Accident, sickness and unemployment cover is often considered by homeowners who want short-term financial security if their income stops. This guide explains how the policy works, how it links to mortgage affordability, and what borrowers should understand before choosing this kind of protection.

This type of cover provides short-term monthly payments if you cannot work due to illness, an accident or redundancy. It can support essential bills, including mortgage payments, for 12–18 months. Borrowers use it to maintain financial stability during unexpected income loss while meeting lender affordability expectations and protecting their credit profile.

Understanding the Basics of ASU Cover

What This Insurance Covers

• Accident-related income loss

• Sickness preventing you from working

• Redundancy in eligible employment situations

• Short-term protection (not long-term replacement income)

• Support with essential bills such as mortgage payments, utilities and transport

Statutory payments are limited, so this type of insurance provides an additional buffer to help meet financial commitments.

Mortgage Fundamentals You Must Understand

Affordability Checks

Lenders review:

• Income vs outgoings

• Stability of employment

• Existing credit commitmentsAny existing financial commitments, such as credit card or l...

• Household spending

• Future financial resilience

Credit Profile Expectations

• Clean repayment history

• Sensible credit utilisation

• Stable past borrowing behaviour

• No severe adverse credit unless using a specialist lender

Income Multiples

Most lenders offer 4–4.5× annual income, with up to 5–6× for strong applicants under specific criteria.

Stress Testing

Lenders check whether monthly payments remain affordable at higher future interest rates.

Deposit Rules

• Standard residential deposits: 5%–25%

• Buy to Let deposits: typically 20%–40%

Mortgage Product Options

• Fixed rate

• Tracker

• Discounted rate

• Offset mortgages

• Interest-only (with approved repayment strategy)

Buy to Let Considerations

• Rental income stress tests (125%–145% at a reference rate)

• Personal income and tax status

• Portfolio exposure and landlord experience

Full Mortgage Process

1. Initial fact-find

2. Affordability and credit assessment

3. Agreement in Principle

4. Property search

5. Full mortgage application

6. Valuation

7. Underwriting checks

8. Offer

9. CompletionThe point at which a property purchase is finalized and owne...

How Much ASU Cover Could You Receive?

Policies usually pay 50–65% of your gross monthly income, up to typical caps of around £1,500 per month, for 12–18 months. Payments can work alongside statutory sick pay or employer benefits to help stabilise household finances until you can return to work.

Is This Type of Cover Suitable for You?

It may be suitable if you want protection against short-term income shocks.

It is not designed for long-term illness or disability. Long-term needs may require income protection insurance, which offers extended cover until retirement age in some cases.

If unsure, professional advice helps compare both options.

When Can You Claim?

Policies include an excess (waiting period):

• 30 days

• 60 days

• 90 days

• 120 days

A longer excess typically lowers the premium. Some policies allow optional backdating so payments are made from the first day of your illness, accident or redundancy after the excess has passed.

Types of ASU Cover Available

1. Combined Cover

Pays a monthly amount for general bills, including mortgage payments.

2. Mortgage Payment Protection Insurance (MPPI)

Pays only the monthly mortgage amount.

3. Payment Protection Insurance (PPI)

Pays for income-related commitments only.

The right option depends on your household bills, employment benefits, and affordability risk.

Factors Affecting Cost

Premiums depend on:

• Age

• Occupation risk level

• Smoking status

• Required monthly payout

• Claim duration

• Deferment period

• Whether backdating is added

Eligibility Notes

• You cannot take a policy if already in a redundancy consultation period.

• Redundancy claims typically cannot be made within the first six months of the policy.

• Voluntary redundancy is not eligible.

Changes in Outgoings

Always update the insurer if bills increase or decrease.

• Increased bills = risk of underinsurance

• Decreased bills = risk of overpaying premiums

  Claims are assessed against provable monthly expenditure.

Self-Employed Applicants

Self-employed people are usually eligible only for accident and sickness benefits, not redundancy protection. Insurers require verified income and business accounts to assess claims.

How to Apply for This Type of Cover

Comparison websites provide basic options, but an adviser can analyse your circumstances, complete paperwork and recommend suitable solutions tailored to your financial goals and mortgage obligations.

Comparison Table

Simple Broker vs Direct Lender Table

Broker Positioning Paragraph

A whole-of-market adviser can compare numerous providers, assess your mortgage affordability position and recommend cover that fits your risks, budget and employment situation. They also streamline the process, prepare documents correctly and help you avoid unsuitable or restricted products that you may encounter when approaching a bank directly.

FAQs

1. How long does this type of policy usually pay out?

Typically 12–18 months, depending on your chosen policy.

2. Can it cover my full salary?

Most insurers cover a proportion of income, usually 50–65% up to a capped amount.

3. Does it apply to all types of redundancy?

No. Voluntary redundancy and redundancies within the first six months are usually excluded.

4. Is it the same as income protection?

No. Income protection is long-term cover, while ASU offers short-term support.

5. Can I rely on statutory payments instead?

Statutory benefits are limited and often insufficient to meet mortgage and household costs.

How-To Section (Suitable for HowTo Schema)

How to Seek Mortgage Advice

1. Gather details about income, spending and credit history.

2. Speak to a regulated adviser for initial guidance.

3. Discuss risks, goals and affordability.

How to Apply Through an Adviser

1. Adviser completes a full fact-find.

2. They research suitable options across the market.

3. You receive a personalised recommendation and breakdown.

4. Adviser submits the application and manages the process.

How to Prepare Your Documents

Prepare:

• Passport or driving licence

• Proof of addressEvidence of a borrower's current address, such as a utility ...

• Last 3–6 months’ bank statementsA record of a borrower's financial transactions often requir...

• Payslips or self-employed accounts

• Credit report from a UK credit reference agency