What's the difference between Accident, Sickness and Unemployment (ASU) and Income Protection (IP)? Aren't they just the same?

ASU and IP are often confused, but they're not the same at all. For most people Income Protection is much better value.

Both policies pay out if you’re unable to work. But whereas ASU offers a limited pay-out to cover mortgage or loan repayments, and then only for 12 to 24 months at most, Income Protection pays up to 70% of your pre-tax pay until you return to work. If you can’t return to work, an Income Protection policy could keep on paying you until you retire.

There are other differences too. ASU is usually sold off-the-shelf – a bit like Payment Protection Insurance (PPI) – so the decision to pay is made at the claim stage rather than defined up front, which means ASU’s successful claim rate is lower. Income Protection is individually-priced to the policyholder up front, and the care taken when setting up the policy means you’ll know exactly what you claim for.

This isn’t to say ASU is never the right policy to choose (Income Protection rarely includes Unemployment Cover, for instance, so if this is something you’re specifically looking for, ASU might be worth a look) but as a rule, we’ll only recommend ASU under certain circumstances.

According to WHICH? Income Protection is “The one protection policy every working adult in the UK should consider” – call us on 0800 316 3166 to find out more.

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Words of wisdom

  • Many people are walking around with inappropriately-sold ASU policies, little knowing their cover is doing nothing for them. If your job offers sick pay at 6 months full pay, then 6 months half pay, for example, an ASU policy may not pay out at all.

Did you know?

  • Income Protection policies usually have a provision to supplement your pay if you return to work part-time or on a reduced salary. (ASU policies won't offer this.)