Accident sickness insurance would ease your financial worries if you were to become incapacitated. As accident and sickness can rear their heads at anytime it makes sense to check out a policy as without it you could have a huge struggle on your hands. Without protection you could have a struggle each month to maintain your mortgage or loan repayments. You could also struggle to find money for your essential outgoings.

The first step you would have to take when looking into accident sickness insurance is which type of policy to take out. You could cover your mortgage repayments with mortgage payment protection, your loan repayments with loan cover and your income with income payment protection. You then choose how much of your monthly repayments of income you want to cover and have this amount pre-agreed by the provider. This is then the amount that you get back, should you need to claim, once you have passed the deferment period and for the term of the policy offered by the provider. Some will pay out an income once the 30th day of incapacity has passed while with other providers it can be up to 90 days before you are able to claim. You could receive benefits for 12 months and with other providers you could be offered 24 months of cover.

As the terms do differ you do need to check with the provider before paying for the cover. You also need to take into account that 90 days can be a long time to wait before you can make a claim. By this time mortgage or loan arrears of 3 months could have occurred and you could have been struggling to find money to put food on the table for your family. Also bear in mind that if you were to take out cover that paid over 24 months the policy would work out dearer in monthly premiums.

While you can just insure against incapacity you could pay out a little more in premiums and have protection for redundancy too. You should also check with your provider to find out if they are generous enough to pay out carer cover in their policy as some do. Carer cover would allow you to stay at home and take care of a close family member if they were to become incapacitated and you would still have an income to rely on from the cover.

Accident sickness insurance can be a better option of security for your repayments and outgoings than risking being eligible to claim an income from the State. The same applies to using savings to continue meeting your financial outgoings as savings could deplete before you recovered.

Accident sickness insurance can be taken out as mortgage, loan or income payment protection depending on the payments that you have to make each month. You can take out cover with an independent provider and by doing so you will be able to save up to 40% on mortgage cover and around 80% on loan payment protection. You would also have a great deal more control over your policy than if you take it out with the loan or mortgage.

One of the factors that go towards your premium is the amount of your loan or mortgage repayments or your monthly income that you choose to cover. The provider would need to agree to this amount because it is the amount that you would get back each month, should you have to put in a claim of course, for the term of offer by the provider. Usually you would have to stand to a period of between 30 and 90 days before making a claim with some providers offering to date back to the first day of your incapacity. Once you have begun to receive your income you would then continue to receive a payment each month you remained incapacitated for the term. This would generally be for either 12 or 24 months and then payments cease.

When considering an accident sickness insurance policy such as to protect your mortgage repayments you would have to consider that if the policy did not begin paying out until the 90th day you could already be in mortgage arrears by 3 months. While lenders will give you time to pay back your mortgage arrears any mortgage arrears will bring stress and worry. You might therefore be better off choosing protection that would provide you with income sooner rather than later. You also need to weigh up that cover providing 24 months of benefit would cost more than a 12 month policy and 12 months could be more than enough time to have made a recovery.

You could take out mortgage cover as accident sickness insurance and this would ensure that you had a substantial amount of money towards being able to service your repayments each month. You would not have to worry about mortgage arrears and the possibility of being evicted. Loan payment cover would protect any loan repayments which would keep you out of court and also keep your credit rating intact. Income payment protection would provide an income that you could spread out over any essential repayments. For a little more in premiums each month you might also want to protect against the possibility of unemployment. In this case you would be able to make a claim if you suffered from either of the events.

Some research conducted by the government’s Department of Work and Pensions not so very long ago found that around one million people call in sick from work every week. Whilst this in itself illustrates quite a high level of sickness absence in the UK, a further statistic gave perhaps even greater cause for concern. That is that of those one million people every week, 3,000 are unable to return to work after six months. For 3,000 people each week, therefore, that call into the office turns into an illness that is more serious and takes longer to resolve than just a few days off work. These are the circumstances in which sickness insurance really could help.

How could it help and what does it do? Sickness insurance takes a lot of the financial worries away from a prolonged absence from work because of an illness. If the policy holder is away for longer than a certain period of time – and is therefore increasingly likely to be losing income as a result – the insurance pays out a regular, tax-free monthly benefit that can be used as a replacement income, or to meet essential commitments, such as mortgage repayments or those on a personal loan or other borrowing. In other words, it can lift a major part of the burden of worrying about how the bills are going to be paid when the income from work runs out and frees the individual to concentrate on the important issues of getting back to full health.

In fact sickness insurance does even more than it suggests in its title. It extends cover not only to the loss of income as a result of illnesses but of physical accidents, too. If the policy holder needs to take time off work in order to recover from an accident, the insurance pays out in just the same way. Because the insurance covers “two for one” in this kind of way, it is usually said that it offers protection against an incapacity to work (whether that incapacity is caused by an accident or illness).

When the cover has been set up and the first of the monthly premiums paid, the policy holder can claim under the policy as soon as he or she has been off work – or incapacitated – for longer than the period prescribed in the policy’s terms and conditions. This “waiting” or “qualifying” period can typically be anything from 30 to 90 days – with most people, of course, being attracted to the shorter qualifying period since it is more likely to pay out for shorter absences from work and because the benefits become payable earlier. Policies differ in respect to the qualifying period, so it is important to find out what this is before settling for a particular policy.

What you receive in monthly benefits from sickness insurance of course depends on the level of cover you have chosen to buy. The monthly premiums you will need to pay are directly related to the level of cover offered, with premium rates now universally quoted in terms of each £100 of cover bought. The chosen amount, of course, is the amount you are guaranteed to receive each month in the event of a successful claim. There is a limit, of course, to the maximum amount that can be insured in this way and that is typically the equivalent of 50% of the policy holder’s normal gross salary from work, or £1,500 a month, whichever is less.

The chosen level of insured benefits are then paid out every month until the policy holder is well enough to return to work or after a typical maximum period of 12 months. This restriction to 12 months, together with the maximum limits on the amount of income that can be covered, is quite central to the whole concept of sickness insurance. The limits help to define the boundaries of the insurer’s potential liability and determine both the amount that is liable to be paid each month and the number of months for which it may need to be paid. Because the limits of liability are so clearly defined, the insurer is able to offer the insurance at a remarkably low price in terms of the premiums that need to be paid. The limits in fact work to the policy holder’s advantage, therefore.

Nevertheless, if 12 months seems too short a duration for recovery for some of the more serious illnesses that can keep an individual away from work, some policies offer the option of extending the maximum period of benefit payments to 24 months – although the premiums, of course, will be appreciably more expensive (for the reasons just given).

For those concerned about the truly more serious illnesses – perhaps those that are life-threatening or that can leave the victim unable to work again – then sickness insurance is probably not the most appropriate insurance. Instead, it could make more sense to consider products like critical or serious illness insurance, which pays out a single lump-sum benefit in the event of the policy holder being diagnosed with such a condition.

Sickness insurance, however, provides the ideal kind of cover for those instances where the illness is serious enough to incapacitate the individual for several months at a time, but where there is nonetheless every realistic prospect of resuming normal working before too long. We have seen that it is remarkably flexible in terms of the amounts of income that can be insured, but it is flexible, too, in the risks that can be covered. It has already been mentioned that sickness insurance automatically incorporates cover against incapacity as a result of an accident, but on payment of only a modestly priced increase in premiums, it is also possible to extend cover to the risk of redundancy, too. In other words, precisely the same level of benefits could be paid out each month, over the same maximum period of time, in the event of the policy holder being made compulsorily redundant.

Most forms of insurance are, almost by definition, guarantees of compensation, or indemnity, against accidents of one kind or another. Accidents can be seen as the manifestation of all kinds of risks that surround us. In the case of accident insurance, however, the rather special risks singled out for cover are those arising from events causing accidental injury and the consequent loss of the usual income from work because of the time needed to stay in hospital or at home in order to recover.

In fact, the risk of accidental injury is so akin to the “accident” of falling ill and, for similar reasons needing the time off work during which to recover, that the risks of both physical accidents and illnesses are covered under one and the same accident and sickness insurance or incapacity insurance, as it is sometimes called (since both result in an incapacity to work). Unless, the individual enjoys a particularly generous sick-pay scheme run by his or her employer, time off work through incapacity is unlikely, sooner or later, to result in a withdrawal of pay. It is this loss of income that accident insurance seeks to address.

In the event of the policy holder being incapacitated by an accident or illness, therefore, the insurance pays out a regular, monthly benefit by way of compensation to indemnify the policy holder for his or her loss of income. It makes up for, at least in part, the income that has been lost through having to be absent from work.

Just as no one can predict when an accident might happen, so no one can foresee the injuries caused or the time it might take to recover. All that can be predicted is that income is likely to be forfeit and that the loss might continue for several months or more whilst the victim of the accident recovers from his or her injuries. In order to cover as long a period for recovery as possible, whilst still being able to shave the cost of premiums down to the minimum, therefore, accident insurance pays out the monthly benefits for a typical maximum of 12 months – long enough, in other words, to recover from all the most serious of injuries and return again to normal work. Nevertheless, for more cautious folk, considering the risk of injuries taking longer than a year to heal, some policies will offer the option of extending the maximum payout period to up to 24 months, when an additional premium will obviously need to be paid.

Immediately after an accident or the onset of an illness, of course, there is often no way of knowing whether they will be serious enough to require a lengthy period of time off work. Most policies, therefore, incorporate a waiting or “qualifying period” which must be completed from the first day off work until the insured benefits begin to be paid. This waiting period is typically between 30 and 90 days and, on completion, the policy might either treat it as having been a form of “excess” (with any loss being borne by the policy holder), or backdate the payment of insured benefits to the first day’s absence from work. The longer the waiting or qualifying period, of course, the less likely your period of absence is going to qualify for a claim on the policy and the longer you will need to wait for the payment of any claimed benefits. This is something to take into account, therefore, when choosing your accident insurance policy.

The other major choice to be made when setting up the cover is just how much will be needed by way of benefits during any incapacity. Will these be used as a general, all-purpose replacement income, or will they be used to cover specific, essential commitments which you simply cannot afford to miss, like the mortgage or the repayments on other loans or credit? The decision is likely to influence the level of cover you choose. Your choice is also likely to be influenced by the cost of the premiums, which are surprisingly modest, but which increase, of course, as the amount covered also goes up. Costs can be calculated easily enough, however, since these policies all now quote the premium price per £100 of cover provided. As a general rule, you should expect the maximum available amount of cover typically to be equivalent to 50% of your normally earned gross income, or £1,500 a month, whichever is less.

Whatever the type of insurance, some people are concerned about the “small print” of the policy and the risks excluded. It is true that accident insurance policies will also have their fair share of exclusions, although these are not generally numerous and none should be found too surprising. Since the insurance covers the risk of incapacity for work through accidents and illness, pre-existing medical conditions and ailments will probably be excluded, as will those illnesses which perhaps the majority of those in the workplace seem to suffer, such as “stress” and “bad backs”. Nevertheless, this form of accident insurance can be purchased without the need for medical examinations or the completion of detailed questionnaires.

In fact, the criteria of eligibility for accident insurance are very wide indeed. Since the insurance is covering the risk of a loss of income from work, you will clearly need to be in regular work at the time of purchase and will have to show that you have been so employed for at least the previous six months. Residence in the UK, Channel Islands or Isle of Man is required as is an age that remains below normal retirement age throughout the period covered by the insurance.

One of the times when consumers are most likely to be asked to consider taking out accident insurance is soon after arranging a loan or other credit (although these days lenders are required to wait at least seven days before making such overtures). Research has shown, however, that even if the insurance is to be used to protect a known monthly commitment to loan repayments, the best value for money is likely to be found in entirely standalone policies from independent insurance providers.

Some things have a nasty habit of sneaking up on us when we least expect it and when it’s the worst time to happen. Accidents and illnesses can be rather like that – they strike when it’s least convenient. You’ve just moved into your new home, for example, or you’ve just taken on an additional financial commitment, only for an accident to happen or for an illness to lay you low and off work for several months without pay while you recover. Accident sickness insurance will help ensure that life continues pretty much as normal even when accidents or illnesses sneak up on you.

Accident sickness insurance must be one of the most simple and straight forward types of policy available in that it does exactly what it says. It covers the policy holder against the risk of accident and illness by recognising the potential lost earnings and compensating him or her accordingly by way of a regular, tax-free monthly benefit. Of course the blow to the individual’s health and fitness is likely to be the major concern, but the ability to put away financial worries about paying normal bills and expenses during unpaid sick leave can only help to speed recovery.

For an insurance policy that covers the risks of accidents and illnesses, many people are surprised that no medical examination or elaborate questionnaire is required in order to set up the cover. In the event of a claim, however, any pre-existing medical conditions or illnesses will naturally be taken into consideration, with the likelihood of their being excluded. A number of other frequent work-place disorders, such as “stress” and “backache” are also likely to be excluded. Apart from that, however, practically anyone is eligible for accident sickness insurance. All it takes is to be currently and actively employed (i.e. not on sick leave) at the start of the cover and to have been regularly employed for at least the past six months. Policy holders need to remain below retirement age throughout the term of the insurance and to live in the UK, Channel Islands or Isle of Man.

Deciding on how much cover to buy – in other words how much you would need to receive in monthly benefits if you had to claim – will, of course, depend on your particular circumstances and how much you are prepared to pay each month in premiums. The latter are universally quoted in terms of each £100 covered, so the calculation is easy to perform. In this way, it is possible to insure up to a typical maximum of 50% of your normally earned income, or £1,500 a month, whichever is less. With such an assured income each month, you can rest more easily knowing that important bills and expenses can continue to be made, whilst you concentrate on the more serious business of recovery and convalescence.

The benefits from such accident sickness insurance can be used as a genuinely replacement income, to be spent exactly as the policy holder desires. At the time of setting up the insurance and deciding what level of premiums to pay, however, it might be decided that the benefits would be better linked to essential monthly mortgage repayments or those on any other type of borrowing. In that event, it accident sickness insurance is sufficiently flexible also to provide mortgage or loan insurance to cover the cost of those repayments.

In the event of an accident or sickness occurring, both the policy holder and the insurer will want to know that any period of absence from work is likely to be sufficiently long enough to lead to a potential loss in pay. For that reason, therefore, most policies incorporate a “waiting” or “qualifying” period of between 30 and 90 days off work, before claims become payable (the shorter the period, of course, the more frequently claims are likely to qualify and the sooner the benefits will be paid). At the end of this period, the insured benefits are payable, either from the immediately next day, or in the case of some policies, even backdated to the very first day off work.

Once in payment, the insured benefits continue to be paid regularly on the same day each month. Few people are likely to be able to predict in advance, of course, just how long such a period of enforced absence from work is going to be. Some injuries heal more quickly than others and some illnesses clear up more quickly than others before allowing the individual to resume normal working. Accident sickness insurance, however, generally takes the view that a maximum of a year is likely to be as long as the vast majority of individuals will need. Therefore, the benefit payments are payable for up to a typical maximum of 12 months. The definition of a finite period such as this helps the insurer to calculate the maximum liability assumed on any one policy and, because it stretches at most to just 12 payments, the premiums for the cover can be kept remarkably cheap. By the same token, however, for those individuals who feel that 12 months is too short a period in which to ensure complete recovery, and for those who are prepared to pay a correspondingly increased premium, some policies offer the option of extending the maximum payout period to up to 24 months.

Perhaps one of the most surprising and exciting developments in the evolution of accident sickness insurance is that, with certain policies, it can now even be extended in the shape of full-time care for a close family member. If a member of the policy holder’s immediate family requires such care, for example, the policy holder can take unpaid leave of absence from his or her job to provide that care and attention, confident in the knowledge that the insurance policy will nevertheless continue to pay out a regular monthly benefit, just as though the policy holder him or herself were incapacitated from work.

Finally, it should be noted that accident sickness insurance provides robust and reliable cover against the risk of incapacity. For a relatively small increase in the cost of the monthly premiums, this same type of cover can be extended to the further risk of the policy holder being made compulsorily redundant.

Accident sickness insurance could stop you from falling into payment arrears as it would supply you with an income each month for a certain period of time. This amount of time would depend on the provider you chose to take out the insurance with as would how long the protection would continue to payout. You can choose the repayments you want to take protection for by way of mortgage, loan or income payment protection, depending on your needs.

Of course there is another way that accident sickness insurance can be taken and that is with the lender when you take on the mortgage or loan. However while this might seem to be the ideal solution to taking what can be very valuable form of protection, it will usually be the dearest option. Lenders generally calculate the cost of the insurance over the full term of the loan or mortgage and then add it into the sum you are borrowing. This then means that interest is calculated on the whole amount borrowed which includes your payment protection. When taken with the standalone provider you can choose the amount you want to protect of your income or repayments, providing the provider agrees with this sum, which goes towards setting a monthly premium. While ever you continue to pay this premium you would be able to make a claim on the policy once the deferment period had passed. This is usually between the 30th and the 90th day of your incapacity, your tax free payments would then continue for either 12 or 24 months and then cease regardless of whether you had made a recovery and got back to work or not.

If you have mortgage repayments to maintain then mortgage payment protection insurance might be something that is worth considering. The income from your mortgage cover would be used towards ensuring you could service your repayments which would stop you from falling into arrears and be at risk of losing your home.

Should your monthly loan repayments be a cause for concern then you could give loan payment protection some thought. Again the income would go towards you being able to continue meeting your loan outgoings. Missed loan repayments would affect your credit status and if then loan was secured you could lose your home. Unsecured missed payments could mean you are taken to court and if this happens you could lose your belongings.

Income payment protection could be taken if you want to ensure that you would have an income towards being able to meet you essential outgoings. When taking out this form of accident sickness insurance it can stop you from having to cutback and make changes that would seriously disrupt your normal routine and that of your family. All forms of payment protection can be better than risking being able to make a claim to the State for an income and it can also be a better solution than risking being able to use your savings as a means of getting by.

Accident sickness insurance is taken out to ensure that if you suffer an accident or fall sick you have money coming into your home to go towards your repayments. You can choose what you want to protect such as your mortgage repayments, loan repayments or your essential outgoings. You also have the choice of taking out the insurance independently as opposed to having it included in with the borrowing at the time of taking it out with the lender.

How much you would receive back each month from your accident sickness insurance is down to you as you can choose this amount. Providing it is pre-agreed by your chosen provider this would then be your monthly tax free income. You could make a claim on the policy if need be after the 30th and between the 90th days of incapacity. Some providers will also date back the cover to the first day of you being incapacitated so this is always worth checking. Once the cover has begun to payout it would continue to do so for either 12 months or 24 and then ceases.

While you can just choose to take out protection against the possibility of falling ill or having an accident you could for a little more choose to protect against the chance of redundancy also. You would then be able to make a claim for either event if you were unlucky enough to become a victim.

When considering a policy you would of course have to decide which type of protection you wanted. If you have mortgage commitments then you could take out mortgage payment protection insurance to cover the repayments. Being able to maintain your repayments is essential if you want to ensure that you remain in your home. Mortgage arrears which you are unable to catch up on of even just a couple of months could be enough for the lender to take you to court and you could lose your home.
If loan repayments are your biggest concern then you might want to look into loan payment protection. This policy could stop payments arrears which keeps you up to date and stops the lender from taking you to court to claim back the money you owe. As you are able to maintain your repayments it will also stop your credit rating from being affected.

Finally you could choose to take out accident sickness insurance in the form of income payment protection. The money provided from this policy could be spread out as you wished between any essential outgoings that drop through your letterbox each month. Your life could be less stressful with income cover to fall back onto.

There are three forms of accident sickness insurance that you can consider taking out. The policy you would most benefit from would depend on the payments you have to make each month. If you have a mortgage to repay then you should take a look at the many benefits of mortgage payment protection. If loan repayments are your biggest worry each month then you should give some thought to taking out loan payment protection insurance. Essential repayments can be protected with income payment protection insurance.

All forms of accident sickness insurance can be taken out with a standalone provider. By choosing to search and compare the cost of payment protection insurance you can make savings on the premiums. In some cases providers will offer savings of as much as 80% on loan cover and 40% on mortgage payment protection. They will also offer protection that comes with all the information needed to ensure that a policy would be suitable. This included mention of the exclusions which need checking against your lifestyle. You would be able to choose the amount of your repayments or income that you want to insure and the provider of your choice would pre-agree to this amount. However all will state a certain amount that you can insure up to so check before taking out the policy. The amount covered would be the sum of money that is paid back to you if you need to claim on the insurance and it would be paid tax free.

All providers will also state a deferment period and this is the time that you would need to have been unemployed or incapacitated before making a claim. This would usually be between the 30th and the 90th day depending on your chosen provider. Once the provider had begun to payout on the protection you would then have a certain amount of time to recover or to find work again. Usually a provider will offer a policy that continues paying out for between 12 and 24 months. After this period of time the policy will cease paying out.

Mortgage protection taken as accident sickness insurance can be a Godsend as it could ensure you would have the money to be able to continue servicing your mortgage repayments each month. This is essential if you are to avoid mortgage arrears and the possibility of losing your home. Loan cover would also go towards keeping you out of court and losing your home if the loan is secured on your home. With income cover you would not have to struggle and make drastic lifestyle changes to be able to find the money to continue meeting all of your essential repayments.

If you are uncertain about the future and you worry about losing part or all of your income due to accident or sickness then it might be a good idea to protect your wages with accident sickness insurance.

Having a reduced income could adversely affect your lifestyle and finances especially if you have mortgage payments to meet and a family to provide for. Having a replacement or supplementary income could be just what you need to help you maintain your lifestyle while you recover.

By recognising the need for accident sickness insurance you can ensure you receive a monthly income that it paid free of tax if you are off work due to one of the named qualifying events of the policy. Benefits are paid for 12 or 24 months subject to the provider terms.

The policy is a safety net that provides financial relief as well as peace of mind. While you are on your sick bed you won’t have to worry about the bills being paid or creditors knocking at the door. You can spend your time concentrating on making a full recovery.

Points To Consider
Qualifying to apply for a policy will call for a minimum employment time which the provider will specify. In addition the benefits you receive will not cover your entire salary. Providers will pay a percentage of your gross income, as the policy is meant to supplement what you are already receiving in the event of a reduced income being paid.

Once you’ve been successful in obtaining a policy if you want to make a claim, you’ll have to wait out the 30 – 90 day deferment period which varies from provider to provider.

If you want to save on your accident sickness insurance premiums then the best bet is to see what an independent provider has to offer. Taking your policy with a high street provider will result in higher premiums so it is better to check out other companies.

Simon Burgess, Managing Director of independent protection provider British Insurance says ‘Consumers are being robbed of the opportunity to save on premiums when they stick to high street providers. Independent companies like British Insurance can provide as much as 80% off premiums for certain protection products so it is advantageous to the consumer if they see what independent providers have to offer’.

One last bit of advice is to read your terms and conditions carefully as these protection policies carry exclusions that could prevent you from making a claim when you need too.

Summary
Having accident sickness insurance could be a life saver when you find yourself off work sick with a reduced income. It will help keep you clothed, fed and housed while you concentrate of returning to health.

An accident sickness insurance policy would provide the policyholder with an income if they were to become incapacitated. The income received from the cover would then go towards maintaining the repayments they had chosen to protect. A policy could be taken out in the form of mortgage, loan or income payment protection.

You would have to decide on the policy most suitable depending on what your outgoings are each month. Then you have to decide how much of your loan or mortgage repayments or your monthly income you want to protect. The provider you choose to take out accident sickness insurance with would pre-agree to the sum and this is the amount you would get back tax free, if you were to have to make a claim. You would need to wait until the deferment period had passed before making your claim and the cover would only payout for a specified number of months.

Accident sickness insurance is usually offered when you take on a mortgage or loan with the lender on the high street. However this is normally the most expensive way of taking out protection and you can get a cheaper quote if you shop around with a specialist provider. One of the cheapest quotes will come from ethical payment protection provider British Insurance. They offer savings of around 80% on covering the repayments of your loans and 40% on mortgage cover. Along with savings they offer cover that can be claimed upon once the 30th day of incapacity has been reached and it would continue to provide you with an income for up to 12 months.

The terms offered by other providers could differ greatly and you need to check the small print to see when cover would begin as some providers state a deferment period of up to 90 days. Also check to find out how long the policy would continue paying out. Some providers could offer a policy that ran from 24 months. Also compare exclusions against your circumstances as they too can differ. Ethical British Insurance only adds in the most common of exclusions but other providers could include many more in the protection they offer.

An accident sickness insurance policy could make your life a great deal easier by providing financial help. Of you have mortgage repayments to make each month then mortgage payment protection could provide you with the money towards those repayments. Loan payment protection would supply an income that could help you to keep your loan repayments up to date and income payment protection would allow you an income towards being able to service any essential outgoings.