Accident, suckness and unemployment cover vs. income protection

Protecting your income if you can't work

It's not uncommon for illness, injury or unemployment to prevent you from earning a regular income. This can be an unsettling experience, particularly if you have financial commitments, such as a mortgage, or dependants.

This is where insurance policies like income protection and ASU cover can bridge the gap, offering key benefits, such as:

• Financial support to help cover bills while you're not working

• Securing your family's future and any dependants that rely on your income

• Providing peace of mind that should the worst happen, you're financially protected

They key difference between the two policies is that ASU tends to act as short-term cover, with policies sometimes only lasting up to 12 months. Income protection can provide longer-term cover if you're unable to work for health reasons. This can last until you return to work or if you retire.

What is ASU insurance?

Accident, sickness, and unemployment insurance (ASU) is a shorter-term type of income protection cover. It can provide you with financial support if you're unable to work due to illness, injury, or if you lose your job unexpectedly.

As a short-term policy, ASU may only pay out for a limited period, typically 12 months - but you can find cover for up to 2 years. Many income protection insurance policies exclude unemployment cover, so ASU can be worth considering if you're looking for a broader level of protection.

While ASU can cover unemployment, it generally doesn't cover you if you accept voluntary redundancy. You also won't be able to claim if you lose your job due to poor performance, a criminal conviction, or any form of misconduct.

A policy can cover anywhere between 50% and 70% of your gross income, helping you cover essential outgoings such as mortgage or rent payments and bills. As a standalone policy, you pay monthly premiums for ASU. If you make a successful claim, stop paying premiums, or cancel the policy, your cover ends.

What is income protection insurance?

Income protection insurance provides longer-term cover, offering financial protection against accidents, injuries or illnesses that prevent you from working. This type of policy can pay out 50% to 70% of your typical income depending on the cover and provider you choose.

Its long-term nature means a successful claim can provide you with financial protection until you return to work, begin another job, or retire. It won't, however, offer any cover for unemployment.

Choosing this policy offers greater flexibility in terms of payouts, so you can typically select whether you require a lump sum or regular payments to cover your income. Premiums are generally more expensive compared to ASU policies, but income protection payouts are usually tax-free.

To apply, you may be required to provide information regarding your personal circumstances and complete a medical questionnaire.

You may be prompted to choose between income protection policies that offer cover for 'own occupation', 'suited occupation' or 'any occupation'. This refers to your incapacity in the event of a claim. An own occupation policy can pay out if you cannot fulfil the duties of your specific role due to an accident, illness or injury.

A suited occupation policy offers less cover, as an insurer may require you to assume a different role suited to your skills and experience. Let's say you're a forklift driver at a warehouse, for example. If an accident, illness or injury prevents you from working, an any occupation policy may require you to assume an office role. This is dependent on whether your employer can offer this solution and if you're capable and qualified for the role.

Any occupation cover may only offer a payout if you cannot work in any occupation regardless of your skills or experience. Essentially, you'll have to be incapable of fulfilling any type of role in order to claim.

To claim, you should reach out to your insurer and explain your situation in detail. You may be required to provide some form of evidence; this can be a doctor's note, for example. If your claim is successful, your insurer should contact you to arrange your payments.

ASU vs income protection: What’s the difference?

We've already discussed both types of policies, but how do they stack up side-by-side? Let's break it all down:

Which one should you choose?

Due to the nature of both policies, and as a general rule of thumb, ASU is more suited to those who require a financial safety net for a set period of time. This ensures that, for whatever reason over a 12-24 month period, you're financially protected against illness, injury and unemployment.

However, income protection insurance offers a more flexible and comprehensive policy that can provide a more lasting peace of mind. These policies may be a more convenient cover option that can last until you return to work, begin another job, or retire.

What factors affect the cost of ASU and income protection?

ASU cover and income protection insurance aren't available at fixed premiums. This is because various factors can affect what you pay for a policy. Your personal circumstances and preferences in a policy are used to calculate your premium. This includes:

• Your typical salary: The payouts you can potentially claim for are based on a percentage of your salary. Therefore, your premiums can reflect a portion of the salary you'd like to cover. This may be capped at a certain amount depending on your insurer.

• Your age: Generally, the older you are, the more likely you are to develop an illness that may prevent you from working, resulting in a claim.

• The type of income protection policy you choose: Income protection policies are usually more expensive than ASU cover due to their length and how comprehensive they are.

• The length of your deferred period: Both types of insurance include what's known as a 'deferred period'. This is the length of time between a successful claim and when you begin receiving payments. The length of time can vary. You can choose between a few weeks, 6 months and 1 year. Selecting a longer deferred period may reduce what you pay in premiums.

• Your occupation: If your job poses a greater risk in terms of your likelihood of claiming, it may increase what you pay in premiums.

• Your level of cover: When you apply for a policy, you may decide how much of your typical income you'd like to cover. Choosing a higher percentage of income cover increases what you pay.

• Your medical history: This is particularly relevant to income protection, where you may need to answer a medical questionnaire during your application. Your smoking status and pre-existing conditions may affect what you pay. You may be offered a policy that excludes the option of claiming against certain health conditions, or you may not be offered a policy entirely.

What UK sick pay are you entitled to?

An employer is required to provide Statutory Sick Pay (SSP) if illness prevents you from working. You can receive this amount (£118.75 as of January 2026) on a weekly basis for up to 28 weeks.

You cannot receive any less than this amount, but you may receive more if your company provides its own sick pay scheme. To find out, you should read through your employment contract and check with your employer.

As SSP is provided by an employer, self-employed individuals do not qualify for the scheme. This is why ASU cover or income protection insurance can be even more important to consider if you're self-employed.

You'll receive SSP for all of the working days you're off sick, except for the initial 3 days. If you've received SSP within the last 8 weeks, you'll only be paid SSP for the first 3 working days you're off sick.

To claim, you must be an employee (this includes agency workers) and earn an average of at least £125 per week. You won't be eligible for SSP if you've received the maximum amount of SSP (28 weeks) or if you're already claiming for Statutory Maternity Pay.

If you're sick for longer than 7 days (including non-working days), you must provide your employer with a fit note. This is also known as a sick note and can be obtained by a:

• GP or hospital doctor

• Registered nurse

• Occupational therapist

• Pharmacist

• Physiotherapist

You should talk to your employer if you beieve their decision not to pay you SSP is wrong or if you're not getting the correct amount of SSP.

If your situation isn't resolved, you can contact the HMRC Statutory Payment Disputes Team.