Accident, Illness and Redundancy cover

16 July 2008

I am now just over 26 weeks pregnant, so starting to think about all of the dull and boring things that would make my and my families lives easier in case of emergency.  My husband and I are in the process of making wills, have the drafts back and just need to get the documents witnessed.

The other 'gap' in our armour is the dreaded what would happen if either of us was unable to work for reasons such as accident, illness or redundancy.

In my case at the moment I am heading for maternity leave, planning to return full time after 6 months.  Husband will continue to work full time in this period and we shouldnt suffer too badly as a result.

We have around 2 months household outgoings saved for emergencies and are adding to this all the time. We'd like to get to 6 months in savings eventually but its taking quite a while to build up.

We have life insurance and critical illness cover so both our mortgages would be paid in full if either of us died, and we have the critical illness in case something dreadful happened.

But what would we do if we were temporarily out of work and we used up our savings?

I've been looking into accident, illness and redundancy insurance and the first thing I found was that

A) It doesnt tend to kick in for between 60 and 90 days into your period of you not being able to work.

B) It doesnt cover your entire outgoings only up to 60% of them. So you would probably be alright for mortgage and bills but its not going to cover your non-essential spending.

The cheapest I could find was around £25 a month and that would kick in after 90 days and last up to 1 year.

I am quite a cautious person so the idea of knowing we'd have some help towards the mortgage and bills in the case of emergency would be good, but what do other people think? 

The views I've seen expressed by Merryn Somerset Webb (my heroine) and various other financial journalists is that you might as well skip this cover and just put the premiums into your emergencies pot because you are only covered for a year in most cases and you may as well just keep building up your holdhouse savings pot and earning interest instead of paying some insurance companies Gilt investments.

Also, although Im planning to be off for that 6 months, at the moment and we could afford it for me to return to work full time and to pay nursery bills so the likelihood of both of us suddenly being struck down by illness or made redundant seems low. If one of us is working and we have the 6 months emergency money then we could manage without this insurance.

So Im not really sure what to decide. £25 a month is one trip to a mid range restaurant these days or a night down the local gastro pub. Not saying we do a lot of that at present as Im not drinking anyway but Im just illustrating that perhaps for the peace of mind it would offer I should set up a policy.!!!