Definitions: What is the difference between..

Orchid

I am totally confuse..

What is the difference between:-

(1) Accident, Sickness and Unemployment insurance (ASU) and
(2) Income Protection

Is it best to have both policies ?

I've had quotes for both (over £90 p.m. for Friends Provident & Norwich union for Income Protection and over £50 p.m. for Scottish Equitable for ASU)... I was shocked by how high the monthly premiums were even with a 6 months deferment for the Accident & Sickness part.

dunstonh

number 2 is actually called permanent health insurance. Income protection is the marketing name that is given to this by some insurance companies. Although some also call ASU "income protection" too just to confuse matters.

PHI does not include unemployment cover and is underwritten to your circumstances. It also has a longer payout period. For example, you can set the expiry date to be age 65. If you then make a claim at age 28, it will continue to pay out until age 65 if necessary. Whereas ASU has 12 months only usually (although some exist to 24 months).

You can reduce PHI premiums by shopping round (obvious i know but there are big differences in premiums across providers), altering the expiry age, going with a level plan instead of increasing or having a split plan (with 2 different deferment periods).

ASU is not underwritten to your circumstances and is a general insurance policy. This means that you could pay it for years only to find out that a claim gets rejected as it doesnt cover you. They can also alter the terms and premiums at given times which cannot be done with a PHI policy.

Orchid

Thank you dunstonh...exactly what I needed to understand.