Accident, Sickness and Unemployment Insurance (ASU)

Most people assume they will live a long and healthy life with a stable income. The majority are correct. However, it is important to make sure you are adequately covered in the event of being unable to work for one reason or another for a prolonged period of time.

What is ASU?

Accident, sickness and unemployment cover, also known as ASU, meets your loan payments if you are unable to fulfil them as a result of an accident, prolonged illness or losing your job.

Payments are either for a fixed term or, more likely, for the duration of the term of your loan.

The insurance policy does not need to be linked to a mortgage or loan and can be used to provide an income if you are unable to work. However, be aware that these policies will not cover your total income as it could then be argued that you would be better off out of work than in regular employment.

You should also bear in mind that the policy will pay out for a fixed period only, usually one year.

Do I need it?

Although insurance of any kind is generally a good idea, you may find that an ASU policy is unnecessary in your circumstances. For example:

If you have savings you would be able to use to tide you over for a short period of time.
You should check the details of your employer's sickness scheme as this may be sufficient to cover you in the case of ill-health.
If you are made redundant you should receive a payout which could cover you for the period you are likely to be out of work.
You may work in an industry where finding a new job is relatively easy.

If you are unsure whether you need ASU Insurance please call one of our advisors on 01908 622 300 and they will talk to you about your needs.

Who can apply?

Generally you only need to fulfil some basic requirements to be eligible:

You must be aged between 18 and 64.
You must have been working for at least six months.
You must not be sick at the time of application.
You must live in the UK.
You must work at least 16 hours per week.

How much will it cost?

The cost of your policy will be affected by many different factors such as the amount of cover, your age, gender, occupation and whether or not you smoke.

Premiums can be reduced by having optional excess periods, usually 30 or 60 days before you make a claim.

It is always worth getting a quote from an insurer other than your lender as they can be up to one-third cheaper.

Be careful not to cover yourself unnecessarily. If you would receive a significant payout in the event of redundancy, for example, it is probably unnecessary to cover yourself against unemployment.

How much is it worth?

An ASU policy will generally cover up to 60% of your gross salary. The payment is tax-free so by the time you take into account what you would have paid in tax and national insurance you will probably only see a 10% reduction in your monthly income.

The ASU monthly payment is usually a guaranteed amount and you can make as many claims as outlined in your policy.

When can I claim for unemployment?

As long as you are not considered to have made yourself deliberately unemployed your policy should pay out.

You can also claim if your employer relocates a significant distance and you choose not to move with them.

Circumstances where you cannot claim include:

If you refuse comparable alternative employment with your current employer.
If your work is seasonal and it is the off-season.
If you resign
If your employment is terminated for gross misconduct.
If you take voluntary redundancy.

If you are self-employed different criteria will apply and it is important to talk to a financial advisor about your own particular circumstances. Eden Finance will be happy to talk to you about your situation on 01908 622 300.

When can I claim for accident or sickness?

The policy will generally pay out if you have an illness or an accident that stops you being able to carry out your current job or another for which you are qualified.

You should have declared any pre-existing health conditions when you took out your policy although a medical is unnecessary for this type of insurance. If, however, you failed to disclose an existing condition it could affect your claim.

Conditions not generally covered by an ASU policy include:

Normal pregnancy.
Elective surgery (such as cosmetic surgery).
Intentional or self-inflicted injury.
Alcohol or drug abuse.
HIV or AIDS.

In conclusion

As you can see, whether you need cover, the type of cover you require and your personal circumstances can greatly affect the type of policy that is right for you.

It is strongly recommended that you speak to an independent financial advisor before making any final decision.

Eden Finance Ltd have trained and experienced advisors who can talk you through all your options and find the right solution for you. Please call on 01908 622 300 for more information.

←Back to insurance