Accident, Sickness & Unemployment Cover (ASU)

The term ‘Accident & Sickness’ is usually associated with ASU policies which provide Accident, Sickness & Unemployment cover. Claims are paid as a monthly benefit to replace lost income in the event of accident, sickness or unemployment. The claim period is usually restricted to 12 or 24 months or when the person returns to work.

ASU policies can be set up in two ways, one to protect financial commitments such as a mortgage or rent and another to protect income instead of outgoings.

Mortgage Payment Protection Insurance – MPPI – will be based on the monthly mortgage amount plus certain associated costs. It’s important to know which costs will covered so that you insure the correct amount. You must have a mortgage or rental agreement to be eligible for this type of cover.

If you are ‘over insured’ you could be paying more for cover you wont be able to claim.

Income Protection – IP – This will protect up to 50% of income or £1000 of monthly benefit (whichever is the lesser) and although it can be used to protect a mortgage or rent a policy holder does not have to have either.

This type of cover is not to be confused with PHI (Permanent Health Insurance) which is sometimes referred to as ‘income protection’ and also provides protection in the event of an accident or illness. PHI claims can be paid for many years depending on the term of cover or until the policy holder reaches retirement age, returns to work or dies.

Multiple claims can be made with a PHI policy while ASU policies only protect against one claim.

For example; an ASU policy holder is involved in a car accident and cannot return to work for 6 months. If they make a valid claim, the ASU policy will pay the monthly benefit for 6 months and the policy will end. If further cover is needed a new policy will be required.

If the policy holder is unable to return to work for more than a year and the policy only provides cover for 12 months, after 12 months the cover will cease and the monthly benefit will stop.

ASU policies require less underwriting and are therefore easier to apply for than PHI policies which are fully underwritten on age, medical conditions and occupation.

Because less underwriting is required and because claims are only paid for 12 or 24 months, ASU policies can be cheaper than PHI.

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