What is Accident, Sickness and Unemployment Insurance?

The insurance industry is full of jargon, so the following are some commonly used terms to describe the types of accident, sickness and unemployment insurance products that are available.

Whilst the Financial Services Authority (FSA) do not distinguish between mortgage payment protection insurance and accident, sickness and unemployment insurance, the definitions used here are as those determined by the CII (Chartered Insurance Institute).

Accident, Sickness and Unemployment Insurance is a way of mitigating or reducing the financial effects of an adverse life event relating to you, your partner’s or family’s health or employment.

Adverse life events covered by accident, sickness and unemployment insurance are typically short term (annual) contracts to provide you with an income in the event you are unable to earn due to accident and sickness, or illness and disability and unemployment.

Death is a terminal life event covered by Life Assurance policies such as Term Assurance and Whole of Life policies.

Depending on the type of accident, sickness and unemployment insurance policy taken out by you or on your behalf, ASU policies are short term contracts lasting usually one year where payments will be made monthly to the beneficiaries of the policy in the event of a claim being made.

 

What are the types of Accident, Sickness and Unemployment Insurance?

The following are the types of cover available with mortgage payment protection insurance:-

  • Accident and Sickness Only pays out a monthly benefit in event of accident and sickness (illness and disability) preventing you from earning. The monthly benefit is designed to pay you an income.
  • Unemployment Only pays out a monthly benefit in the event of you becoming unemployed preventing you from earning. The monthly benefit is designed to pay you an income.
  • Accident, Sickness and Unemployment (ASU) pays out a monthly benefit in the event of accident, sickness or unemployment preventing you from earning. The monthly benefit is designed to pay you an income.

 

Why should I take out Accident, Sickness and Unemployment Insurance?

There are a number of factors about an individual’s personal circumstances that will determine which of the types of accident, sickness and unemployment insurance that may be applicable are based on their suitability and affordability.

However there are currently a limited number of state benefits and allowances that are available and you or your employer may have an Income Protection Insurance or Permanent Health Insurance (IPI/PHI) plans that may cover you in the event of accident or sickness (but not unemployment) which should be considered before entering into a ASU contract.

 

How should I take out Accident, Sickness and Unemployment Insurance?

The first and most important step after you have decided you may have a need for general protection insurance cover is to have a discussion with us to provide you with independent financial advice.

Once we have agreed what the most suitable type of accident, sickness and unemployment insurance cover is for your particular circumstances we make an application on your behalf to take out a protection policy based on how much you can afford and the amount of cover required, with the most suitable deferred period to match your needs.

 

How do I pay for Accident, Sickness and Unemployment Insurance?

Once the amount of benefit you require has been determined your monthly payment or premium for protection under the policy or cover will be offered to you by the insurer’s underwriter after they have reviewed a completed personal questionnaire relating to your occupation and lifestyle including in some cases a medical report.

The monthly premiums payable and the contract will be reviewed every year by the insurance provider i.e. the insurance company underwriting the policy.

 

Want to know more?

Talk to one of our qualified financial advisers on 01553 777600 or e-mail us at enquiries@ringassociates.co.uk

Also you may want to read the articles by accessing the following Association of

British Insurers website http://www.abi.org.uk/BookShop/ResearchReports/Payment_Protection_Guide.pdf

and the Directgov website at

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/Insurance/DG_10034587

and the Financial Service Authority (FSA) consumer guide available on their website at http://www.moneymadeclear.fsa.gov.uk/products/insurance/types_of_insurance.html