Prices are rising faster now than at any time in the past 16 years. This will be the fastest price spiral since many people first started working. But even though it might be a new phenomenon for many, its effects have already hit the pockets of income-earners very hard. If it is increasingly difficult to make ends meet at the moment, however, it hardly bears thinking about how many would manage if further disaster struck in the shape of enforced redundancy. Little wonder, therefore, that more and more people are looking to redundancy protection.

In the middle of October 2008, the national press reported official government figures showing that inflation in September had reached 5.2%, principally as a result of swingeing annual increases in average electricity and gas prices of 30.3% and 49.9% respectively. Together with across the board increases in the cost of food, this has pushed overall inflation higher than at any time since July 1991.

What this means, of course, is that household budgets have become desperately difficult to manage – and, in the event of the principal breadwinner’s redundancy, well nigh impossible. With the sudden and unexpected loss of an income, the bills begin to pile up, repayments of debts are delayed or missed altogether, and the credit rating takes a such a hammering that credit in future will be difficult to secure and extremely expensive. In the worst case, of course, missed mortgage repayments could lead to repossession of the home.

Redundancy protection, however, offers just that – the protection of a replacement income if the policy holder loses his or her job through no fault of their own. It is paid monthly – just like a normal salary – and can generally be arranged to maintain up to 50% of a regularly-earned income or £1,000, whichever is less (with the actual limits varying from insurer to insurer). If the decision is taken at outset that the most important monthly outgoing that needs to be protected is the mortgage, then redundancy protection can take the form of unemployment mortgage payment protection insurance. In this case, a large proportion of the mortgage repayments can be secured, in the event of redundancy, with the monthly insurance payout going directly to the mortgage lender. With this type of policy, maximum cover is typically set at 65% of the mortgage repayments (including related life and home insurance premiums) or £3,000, whichever is less – but once again the actual limits will depend on the particular policy chosen.

For all forms of redundancy protection, one of the country’s leading independent providers is British Insurance, whose managing director, Simon Burgess, comments: “redundancy protection is like a lot of insurance – you don’t realise how important it is until you really need it. Given the present state of the economy, literally millions of people could potentially thank their lucky stars that they had the foresight to prepare for an unwelcome spell of unemployment. For such policy holders, the modestly-priced monthly premiums will have seemed like a drop in the ocean compared to the benefits such cover can bring”.

Most people would want to cover redundancy in some way. Look through the financial pages of just about any newspaper these days and there will be confirmation enough of the forecast 2 million of the nation’s workers on the dole before the end of 2008. Swathes of jobs in the finance sector, of course, are already on the line; but falling sales in the retail sector have led to many shops opening later and closing earlier in an attempt to cut costs; car assembly plants are introducing four-day working weeks; as prices force more and more people to stay at home, up to 30 international airlines are reputed to be close to bankruptcy; and those in the most vulnerable private sector jobs are complaining that the public sector should not be immune from redundancies.

As the recessionary tide bites further and further into the “real” – as opposed to financial economy – job losses are unlikely to halt at the 2-million plateau, but will probably continue to rise well into the following year. It is a grim picture in which very few jobs can be counted on as entirely secure and most people will want to consider ways in which they can cover redundancy with an appropriate level of insurance.

There is never a good time to be made redundant, of course, but in the present climate, when rapidly escalating prices have already emasculated most households’ savings, it couldn’t be worse. No work means no pay. Yet the household bills will still need paying. That is why it is important to have insurance that provides redundancy cover.

This insurance – one variant of the collection of policies commonly named payment protection insurance – operates very simply: if the policy holder should become involuntarily unemployed or made compulsorily redundant, the policy pays out an agreed monthly benefit. This can be any percentage of the policy holder’s normally earned salary, up to a typical maximum of 50% or £1,000 a month, depending on which is the lower sum, although these limits will vary from insurer to insurer. Since the intention is to cover redundancy for a relatively temporary period (until alternative employment is found) the benefit payments are generally limited to a maximum of 12 months, although a 24-month maximum is also available for those who want a longer period of security and who are prepared to pay a higher premium.

Such redundancy cover is frequently packaged together with protection against loss of earnings through accidents or illness – when it is arranged as a combined accident, sickness and unemployment (or simply ASU) insurance.

One of the leading providers of these types of policy in the UK is British Insurance, whose managing director, Simon Burgess, says: “given the current plight of the world economy and the inevitable problems that are being stored up as companies and businesses – of all sizes and across all sectors – struggle to contain costs, we will be seeing a return to fairly widespread unemployment. Anyone in work at the moment will want to safeguard the future and ensure that the family’s income stream is maintained by acting now to cover redundancy”.

However “safe” you might have considered your job, the sad fact is that there is a greater chance of being made redundant than of winning the lottery. So, when that fickle finger of fate points down from the sky to mark you out – for an unwelcome stroke of unemployment – it really is a sensible precaution to have taken out some redundancy insurance.

Although the dramatic near-meltdown of financial markets during October of 2008 filled our television screens and newspapers, there was a certain unreality to it all – unless your job happened to be in the finance sector, of course – and a sense that it somehow left little mark on ordinary, day to day events. Make no doubt about it, however, the reality will sooner or later hit every aspect of life.

The unfortunate jobless will not be restricted to those City employees who have naturally borne the brunt of the recent crisis, but will inevitably spread out into what is being termed the “real” economy, too. Banks lack the funds to extend credit and customers lack the cash to engage in the retail market, thus leaving many small businesses finding it difficult to prosper. The Guardian newspaper, for example, reported on 12th October 2008 that the country can expect some 2 million people to be on the dole by November, bringing unseasonable grief to many over Christmas and the New Year.

So, if the prospect of redundancy looms ever nearer for many people, what safeguards can be taken now? Redundancy insurance is a ready and widely-available solution to suit practically anyone who currently has a regular job. In return for a modest monthly premium, it is possible to select what level of replacement income would be necessary if and when unemployment strikes and then if the worst should happen, the policy will pay out a regular monthly benefit until such time as the policy holder has found another job or for up to a maximum period of time (generally 12 months, but 24-month payout periods are also available at an enhanced premium rate).

Because this kind of redundancy insurance – one of the types of insurance collectively known as payment protection insurance – is designed to offer temporary, short- to medium-term protection (i.e. until an alternative job is found), it is not necessary to insure the whole of one’s normally earned salary and, indeed, the maximum percentage that can typically be covered is 50% or £1,000 a month, whichever is the lower sum (policies vary from insurer to insurer, of course, as will these limits).

One of the leading independent specialists in redundancy insurance is British Insurance, whose managing director, Simon Burgess, explains: “no one knows if or when their job might come to an end during these fairly tumultuous economic times. Putting it bluntly, it’s something of a lottery. But it could so easily be you! The smart money, therefore, is one those who make the very modest investment now in purchasing the peace of mind that redundancy insurance can bring”.

Payment protection insurance of all kinds has come in for quite a drubbing from many quarters of the financial press, so many people could be forgiven for thinking that unemployment income protection insurance is something to steer well clear of.

The steadily lengthening roll-call of institutions penalised by industry regulators for mis-selling payment protection insurance is certainly enough to ring alarm bells for most consumers. The size of some of those penalties goes some small way to suggesting just how serious the problem has been. At the beginning of October 2008, for example, the heftiest fine yet – some £7 million – was imposed on leading high street bank Alliance and Leicester for what the Financial Services Authority described as the “most serious mis-selling” of payment protection insurance.

Although such criticisms have been circulating for several years now, the bank continued to give its customers the impression that payment protection insurance was somehow “obligatory” and unfairly pressurised customers into buying it. This was the same unfair practice that landed HFC Bank (a subsidiary of HSBC) a £1.09 million fine in January of 2008.

Despite 18 months now of formal investigation by the Competition Commission and the latter’s constant warnings to the banking industry, the Consumer Association continues to receive more than 1,000 complaints every month about payment protection insurance policies being brazenly mis-sold.

All in all, it’s enough to make anyone think twice about buying unemployment income protection insurance. But it is certainly is worth giving it a second thought. Whilst the big banks and building societies have been selling such insurance with almost complete disregard for their customers needs, some of the independent insurance providers have been acting with all due integrity in ensuring that the cover supplied meets the consumers’ needs exactly.

One such provider is British Insurance, whose managing director, Simon Burgess, comments: “despite the best efforts of the big banks and building societies to give income payment protection insurance a bad name, we’ve been steadily working away to ensure that this extremely useful product is put properly into the hands of those who most need it – and at a time when almost no job can be relied on as being completely safe from the prospect of redundancy, we’re more than ever concerned to offer unemployment income protection insurance to a wide cross-section of buyers”.

Unemployment income protection insurance works in a very simple way: if the policy holder becomes unemployed through no fault of his or her own, the insurance pays out a monthly benefit that can be used as a replacement income until a return to work – or for up to a maximum of 12 months (24 months if the policy holder chooses to pay somewhat more expensive premiums). The level of cover is chosen from the outset and there is typically a maximum of ceiling of 50% of the policy holder’s normal income from his or her existing employment or £1,000, whichever is the lower figure (although the actual limits will vary from policy to policy).

The government has recently confessed that it can do nothing to save individual jobs and there is precious little the employee him or herself can do to avoid a compulsory redundancy. So is there anything at all that can be seen as effective unemployment protection?

Government minister, James Purnell, the Works and Pensions Secretary, is on record as saying that “we cannot protect each and every job, (but) we will do whatever we can to help people prepare for and find the next job” (the Telegraph, 9 October 2008). This is all very well, of course, and it remains to be seen just how effective that assistance with preparing for and finding the next job might be – but what about the lost income between losing one job and securing the next? This, after all, is what unemployment protection is really about.

Unemployment protection you can count on – in the form of income payment protection insurance – is the sure-fire way of ensuring that a replacement income can be preserved even when the policy holder is made compulsorily redundant. “No more than the government can this type of insurance actually save a job that’s lost to economic recession” says Simon Burgess of one of the leading providers of protection insurance, British Insurance “but it certainly delivers the goods when it come to providing a viable replacement income if unemployment should strike”.

Depending on the insurer chosen, it is usually possible to guarantee up to 50% of an individual’s normal earned income, or £1,000 a month, whichever is lower. The policy will then continue to pay the replacement monthly income until the policy holder is able to secure alternative employment and return to work, or failing that, for up to a maximum period that is typically set at 12 months. Some policies will guarantee payments for up to 24 months, although for these benefits the monthly premiums will of course cost rather more.

This kind of unemployment protection is available – at a very modest price – to practically anyone currently with a steady job and is not presently under notice of redundancy. Both the employed and self-employed are elgible, as are homeowners and tenants, young and old. Indeed, some policies even have “age-related” premium scales which recognise that younger people are statistically more likely to find alternative employment in the face of reundancy more quickly than their older colleagues. As a result, therefore, premiums for those in their twenties can be up to half the price than those paid by individuals in their forties or fifties.

If there is one thing certain about the immediate future, it is that troubled and uncertain economic times will be around for some time yet. As the recession continues to bite, it seems inevitable that more and more people will be given redundancy notices as their employers struggle to manage overhead costs. Although no one can prevent such redundnacies taking place, unemployment protection is neverthless available and will provide a much-needed financial cushion between the last pay cheque from a former employer until the next one from the new job.

As the country slides ever more certainly towards an indeterminately lengthy recession, most analysts predict that the nation’s total unemployed figure will pass the 2 million mark before the end of this year. Quite how many jobs will be affected, of course, remains to be seen, but recent press reports – The Guardian on 14th September 2008, for instance – have suggested that up to a further 500,000 jobs could be axed during the coming two years. It’s not surprising, therefore, that many employees are running for unemployment cover.

How are they taking cover? They are taking the simple and extremely cost-effective expedient of purchasing redundancy protection by way of income payment protection insurance. This is a very popular and widely-sold form of insurance which pays out a predetermined replacement monthly income in the event of the policy holder being made involuntarily unemployed.

It is frequently packaged together with accident and sickness insurance, which pays out the same benefits if the policy holder needs to take time off work because of an accident or ill-health. However, it is just as easy to buy the unemployment cover as a standalone policy and reduce the premiums otherwise payable for the combined insurance by roughly 50%. This makes unemployment cover a particularly affordable option.

Not only cheap, it works in an especially simple way too. If the policy holder is made compulsorily redundant, there follows a reasonable “qualifying period” to establish whether or not this is likely to incur financial loss. The qualifying period can be as short as 30 days under some policies or as relatively long as 90 days under others. Once the qualifying period has been passed, however, the cover’s benefits become payable. With the best of the policies, these benefits are then backdated to the first day on which the policy holder was out of work; with others, the qualifying period is regarded as an effective policy excess and the benefits become payable from the first day immediately following that period.

The actual amount of unemployment cover can be tailored to suit the individual policy holder’s needs (and pocket), depending on the level of replacement income likely to be needed. In most cases, the maximum will be limited to 50% of the normally earned salary or £1,000, whichever is the lower amount, although these limits will of course vary from insurer to insurer. Depending on the policy chosen, the insured benefits will then be payable for a maximum period of 12 months (with an option of increasing this to up to 24 months with the more expensive types of policy), but either way, for a period almost certain to cover the time taken to find and secure alternative employment.

One of the market leaders in the provision of such unemployment cover is a company called British Insurance. Their managing director, Simon Burgess, says: “the economic future for this country looks pretty bleak and there will be hundreds of thousands of casualties amongst those who lose their jobs as a result of the recession. It makes a great deal of sense to prepare for the worst now by taking out some affordable unemployment cover“.

It’s official, a member of the government has confirmed the bleak news that recession is inevitable and, with it, the almost certain loss of hundreds of thousand more jobs (according to a report in the Telegraph newspaper on 9 October 2008). Add to this the threats to the continuity of income to those who manage to keep their jobs yet fall victim of accidents and sickness and need to take time off work, and it is understandable that more and more people are turning to accident sickness unemployment insurance – or simply ASU insurance as it is popularly known.

“No one knows when their income is going to be disrupted by an accident or illness, or – given the gloomy recessionary times ahead – be out of a job altogether” says Simon Burgess of independent providers of accident sickness and unemployment insurance, British Insurance, “so there’s no time like the present to be forearmed with adequate ASU insurance”.

This is a type of insurance that protects against the three most common causes of sudden and unexpected financial difficulty. It can only take a few months off work, nursing an illness, recovering from an accident or having to look for alternative employment, before the bills start piling up and it becomes more difficult than ever to make ends meet. Defaulting on the payments when they fall due can, of course, lead to the kind of adverse credit reports which store up even more problems in obtaining credit in the future, or, in the case of mortgage repayments, can even lead to the repossession of the home.

One of the beauties of accident sickness unemployment insurance is that it is sufficiently flexible to suit almost any personal circumstances – young or old, owner-occupier or tenant, employed or self-employed – and the premiums can be tailored to suit practically any pocket. Naturally, the size of the monthly premiums will determine the level of cover offered. This can range from a relatively modest percentage of the individual’s normal working salary, right up to a typical maximum of 50% of normal earnings or £1,000 a month, whichever is lower (although the precise limits will vary from insurer to insurer).

In the event of a claim arising from the policy holder’s absence from work following an accident or in order to recover from an illness, or if the policy holder has been made involuntarily unemployed, the insurance will then pay out a monthly replacement income as agreed at the outset.

Since this accident sickness unemployment insurance is designed to provide immediate and temporary relief from the most common occurrences of interrupted pay, the benefits payable are usually limited to a maximum of 12 months – generally quite long enough for most people to recover from a temporary incapacity or to secure alternative employment – although there are policies available (at a higher premium) that extend this maximum to 24 months.

Given the present state of the economy, it would seem that anyone in work can count themselves fortunate to have the wherewithal to pay all the household bills. Nevertheless, fate has a way of opening up unexpected pitfalls even for the lucky ones, who can be deprived of their hard-earned monthly income in the event of an accident, or illness, or even a notice of redundancy. To cover those risks, accident sickness redundancy insurance is many by many as an indispensable safeguard.

The risks are certainly real enough. A report in the Telegraph newspaper on 9 October 2008 quoted the Work and Pensions Secretary, James Purnell, as warning that the government had put in place contingency plans to deal with widespread unemployment in Britain, but that no one should count on the government actually to save threatened jobs. As the country slides inevitably towards recession, therefore, the spectre of unemployment seems to have opened up a very real chasm for many workers.

But even if the fickle hand of fate fails to deal a body blow in terms of redundancy, there are still other ways the hard working employee can find his or her regular income disrupted. Having successfully dodged the slings and arrows of an outrageous economic climate, the poor employee might still fall prey to an accident or suffer an illness that keeps him or her off work for a month or more. Indeed, some recent research suggests that as many as one in eight of the population have lost income from work as a result of accidents and illnesses. The average individual shortfall from such periods of absence has been the smarting sum of £5,320 no less.

So the pitfalls are certainly out there and will trap the unwary. The more careful employee, however, will make certain to be adequately insured against such risks with accident sickness redundancy insurance. This is a simple and cheap way of ensuring that even when the miserably unexpected happens, there is still a reasonable replacement income coming in with which to pay the bills.

Policies vary, of course, but typical accident sickness redundancy cover can be arranged to provide a replacement income of up to 50% of the policy holder’s normal, earned income or £1,000 a month, whichever is less. Most policies will pay out such benefits for up to 12 months (the more expensive policies up to 24 months) or until the policy holder is fit enough to resume work, whichever comes sooner.

As Simon Burgess, of British Insurance one of the leading independent providers dealing in this kind of specialist insurance puts it: “whether it’s the result of the deepening recession or good old-fashioned injury or illness, the loss of a regular income can deal a crippling blow to many a household. Now more than ever before, to take the precaution of accident sickness redundancy insurance makes a great deal of sense”.

It’s bad news when an accident or illness keeps you off work. It’s even worse news if the time at home has you worrying not only about recovering from injuries or sickness but also about how the bills are going to get paid. For many people, of course, such time off work means time off without pay – and it is then that accident sickness insurance can come to the rescue.

The statistics are really quite sobering. According to a survey published in an on-line finance blog dated 18 August 2008, an eighth of the population evidently suffered a loss of earned income by having to take time off work because of an illness or injury. They sustained losses of an average £5,320 per person, with 34% taking off more than a week, 58% more than a month and 17% still off work after a year.

In the same survey, respondents were asked where they would find the money to pay the bills if nothing was forthcoming from their employer during their time off. 23% replied that they would borrow the money from friends or family; 11% said they would need to arrange a loan; 5% replied that they would simply put off making large repayments like the mortgage; and only 8% revealed that they had taken the precaution of arranging accident sickness insurance.

Those that confessed that they would probably default on their mortgage repayments are of course storing up serious problems for the future. Missed mortgage payments have an immediate and profound on the individual’s credit rating, making future borrowing both more difficult and expensive, and can ultimately lead to the mortgage lender repossessing the home. Those who borrow the money – even on an interest-free basis from friends or family – will still need to repay it when they finally return to work and with an average of £5,320 borrowed, this is clearly a mammoth burden.

How much more peace of mind will be enjoyed, therefore, by the prudent 8% who had the foresight to arrange accident sickness insurance. This modestly-priced insurance provides a replacement monthly income in the event of time off work through accident or illness that lasts longer than an agreed “qualifying period” – with the best forms of cover (that offered by independent insurance specialists British Insurance, for example) this can be as short a period as 30 days, but with other policies might be as long as 90 days. The benefits are then paid directly to the policy holder each month and can be used to ensure that none of the bills goes unpaid.

The amount of accident sickness insurance cover needed will, of course, depend on the individual’s personal circumstances, but the maximum available is typically 50% of the policy holder’s normal, earned income or £1,000, whichever is the lower figure. Once again, however, these limits will vary from insurer to insurer.

The government has recently confessed that it can do nothing to save individual jobs and there is precious little the employee him or herself can do to avoid a compulsory redundancy. So is there anything at all that can be seen as effective unemployment protection?

Government minister, James Purnell, the Works and Pensions Secretary, is on record as saying that “we cannot protect each and every job, (but) we will do whatever we can to help people prepare for and find the next job” (the Telegraph, 9 October 2008). This is all very well, of course, and it remains to be seen just how effective that assistance with preparing for and finding the next job might be – but what about the lost income between losing one job and securing the next? This, after all, is what unemployment protection is really about.

Unemployment protection you can count on – in the form of income payment protection insurance – is the sure-fire way of ensuring that a replacement income can be preserved even when the policy holder is made compulsorily redundant. “No more than the government can this type of insurance actually save a job that’s lost to economic recession” says Simon Burgess of one of the leading providers of protection insurance, British Insurance “but it certainly delivers the goods when it come to providing a viable replacement income if unemployment should strike”.

Depending on the insurer chosen, it is usually possible to guarantee up to 50% of an individual’s normal earned income, or £1,000 a month, whichever is lower. The policy will then continue to pay the replacement monthly income until the policy holder is able to secure alternative employment and return to work, or failing that, for up to a maximum period that is typically set at 12 months. Some policies will guarantee payments for up to 24 months, although for these benefits the monthly premiums will of course cost rather more.

This kind of unemployment protection is available – at a very modest price – to practically anyone currently with a steady job and is not presently under notice of redundancy. Both the employed and self-employed are elgible, as are homeowners and tenants, young and old. Indeed, some policies even have “age-related” premium scales which recognise that younger people are statistically more likely to find alternative employment in the face of reundancy more quickly than their older colleagues. As a result, therefore, premiums for those in their twenties can be up to half the price than those paid by individuals in their forties or fifties.

If there is one thing certain about the immediate future, it is that troubled and uncertain economic times will be around for some time yet. As the recession continues to bite, it seems inevitable that more and more people will be given redundancy notices as their employers struggle to manage overhead costs. Although no one can prevent such redundnacies taking place, unemployment protection is neverthless available and will provide a much-needed financial cushion between the last pay cheque from a former employer until the next one from the new job.