Accident, Sickness + Unemployment and Redundancy (ASU) Cover - A Buyers Guide

What would happen to you or your family if you were to suddenly fall ill and find yourself unable to work? How long could you meet your normal financial obligations before finding yourself in very hot financial water?

Don't think it would never happen to you. In the UK alone, every two minutes someone is diagnosed with cancer, and over one-third of Brits will develop some type of cancer in the course of their life. Cancer is just one of a host of illnesses that can keep you from being able to work for a protracted period of time.

What is ASU Insurance?

The purpose of ASU insurance (which stands for accident, sickness, and unemployment insurance) is to protect your income when you find yourself suddenly unable to work. A simple, flexible insurance plan, ASU costs range from as little as 75p per £100 of benefit. In other words, if your plan provides you with £2,000 per month if you are suddenly unable to work, your monthly premium could be as low as £15 per month.

Generally, ASU policies will protect your mortgages, credit card debts, and other types of loans. Some policies offer a lump sum payment, others offer regular payments for 30, 60, or 90 days. Other policies will cover you for longer still, with the longest policies paying out for up to 18 months.

You can set your policy to expire when you reach retirement age, and you can also put most policies on hold if you have a lifestyle change which leads to a reduced need for ASU coverage. Typically, policies will not reduce their benefit if you begin to receive Social Security benefits, Income Support, or income from an investment, but you should check with the insurance company to verify these details, as every policy is slightly different.

Some policies also offer an extra terminal illness benefit. In these policies, should you be diagnosed with an illness that will lead to death within one year, the insurance policy will pay out a lump sum in advance. By choosing the lump sum payment, however, monthly benefits will cease. You should be aware that an ASU policy is not a life insurance policy and will not provide your family with any additional benefits at the time of your death.

ASU Policies versus Credit Card Protection Plans

An ASU policy offered by a reputable insurance company is often a better investment than paying your credit card company for a payment protection plan. Credit card protection plans offered by the credit card companies themselves tend to be expensive by comparison, and they will only cover your credit card. If you do find yourself unemployed and unable to pay your credit card company, the chances are you will also be struggling to pay your mortgage and other loans, so why opt for a more expensive coverage that only covers your credit card debt?

ASU Private Insurance versus Government Benefit Programs

You might wonder if ASU insurance is worth it, considering that the State offers some benefits when you find yourself too sick to work or unemployed. Depending upon your level of income and your expectations for ASU coverage, relying upon the State may indeed be a better option.

However, keep in mind that Statutory Sick Pay, or SSP, is a scant £75.40 per week. Unless you have deep savings, or your employer offers an additional sick pay scheme, £75.40 per week will barely be enough to keep putting food on the table. Furthermore, you must be sick and out of work for a full 28 weeks – more than half a year – before you can apply for Employment Support Allowance.

In these tough economic times when even the State itself seems to sometimes totter on the edge of bankruptcy, many government officials are pushing for welfare reform. If these officials succeed, expect State support for the sick, jobless, and disabled to decline even further.

Which ASU Policy is Right for Me?

Taking into consideration all the factors outlined above, start shopping for an ASU policy by creating a list of what you will need should you experience a sudden loss of income. Add up your major monthly expenses, such as your mortgage, credit card payments, and other bills, in order to decide how many pounds per month of coverage you realistically need.

Once you have a basic figure in mind, begin comparing various ASU policies. Some will be more suited to your lifestyle than others, offering options for the self-employed, child sickness coverage, international payment protection, etc., so shop for a policy considering these factors.

Don't allow yourself to get ripped off; there is some evidence to suggest that insurance companies have knowingly sold payment protection insurance to individuals who will never qualify for a payment, due to age, self-employment status, or some other factor. Therefore, before you finalize your policy with the insurance company, be sure to read the fine print.