Accident, Sickness and Unemployment Cover information guides on insurance by TOMS

Accident, Sickness and Unemployment Cover

What is Accident, Sickness and Unemployment Cover?

Accident, Sickness and Unemployment cover (ASU) is a policy that will pay out a regular income for a set period of time, should you be unable to work because of an accident/sickness or unemployment.

Why do I need Accident, Sickness and Unemployment Cover?

According to the government’s statistics, the redundancy rate for the 3 months up to April 2006 was 6.0 per 1000 employees – up from 5.7 the previous quarter. The unemployment rate was 5.3% - up 0.6% in the last year. There are now 1.61 million unemployed people.

You cannot rely on the government to cover your mortgage payments if you cannot work. There are no benefits paid for mortgages taken since October 1995 for the first nine months of unemployment or disability. Existing borrowers can only receive benefits if they qualify for Income Support.

Can you really keep up your mortgage payments for nine months if you cannot work?

What types of policies are there?

There are a variety of providers of ASU, and you can choose to be covered only in the event of accident and sickness, or in the event of unemployment, as well as all three together.

The level of cover is determined by how much you would like to receive each month, as your premiums will be a percentage of this amount. Benefits are usually paid out for 12 months only, as it is expected that you will have recovered/found a new job within this time. The longer you want to be covered for, the more expensive the premiums will be.

Deferment Period

Most policies have a deferment period (of for example 30, 60 or more days) for each claim, after which they will start to pay out the benefits. Usually the longer the deferred period, the lower the monthly premiums are. If you have savings that would cover your bills temporarily, you may choose to work out how long you would be prepared to rely on those for, and adapt your deferment period accordingly. Alternatively, some policies have a waiting period after which time the claim is back dated and paid in full.

Initial Exclusion period

This usually applies to unemployment, and is a period of time at the start of the contract when no claim can be made. This could be 30, 60 days or longer, depending on the type of policy.