Accident Sickness and Unemployment
One of the biggest challenges facing the UK economy is high sickness absence rates. For instance, according to the Office for National Statistics (ONS), the UK economy lost about 131 million working days due to sickness in 2013. The most common sicknesses keeping Britons away from work include coughs, colds, flu, as well as back, neck, and upper limb problems. Another key challenge facing the economy is the relatively high unemployment rate. More specifically, figures from the ONS show that the unemployment rate in the UK currently stands at 6.2%. Predictably, unemployed people are likely to suffer financial difficulties. Luckily, accident, sickness and unemployment insurance can cushion you from the financial repercussions associated with unemployment or sick leave.
If you are unable to work due to sudden or prolonged illness, an accident, or unemployment, this insurance policy will pay out for up to 12 months (some providers 24 months for Accident or Sickness). At this point, it is worth noting that you can buy an insurance policy that excludes unemployment coverage. However, you should only go for such a policy if you are secure in your current job. The only benefit you will enjoy by excluding unemployment is cheaper premiums. It is also possible to purchase a standalone unemployment insurance policy. The most common types of standalone ASU include mortgage payment protection insurance (MPPI).
MPPI covers the cost of making mortgage payments in the event a policyholder is unable to work and earn money. Monthly payments range from £1,500 to £2,000 and most last for one year. Your MPPI will kick in one or two months after losing a job or stopping work due to illness/accident.
Every adult in the UK needs ASU because it is virtually impossible to predict the future. For example, a company with a loyal client base, good revenues, and a promising future could fold unexpectedly, leaving its employees jobless. It is also important to note that doctors routinely diagnose otherwise healthy people with life threatening diseases such as cancer and leukemia. If you lose your job or fall sick, you will definitely have to spend money going to hospital or paying household bills until you get another job. The problem is most people do not have enough money set aside for such emergencies. In fact, a study carried out by Aviva found that the average Briton would only be able to access £914 of disposable income without borrowing. However, people with sick pay insurance or ASU would not necessarily have to worry about these financial obligations.
This type of insurance usually provides short-term income protection. One can purchase a policy that provides coverage for 12 or 24 months. In general, a policy that runs for a long period comes with higher premiums and vice versa. Take note that ASU policies do not start making payments immediately one loses his/her job or falls sick. It will take about a month for your ASU policy to replace your income. Nevertheless, some insurers allow clients to determine how long it should take before payments start trickling in. Generally, the longer one waits before payments start, the cheaper the premiums.
While the amount of money one can expect to get from an ASU policy generally varies from one insurer to an other, it typically ranges anywhere from £2 to £6 per £100 of a policyholder’s monthly income. With this in mind, it is advisable to shop around and compare quotes offered by different insurance companies.
In conclusion, accident, sickness and unemployment insurance can help you pay things such as your mortgage or rent after losing your job or if you fall sick and have to stop working for some time. Most ASU policies sold in the UK have a minimum age requirement of 18 years and an upper age limit of 64 years.