Do you know what your options are, if you were unable to work due to an injury or illness? Lots of people are surprised to learn their sick pay and potential welfare allowances would be a lot less than they released. Accident Sickness Insurance policies are one way to ease the concern and offer a supportive pay out when you need it most.   


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What Is Accident Sickness Insurance?

Accident and Sickness Insurance is a type of protection policy, designed to offer a pay out in the event you are injured or ill and unable to work.  Accident Sickness Insurance pays out a tax-free lump sum dependent on the injury or illness you have sustained. It is not the same as an Income Protection policy, which pays out a monthly benefit and tends to be more comprehensive and long term. But it can be a great, affordable protection plan, that can be tailored to suit your exact needs. 

What Does It Cover?

Accident Sickness Insurance protects you against injuries and illnesses which stop you being able to work. If you do not have sick pay from an employer, or adequate savings, you could find yourself out of pocket as a result of an injury or illness. Accident and sickness policies usually list potential conditions and provide a payout figure for each, in the policy terms. Common things to be covered in these policies are: 

  • Broken bones
  • Hospitalisation 
  • Accidental permanent injury like blindness/deafness or paralysis 

Accident and Sickness Insurance often gives you the opportunity to also cover your child or children. It also usually covers a pay out for accidental death and a funeral benefit also. 

What Does It Not Cover?

All insurance policies include exclusions. Whilst these may vary between insurers, some of the most common exclusions with an accident and sickness policy are illnesses or injuries sustained:

  • Whilst involved in illegal activities
  • As a result of unadvised travel to countries affected by conflict, high terrorism risk etc
  • As a result of substance or alcohol misuse

The Association of British Insurers (ABI) and Group Risk Development (GRiD) reported that the protection industry as a whole paid 98.3% of all claims in 2019.

This type of insurance does not provide a pay out if you are made redundant or unemployed for a reason other than accident or illness. There are policies which do protect against unemployment, but it is not included in an Accident and Sickness policy.


Who Needs Accident Sickness Insurance?

Protecting yourself against accident and sickness is really important for anyone who earns a living and does not have sufficient savings or sick pay benefits from employers to fall back on. It is especially important for those who are self-employed as there is no safety net from employers if you are ill. It is also important for those who do not have sick pay benefits as part of their employee package. It is a common misconception that all employers will continue to pay 100% of your salary if you are off work for medical reasons. With many this is not the case and they will in fact revert to Statutory Sick Pay. 

Accident and Sickness Insurance policies are not medically underwritten, so can be a great option for anyone who cannot get an alternative Income Protection cover for of a pre-existing condition. 

What Are the Chances I will need it?

  • ‘Each year one million workers suddenly find themselves unable to work due to serious illness or injury’ (Welfare Reform for the 21st Century)
  • Yet according to the Department for Work and Pensions Family Resources Survey, around 54% of households have either no savings or less than £1,500 savings and 76% have less than £10,000
  • According to sick pay statistics in a government Health In The Workplace report: only 42% of small organisation employers offer any Occupational Sick Pay, which means the remainder would be left with Statutory Sick Pay (SSP)
  • This means employers would pay you £95.85 a week after the initial four days of illness, up to 28 weeks.
  • After the 28 week period – when SSP ends – if you are still unable to work – assuming you have paid National Insurance for two years or more – you are eligible to claim contributory Employment and Support Allowance (ESA) which is even less than SSP.

How Much Does Accident Sickness Insurance Cost?

It is difficult to give a definitive answer to this question, as there are a number of variables which affect premiums. It is always a good idea to get a tailored quote from one of our expert advisers, based on your individual requirements and circumstances.

Accident and Sickness policies offer different levels of cover and they usually set out the exact pay out amount you would receive, for a particular incident, based on the level of cover you choose. 

Generally policies are very affordable and are a less expensive option compared to a comprehensive Income Protection policy. Core cover can start from as little as £8 per month. A mid level policy would be available for more like £24 a month and example pay outs for this level of policy would range from £2250 for a broken arm, to £150,000 for total permanent disability. 


What Other Options Do I Have?

When considering taking out protection insurance it is important to evaluate your circumstances fully and understand all your options. There are various different types of protection products available on the market and they can work in harmony with benefits from employers, state help available and any savings you may have.


Understanding how much you have in savings and how long this would be able to support you for is important. You need to compare your current income with what your base level necessary outgoings would be. Things that seem essential may in fact become unnecessary in reality. None-the-less, findings from a Scottish Widows (2014) ‘Savings Report 2014’ found that 42% of households could survive only a couple of months on their savings and only 26% could survive one year or more. Whilst savings could be a viable option for some in the short term, realistically there are few who could manage to save sufficient amounts to secure sufficient income replacement long-term or until retirement with an average 30 year old likely to need in the region of £500,000 to last until retirement.

State Welfare

One of the most sited reasons for the uptake of Accident Sickness Insurance not being greater, is the general assumption that either your employer or the state will be there to support you if you were unable to earn due to illness. According to ABI ‘Welfare Reform for the 21st Century’ paper; ‘The UK welfare system is based on a fundamentally flawed assumption that households that will get little or no support from the state recognise this, and act to put in place their own safety net’.

Understanding the level of support you would receive from the state is confusing for some, impenetrable for others. It is affected by a number of factors including:

  • Previous earnings
  • Children
  • Home owner (including with mortgage) or renting
  • Other household earnings
  • Household savings

This confusion can lead to people not understanding the level of support they would receive, which can be significantly less than previous earnings.

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Our unparalleled team of friendly, expert advisers are on the end of the phone, ready to guide you easily through the whole process. They will get to know your unique individual requirements, do all the hard work comparing prices and policies for you; then advise on the best and most cost-effective quote.

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