As if worrying about the possible meltdown of the entire global banking system, the rising tide of unemployment, or ever escalating prices weren’t enough, there is the ever-present risk of losing a month or two of income simply by being unable to work because of an accident or illness. That, of course, is when accident sickness insurance comes into its own.
However much the world around us is being buffeted by one economic crisis after another, there are some things that continue to be governed by the fickle hand of chance. Accidental injury, for example, is defined by its sudden unexpectedness. No one knows when an accident might happen. But if injuries are sustained and there is a need to take time off work to recover from them, the potential loss of income can bring still further difficulties in its train. All the routine, household bills, of course, still need to be paid – somehow.
Similarly, an unexpected and obstinate illness can be dealt to anyone, regardless of the care they take. Once again, it can lead to a month or two off work and the kind of disruption to a steady income stream that can easily throw into complete disarray the most carefully planned domestic budget.
Accident and sickness, therefore, are the most common types of misfortune keeping a very significant number of people off work every year. Although some employers might have seemingly quite generous sick-pay packages, the restrictions and conditions can leave some employees less well-off than they thought they might be. Furthermore, as the current recession bites into the business performance of an increasing number of employers, those sick-pay packages look set to become less and less generous than once they might have been.
Accident sickness insurance, therefore, is designed to allow the employee to take matters into his or her own hands when it comes to protecting an income when random misfortune strikes. Provided the incapacity is such that absence from work is needed for longer than a given “qualifying period” (which can range from 30 to 60 days, depending on the particular insurance policy), the insurance pays out a regular monthly benefit.
The benefit can take the form of a general income replacement or be used to cover a known commitment to loan repayments and is typically subject, depending on the insurer, to maximum cover that is typically equal to 50% of the policy holder’s regular earned income or £1,000, whichever is less.
Alternatively, the cover can be used for the specific protection of most people’s most critical monthly obligation, the repayment of the mortgage. In this case, the maximum amount of cover is generally higher and can typically cover (again, depending on the particular policy) up to 75% of the normal monthly income or as much as £3,000, whichever is the lower figure.
An expert in the field of accident sickness insurance, Simon Burgess of British Insurance, comments: “the completely random and unexpected nature of this kind of incapacity is often overlooked and many of us think we’ll be immune – until the accident happens or we succumb to illness. Accident and sickness insurance is something to be seriously considered by any working person”.
For many years I have been a staunch campaigner against the major names in finance who, I believe, rip-off their customers by selling over priced, often unsuitable payment protection insurance (PPI) cover.