Accident, Sickness and Unemployment Cover (ASU)

Accident, Sickness and Unemployment Cover (ASU)

ASU policies can only be claimed for a maximum of 1-2 years typically. The policies are set up with a deferred period (the time the insured will have to be off work before they can make a claim), therefore premiums will be cheaper for a longer deferred period as the likelihood of a claim reduces.

ASU cover can be linked directly to pay loan payments, mortgage payments or it may simply be used to assist with general bills/income. The maximum amount of cover available is dependent on the provider, but it is typically in the region of £1,500 per month.

Some of the ASU policies, will also provide a lump sum in the event of certain conditions taking place such as loss of a limb, total and permanent disability and death as a result of an accident. The amount of lump sum payable will often increase in relation to the severity of the accident.

ASU policies are annually renewable, and can therefore be changed at the discretion of the provider. This means the insurer could increase premiums or withdraw the cover all together if they wish. This is very different to permanent health insurance (income protection), as this provides permanent cover once it has been underwritten.

If the policy holder makes a valid claim under the terms of the policy, then the benefits will be tax free. This would apply whether the claim was for income or a lump sum.

Although this policy is commonly called accident, sickness and unemployment, it perhaps should be classed as accident, sickness and redundancy, as the policy will not pay out if the unemployment was a result of the insured being sacked.