You can choose to cover redundancy in the forms of mortgage, income or loan cover. Of course the type of policy you would choose would reflect on the payments and outgoings you have each month. For example if you were to have mortgage repayments that you need to maintain then you could take out mortgage payment protection. Should you have loan repayments to maintain from either a secured or unsecured loan then you could choose to take out loan payment protection. If your utility bills and rent are your main cause of concern then income cover could be more suitable.

Once you have chosen which form of insurance would be the most suitable you would then have to decide how much of your monthly income or your loan/mortgage repayments you want to insure. The provider will set a maximum amount that you would be able to insure up to so they will have to pre-agree to your chosen amount. The amount chosen and pre-agreed is the money that you get back each month for the term; tax free, should a claim have to be made due to unemployment. Some providers ask that you wait for up to 30 days before claiming while others could ask you wait for 90 days. Some will also date back your benefit to the first day that you became unemployed. Your benefit could continue for a period of 12 months or some providers may pay out for as long as the 24th month.

As the terms of the redundancy cover do differ greatly it is essential that you check the policy before you take on any form of cover. 90 days can be a long time to wait and it can be very stressful as you could be in mortgage arrears or loan debt by this time of 3 months. You also have to be aware that you would need to pay out more in premiums each month if you take on redundancy insurance that would continue to provide your income for 24 months. However also bear in mind that all policies will cease if you have to claim on it for up to its term.
Being able to cover redundancy alone is great, however you could want insurance against incapacity too and if you pay a little more in premiums each month you could have. In this case you could make a claim if you suffered from either of these events. Some providers will also include carer cover in the policy so you would have to check this in the terms. Carer cover can give enormous peace of mind as if one of your close family members were to become incapacitated you would be able to take the time off work to take care of them and your policy would pay your income. You would not have to worry where to get money from each month towards your repayments or outgoings and not have to pay to have a stranger come into the home to care for your loved one.

Imagine for a second how you would manage to continue meeting the demands of your repayments if you were to become a victim of redundancy. If you have the commitment of a mortgage then it is essential to keep up with your monthly repayments or risk losing your home to mortgage arrears. If you have loan repayments to maintain then you would have to face the consequences of missed payments which vary depending on the type of loan you have committed to. Of course there would also be all your essential repayments to maintain such as your utility bills and the monthly food bill. When choosing to cover redundancy with protection you would not have to worry about where to find the bulk of the money to continue meeting these repayments as the policy would provide a substantial sum towards meeting them.

When you wish to cover redundancy you can choose your provider and by doing so you can compare the cost of insurance to ensure that you get the best deal possible for your needs. You would have a great deal of choice with a standalone provider such as being able to choose the amount of your income of repayments you wanted to protect. Of course there would be a limit to this amount as it is the amount that you would receive back each month if you were to become unemployed. The tax free payments would last for a certain period of time and then cease which would generally be either 12 months or 24 months. You would also need to wait for a period of time before making your claim and again this would depend on your chosen provider. Some will ask you are unemployed for a period of 30 days and others could ask you wait until 90 days before making your claim.

Income payment protection is one of the most versatile ways of taking out protection against unemployment. The income the policy provided could be spread out as you wanted to cover any essential repayments that came into the home. You would be able to use it just as you did your own income. Loan cover taken to cover redundancy would give you peace of mind that you had a substantial sum of money coming into the home each month towards servicing your loan repayments. If you are able to maintain your loan repayments your credit rating would remain intact which is essential if you want to borrow again in the future. Mortgage repayments can be maintained with the help of mortgage payments protection and this could ease your worries of having your home repossessed. Just a few months of mortgage arrears can lead to the lender taking you to court which of course could mean repossession.

Have you thought of how to cover redundancy if it should happen to you with very little warning? If you are considering being able to turn to savings to continue meeting your outgoings then you should think again as they could run out before you found work. Similarly if you were hoping to be able to claim an income for the State to maintain them then again you could be let down, as even if you should receive an income it might not match the one you used to bring home. A good possibility to protect against redundancy is payment protection insurance.

Payment protection insurance to cover redundancy can be taken with an independent payment protection specialist. You have the choice of protecting your mortgage or loan repayments or your essential outgoings. Whichever form of cover you choose you would have to decide how much of your loan or mortgage repayments or monthly income you want to cover. Of course this amount would have to be pre-agreed by the provider as it would be the amount they pay back to you should you become a victim. There will be a deferment period which you will have to be unemployed before claiming on the insurance and this is usually between days 30 and 90. Following the onset of your claim you then have either 12 months or 24 months in which to have made a recovery before the protection ceases.

The income supplied from mortgage cover for example would be used towards you being able to maintain your monthly mortgage repayments. This would give peace of mind and security that you would not fall into arrears and be at risk of the lender taking your home by way of repossession. Repossession of course would mean that you have to move out of your home and leave everything behind.

Loan repayments could be secured the same way by choosing to take out loan payment protection. By choosing to protect your loan repayments you would have a substantial amount of your payment each month, for the term, which helps you to keep your head above the water with your repayments. This would stop the lender taking you to court and in the case of missed secured loan repayments, losing your home.

You could also choose to cover redundancy by way of taking income payment protection. The income from this policy would allow you to maintain any essential outgoings that come into your home each month. This could be anything from your family food bill to your heating and lighting bills. You would of course be able to use this income in any way you wanted and for any bills.

You could cover redundancy with mortgage, loan or income protection depending on what you have to payout each month. All types of insurance can be taken the same way with an independent provider and this is the cheapest way to get payment protection cover. It is also one of the best ways to get information relating to the different types of protection you could take and this is essential when it comes to the exclusions. The exclusions would need to be checked against your lifestyle to ensure that cover would be suitable.

Once you had chosen the type of policy you need to cover redundancy you would then need to decide how much you would like to protect. You can choose the amount of your loan or mortgage repayments to protect or your monthly income. The amount chosen would be paid back to you each month you were unemployed, up to the limit set by the provider. This amount is tax free and you would get a payment back each month for the term of the policy after waiting for the deferment period to pass. You could usually put in your claim between the 30th and the 90th day depending on the provider and get a payment each month for either 12 or 24 months.

While you can choose to protect against redundancy alone, for a little extra each month you might want to take out protection that would also cover sickness and accident too. This means that if you should suffer from either unemployment or redundancy you would be eligible to make a claim on your insurance.

If you chose to cover redundancy with mortgage payment protection you would have an income coming into the home that would go a long way to you being able to continue meeting the demands of your mortgage. Meeting your mortgage repayments is essential as if you were to fall into arrears you could be at risk of the lender taking you to court to repossess your home. Should the judge side with the lender you could have to leave your home behind. A payment policy behind you could stop this from happening as you would have the sum you chose to insure to go towards the repayments. If you wanted to protect your loan repayments against a possible loss of income then you might want to consider taking out loan payment protection. Not only would the money go a long way towards helping you to keep up with your loan repayments it would also help to keep your credit rating in good order. As you need a good rating if you want to borrow in the future this would be essential. Income cover could make servicing your essential repayments that much easier. You would not have to juggle bills around or have to make cutbacks which might have an effect on the whole of the family.

Redundancy is like lightning – no one knows where and when it may strike, but when it does, your life can be shattered. That’s why you need insurance to cover redundancy.

Besides the emotional side effects on your self-worth and how you can find another job in troubled times, losing your job can also bring financial problems as well.

Most people might consider protecting against redundancy as a sensible – but leaving it to the last minute to cover redundancy is dangerous.

Providers will not accept an application if you know you are losing your job or if you are made redundant during the policy qualifying period – which is from 30 to 120 days from the start of the policy.

If you want to cover redundancy, then you should act now.

Companies play their cards close to their chests when trading problems arise because any bad news leaking out can affect cash flow. That’s why most people don’t know their job is going to be lost until the last minute.

To avoid financial hardship, planning to top up any redundancy payment you might receive is worthwhile.

For a start, if you have worked with your company for less than two years, the chance is you won’t get any redundancy settlement.

If that’s the case, you want to look for a policy with a short qualifying period and no deferment of benefit.

Deferring benefit acts like a motor policy excess and puts off the day the insurer starts paying out. This makes s your insurance cheaper.

But it’s no good waiting two or three months for you money if you need it today.

Even if you have worked with your company for more than two years, your payout depends on your age and length of service and can be ’capped’ if you are a high earner.

To cover redundancy, insurance pays out either a percentage of your gross salary – the amount you are paid before any deductions - or a maximum cash amount per month.

The idea is not to make you better off, but to bridge the gap between any savings or state benefits you may receive and your actual monthly outgoings.

Different providers pay out for varying lengths of time, but generally, the policies pay out for 12 months.

The idea behind this is to give you time to look for another job or retrain while protecting your financial outgoings and your credit rating by making sure you don’t miss important mortgage or bill payments.

If you are a contract worker, investigate how to cover redundancy, but dig in to the detail and see how the policy covers your job status before signing up.

When the risk of losing your job through compulsory redundancy is a more or less constant worry – as it is for thousands of people these days – it is time to give serious consideration to a simple, straight forward and remarkably cheap way to cover redundancy against the toll it will inevitably take on personal finances. Simple income payment protection insurance, to give it its more formal title, will help you rest more easily with the ever more present risk of redundancy.

Such insurance works in a very straight forward way. It recognises that the single most important safeguard against the impact of redundancy is the retention of a reasonable income following the loss of a salary from work. The insurance therefore provides a replacement regular monthly income. The size of that income is determined by the policy holder at the outset – the more expensive the premiums, the higher the payouts of course. So, it is simply a question of choosing the level of replacement income with which you would be able to rest easy to cover redundancy.

All policies will set a maximum level of cover available and this is based either on an absolute sum or a proportion of the policy holder’s normal income from their regular employment. A typical maximum, for example, is £1,500 a month or 50% of the normally earned income, whichever is less. This is generally regarded as an adequate income to tide the policy holder over until a new job can be found. This short- to medium-term approach to providing an emergency income during a period of relatively short-term unemployment is a key to understanding redundancy insurance and the approach is one that allows premiums to be kept as surprisingly low as they are. Although the insurance continues to provide a replacement income every month that the policy holder remains unemployed, the basic approach also helps to explain why the typical maximum number of payouts is limited to 12 months – since this is generally a more than adequate interval in which to secure alternative employment. Nevertheless, for those wishing to spend rather more on their monthly premiums to cover redundancy, some policies are available that continue to pay out for up to a maximum of 24 months.

Practically anyone can cover redundancy in this way. All that is necessary to be eligible for the cover is to be in current regular employment (of more than 16 hours a week) and to have been regularly employed for at least the past six months. The insured person will need to be of working age throughout the period of cover and remain permanently resident in the UK.

One of the country’s leading providers of competitively-priced redundancy insurance is British Insurance. Managing director, Simon Burgess, says: “as the number of people expected to receive redundancy notices in the coming few years continues to rise, there is a growing interest in simple, straight forward and cost-effective ways to cover redundancy. Income payment protection insurance does that job admirably well”.

When it comes to protecting yourself against redundancy you have to act while you are still employed. In fact if you wait until you know about the impending job loss to apply for a policy it will be much too late. Policies that cover redundancy must be in place well in advance if you want to benefit from the financial relief they can provide.

Redundancy policies are designed to provide an income if you face involuntary unforeseen job loss. The thing is if you knew about the redundancy in advance or you volunteered for a redundancy package you will not be covered. You can double check the provider terms for more information about points like these.

Before you can apply for a policy you must have been employed for a minimum period as specified by the provider but once your policy is in place and you make a claim you can expect the payment to last for 12 or 24 months subject to the provider terms.
The benefit is also tax free and if it is a stand alone policy in that it is not attached to a specific debt then you can spend the money in any way you like.

Most policies that cover redundancy have other eligibility criteria relating to the minimum number of hours you need to be employed each week. Age limits, employment type etc. it is important to take note of these points before you sign up for your policy. Unfortunately providers don’t always take the time to explain these terms and conditions to consumers so make sure and do your homework.

When selecting your provider you should know that the premiums could vary widely from provider to provider but to get the best deals you’ll be better off if you approach an independent provider rather than a high street company.

Many providers will try to sell you their protection cover when you take out a loan or mortgage but this practice is frowned upon and the competitions commission is trying to make it illegal for providers to sell protection products to consumers within 14 days of taking out a credit product.

Simon Burgess is the Managing Director of British Insurance – a company that provides policies that cover redundancy and he says ‘If the competitions commission is successful this will give consumers the opportunity to explore what other providers have to offer. This can open many avenues for huge savings on premiums’.

Summary
So as you can see there are many benefits to getting a policy that can cover redundancy. There is peace of mind and financial benefits as well. You will need to evaluate the policy terms carefully but it is better to know before hand what the policy will provide and whether or not your circumstances will be covered.

You could cover redundancy with one of the three forms of payment protection. Your choices for protection are loan; mortgage or income payment insurance and they are named after the repayments they cover. With income payment protection this policy would protect your essential outgoings. Loan and mortgage cover are usually offered at the time of borrowing with the lender on the high street or you can choose to shop around independently. By choosing to take cover with a standalone provider you could save as much as 80% on loan protection and 40% on mortgage cover, if you got quotes with ethical standalone provider British Insurance.

British Insurance would allow you to protect a pre-agreed amount of the monthly mortgage or loan repayment you make, or a sum of your monthly income. The amount that you chose to protect would be the amount that would be paid back to you if you suffered from unemployment caused by redundancy. If you cover redundancy with British Insurance the income would be tax-free and if you needed to claim you could do so from the 30th day. Upon commencement of the first payment you would receive one payment each month for 12 months if you were to have to claim that long.

Should you choose to look with other providers to cover redundancy then check out the small print of the policy. There are some standalone providers that could extend the deferment period to as long as the 90th day of unemployment. You should also choose to find out how long protection would continue, as it can be up to 24 months with some providers. Also check exclusions as there will be at least the most common ones in a policy. British Insurance adds in just a few but other providers might add in more and these determine if cover is suitable or not.

If you have mortgage repayments to maintain over many years then you do need to give some thought to mortgage payment protection. You would have an income that goes a long way towards maintaining the repayments of your mortgage and this can stop you from getting into mortgage arrears. If you should fall into arrears with the mortgage it can be impossible to catch up. In this case you would be faced with the strong possibility of losing your home.

Loan cover allows you to continue servicing your loan repayments. By maintaining these you would also keep your credit file intact and this allows you to borrow again in the future. In fact a good credit score is needed in order to be able to apply for credit of any kind.

You could choose income payment protection to cover redundancy which would allow you to continue meeting the demands of your essential monthly repayments. This type of protection against unemployment would allow you to decide what you spend the monthly replacement income on.

Government statistics suggest that the number of unemployment benefit claimants will rise by more than half a million over the next two years, taking the total of such claimants to more than 1.5 million. When added to approximately the same number of unemployed who do not claim benefits, this brings the estimated total number of jobless in this country to over three million. With unemployment at these rates, it is hardly surprising that many people are asking how they can cover redundancy.

In fact redundancy can be covered remarkably easily and cheaply, so that unemployment doe not inevitably lead to mortgage payment arrears and the risk of repossession or that missed loan repayments do not inevitably lead to adverse credit reporting or county court judgments. In order to avoid such outcomes, it is simply necessary to cover redundancy with a suitable redundancy protection insurance that pays out a regular monthly benefit in the event of the policy holder losing his or her job.

If redundancy insurance is used to protect mortgage repayments, then most policies will allow cover up to 75% of the policy holder’s income whilst in work, or £3,000 a month, whichever is less; if the cover is for other borrowing of loans or credit, the typical limit is 50% of the income when in work or £1,000 a month.

Apart from the comfort of knowing that redundancy protection is safely in place, there are two additional reasons for not delaying the purchase of such insurance. The first relates to the availability of such cover. As the risk of redundancy daily grows ever more likely for hundreds of thousands of individuals, so many insurers have become reluctant to offer the cover. A report in the daily Telegraph newspaper on the 17th of November 2008, for example, revealed that many insurers have withdrawn their standalone, redundancy only insurance plans and are selling only the complete package of accident, sickness and unemployment insurance. As the risk of unemployment continues to grow, therefore, fewer insurers will be offering standalone redundancy cover, whilst those that do so will inevitably need to start charging higher premiums.

A second reason for acting quickly is related to the way in which redundancy cover works. In order to prevent unfair claims under such insurance from individuals who already know they are about to be made redundant, all policies carry an initial exclusion period (typically the first 120 days) during which time no claims can be made. In order to cover redundancy safely and securely, therefore, it could prove important to have beaten this exclusion period by having the cover in place well before a redundancy is announced.

One of the leading providers of redundancy insurance – and one of the notable exceptions specifically cited in the Telegraph report of the 17th November as continuing to market standalone unemployment insurance – is British Insurance. The Company’s managing director, Simon Burgess, says: “with unemployment rising at its present rate and with further job losses forecast for some time to come, of course it’s important to cover redundancy – and the sooner the better”.

The thing about redundancy is that if you wait until it is upon you to do something about protecting your income it will be too late. There are many policies that can cover redundancy and they are all part of the payment protection family. They can help make payments towards loans, credit cards or mortgages but in the end they perform in similar ways.

The policy is designed to pay out an income if you were made redundant. You will not be covered if you knew about the redundancy in advance as the protection provider will be of the view that you had notice so you could have found another job. The other thing is if you choose to take a redundancy package you won’t be covered either.

The benefit you receive is tax free and the payment period is usually 12 or 24 months depending on the provider you choose. I mentioned earlier that if you waited until you were made redundant that it will be too late; this is because with most providers in order to take out a policy you must have been employed for at least six months.

The protection policies will cover redundancy once your meet all the eligibility criteria the payments will help you keep your debts under control and avoid messing up your credit profile.

You should note however that the benefit you receive will only be a percentage of your gross salary therefore when deciding on your policy, make sure the income will cover your monthly debts or at least the most urgent ones.

So How Do You Get Protection
You can take out a policy with your loan, mortgage or credit card provider but these high street companies have been known to charge higher than average premiums. In addition you won’t get the chance to shop around for lower quotes if the policy is added on to your debt.

Simon Burgess, Managing Director of independent provider British Insurance comments ‘When companies provide protection products on the back of a credit transaction, it takes away the element of choice from the consumer. Consumers should be weary of this practice and take the time to obtain other quotes as pretty often they could be lower’.

The Competition Commission shares the same view and they are lobbying to make it illegal for companies to sell protection products within 14 days of the consumer purchasing credit.

Independent providers also have policies that cover redundancy so to find the best policy be sure to shop around. Take time to evaluate the benefits, entry requirements, any exclusions etc.

Conclusion
Policies that cover redundancy can be vital in today’s economy. Once you decide on the best policy for you, you shouldn’t hesitate to take out cover.
You can rest assured that you will be able to maintain your monthly debts while between jobs and your lifestyle won’t have to be adversely affected.