Accident, sickness and unemployment insurance

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What is accident, sickness and unemployment insurance?

If you’re employed but are 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.

ASU offers short-term income protection, offering pay-outs for up to 12 months if you make a claim. It means you can still cover your mortgage and other bills if you develop an illness or injury and can’t work.

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

You can buy both unemployment insurance and accident and sickness insurance as standalone products, so it’s worth considering whether you need all three.

If you have a job and are considering ASU, first check what your employer offers in terms of sick pay and redundancy packages, so you’re not buying something you don’t need.

What do I need to get a quote?

Once you’ve chosen what type of income protection you need, we’ll need some details, including:

  • Your name, age and address
  • Whether you’re employed or self-employed
  • The type of job you do
  • Your income
  • How much cover you want, based on your monthly income
  • Whether you own or rent your home
  • Your deferred period (the maximum number of days you’d want to wait before your policy pays out)
  • If you smoke, or use nicotine-based products.
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[1] Correct as of June, 2022.
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What’s covered by accident, sickness and unemployment insurance?

ASU cover can help you and your family get through what’s often a distressing and stressful time. It will provide 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
  • Get injured and need to take time off work.

If your claim is successful, your insurance 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 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 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. That way there won’t be any nasty surprises if you make a claim. ASU cover 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 pay-out.

And if you’re over 65, or have been in your current job less 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 useful.

You’re unlikely to need ASU cover if you have savings to fall back on, or work for a company that offers generous sick pay and redundancy packages. But if your employer pays only the statutory sick pay minimum – £99.35 for up to 28 weeks – and their redundancy packages are less than generous, you may want to consider ASU insurance. Always check what your employer offers before taking out a policy.

You may not need ASU cover at all, or only certain aspects of it. It depends on your 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.

What types of accident and sickness protection are available?

There are two types of accident and sickness cover available to you:

Short-term – as the name implies, short-term accident and sickness protection covers your income for a set period if you get ill or injured and are unable to work. Depending on the policy, you should receive up to 70% of your income for a period of up to two years.

Long-term – long-term accident and sickness protection will cover your income right up until retirement age. It tends to kick in after your corporate sick pay stops. But given that it could be covering a long period of time, you’re likely to find that the premiums are expensive.

Frequently asked questions

How much ASU cover do I need?

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

How long will ASU 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. ASU policies have a 'minimum claim period', which typically lasts 30 days. During this time, you won't be eligible to make a claim. On top of this, there’s also an 'excess period', which you decide on, depending on your needs.

For example, if you buy a policy with a claim period of 30 days, choose an excess period of 60 days and make a successful claim, you’ll receive your first pay-out on day 91.

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

Is ASU the same as PPI?

No. PPI (payment protection insurance) typically comes with a loan or credit card. It can help if you’re unable to make a payment.

PPI is designed to cover payments for specific debts, while ASU provides a replacement for your wages. With this alternative income, you can hopefully maintain your regular outgoings, not just individual payments.

Does ASU cover illness?

Yes, ASU can cover loss of earnings through illness or injury. Statutory Sick Pay is likely to be much lower than your earnings, so accident and sickness insurance can help bridge that gap. There are policies that cover either short-term or long-term illness.

You’re more likely to find short-term sickness insurance, which usually covers periods of up to 12 months. Long-term sickness insurance is more expensive, but is designed to pay out 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 affect my sick pay?

It doesn’t. ASU insurance is there to help cover your expenses when your sick pay ends.

Sick pay varies, depending on where you work. Some employers will give you your full salary for a certain time period while you’re ill, with some packages paying you for up to 12 months.

Otherwise, if you qualify for Statutory Sick Pay (SSP) you’ll receive £99.35 a week for up to 28 weeks.

Before buying any insurance, check what your employer will pay you and for how long. That’s because it will affect your deferred period – the length of time you have to wait before your pay-outs kick in.

If you’re self-employed, you won’t receive sick pay, so you may 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 one way to secure a regular income to replace your lost wages. After a deferral period, you’ll receive a tax-free income to cover your monthly outgoings. Payments typically last up to a year. More comprehensive accident, sickness and unemployment insurance plans also cover redundancy.

It’s worth remembering that ASU won’t cover you if you take voluntary redundancy, and it won’t pay out if you’re fired for misconduct.

Does ASU cover mortgage payments?

Yes, you can use ASU pay-outs for whatever you want. But you can get mortgage income protection that 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-outs begin. During this time, you might use your savings or company sick pay to cover your expenses before your policy pays out. You can choose the deferred period yourself, depending on your needs. The longer the deferred period, the cheaper your premiums are likely to be.

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

Our comparison service makes it easy. Just give us a few details and decide what you want covered – your mortgage payments, or your income.

Then pick the kind of cover you want – accident and sickness, or accident, sickness and unemployment. It only takes a few minutes.

You’ll see a page listing your quotes in price order, with the cheapest at the top. There are also tabs you can select to see the different kinds of cover, and how much each costs.

But don’t make your decision based on price alone. Read what each policy covers to make sure you get the cover that’s right for you.

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 available to you. This can help reduce the cost of your premiums. The amount you choose should be enough to cover essential outgoings, like your mortgage, food and other bills.