We never know what life has in store for us. We hope that everything goes our way. But we canโt guarantee it.
What can be guaranteed is that the bills keep coming in even if our income doesnโt.
Putting food on the table and a roof over it is expensive and can become impossible if a serious illness or accident or a job loss stopped us working. State benefits exist, but the sums involved and the help they provide is limited.
At Continuum we often recommend that our clients keep a cash lump sum to replace an income for six months or a year. But we know that for many people building up that kind of cash reserve is impossible (especially as with inflation running rampant, it means watching the value of those savings eaten away).
But there could be an affordable solution, with Accident, Sickness and Unemployment cover.
What is Accident, Sickness and Unemployment cover?
Accident, Sickness and Unemployment cover, also known as ASU, is a type of insurance designed to replace a lost income.ย It is an insurance policy that pays you a tax-free proportion of your lost salary every month for a period of time over 12 or 24 months if you are unable to work due to illness, injury or redundancy. It can help you cover your financial commitments such as mortgage, rent, bills or loan repayments until you are fit enough to return to work, or until you find a new job.
Short-term policies can pay out up to 70% of your income every month for a limited period โ usually up to two years. You can claim multiple times on your policy as long as you continue paying your premiums.
Long-term policies have no limit to your claim period, so you can continue receiving monthly benefits from your policy until you reach retirement age. However, long-term cover usually excludes cover for unemployment.
How it works
ASU pays you a tax-free proportion of your lost salary every month until youโre back on your feet. A typical policy can cover 50% to 70% of your monthly income, based on your salary or your gross annual earnings.
After stopping work, you will need to wait out a set period before you begin receiving ASU benefits. This can be set to match any sick pay you may have. Setting longer periods can save you money on your premiums.
Self-employed professionals may not qualify for unemployment cover under an ASU policy, so they may need accident and sickness only cover.
Your cover doesn't end when you stop claiming benefits. While limits may apply to each claim, you can continue to make claims on your policy until the end of your policy's term. There is no limit to how many times you can claim on your policy.
Other types ofย income protectionย
You might want to avoid the cost of full ASU, and there are other types of cover available.
Payment protection insurance or PPI will cover the repayments for outstanding loans if you stop earning. The pay-outs usually go directly to your lender.
Mortgage PPI will cover your mortgage payments if you can't work. Some policies continue to pay out until your mortgage is paid off. Mortgage PPI pay-outs usually go to the policyholder.
So, should you consider ASU cover?
If you canโt count on a generous sick pay or redundancy package from your employer, ASU can provide valuable peace of mind.
It can be even more important if you are self-employed or run a small business where the income depends on you and your hard work.
At Continuum we can help find cover for you.ย We can help you get the cover you want, and help you integrate it into an all-round financial safety net.
To start getting the financial security you and your family need, call us at Continuum today.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products, you should seek independent financial advice before embarking on any course of action.
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