Accident, sickness and unemployment insurance, as the name might suggest, provides you with a tax-free monthly income if you're unable to work as a result of accident, sickness or unemployment.

• You agree upfront how much income you will receive each month if you have to make a claim. This is usually a percentage of your salary.
• You also set how long you want to wait for the payment to start and how long you want to be covered for.

Pros

• The policy doesn’t end when you make an initial claim, you can make as many claims as you like.
• It will provide you with a tax free monthly income. 
• It’s entirely up to you how you spend the money.
• You can decide how long to wait before you start to receive your monthly payments (the deferred period). So if you have existing sick pay arrangements and other insurance policies to provide you with an immediate income, you may be able to wait longer and therefore you could pay less for your premiums.

Cons

• You will have to pay more for a higher level of cover and longer payment term. 
• To make a claim you need to have paid premiums for at least six weeks, and often companies will not pay out for the first month.
• Some policies might not pay out if you receive sick pay from your employer.
• The income you receive is normally only a percentage of your regular wage (generally up to 60% of your gross salary), however as this is not taxable under current UK tax rules, this could amount to approximately 80% of your take home pay.
• Payments are only made for a maximum of two years so you need to be sure this will be long enough.
  

If you are concerned about how you would pay your bills if you had an accident, were sick or out of work for any length of time then this type of plan could be for you.

This product is also suitable if you’re not entitled to sick pay at work, or you’re self-employed.

ASU policies are fairly widely available and it’s likely you’ll be offered one if you take on any new debts including mortgages. If you want to research the market for yourself, look at insurance companies, banks, building societies and other financial companies. You can usually buy direct through the internet or over the phone, or you can speak to a financial adviser.

Think about it – Make sure you’ve thought carefully about what you want and taken into consideration any cover you already have or cover you are entitled to from your employer. You don’t want to be paying for more cover than you need.

Check the small print – Make sure you understand what is and isn’t covered as these can vary from company to company.

Consider all your options – Ask what’s available and make sure you understand all the extra options.

Shop around – Different companies offer different levels of cover at different prices. Make sure you shop around and that the cover you choose is the most appropriate for your needs and circumstances.

If unsure, get advice – If you’re unsure of what to do next, speak to a financial adviser who will be able to help you make the right choice.