Accident, Sickness and Unemployment Cover Explained (UK)
Accident, sickness and unemployment cover, often shortened to ASU, is a type of short-term income protection insurance designed to replace part of your income if you cannot work due to an accident, illness, or involuntary redundancy. It is similar in concept to mortgage payment protection insurance but can be used more flexibly to cover general living costs rather than being tied specifically to a mortgage.
How ASU policies pay out
ASU policies typically pay a monthly benefit, often based on a percentage of your income up to a maximum limit, if you are signed off work due to accident or sickness, or made involuntarily redundant. Like MPPI, there is usually a deferred period before payments begin, and a maximum benefit period per claim, commonly 12 to 24 months, after which the policy would need a fresh claim if the same or a different qualifying event occurred again.
The three elements explained separately
Some ASU policies allow you to select combinations of the three elements rather than buying all three together — for example, accident and sickness cover only, without unemployment cover, which can be useful for self-employed people or those in secure employment who are more concerned about health-related income loss than redundancy. Reviewing which elements you actually need, rather than buying a bundled policy by default, can help you avoid paying for cover that would never realistically be claimed.
Who unemployment cover typically excludes
As with MPPI, the unemployment element of ASU cover usually only applies to involuntary redundancy from permanent employment, excluding resignation, dismissal for misconduct, and voluntary redundancy. Self-employed workers, contractors, and those on fixed-term or zero-hours contracts are commonly excluded from the unemployment benefit entirely, though accident and sickness elements may still be available depending on the insurer.
Pre-existing conditions and waiting periods
Most ASU policies exclude claims relating to pre-existing medical conditions you had before taking out the policy, and many include a minimum period you must hold the policy before an unemployment claim becomes valid, to discourage people buying cover only once redundancy already seems likely. Carefully checking these exclusion periods against your own circumstances is an important step before purchase.
How ASU compares with standalone income protection
Standalone income protection insurance generally offers longer benefit periods, sometimes running to retirement age, and can be tailored more precisely to your income and occupation, but does not usually include unemployment cover, since insurers view redundancy as a different type of risk to insure than illness. ASU cover bundles a shorter-term income replacement with redundancy protection, making it a distinct product suited to different needs.
Assessing whether ASU cover is right for you
ASU cover tends to suit employed people with limited savings who want an affordable safety net covering both health-related and redundancy-related income loss for a defined period, rather than comprehensive long-term protection. Comparing the cost, benefit period, deferred period and exclusions across several providers will help you find a policy that matches your actual risk and budget.
Reviewing your cover over time
As your circumstances change — a new job, a change in income, paying off debts, or building up savings — it is worth reviewing whether ASU cover, or an alternative form of income protection, still represents good value, since your need for this type of protection can shift considerably over the course of your working life.
Building an emergency fund alongside insurance
ASU cover works best as part of a wider financial safety net rather than a complete replacement for savings, since even the best insurance policy involves a deferred period before payments begin. Building up an emergency fund covering at least a few months of essential outgoings, alongside appropriate insurance, gives the strongest overall protection against unexpected income loss.
Comparing quotes from multiple providers
ASU cover is offered by a range of specialist insurers and mainstream providers, and the price, benefit period and exclusions can vary considerably between them for what looks on the surface like similar cover. Taking the time to compare several quotes, ideally with the help of a broker familiar with this type of protection, can help you find a policy that balances affordability with genuinely useful benefits, rather than settling for the first option you come across, which may not represent the best value or the most appropriate terms for your particular employment situation and financial circumstances.
Final thoughts on choosing ASU cover
Ultimately, ASU insurance works best when chosen deliberately to fill a specific gap in your financial safety net, rather than being added automatically without considering whether the cover truly matches your employment situation and existing savings.