Accident, Sickness and Unemployment ASU

What is ASU?

Accident, sickness and unemployment insurance, or ‘ASU’, pays a percentage of a person’s mortgage payments if they are unable to work because of illness, accident or compulsory redundancy. This is typically an important insurance in situations where even a small duration in the loss of income would cause difficulty to repay a mortgage. ASU is not long term insurance cover and would only normally cover the loss of an income for a maximum of 2 years, if you want protection for a greater period of time then normally Income protection would be a better choice.

Usually, payments start when the ‘insured’ has been unable to work for 30 or 60 days, and continue for between six months and two years, or until they return to work. Importantly, most policies do not give unemployment cover to casual workers, part-time workers or the self-employed.

Note: ASU is sometimes referred to as MPPI, or Mortgage Payment Protection

What kind of terms apply to ASU?
Terms and conditions naturally vary from policy to policy but here are a few of the most common:

1. There is often a delay before the unemployment element of the cover starts
2. Once you make a claim, usually there is a waiting period (often 30 or 60 days) before the policy starts to pay out
3. Policies usually pay out only for a limited period, e.g. 12 or 24 months
4. Most policies will not cover any claims related to health problems that already existed when you started the policy. Typically, this extends to illnesses and conditions you were treated for, or should have been aware of, during the 12 months (and sometimes longer) before the policy started
5. Some illnesses may be excluded altogether

Cost?
As with all insurance policies, premiums vary considerably from company to company, and often depend on the number of exclusions that are contained within a policy (it’s vital that you check this out yourself or seek advice from an experienced broker).

Need for ASU?

1. Yes, if the cover clearly applies to you, e.g. if you are a permanent, full-time employee in good health
2. Yes, if you have no other means to repay the mortgage
3. No, if you have other sources of income to repay the mortgage
4. No, if cover would not apply to you, which is possible if you are a contract worker, part-time employee, self-employed or have existing health problems
5. No, if you already have enough cover (perhaps through permanent health insurance [PHI] or through your employer)