay minimum – £96.35 for up to 28 weeks – and their redundancy packages are less than generous, you may want to consider ASU insurance. It’s important to first check what your employer offers before taking out a policy.

You may not need ASU insurance at all, or only certain elements of it. It depends on your own personal circumstances.

As ASU insurance is only for the short term, another option is to take out long-term income protection. This will pay out until you return to work (however long it takes), retire or the policy ends. Premiums are more expensive, though.

Frequently asked questions

Will ASU insurance pay out if I’m off work with coronavirus?

As long as you weren’t suffering symptoms of coronavirus before you took out your policy, you should be covered. Fortunately, most people who get coronavirus recover quickly, usually within a few weeks, so it’s unlikely you’ll have to make a claim unless your symptoms are severe.

Instead, if you’re off work because of COVID-19, you’re likely to be covered by Statutory Sick Pay (SSP) from your employer.

How much ASU cover do I need?

You can choose an amount that represents your mortgage amount or your total bills. Our online journey allows you to cover up to 60% of your monthly (gross) income.

How long will my ASU policy pay out for?

ASU cover is designed to cover periods of temporary unemployment, sickness and injury. A typical policy will only pay out for a maximum of 12 months.

Alternatively, long-term cover – otherwise known as permanent health insurance – can last up to retirement age, although premiums are more expensive.

Will my ASU pay out straight away?

No it won't. ASU policies have a 'minimum claim period' and these typically last for 30 days. In this time, you won't be eligible to make a claim. On top of this claim period, there is an 'excess period' which you select dependant upon your own needs. 

For example, if you had just bought a policy which has a claim period of 30 days and you selected an excess period of 60 days, if your claim is successful, your payout would be made on day 91. If you have had your policy for more than 30 days then you would be paid out after your chosen excess period.

If your policy has ‘back-to-day-one cover’ included, you would still need to wait for the 'claim period', but there would be no excess period to wait.

Is ASU the same as PPI?

PPI (payment protection insurance) is typically taken out with a loan or credit card. It can help if you’re unable to make a payment.

PPI is taken out to cover payments for specific, individual debts, and this is where the difference lies. ASU will provide you with a replacement for your wages. With this alternative income, you may be able to keep up all your regular outgoings, not just individual payments.

Does ASU cover illness?

Yes, it can cover loss of earnings through illness or injury. Statutory Sick Pay can be significantly lower than your actual earnings, so accident and sickness insurance can help bridge that gap.

There are policies which cover either short-term or long-term illness. Short-term sickness insurance is more typical, and usually covers up to 12 months. Long-term sickness insurance is designed to payout for a minimum of two years and a maximum of up until your retirement age. Depending on your health, it’s important to consider which cover is right for you.

How does insurance impact on my sick pay?

It doesn’t. The idea of ASU insurance is to help cover costs when your sick pay ends.

Sick pay can vary. Some employers will provide you with your full salary for a period of time while you’re ill, with some of the better packages paying you for up to 12 months.

Otherwise, you can get £96.35 a week from your employer for up to 28 weeks, if you qualify for Statutory Sick Pay (SSP).

Before you buy your insurance, you should check what your employer will pay you and for how long. This is because it will affect the waiting period before your insurance payouts start (sometimes called the deferred period) and, consequently, the cost of your insurance.

If you’re self-employed, you won’t have any sick pay from an employer, so you might want to consider income protection, which covers you if you become ill.

Can I get insurance for redundancy?

If you lose your job, redundancy insurance is a way of securing a regular income to replace your lost wages. After a deferral period, you’ll start receiving a tax-free income to cover your monthly outgoings. These payments typically last up to one year. Redundancy will also be covered under a more comprehensive accident, sickness and unemployment insurance plan.

Does ASU cover mortgage payments?

Yes, you can use ASU payouts for whatever you want. But you can get mortgage income protection that specifically covers your mortgage repayments if you get sick or lose your job through no fault of your own. 

What is a deferred period?

A 'deferred period' is a fixed period of time that has to pass before your monthly pay out begins. During this time you might rely on your savings or company sick pay to pay the bills before the policy pays out. You can choose the deferred period yourself depending upon you own needs. Generally, the longer the deferred period, the cheaper your monthly premiums are likely to be.

How can I compare accident, sickness and unemployment protection polices?

It’s easy with our comparison service. Just fill in a few details about yourself and choose what you want to cover – your mortgage payments or your income. 

Then pick the kind of cover you’re interested in – accident and sickness or accident, sickness and unemployment. It only takes a few minutes. 
You’ll then see a page listing your quotes in price order, with the cheapest at the top. There are also different tabs you can select to see the different kinds of cover and how much they would cost. 

But don’t use the price as the main selling point. Carefully read through what’s covered under each policy to make sure you’re getting the cover that’s right for you.

What do I need to get a quote?

Once you’ve chosen the type of income protection you want, we’ll ask you a few questions about yourself and the cover you need, including:

  • your name, age and address
  • the type of job you do
  • whether you’re employed or self-employed
  • if you smoke or use nicotine-based products
  • the deferred period you choose
  • your health
  • the amount of cover you want, based on your monthly income
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Mubina Pirmohamed

From the Life team

What our expert says

"When choosing an accident, sickness and unemployment policy, bear in mind that you may not need the maximum amount of cover that’s available to you. This can help to reduce the cost of your premiums. The amount you choose should be enough to cover any essential outgoings, like your mortgage, food and other household bills."

Why use Compare the Market?

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93.8% of users would recommend Compare the Market to friends or family****

***On average it can take less than 2 minutes to complete an income protection ASU quote through Compare the Market based on data in November 2020.

****For the period 1st September to 30th November 2020, 12,477 people responded to the recommend question. 11,706 responded with a score of 6 or above, therefore 93.8% are likely to recommend.

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