Accident, Sickness & Redundancy Cover – What is it?
Accident, Sickness & Redundancy (Unemployment) cover, shortened to ASU or known also as mortgage payment protection, is designed to provide you with an income to pay your mortgage and other outgoings if you are unable to work due to an accident, sickness or involuntary unemployment (view some important reading here).
This type of insurance usually pays out for a maximum of 12 months, so is a short-term solution. It is particularly advisable for self-employed people, who are reliant on their income to cover their financial commitments, to consider how outgoings would be met, even for short incapacities. If you would prefer an insurance policy that pays out for longer than this, it is possibly more beneficial to consider Permanent Health Insurance, also known as Income Protection Cover instead.
With ASU cover, you can generally insure up to 60% of your current income, although this does vary between insurers. It’s reasonably flexible, and will allow you to choose whether you would like:
- just accident and sickness cover;
- just unemployment cover;
- or the whole package of accident, sickness and unemployment.
Should you need to make a claim this type of policy will pay out after the deferred period, which is usually one month. Benefits will then be paid to you for the specified period, which is usually 12 months but some plans will pay for 24 months.
Things to watch for
- Lenders will often try to persuade you to take out ASU when embarking on a mortgage or remortgage. But ASU is a standalone product and it’s definitely worth shopping around for the best premiums.
- Premiums are not guaranteed and therefore may rise in future.
- Limited benefit period of 12 or 24 months.
- Subsequent claims for a recurring illness/injury may be excluded.
Rather than trawling the growing ASU marketplace yourself, why not contact us and leave us to do all the hard work