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Accident, sickness and unemployment insurance

Life in the working world can be difficult, long hours, stressful situations and office parties can really take their toll on the modern-day human. It’s generally considered a necessary evil however, and unless you’re lucky enough to be born into royalty, a requirement to live a normal life. For those out of work it may seem nice at first but when unemployment starts to drag on it can cause alarm as the bank balance races towards zero. For those who wish to be prepared in case of the unforeseen, there is Accident, Sickness and Unemployment Insurance. But what is it and how does it work? Fortunately, we have put together a quick guide to make sure you’re in the loop.

In This Guide:

What is accident, sickness and unemployment insurance?

Much is like it sounds, Accident, Sickness and Unemployment insurance is a policy that will make sure that you receive enough money to make ends meet if you can’t work. If you fall ill or injure yourself and are unable to work, then most companies will continue to pay your salary for a set period of time. If and when that time elapses, or your company does not have such a policy, then your income protection insurance will kick in, it’s main function is to cover a portion of your salary so you are not left too severely out of pocket. Unfortunately, it’s important to remember that if you feel like quitting your job and taking out a policy to cover the downtime, you’re out of luck as income protection insurance will only cover situations which are out of your control.

What type of cover do I need?

Exactly what kind and how much cover you decide to go for will generally depend on the situation you are in and how much you have to lose from a loss of income. Some people will opt for income protection insurance which will be there specifically to cover a portion of their salary should they be unable to work. Exactly how much you will receive when the policy starts paying out is dependent on what kind of policy you take out with the more expensive ones generally paying between 50-70% of your salary.

If a more important factor for you is a specific bill or mortgage that needs to get paid in case of injury, illness or unemployment then you may be better off taking out payment protection insurance. There are different kinds of policies depending on what kind of payment it is, but in essence, this insurance will mean that one or all of your financial commitments will be covered in a situation where you are unable to pay them.

What length of policy do I need?

When it comes to choosing a length of policy there are generally going to be two options:

Short Term Policy

This policy is designed to cover those for a set period of time if they are unable to work. If you opt for a short-term policy then the maximum amount of time you can receive cover for is up to 12 months. This option is better for those who do not wish to pay as much of a premium and have a lower risk of a chronic problem preventing them from working in the long term

Long Term Policy

The policy will continue to pay out either until you return to work or retire which could be within reason, any amount of time. This policy is better geared towards those who are at higher risk of long-term unemployment.

How quickly will I receive my monthly payments after I become unemployed?

A deferred period is the time in between you becoming unable to work or unemployed and when your policy starts paying out. How long your deferred period is will have an effect on your policy so if you are able to last a couple of months without payment then you will pay much less than someone who has a deferred period of a week or two. A longer deferred period will suit those better who may be able to get by for a short period without payment but would struggle in the long term.

Will I be eligible?

There are a few factors that insurers will look at before accepting an application for an accident, sickness or unemployment policy. First of all, you will generally need to have been in work for a certain amount of time which may in some instances mean you must have passed probation. You will in most cases have to be in full-time work to be considered and not in a position where your job is in danger when you applied.

How much will a policy cost me?

This will depend on a range of factors including.

  • Length of policy
  • Length of deferred period
  • Amount of salary covered (if income protection insurance)
  • Value of bills/mortgage covered (if payment protection insurance)
  • Current state of health, previous employment record may also be taken into account

Our advice is to shop around, Money Expert can help you compare life insurance so you find the best deal on the market.