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June 13, 2024

Accident sickness and unemployment vs income protection cover

By Nathaniel Dalby

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No matter what industry you’re in, it’s always helpful to be covered in circumstances where you can’t work. But with so many insurance options out there, it can be confusing to figure out the type of coverage you need.

Accident, sickness and unemployment insurance (commonly known as ASU) and income protection are two of the most common types of coverage for protecting your household finances, and which one you choose will depend on your personal circumstances.

In this article, we’ll take you through the differences between ASU insurance and income protection cover, as well as how to find the right plan for you.

Read on or jump to a specific section:

What is accident, sickness and unemployment insurance?

Accident, sickness and unemployment insurance covers you if you’re unable to work due to illness, injury and or redundancy. This type of insurance is generally known to be “short-term”, in the sense that it only pays out once per policy and you’ll only get up to 12 months of payments once it does.

The level of coverage will depend on your income, with the payment equalling between 50 and 65 percent of your earnings. This will be paid out regardless of how much your employer offers in statutory sick pay or redundancy pay.

Like most other forms of insurance, ASU insurance is paid via a monthly premium, which will stop if the policy is cancelled or once a claim is successfully made.

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What is income protection insurance?

Income protection insurance differs from ASU in that it offers a long term solution for those who are unable to return to work, generally covering sickness and injury and not redundancy.

There is no limit to income protection insurance, and policies will pay out until you can return to work, find another job or, in some instances, retire. Insurance providers will, however, ask for proof that you are still unable to work.

Another way this is different to ASU is that, depending on policy, you’ll only be paid if you are unable to do any work, rather than merely your existing job. You do have the option of policies that cover all work, but these will demand a higher premium.

Are there any exclusions to ASU and income protection cover?

The main thing to remember in terms of exclusions is that these policies don’t always cover every type of illness, especially if that illness is pre-existing.

When applying for this type of insurance, your medical history will be looked at and any existing illnesses flagged. If you have an existing condition, it’s worth comparing policies to see if it will be covered.

English couple paying bills online on their laptop computer at home

Things to consider

When choosing a policy, it’s important to consider your personal situation and how different types of coverage would benefit you. Before you commit to a policy, here’s a checklist of what you should think about:

  • Look at your other insurance policies – If you’re looking for income protection due to an illness, you may already have a policy that covers it, either with your employer or as part of a mortgage. Some employers offer coverage as a benefit, so make sure you check before you commit your own money.
  • Are you more concerned about redundancy or illness/injury? Think about what is more likely to affect your employment. If you have a long-running illness, you’re more likely to want income protection insurance, which will offer long-term benefits. If you’re more concerned about redundancy, ASU coverage would suit you better, as income protection insurance generally doesn’t cover it.
  • Could your savings be enough? If you have some money put aside for a rainy day, it might be more financially viable to add to that monthly rather than paying for an insurance premium. This is particularly beneficial in the instance of redundancy, rather than long-term illness or injury.

Where can I get ASU or income protection insurance?

ASU and income protection cover is available from a number of providers, with different levels of cover and competitive prices available if you shop around. Using a price comparison website, you’ll be able to find many providers offering this type of coverage.

As previously mentioned, make sure you consider your financial and personal situation before committing, as no one policy or provider will suit everyone.

Or, if you’re looking for coverage against accidents, Save More Money’s Accident Only Income Protection could be the right fit for you. Our policy covers you financially if you’re medically certified as unable to carry out the core duties of your job due to an accident. And, for extra peace of mind, you can choose a benefit of up to £6,000 per month.


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