Accident, sickness, and unemployment insurance, also known as ASU, is designed to secure people who cannot work due to injury, illness, or unemployment. In addition, it provides financial support to help you cover your living expenses. These include rent or mortgage payments, utility bills, and more. Generally, this insurance usually pays out for a maximum of 12 months, and thus it is a short-term solution.
Accident, sickness, and unemployment insurance are advisable for self-employed people who rely on their income to cover their financial commitments. Hence, you can enjoy peace of mind and also continue to pay your essential outgoings each month, irrespective of accident, sickness, unemployment, or redundancy. If you’re interested in purchasing this policy, read through this article till the end.
What is Accident, Sickness, and Unemployment Insurance?
This is a policy designed to provide a monthly tax-free payment directly to you to replace your income if you lose your job. It also covers your income and enables you to recover from an injury or illness or find a new job without suffering financially.
If you lose your regular income due to accident, sickness, or unemployment, this policy can help cover your expenses. You will be paid a monthly tax-free to cover your loss of earnings for up to 12 months or until you return to work.
How Does it Work?
This is simple. Once you decide to purchase this insurance, you will need to research and choose the right product for your situation and circumstances. After which, you can proceed to apply for the policy.
It is, however, essential to know that for unemployment policies, you will have an initial exclusion period. This means that if you are made aware that your job is at risk within this period, then it is best to cancel the policy. This time could be 60 days, 90 days, or 120 days.
However, for accidents and sickness, there is no initial exclusion period. And you are covered immediately upon taking the cover out. You can either choose an excess or a waiting period; this is the time you will wait at the point of claim before you receive your payout. It is key to note that this is dependent on your preferences and budgets.
The last period is 30 days, increasing to 90 days, which is the cheapest for accident, sickness, and unemployment cover. In addition, this policy will continue as long as you are paying your monthly premium payments; if you stop paying, your coverage will stop. If you continue paying, you will be covered until you reach the age of retirement or if you wish to cancel.
What Does it Cover?
Generally, this insurance insures up to 60% of your current income, although this does vary between insurers. In addition, it is flexible coverage, as you can choose whether you would like to cover just accidents. And sickness, just unemployment, or the whole package of accidents, sickness, and unemployment. You will have to purchase coverage based on your budget.
What Are the Exclusions?
It is important to know some of the exclusions of this insurance, and some of these exclusions include:
- Accident caused whilst committing a criminal act
- Which are self-inflicted or due to alcohol, drug abuse, or misadventure?
- Resulting from war/serving in the armed forces
- Pre-existing medical conditions
- Stress, anxiety, or depression
- Standard pregnancy without complications
- Resignations or voluntary redundancy
- Unemployment due to misconduct or industrial action
How Much Does It Cost?
The cost of this insurance depends on several factors, which include;
Monthly Benefit
If you select a higher monthly benefit, you will have to pay a higher monthly premium.
Age
Another factor that determines the premium you will have to pay is your age. Generally, your monthly premium increases with your age. This reflects the increased risk of health-related issues and the recovery time needed for most accidents.
Deferred Period
If you begin paying the monthly benefit after 30 days, you will have higher premiums than policies that pay out after 60 or 90 days.
Health and smoking status
Non-smokers with no pre-existing conditions will enjoy lower premiums than smokers with existing health issues.
Occupation
The cost of ASU coverage is also determined by your occupation. For office-based roles, you are likely to have cheaper monthly premiums than those for high-risk hazardous professions such as construction workers.
Benefit Period
If your benefit period is 12 months, you will have a lower monthly premium than those with 24-month benefit periods.
To decide which policy is right for you, you will need to compare quotes to find the best and most affordable prices.
Is Accident, Sickness, and Unemployment Insurance Worth It?
As stated above, this is an ideal policy designed to help provide income to people who are injured, sick, or unemployed. Also, it eases the financial burden and provides you with the support you need to get back on your feet.
While this insurance has its benefits, borrowers need to review policy terms, exclusions, and waiting periods before purchasing the coverage. Furthermore, it is worth considering alternative protection options such as income protection insurance and critical illness coverage to ensure they have the most comprehensive and suitable coverage.