He says self-employed people will find it harder to make a successful claim, as often people need to be employed on a proper contract for at least six months, and if someone tries to claim as a sole trader, they could be in breach of the stipulation on the terms and conditions that they are suddenly put out of work through no fault of their own.
Dean Mason, director of Masons Financial Planning, says: “ASU may not be suitable for the self-employed on the unemployment side, but it can be used to cover all regular bills [in the event of sickness], including mortgage or rent.
“ASU is therefore suitable for anyone who received little or no sick pay from their employer and who could not manage their monthly financial commitments if their income ceased.”
Things to consider
Often employers will offer a period of sick pay, as well as providing support and rehabilitation services through group income protection or group private medical insurance, which can help get employees back on their feet and back into work.
In some cases, according to Steve Devine, chairman of the Protect Association, some employers will pay one’s full salary for a long period of time. In other cases, if someone qualifies for statutory sick pay, they can get the minimum £92.05 a week from the employer for up to 28 weeks.
If the cover offered by the employer is comprehensive enough, having a full ASU might not be needed by individuals; perhaps they may only need the unemployment element.
Mr Devine adds: “You should check what the employer will pay, and for how long, as this will affect the waiting period before the insurance payouts start and, consequently, the cost of the cover.”
However, it is also worth checking what sort of redundancy and severance packages are being offered by employers – sometimes these could be generous enough to offset any need for short-term unemployment cover.
Alan Lakey, founder of CI expert, goes further. He believes: “ASU is really a poor man’s income protection plan.
“There may be occasions when the occupational underwriting may be less severe within an ASU plan, but with the advent of short-term income protection plans, cost should not be an issue. IP should be the default and only dismissed if cost or any other aspects make it unsuitable.”
As Peter Hamilton, head of market management for Zurich UK, adds: “Whether these plans are attractive or appropriate will depend on what your employer might provide, your budget and how long you want cover to last.”
