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Accident Sickness and Unemployment

Accident, Sickness & Unemployment insurance (ASU), is also known as mortgage payment protection. It is designed to provide you with an income to meet your outgoings in case you are unable to work due to illness or an accident, or if you are made redundant.

With this type of insurance, you pay a monthly premium for the level of cover you need, and if you lose your job or can't work, you will receive a payment each month to help you ensure you can continue to make ends meet. Policies usually pay out for up to a year or until you return to work, whichever happens first.

You can choose the amount of benefit you would like to receive, although there are some limits on the maximum amount. The premium will be a percentage of the amount of monthly benefit you would like to receive.

Some policies will also allow you to choose whether you want to receive benefits for accident & sickness only, unemployment only or all three.

There are some exclusions and pitfalls to mind of, but as your experts we’ll talk you through these and make sure that you don’t have any shocks should you needs to make a claim.

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Income Protection Insurance

It's when you need to make a claim that you realise just how wise investing in health and medical insurance can be.

If you're unable to work because of illness or injury, under an employers group sickness scheme (Group IPI) salary is continued but is subject to tax and NI in the usual way. The maximum amount of income you can replace through insurance is broadly the after-tax earnings you have lost, less an adjustment for state benefits you can claim. As with all insurance, it is important that you have the right type of policy which provides all that you need it to do for you.

Long-term income repayment policies usually come into play between the time when your employer stops paying sick pay, and when you collect your pension.

Shorter-term policies tend to be used to protect a mortgage, bank loan or other payment. These usually commence within a few weeks but stop entirely after 12 months or 24 months. Short-term policies often include unemployment and redundancy, unlike longer-term income protection cover which does not .

To clarify, Income Protection Insurance only applies to products which pay you an income if you become unable to work due to sickness or injury. Policies to protect mortgages, loans or credit card debts are often called Accident Sickness Unemployment (ASU) policies.

We will happily explain this in more detail to you.

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Redundancy Cover

How can you protect your against involuntary redundancy?

Well you can buy peace of mind when you take out an unemployment protection plan. Part of the payment protection insurance - PPI - family, redundancy cover provides a tax free monthly amount that can be used to help you manage financially in the event of involuntary unemployment. Once you are made involuntarily unemployed, the policy will begin to pay out after a set period of time, and whilst this can vary among different providers it is typically from 30 to 90 days after redundancy.

What income level can you expect?

A typical plan will allow you to insure up to 50% of your monthly gross earned income, or up to £1,500 - whichever amount is the lesser, and when you compare this to whatever you may receive from the State, (not everyone is eligible for financial assistance from the Government if they are made unemployed), you'll appreciate how valuable this type of cover can be.

How long will the cover pay out for?

This varies from provider to provider but most policies will pay out for up to 12 months, or until you get back to work - whichever event is sooner, giving you peace of mind in knowing that you are still receiving an income even when yours has ceased.

Why it's important to consider a policy

We've already mentioned that getting help from the State can be difficult and there are eligibility hurdles to jump. If, for example, you were unemployed and had mortgage commitments to meet, even if the State were to contribute towards your mortgage, it would only cover the interest part of the repayments.

Unemployment cover can be quite affordable and can cost from just a few pounds every month for every £100 worth of protection required.

We can advise you on appropriate providers for your needs, as cover may be cheaper when taken with an independent payment protection specialist compared with the high street banks and lenders.

This type of policy gives you financial breathing space at an already difficult time.

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Registered in: England & Wales

The guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.

Kind Financial Services Ltd is an appointed representative of TenetLime Limited, which is authorised and regulated by the Financial Conduct Authority. TenetLime Limited is entered on the Financial Services Register (www.fca.org.uk/register) under reference 311266.