How does Accident, Sickness and Unemployment Insurance work?

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 works by paying out a tax-free sum known as a monthly benefit amount, in the event that you are made involuntarily redundant, or are unable to work because of an accident, injury or illness.

By protecting your income for up to 12 months, these policies offer peace of mind and financial security, helping cover any essential outgoings while you look for another job, or take the time you need to recover.

When you buy Accident, Sickness and Unemployment Insurance, you’ll be asked some simple questions to make sure you’re eligible for cover.

How much of my income will ASU policies cover?

To help find out more about your needs and financial situation, you’ll be asked to provide details about your job, such as the nature of your work and your annual income. This is because the amount of money you receive when you make a claim (your monthly benefit amount) depends on how much you earn, but can be anything up to 65% of your gross monthly income

When choosing a monthly benefit, bear in mind that you don’t need to choose the maximum that’s available to you. Accident, Sickness and Unemployment Insurance policies are designed to protect a percentage of your income, but not all of it, so the amount you select should be just enough to cover any essential outgoings, such as food, rent and household bills.

Eligibility for Accident, Sickness and Unemployment policies

To be eligible for Accident, Sickness and Unemployment Insurance, you’ll need to be a permanent resident of the UK, Channel Islands or Isle of Man, and working full-time (more than 16 hours per week). At the time of making a claim, you’ll need to provide ID, proof of residential status, and evidence of your income in the form of payslips, proof of signing up with your job centre and proof that you are actively seeking employment.

When you buy a policy, you’ll need to confirm that you’re not aware of any potential redundancies or restructuring in your place of work, and aren’t subject to any enquiry or disciplinary procedure by your employer.

If you’re self-employed, you can still purchase income protection, you just need to able to prove that your business isn’t in any financial deficit or at risk of closure.

For the accident and sickness element of cover, you’ll be required to tell our advisors about any pre-existing medical conditions, as these will be counted as exclusions and you won’t be able to claim for them.

Cover for existing medical conditions with sickness insurance

With the majority of insurers, a pre-existing condition is defined as a condition, illness or injury that you’ve had symptoms of or sought medical advice for in the 12 months prior to buying a policy. If you’ve been symptom free for at least 24 months, and this can be verified by your GP, the exclusion will no longer apply.

If you’re made involuntarily redundant and need to make a claim, you’ll need to get past what’s called an Initial Exclusion Period (IEP). Lasting between 60 and 120 days, this is the amount of time you must wait after purchasing a policy before you can claim. If, during this time, you are made aware that your job is at risk, you’ll need to cancel the policy, because any claim you make will not be valid.

How quickly will I be paid when I make a claim on my accident, sickness and unemployment policy?

Accident, sickness and unemployment policies come with what’s called an excess period (also known as a deferred period or waiting period). Lasting back to day 1,30,60, 90 or 120 days, this is chosen by you at the time of purchase, and simply means how long you’ll need to be off work before you receive your first payment.

Because you’ll need to be supporting yourself during this time, it’s important to think carefully about the excess period you choose. The majority of customers are confident that they can survive for the first month, and so opt for a 30 day excess, but you should select the one most suited to your financial circumstances.

If you need the payments to start sooner, the ‘back to day 1’ or 0 excess period will pay you in arrears from the very first day of your claim, but do bear in mind that that this will increase the cost of your monthly premium.

In the event that you fall ill, or suffer an injury and need to claim for accident or sickness, you won’t need to serve an Initial Exclusion Period, so as soon as your chosen excess period has elapsed, you will receive your first payment.

For more information about accident, sickness and Unemployment Insurance, or to purchase a policy, it’s a good idea to speak to an advisor. Experts in income protection, our specialists will take your situation into account, and search the market to find the right cover for you.