Does Income Protection Cover Redundancy?

Standard income protection does NOT cover redundancy or job loss - it only covers inability to work due to illness or injury. For redundancy protection, you need Accident, Sickness & Unemployment (ASU) insurance or specific redundancy cover. ASU policies cover all three scenarios but are more expensive and typically pay for 12-24 months maximum.

Does income protection cover redundancy?

Standard income protection does NOT cover redundancy - it only covers illness and injury. For redundancy cover, you need a separate policy called Accident, Sickness & Unemployment (ASU) insurance or specific redundancy insurance.

What is ASU insurance?

ASU (Accident, Sickness & Unemployment) insurance covers you if you can't work due to accident, sickness, OR involuntary redundancy. It's typically short-term cover (12-24 months) and more expensive than standard income protection.

Can I add redundancy cover to income protection?

Some insurers offer redundancy as an add-on to income protection, but most keep them separate. Adding redundancy significantly increases premiums. Check if the policy covers voluntary redundancy (usually not).

How much does redundancy insurance cost?

Redundancy insurance typically costs £15-40 per month depending on your income and benefit level. It's more expensive than standard income protection due to higher claim rates.

What's the difference between income protection and redundancy insurance?

Income protection covers illness/injury only and pays until recovery. Redundancy insurance covers job loss and typically pays for 12-24 months maximum. Many people have both for complete protection.

Is there a waiting period for redundancy cover?

Yes, most redundancy policies have a waiting period of 30-90 days before you can claim. There's also typically a qualifying period of 90-180 days before you're covered at all (to prevent immediate claims).

Quick Answer

Income Protection with Redundancy Cover

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Standard income protection doesn't cover redundancy. You need ASU (Accident, Sickness & Unemployment) insurance for job loss. ASU covers illness + redundancy but pays max 12-24 months.

Many people assume income protection covers redundancy, but standard policies only pay if you can't work due to illness or injury. If you're concerned about job security as well as health, you have two main options: take out separate redundancy insurance, or get an ASU policy that combines accident, sickness, and unemployment cover.

Cover is subject to policy terms. Pre-existing conditions and voluntary redundancy are typically excluded.

Key Points

1Standard income protection = illness/injury only
2Redundancy needs separate ASU or redundancy policy
3ASU covers accident + sickness + unemployment
4Redundancy cover typically 12-24 months max
5Qualifying period before you can claim
6More expensive than standard income protection

Eligibility Criteria

Must be employed (not self-employed for redundancy)
Permanent or long-term contract
Not already under notice of redundancy
Minimum employment period (often 6 months)
Involuntary redundancy only (not voluntary)

Typical Timeframe

Redundancy policies typically have a 90-180 day qualifying period before cover starts, then a 30-90 day waiting period before claims pay out.

Next Steps

1Decide if you need illness cover, redundancy cover, or both
2Compare ASU vs separate policies
3Check qualifying and waiting periods
4Review what counts as 'redundancy'
5Get quotes from specialist providers

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Income Protection with Redundancy Cover

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

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