What is Accident and Sickness cover?
Accident and Sickness cover is basically an insurance policy that will replace a percentage of your income should you be unable to work due to an illness or injury. Accident and Sickness cover is generally known as Mortgage Protection or Mortgage Payment Protection in the field of insurance companies.
Unfortunately, none of us are immune to either sickness or even an accident and if we were to suffer from either it could mean we are unable to continue doing our job for a period of time. During this time we may not be fortunate enough to continue to receive pay, especially if we are unable to carry out our job for an extended period of time. Surveys have shown that at any one time approximately an eighth of the working population are off work as a result of an accident or illness. These people will still have their monthly bills coming in and a lot of them will possibly have a family to support as well. However, based on the current working population approximately three million people are absent from work at any one time and yet only about 8 % of them will have taken out any form of insurance to cover such an eventuality.
The first and most common form of accident and sickness is known as Mortgage Protection or Mortgage Payment Protection and basically does as it says, protects your mortgage payments. Along with your monthly mortgage amount you can also cover other mortgage related payments. Such payments may include buildings and contents insurance as well as monthly premiums for other insurance policies that you may have taken out at the time of your mortgage to cover any unforeseen eventualities. For example: life insurance, critical illness cover and/or income protection. These can also be grouped into the overall monthly amount of cover required. In addition to this some insurance companies may allow you to have extra cover on top of the mortgage costs, normally about 33%. For example, if your mortgage and related costs came to £500 then some insurance companies may allow you to cover yourself for an extra 33% on top of this, ie: £800 per month. There are some companies that allow you 50% extra. However, any individuals benefit must not exceed 75% of their gross income.
The second and less common form of Accident and Sickness cover offered by some insurance companies is known as Income Protector. Income Protector is basically the same plan with the same rules as for Mortgage Payment Protection. However, the mortgage and related costs is not taken into consideration but a person’s income instead. Income protector allows an individual to cover up to 65% of their gross earnings. This could be more advantageous for someone with low mortgage costs and a higher level of income. For example, someone earning £50,000 per annum with a monthly mortgage of only £200 pounds would benefit more from Income Protector than Mortgage Protection should they suffer an illness or injury causing them to have a period of time off work with no pay.
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