Understand ASU insurance in the UK - what it covers, who it suits, costs, eligibility, pros and cons, and safe next steps to protect your income during illness or redundancy.
A safety net for uncertain times
Millions of UK households are feeling the strain of long-term sickness and a tougher jobs market. As of 2025, around 2.83 million working-age people are out of work due to long-term sickness. Unemployment has ticked up too, and many find that statutory support does not stretch far enough. When your income stops, bills do not. That is where Accident, Sickness and Unemployment insurance - often shortened to ASU - can help.
ASU is designed to replace part of your income if you cannot work due to illness, injury, or redundancy. It pays a tax-free monthly benefit for a set period, helping you meet essentials like mortgage or rent, utilities, food, and travel. It is not a silver bullet and it will not suit everyone, but it can provide important breathing space while you recover or find new work.
This guide sets out how ASU works in plain English. We explain what it covers, the limits and exclusions to be aware of, and the choices you have when selecting a policy. We will also highlight where it may not be right for you, so you can avoid paying for cover you do not need. Our aim is to help you weigh the facts calmly and confidently.
Insurers paid out more than £7 billion in protection claims in 2023, showing that these products can and do work when used appropriately. Yet only about 1 in 11 UK adults hold income protection, and many overestimate the cost. With average household spending around £2,700 a month, understanding your options matters. If your employer sick pay is limited, or you rely on every payslip to cover your outgoings, ASU could be worth a closer look.
Insurance can offer real financial protection, but only when you understand what is covered - and where the gaps are.
What the cover includes and how payouts work
ASU policies aim to replace a portion of lost earnings when you cannot work due to accident, sickness or redundancy. Most policies pay between 50% and 70% of your usual gross income, tax free, up to a monthly maximum set by the insurer. Short-term policies commonly pay for 12 to 24 months per claim. Some longer-term products cover accident and sickness only and can pay to retirement age, but they usually exclude unemployment.
There is typically a waiting period - known as a deferred period - before payments start. You choose this at the outset to align with any employer sick pay. Common options are 4, 8 or 13 weeks. A medical professional must certify that you are unable to work to support accident or sickness claims. For unemployment claims, you are usually required to have been in continuous employment for a minimum period and to register as actively seeking work.
Not everything is covered. Unemployment due to voluntary resignation, misconduct, or knowing a redundancy was likely when taking out the policy is typically excluded. Pre-existing medical conditions may be excluded or subject to waiting periods. Short-term contracts, seasonal roles, and some self-employed arrangements may not qualify for unemployment cover. If you are self-employed, many insurers will only offer accident and sickness protection.
Here is a simple example. If you earn £2,400 a month and choose 60% cover with a 2-month deferred period, you could receive £1,440 per month after those 2 months if you qualify. If you return to work sooner than expected, payments stop. If your unemployment claim hits the maximum payout period, you will need to rely on savings or other support beyond that point.
The goal is to help you keep up with essential bills while you get back on your feet - not to replace your full salary indefinitely.
Who benefits most from this cover
ASU can be valuable for employees whose households depend on their income, especially where employer sick pay is limited to statutory levels or where savings would last only a few months. It can also help renters and homeowners who need to keep up with mortgage or rent payments during a period out of work. Workers earning under £100,000 often find short-term ASU a practical balance of affordability and protection.
If you are self-employed, an accident and sickness only policy may be suitable, as unemployment cover is often unavailable. Those with a strong emergency fund, generous long-term employer sick pay, or guaranteed income from other sources may decide ASU is less necessary. If you know redundancy is imminent, you generally cannot take out unemployment cover to claim for that event. Matching the policy to your actual risks and financial commitments is key.
Choosing your cover level and options
-
Basic - Accident and Sickness Only
- Pays a monthly tax-free benefit if you cannot work due to illness or injury.
- Often available with lighter medical questions and quicker decisions.
- Suitable for self-employed or those not eligible for unemployment cover.
-
Standard - Accident, Sickness and Unemployment
- Replaces a portion of income after a waiting period when illness, injury, or redundancy stops you working.
- Short-term benefit period, usually 12 months, sometimes up to 24 months.
- Good for employees seeking broad protection across the main risks.
-
Enhanced - Higher Benefit Caps or Longer Benefit Periods
- Offers higher monthly limits or up to 24 months per claim.
- May include more flexible deferred periods to align with employer sick pay.
- Higher cost due to wider protection and increased payout potential.
-
Optional Add-ons and Choices
- Back-to-work support - rehabilitation guidance or training assistance during claims.
- Index-linking - benefit rises with inflation to help maintain spending power.
- Waiver of premium - premiums paused while you are on a valid claim.
- Excess period options - select 4, 8, 13 or more weeks to manage cost.
- Guaranteed vs reviewable premiums - predictable costs vs potential repricing.
-
Complementary Cover - Mortgage Payment Protection Insurance (MPPI)
- Targets your mortgage payments specifically and may pay the lender directly.
- Can sit alongside ASU to ringfence your home and avoid arrears risk.
Choose the shortest list of features you genuinely need. Extra options increase cost and complexity, so keep it simple and focused on essential bills.
What it costs and what shapes your premium
| Factor | Typical impact on price | What to know |
|---|---|---|
| Age | Higher age tends to cost more | Claims likelihood rises as we get older |
| Occupation risk | Manual or hazardous roles cost more | Risk ratings vary by industry and duties |
| Cover type | AS only is cheaper than full ASU | Unemployment cover adds cost and criteria |
| Benefit amount | Higher monthly benefit costs more | Capped as a percentage of pre-claim income |
| Deferred period | Longer wait lowers cost | Align with employer sick pay to avoid gaps |
| Benefit period | 12 months is cheaper than 24+ | Longer payout windows increase premiums |
| Health history | Recent or ongoing conditions may add cost | Some conditions may be excluded or loaded |
| Smoking status | Smokers often pay more | Risk-based pricing applies |
| Location | Minor regional variations | Insurer pricing models can differ |
| Claims history | Previous claims can raise price | Underwriters assess recent patterns |
Prices vary widely by personal circumstances and product design. Short-term ASU aimed at employees earning under £100,000 is often competitively priced compared to long-term income protection. Always compare several quotes and check what is included at each price point. Avoid assuming the cheapest policy offers the right balance of benefits and exclusions for your needs.
Eligibility - who can apply and what is checked
Most ASU policies are open to UK residents aged 16 to 65 who work at least 15 hours a week and have been in continuous employment for a minimum period, often 12 months. You will usually need to be registered with a UK GP. Insurers ask about your job type, income, contract status, medical history, and any known or expected changes to your employment.
Unemployment cover often excludes temporary, seasonal or short-term contract roles. If you are self-employed or a company director without PAYE, you may be ineligible for unemployment cover and should look at accident and sickness only. Common reasons for decline include known impending redundancy, recent periods of unemployment, non-UK residency, or undisclosed pre-existing medical conditions. Providing accurate information is essential. Keep payslips, contract details, and proof of income to support both the application and any future claim.
From quote to claim in clear steps
- Gather payslips, employment details, and monthly essential outgoings.
- Request quotes for AS only and full ASU to compare options.
- Choose a benefit level aligned to core bills, not full salary.
- Select a deferred period to match your employer sick pay.
- Complete health and employment questions honestly and accurately.
- Check exclusions, waiting periods, and claim evidence requirements.
- Buy the policy and store documents and contact details securely.
- If you need to claim, notify the insurer promptly and follow guidance.
Weighing it up - advantages and drawbacks
| Pros | Why it helps | Cons | What to watch |
|---|---|---|---|
| Tax-free income replacement | Helps cover mortgage, rent, and bills | Limited payout duration | Short-term policies often cap at 12-24 months |
| Broad protection | Covers illness, injury, and redundancy | Unemployment exclusions | Misconduct, voluntary leave, or known risks not covered |
| Flexible setup | Choose benefit, deferred and benefit periods | Pre-existing conditions limits | Some conditions excluded or loaded |
| Real-world reliability | Strong industry payout statistics | Cost can rise | Reviewable premiums may increase at renewal |
| Complements state support | Bridges gaps in SSP and benefits | Eligibility hurdles | Contract type or hours may restrict cover |
Balanced view: ASU is not a replacement for long-term income protection, but it can be a practical buffer during short-term shocks. Consider how it would fit alongside savings, employer sick pay, and any existing cover.
Key checks before you commit
Read the policy schedule and terms carefully. Confirm how your income is defined, the maximum monthly benefit, and the exact waiting period before payments start. Understand the benefit duration per claim and whether multiple claims are allowed. Check any exclusion for pre-existing conditions, stress-related illness, or back pain, as wording varies. For unemployment, look closely at qualifying employment periods, redundancy definitions, and any probation or moratorium periods. Note whether premiums are guaranteed or reviewable and how renewal pricing works. Keep evidence of income, employment status, and medical certification easily accessible, as these documents can speed up claims and reduce stress if the unexpected happens.
Alternatives and related options
- Long-term Income Protection
- Pays a percentage of income for illness or injury to retirement age. Does not include unemployment but offers longer security for health-related absence.
- Critical Illness Cover
- Lump sum if you are diagnosed with a specified serious condition. Useful for clearing debts or adapting your home, not for monthly income replacement.
- Emergency Savings Fund
- Cash buffer to cover 3 to 6 months of essential spending, offering flexibility with no policy exclusions.
- Mortgage Payment Protection Insurance (MPPI)
- Targets mortgage repayments directly and can work alongside ASU to protect your home.
- Employer Benefits Review
- Some employers offer enhanced sick pay or redundancy support, reducing the level of private cover needed.
Frequently asked questions
Q: How much will an ASU policy pay each month? A: Most policies pay 50% to 70% of your gross income, up to a monthly cap set by the insurer. Payments are usually tax free and designed to cover essential bills rather than full salary.
Q: How long do payments last if I claim? A: Short-term ASU typically pays for 12 months per claim, sometimes up to 24. Some accident and sickness only policies can offer longer terms, but unemployment cover is usually short term.
Q: What does statutory support provide and is it enough? A: Statutory Sick Pay is a modest weekly amount paid for up to 28 weeks. After that, ESA or Universal Credit may apply, but payments are often below typical household expenses. Many households face a shortfall.
Q: Can I get unemployment cover if I am self-employed? A: Usually not. Self-employed people often take accident and sickness only cover, which can still protect income during illness or injury. Always check the insurer’s eligibility rules.
Q: Are mental health and musculoskeletal conditions covered? A: Many policies do cover these conditions, but exclusions or waiting periods can apply. Insurer wording varies, so read the terms carefully and ask for clarity before you buy.
Q: Will the insurer actually pay out if I claim? A: Industry data shows insurers pay the majority of valid protection claims each year, with billions paid out. Providing accurate information and required evidence is key to a smooth claim.
Q: What if I already know my job is at risk? A: If you are aware of likely redundancy when applying, unemployment cover typically will not pay. Insurers expect that the risk is unforeseen at the time of purchase.
What to do next
If ASU looks suitable, make a list of your essential monthly costs and any employer benefits you receive. Compare quotes for accident and sickness only versus full ASU, selecting a deferred period that matches your sick pay. Read the policy terms line by line and ask the insurer to confirm anything unclear. Take your time and choose the level of cover that fits your real needs and budget.
Important information
This guide is general information, not personal financial advice. Policy terms, exclusions, and eligibility vary by insurer. Check the full policy documents and key facts before buying and consider professional advice if you are unsure.
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