Accident, sickness and unemployment insurance

Get cover for when you’re out of work with ActiveQuote[1]

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What is accident, sickness and unemployment cover?

Accident, sickness and unemployment cover (ASU) is an income protection insurance product for times when you can’t work because you’re too ill or injured, or you’re made redundant.

You pay monthly premiums and if you have to stop working for one of those reasons you’ll get a monthly payout that’s a proportion of your normal salary, usually up to 50% of it.

If you need to claim, it’ll normally only pay out for a relatively short period of time, typically 12-24 months, which will hopefully be long enough for you to find another job or make longer term plans if you can’t work any more.

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What does accident, sickness and unemployment insurance cover?

ASU covers you for:

  • Being made redundant
  • Losing your job through no fault of your own
  • Becoming too ill to work
  • Not being able to work because you’re injured

What’s not covered by accident, sickness and unemployment insurance?

You won’t be covered for:

  • Taking voluntary redundancy
  • Being dismissed for misconduct, or fired
  • Leaving your job through your own choice
  • Getting ill due to a pre-existing condition
  • Any accident, illness or redundancy during the ‘waiting period’ at the start of the policy, which is a period of time you need to have the policy open for before you can claim. For example, 150 days
  • Any accident, illness or redundancy during the ‘deferral period’, which is a period of time you agree at the start of the policy. It’s the time between your income being affected and when the policy pays out, for example 30 days or 60 days

Other exclusions vary from one provider to another, so check your terms and conditions. For example, you might not be covered if:

  • You’ve been on furlough in the last six months
  • You work in certain occupations or industries – each insurer will have a list of occupations they can cover
  • Accidents and injuries caused by specific circumstances, for example injuries caused by sports

Why would I need accident, sickness and unemployment insurance?

Like all types of insurance, ASU is designed to cover you for the unexpected. So you might be fit, well and in a steady job now, but sometimes the situation can change beyond your control – and fast.

If you suddenly find yourself out of work, you might not have enough savings available to pay the bills for long. ASU can help to take the pressure off while you recover, retrain, or look for a new job.

Redundancy levels between September and November 2020 were the highest since records began, according to the Office of National Statistics.

Plan how you’d protect your finances if it happened to you.

Am I eligible for ASU cover?

Since the Covid-19 pandemic affected the incomes of millions in the UK, eligibility for ASU policies has become quite restricted. 

You may be eligible for cover if:

  • You’re aged between 18 and 65
  • You’re working and earning an income
  • You’re a UK resident and taxpayer
  • You’ve been employed as a permanent employee in one job for the minimum period specified by the policy, for example 12 months
  • You meet the minimum hours of employment given in your policy, typically 16 hours a week

When you apply, you’ll also have to answer some detailed questions about your job, health, leisure activities and medical history.

How much ASU cover do I need?

ASU policies pay out a pre-tax proportion of your previous income. You agree this percentage when you take out the policy, for example 50%.

So if your pre-tax earnings were £3,000 and you claimed on your ASU policy, you’d receive £1,500 a month if you agreed 50%.

When working out what percentage of your earnings you want an ASU policy to cover, think about all the bills and expenses you have and how much of your salary you could live on.

The lower the percentage you choose, the cheaper your policy will be, so you might want to take that into account and consider using some savings to make up the shortfall.

What’s the difference between an income protection policy and an ASU policy?

Some other types of income protection products are designed to cover a specific bill payment, for example your mortgage, but ASU works by paying out a percentage of your income.

You could set up an income protection policy to cover your mortgage payment and a monthly personal loan repayment.

But ASU will just pay out the percentage of your income that’s stated in your policy. You can then use the money for whatever you want.

Other types of income protection

There are other types of income protection products that could help you meet your financial commitments if you have to take an extended break from work through no fault of your own:

Payment protection insurance (PPI)

This covers part or all of the payments you make for a specific debt, like your mortgage, credit card or a loan.

Mortgage payment protection

It works in exactly the same way as payment protection insurance, but is specifically for your mortgage. It often covers a longer time period, for example until your mortgage is repaid or you retire.

Redundancy protection

This works in a similar way to ASU but only covers redundancy, not sickness or injury. Since the 2020 Covid-19 pandemic it’s not been widely available.

Frequently asked questions

ASU policies have an exclusion or deferral period before they start to pay out and it can be several months. That means it’s likely you’ll have long since recovered from coronavirus by the time you’re eligible to claim.

But if you are still unable to work because of long Covid or ongoing health problems at the end of the exclusion period, you may be able to claim – check your policy wording to be sure.

Most policies will only pay out for up to 12 months. Some may pay out for as long as two years.

No, there’s a waiting period at the start of the policy before you can claim, for example 150 days.

You’ll also choose a deferral period that lasts from when your income’s affected to when the policy will pay out. You choose them when you take out the policy. It can be as little as 30 days to as much as several months.

No. PPI policies cover a specific debt, like a credit card or loan. ASU pays out a specific percentage of your pre-tax income to spend on anything you need to.

It doesn’t. Any income protection policy you have will pay out completely independently of your statutory or company sick pay.

ASU insurance covers redundancy, as long as you meet the eligibility criteria.

Since the Covid pandemic, there may be many more occupations excluded from cover, so check this first.

ASU doesn’t cover a specific bill or debt. That means you can put it towards whatever expenses you like, including your mortgage.

It's possible to take out ASU cover if you’re self-employed, but the terms and criteria might be different than for employed people. You’ll need to tell the insurer about your employment status and check your occupation isn’t excluded.

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How do I get a quote?

To get quotes for accident, sickness and unemployment cover, just click on the ‘get quotes’ button at the top of the page.

You’ll need to fill in some details about:

  • Yourself
  • Your employment status
  • Your health
  • The cover you need – percentage of income and deferral period

Then we can show you some quotes for cover.

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