REDUNDANCY INSURANCE PROTECTION
Redundancy & Unemployment Protection Insurance - Key Features
"Finding the Right New Job ~ In Todays Economic Climate ~ is a Job in Itself"
A Redundancy Insurance policy is designed to protect your annual salary or monthly income against redundancy, unemployment or loss of work - usually taken out against finance such as mortgage, loan, credit card etc; Why do I need redundancy protection? - because in today's economic climate - finding the Right New Job ~ is a Job in itself. It could take you far longer than you maybe thought.
Also known as Unemployment Insurance, Accident Sickness & Unemployment Cover, ASU Insurance Cover, Redundancy Protection Cover, Sickness Redundancy Insurance, Redundancy Income Protection, Payment Protection Insurance, MPPI, PPI cover; Note, We can only offer products from a limited number of insurers for this type of cover.
- On Redundancy, benefits are payable monthly usually after 1 month for 12 or 24 months
- Payable until a return to work or the ceasing date
- Benefits are paid usually 1/30th of your Monthly Benefit
- Premiums payable monthly or by single premium
- You may have to wait for 60-120 days before Unemployment Cover plan benefits apply
- Plans may cover payments upto 150% of mortgage with maximum benefits of £1,000pm - £3,000pm or 75% of your monthly earned income before tax
- Some plans are not linked to a mortgage but maybe limited to 50% of gross salary payout
- A claim maybe successful if you have been made redundant involuntarily
- Waiting Period upon claim usually 31, 61 or 91 days as applicable
- Ability for extra premium cost to have Back to Day 1 cover - but still usually paid after 30 days
- If you opt for voluntary redundancy, you resign or you're dismissed, you may not be covered
- During the time you're claiming, you must also be available and actively seeking work
- Designed to usually cover a mortgage, loan, credit card or other finance over the term
- Can be in sole, joint cover or 2 separate names
- Unemployment benefits are currently paid out tax free
- Payments will stop when you return to work
- Some plans may ask that you can carry on paying the premiums for cover to continue during a claim - others have a premium waiver option either built or payable as an extra benefit
- If you are a Shareholding Director & own more than 10% of the issued share capital of the business that you work in - you will usually only be insured if your business ceases to trade.
- If you are a Proprietor who wholly or partially owns the business (other than as a shareholder) that you work in - you will usually only be insured if your business ceases to trade.
- Redundancy plans usually have no surrender cash in value at any time.
- Often linked to accident or sickness insurance plans - although can be taken as seperate benefits
- Evidence may be required to confirm that you are not under threat of loss of employment
- Premiums may be guaranteed or reviewable annually
Note: Accident & Sickness cover element of the ASU plan should also be compared also with income protection insurance that covers your salary for potentially longer term and with full underwriting terms than just basic ASU cover.
FOR PROTECTION PRODUCTS WE USUALLY OFFER FROM A RANGE OF PROVIDERS
The following benefits are typical for some types of UK Redundancy Insurance Cover:
Mortgage Unemployment Insurance
This mortgage protection unemployment insurance covers your monthly mortgage repayments for a set period of time. The maximum number of monthly repayments that the insurance company will make is usually 12, but it can sometimes be 24. This means that after this period you will have to pay your monthly mortgage repayments yourself.
Loan Protection Unemployment Insurance
This insurance will cover your monthly repayments for the loan - generally for 12 or 24 months. After this period you will have to pay your monthly loan repayments yourself.
If the insurance for any of these products contains life cover or critical illness insurance, then the cover will usually pay off the balance of the debt covered if you die or are critically ill. If the claim is for disability, the monthly repayments may be paid to the end of the life of the loan.
Read the Key Features - with any Redundancy Cover Policy
This sets out, amongst other things, the main features and benefits of the policy as well as any significant or unusual exclusions and how long the cover lasts. For Broker help & advice > click here
How much will it cost?
Finding policies that only covers redundancy becomes harder if the economy bites. Often the policy will combine accident, sickness and unemployment into one plan.
Remember interest rates and APRs for mortgages, loans and credit/store cards do not usually include the cost of the Redundancy, Accident or Sickness plans, so comparing interest rates on their own will not be helpful if you are intent on taking out ASU cover.
You can pay by a single upfront premium, or regular monthly premiums. The single premium can be added to your finance, thereby increasing what you borrow. A regular premium is a set amount you pay each month. If you take out a single premium plan - bear in mind that, as it's normally added to your finance, you're probably being charged interest on that as well - so will probably not be good value !
Do I need Redundancy Insurance Cover ?
There is no legal requirement to have this cover, yet with economic hardship & the credit crunch many people are naturally concerned about their personal situation. Consider the following issues
* Would you get a redundancy lump sum ?
In the event of unemployment, if you'd get a big payout for long service, the unemployment element of the redundancy insurance policy maybe unnecessary.
* Have you got sufficient savings ?
Redundancy Insurance plans may only lasts a year [ some may be 2 years] , so the maximum payout is twelve times your repayments. If you can cover this from your savings anyway, there's maybe less of a need to spend on this type of policy.
What does Redundancy Insurance Protection generally exclude ?
Like all insurance, Unemployment policies will generally include a number of exclusions or conditions that will prevent you from claiming on the policy. Make sure you understand what is or is not covered - see below. Also, you may not be eligible to take out an uk unemployement insurance policy in the first place - say, if you:
- Under 18 or over 65 at outset
- Plans may also stop if you give up work, repay your mortgage in full, reach age 65 or you die;
- You haven't been in continuous employment for at least 6 months, prior to the insurance starting
- Work less than 16 hours a week
- Employed on a temporary or contract basis;
- If self employed you are aware of impending insolvency, bankruptcy
- Are aware you may become unemployed;
- During the first 60 or 90 days of the plan starting
- If you take out sickness cover also - you have an existing illness; or
- Have stress, depression or back problems
- Redundancy occurs as a result of dismissal due to misconduct, a breach of your contract or you commited a criminal offence.
- Payout if you have multiple occupations & loose income on just one job
- You fail any initial probationary periods
- You are away from the European Union (EU) for a period usually more than 90 day
- Your receiving payment in lieu of notice
If in any doubt, ask the adviser to explain any parts of the policy that you may not be able to claim on (the exclusions and eligibility conditions). Be sure you understand the exclusions before you buy the redundancy cover insurance.
If you have large financial committments & don't take out an employment insurance plan, think about how you would pay the loan, mortgage or credit/store card payments if you were unable to work or became unemployed.