Accident Sickness & Unemployment
What is an ASU policy likely to cover?
ASU is designed to provide you with financial protection in the event you are unable to continue working because:
• You have lost your job through no fault of your own;
• You become ill and are too sick to work;
• You are injured and unable to work.
You will typically receive a proportion of your income for up to 12 months which can then be used to help cover your monthly outgoings.
What is unlikely to be covered by ASU insurance?
As with any form of insurance, when you buy an ASU policy it’s important to find out whether any exclusions apply to your cover.
First and foremost, if you have any reason to suspect that you might be about to lose your job it is vital to be aware that any ASU policy you buy may be invalid.
Insurance companies are careful to investigate customers’ circumstances before authorising pay-outs, and if it seems that you have deliberately tried to insure yourself in anticipation of redundancy you will probably find it impossible to claim.
Most ASU policies come with a waiting period designed to prevent fraudulent claims. This might mean that if you are unable to work within a few months of taking out an ASU policy you won’t be eligible for a pay-out, even if you were 100% honest with your insurer when setting up your cover.
If you are able to make an ASU claim, it’s likely you will have to wait at least a month before receiving a pay-out. The waiting period that comes with your policy is something else to look out for when researching the products on offer from different ASU providers.
ASU policies also tend to be time limited – so you might find that any payouts you are entitled to under your policy will cease after 12 months.
Meanwhile, if you are aged over 65, are self-employed or have been in your job less than six months, you may also find that it’s harder to buy ASU cover.
Finally, don’t forget to find out which medical conditions are limited or excluded under any ASU policy you might take out.
It isn’t unusual for back problems and conditions such as stress to be excluded, and these are among the most common causes of absence from the workplace. Pre-existing medical conditions will also be excluded from your cover, and you’ll be required to declare these when taking out your ASU policy.
How can I cut the cost of an ASU insurance policy?
The best way to make sure you get good value for money when buying ASU is to compare a range of insurance policies from different providers. You’ll be able to look at how much each policy costs, as well as what it covers, before making a decision.
This kind of policy is particularly useful if you are concerned about whether or not you could cope financially in the event that you lost your job through redundancy or ill health.
You can take out an accident sickness and unemployment policy that is specific to a debt so that repayments will continue to be made in the event that you lose your income through an accident, sickness or after becoming unemployed.
Bear in mind that most ASU insurance policies are time limited, so they will only pay out for a set period. This can range from a few months to a couple of years, although if you decide instead to opt for a broader income protection policy, this will continue to pay you a monthly amount until you either recover or until the end of the policy term’. Policies also carry certain restrictions. For example, you may not be covered if you are already at risk of unemployment when you take out a policy.
Accident, sickness and unemployment insurance (ASU) pays out if you lose your job or become unable to work through illness, injury or redundancy.
It’s often referred to as short-term income protection insurance or payment protection insurance because pay-outs are restricted so that you can only claim for a maximum period of between 12 and 24 months.
Cover levels are based on your mortgage and monthly outgoings, and while you get to choose the amount, pay-outs will usually be limited to 60-65% of your income.
You’ll pay a monthly premium for the cover, which rolls over month by month until you cancel the policy or make a claim. This makes ASU insurance relatively informal and easy to take out.
Accident, Sickness & Unemployment insurance (ASU) Explained
Accident, Sickness & Unemployment insurance (ASU), can also be referred to as mortgage payment protection and will provide you with an income to meet your outgoings if you are off work sick, have an accident or are made redundant. It pays out a monthly benefit to cover your mortgage and other related costs.
You may choose the amount of benefit you would like to receive, although there are some limits on the maximum amount. The premium will be a percentage of the amount of monthly benefit you would like to receive.
Some policies will also allow you to choose whether you want to receive benefits for accident & sickness only, unemployment only or all three. Most policies will also have a ‘deferment period’ This is the time you have to wait to start receiving benefits from the ASU policy after you have become ill, had an accident or become unemployed. Again, this can vary from having no exclusion period to 30, 60 or 90 days. In some instances, this can be even longer.
Alternatively, some ASU policies have a waiting period after which time the claim is paid in full. With a 30 day waiting period, on the 31st day of unemployment or disability, the claim is back dated to day 1 & paid in full.
The main instances when you will not be covered are deliberate self-injury, riding on a motorcycle, dangerous sports or occupations, working as a professional sports person, or any injury or condition related to normal pregnancy, stress, backache or which you had prior to your application for cover, AIDS-related conditions, conditions due to drug and alcohol abuse or your criminal activity. If you have also selected unemployment cover, you will not be covered if you knew or had reason to believe you might become unemployed, if your work is seasonal or temporary or you accept voluntary unemployment. If you are on a contract you can still qualify for unemployment cover if you satisfy certain conditions which are contained in the full policy details. A full list of exclusions will be provided with your policy. You will not be covered for any sickness which occurs during the first 60 days of your policy. You will not be covered for any unemployment which occurs during the first 180 days of your policy.
Who is eligible for cover?
Anyone can apply for an accident sickness & unemployment policy so long as you are over 18 and under 60 and you normally reside in the UK, Channel Islands or the Isle of Man. You must also be in employment or self-employment for at least 16 hours per week and have been so for the last 6 months.
You can start claiming your income protection typically after just 60 days of being off work through illness or an accident as certified by your doctor. You can select to cover typically any amount up to £1,500. You can claim your daily income protection from just 60 days after you cannot work through sickness or an accident (or unemployment, if chosen) and continue to claim for up to a full year. As with other forms of personal protection insurances (e.g. life insurance, health insurance) premiums will gradually rise as you get older.