Archive for the ‘Redundancy Cover’

Redundancy cover is an innovative product that will pay you a tax free income for 12 -24 months if you are made involuntarily redundant. This means that you will be able to still continue to meet some of your monthly financial commitments without financial worry.

There are three main types of redundancy cover – mortgage payment protection insurance; loan payment protection insurance; and, income payment protection insurance. The first two are aimed at specifically helping you maintain any loan commitments should you be made unemployed. The benefits received from the policy would help towards the monthly loan repayments you will need to make and often, associated costs. The latter provides a general income which you can use for whatever purpose you wish and is sometimes confused with income protection, largely because of synonymous names and terminology. Income protection, however, is more long-term in nature, sometimes offering coverage to retirement age but for incapacity only. It does not cover redundancy or any form of unemployment.

To get the redundancy insurance, all a policyholder need do is pay a monthly premium to the insurance provider. When a successful claim is made, the insurer will pay a tax-free lump sum each month for a set period to aid the policyholder in their quest to ensure debts do not go unpaid while they seek a new job.

Benefits kick in 30 to 90 days following the first day of unemployment, subject to an individual provider’s terms and conditions. Some providers, such as standalone protection specialist British Insurance, will back date your claim to the very first day you become unemployed, so you do not lose out.

On top of protecting against the financial distress caused by involuntary redundancy, another event, incapacity (or illness and accident) can also be covered, at an extra cost. Customers have the choice of buying protection against one or all three occurrences.

Brits need to protect themselves from the devastating impact of not having protection against short-term job loss. State benefits are often not enough to cover all your bills. Very few people are eligible for this short-term government assistance, and even those that are do not receive it for several months after the loss of employment.

It would not be controversial to say that us Brits have been left in charge of taking care of themselves if involuntary redundancy occurs. Families that rely on consistent monthly income often cannot sustain themselves very long when job loss occurs. There is no reason given the expansion of broker services, the low premiums on the open market, and the service-oriented nature of brokers that more Brits are not protected with redundancy cover.

If you are considering whether or not you need redundancy cover then consider the following statistics. According to the Office of National Statistics (ONS) the levels of unemployment and the applicants for benefits have increased. For the months July to September 2008, there have been more than 90,000 cases of unemployment and people claiming benefits have increased by at least 154,000 so far this year.

You just can’t tell what the future will hold, you maybe gainfully employed today but on the breadline tomorrow. If you have a family to care for, mortgages and bills to pay how will you survive?

Fortunately this is where redundancy cover will come in. This policy will pay you a monthly income for a maximum period of 12-24 months if you are unable to work due to involuntary redundancy.

Main Features and Benefits

You will be provided with a tax free lump sum to help you maintain your lifestyle while you seek alternative employment.

Statutory redundancy pay may not be adequate and relying on State benefits could be a bit hit and miss considering the thousands of people already applying.

To protect yourself and obtain the peace of mind you need, you might want to take out a policy which replaces your income if you are made redundant.

In as much as this cover provides a replacement income, it won’t cover your entire salary. There are maximum benefit levels associated with these policies.

If your lender allows, you may be able to add on cover for sickness and accident, but this will be reflected in the cost of your premiums.

Policy providers may require you to be employed for at least six before you can take out a policy and you must own the policy for at least three months before you can make a claim. These times will vary from provider to provider so be sure to ask your provider for more details.

When deciding on your redundancy cover, you might want to look at what the independent providers have to offer. Pretty often you’ll find their premiums to be much lower than the high street providers.

As an example, Simon Burgess of independent protection provider British Insurance says ‘Thanks to the clever use of technology and a consumer focused strategy, British Insurance can offer consumers up to 80% on premiums for protection products. This savings would be difficult to match anywhere in the market’

Conclusion

The future is very uncertain. There is no such thing as job security anymore and when companies need to save costs, the first thing that usually goes is the payroll. If you took out your redundancy cover while you’re still employed, you just might be able to survive if you were made redundant. By having a policy in place, you will be able to avoid bad debts, threats of repossession and any other unpleasant side effects of redundancy.

A more uncertain economic climate usually means a greater chance of losing your job through no fault of your own. A downturn usually means more and more newspaper headlines contain the word ‘redundancy’. Losing your job is never a pleasant experience and can lead to serious financial difficulty. However, not all workers are aware of the fact that they are able to protect themselves, to a degree, with an insurance policy which kicks in if they are told their services are no longer required. Redundancy cover will effectively provide someone with a replacement income if they are suddenly made unemployed involuntarily - potentially vital for keeping up with essential commitments while seeking a new job.

Also known as unemployment insurance, this type of policy will provide someone with a cash lump sum paid straight into their bank account for each month they are without work. To qualify a person will need to have been made redundant involuntarily, and will not be able to claim if they have accepted an offer of redundancy. Someone who was given prior indication of their impending redundancy before they took out a policy will also not be able to make a valid claim. Note this type of insurance, as opposed to other policies, will not protect someone if they lose their income through sickness or accident.

The first payment will arrive from the insurer around one month after the successful claim, although some providers will backdate cover to the day the person was first unemployed. How much arrives will differ from one insurer to the next and on what level of policy you have selected. Typically, the insurer will ask you to protect a percentage of your income, although most companies will not guarantee 100 per cent of your wages. The higher amount covered, the higher the premium will be.

The idea of this monthly tax-free sum is to help you get by while you get back on your feet and into work again. It can be used for anything from keeping up with the mortgage, to making loan repayments, to simple things like food and fuel bills. Most companies will not put any kind of restriction on what the money is spent on.

The payments will continue for up to a year, although longer payment periods be available from some providers. Normally a policy will protect someone from 12 to 24 months before it is due for renewal. The main benefit of this is peace of mind if you feel your job may no longer be needed in future, and the potential continuation of your mortgage if you fall on real difficulty - redundancy, in the worst cases, can lead to someone losing their home.

Although most big-name insurance providers will be able to offer someone a policy, not all will provide great value for money. Some more specialist insurers such as independent payment protection provider British Insurance can supply cheaper redundancy cover premiums, meaning peace of mind need not break the bank in times when cash is short.

There are three forms of Redundancy cover which can be taken out as payment security if you were to become unemployed through such as being made redundant. Depending on the repayments you have to make each month you can choose from loan, mortgage or income payment protection.

A policy can be taken out by insuring a portion of your income or a pre-defined amount of your monthly mortgage or loan repayments. This would be pre-agreed with the provider and would be the amount of money you would receive back if you became a victim to redundancy.

When considering taking out redundancy cover you would have to shop around for the protection as some providers will charge more for the protection than others. If you got a quote with standalone independent British Insurance you could get loan protection that could save you up to as much as 80%. You can save 40% on mortgage cover and make great savings on income payment protection.

You would also get cover that comes with no excess as it would be dated back to the first day of your unemployment. You could claim after the 30th day of being unemployed and the protection would continue paying out as long as 12-24 months before it would expire. There are some providers that could offer to payout for as up to 12 months only so you do have to read the small print of any policy you are considering. Also you have to find out when you can put in a claim as with some providers it could be up to 90 days. When checking the terms also check the exclusions that are included as some providers could add in more than others. Standalone payment provider British Insurance includes just the basic few and they provide you with the information needed so you can ensure you would be eligible to make a claim.

Insurance taken out in the form of loan cover will provide you with an income that would go towards you maintaining your loan repayments. This is essential if you want to remain on top of payments and not have to go to court. It also protects your credit file which all lenders would take into account when the decide whether to give you approval for credit.

Income payment protection would allow you the peace of mind that you would have an income towards all essential outgoings. You would not have to make lifestyle changes which could have an affect on everyone in the family and you would not have to juggle around bills and hope that sometime you could catch up on them.

Mortgage payment protection can be taken as redundancy cover and the sum from this policy would go towards you keeping the mortgage repayments going and ensure that you would not be at risk of losing your home through repossession.

When you hear the term redundancy cover, you may think that, only redundancy is covered. Sure enough you can get a policy to cover this one incident, but generally you will find that policies will cover you for accident, sickness and redundancy.

This type of insurance will pay you an income if you were to have a successful claim after one of the above incidents. The income will be paid out for 12 to 24 months depending on the provider you choose.

It is a great policy which provides you with peace of mind if or when the unexpected were to occur.

More About The Policy

The payment you receive is paid tax free and can be used in any way you like. While the payment will not replace your entire income, the percentage that is paid is usually quite adequate to sustain claimants until they recover or find another job.

When choosing your policy you can decide if you want to be covered for one, two or all three of the events listed above.

There are usually maximum benefits levels so when you choose your cover make sure you will be able to live on the income it provides.

The cost of the premiums is linked to the level of benefit you choose as well as the number of incidents you are covered for. The provider you choose will also have a great impact on the premiums but more on that a bit later.

Purchasing your own protection cover is more important these days as you can no longer rely on state payments to keep you afloat in such situations. There is such a demand for these funds that you’ll be lucky to get any if and when you need it most.

Selecting A Provider

Because many of the redundancy cover policies are pretty similar when it comes down to the decision, best value for money usually wins out. Well, if you were to obtain your product from an independent provider, you are more likely to get a great deal than if you choose a high street lender. Why is that?

Well one reason is the method of providing products and the ethics of the particular provider.

Simon Burgess of British Insurance says ‘At British Insurance we use technology in a way that allows us to deliver superior products at a much lower premium than our competitors. There is no reason our customers should pay one penny more than they have too.’

In light of that, British Insurance has been known to provide as much as 80% off protection products.

When choosing your product it is also important to read the terms and conditions to make sure there are no exclusions that could hinder you from making a successful claim.

Summary

Taking out redundancy cover is something you should seriously consider. There is no telling what the future holds and life just has a way of surprising you in the most unpleasant ways. This is not said to scare you, but if you look amongst your friends I am sure you know of someone who has been made redundant. If it were to happen you, make sure you are prepared for it.

When economies start to slow down and attract some negative headlines, the issue of job losses normally comes up. Being made redundant is not a pleasant experience and can lead to significant stress while someone tries to find a new job. During this period there is always the question of how bills and even mortgage repayments are going to be paid. This leads some workers to take out redundancy cover as a precaution.

The UK does have a statutory redundancy pay rule in place, but how much someone gets when they are laid off will vary depending on how old they are and how long they have been with a company. Someone who is around 18 years of age may even only get a couple of weeks’ worth of wages. When it comes to jobseekers allowance, the State is not exactly generous and in some cases weekly payments can barely be enough to meet things like grocery costs. Redundancy cover is designed to fill the remaining gap until someone gets back into work.

This type of policy is also a form of cover which falls under the umbrella of the payment protection insurance sector. This area features a number of products which are designed to protect someone’s varying financial commitments if they suddenly lose their salary through becoming ill, being made redundant, or suffering an accident. Redundancy insurance will only cover someone if they are made involuntarily redundant, and will not apply if they lose their salary for any other reason.

This means this type of cover can be of particular use to someone who is concerned an employer may hand them their notice in future. However, it is important to note that a policy will be invalid if a person knew they were going to made redundant before they took out the insurance. They must have no prior knowledge in order to be able to claim successfully.

A policyholder will need to decide what percentage of their income they would like to have protected. Should they need to claim, this percentage will then be paid into their bank account directly by their insurer for a set period, usually up to a maximum of approximately 12 months depending on the provider. The idea is not to fully replace someone’s income but merely to give them a helping hand while they carry on searching for a new job. The payment, which arrives tax-free each month, can be spent on anything from keeping up with loan and mortgage commitments to household bills, groceries and even a new tie for a job interview. There is usually no stipulation on exactly what the policyholder spends it on.

Most high street insurance firms will offer a form of redundancy cover but at varying prices. It does not always make sense to merely take out a policy with your existing car insurance provider, for example. Other companies might be able to provide you with just as an effective policy for less. A good example of a more independent standalone provider is specialist payment protection provider British Insurance.

Redundancy cover often works out a lot cheaper with a standalone payment protection provider. You would need to choose the type of cover most suitable depending on what outgoings you have to make each month. Providers offer mortgage, loan or income payment cover, if you choose cover with standalone payment protection provider British insurance you would save as much as 40% on mortgage cover and 80% on loan payment protection.

You would take out the cover by insuring so much of your income or a sum of your loan or mortgage repayments, which you would pre-agree with the provider, against the possibility that you could lose your income due to unemployment. This sum of money would then be claimed back tax-free if you were to fall victim to redundancy.

If you take mortgage protection insurance the sum of money you received back from the policy would go a long way towards servicing your mortgage repayments. Keeping up with the repayments for your mortgage is essential if you are to keep your home as missed payments and mortgage arrears lead to the lender seeking repossession of your home.

Loan payment protection would supply you with an income towards servicing your loan repayments so that you do not fall behind. Depending on the loan you had taken out would depend on the consequences you would be faced with. At the very least missed payments would affect the credit rating and this means that obtaining credit in the future could become very hard.

Income payment protection taken as redundancy cover would provide you with an income towards being able to maintain all of the essential outgoings that would come into your home. It would help to stop you from having to make lifestyle changes and cutbacks which affect the whole of the family.

Independent payment protection provider British Insurance would provide redundancy cover that would come with no excess as they date back the protection day one of your unemployment. You can make a claim on the policy after the 30th day of continuous unemployment had been reached and then receive an income each month for a maximum of 12 months if needed. If you were to look with other payment protection providers you might find that you could have to wait 90 days before claiming and you have to check this in the terms and conditions of the protection. You also have to look here to find out how long protection lasts as with some providers it could be 24 months. You need to consider what exclusions the providers have added in and check these against your lifestyle. Ethical British Insurance adds in just a few exclusions.

Redundancy cover can give great peace of mind by providing a replacement income if you are unable to meet outgoings if you lose your own income as a result of becoming unemployed. A loss of income could come about at anytime and could leave you struggling. You could choose between three types of payment protection policies that would safeguard your loan or mortgage repayments or your essential outgoings against redundancy.

All forms of redundancy cover can be taken by you insuring up to a certain amount of your loan or mortgage repayments or a portion of your income which is pre-agreed when taking out the cover. You then claim this back, tax-free. You would have to wait for the period of time specified in the terms and conditions of the provider before you would be able to put in your claim and the cover would then payout for a certain period of time before it expires.

If you were to get a quote for loan protection with leading payment protection provider British Insurance this would cost up to 80% less than with high street providers. The sum of money you recovered back each month would go towards you being able to maintain your loan repayments and so stops you from falling into debt. If you were to get behind on the repayments then you would have to catch up and your credit rating would be affected, in the worst case the lender could take you to court.
Mortgage payment protection insurance (MPPI) would go towards you being able to continue servicing the repayments of the mortgage each month and helps you to stop falling into mortgage arrears. It is essential you do not get behind on your mortgage repayments as this can lead to the lender taking your home. Just a couple of months of mortgage arrears could mean that the lender could take you to court if you have not got an income coming in to make an agreement with them to catch up and this could lead to a judge giving you an eviction date.

Income payment protection taken out to cover redundancy would allow you money towards all of the essential outgoings that have to be maintained each and every month. The sum of money can be used towards whatever bills come into the home which means you would not be struggling and have to make huge changes to your lifestyle.

All forms of redundancy cover taken out with independent payment protection provider British Insurance would begin to provide your income once you had been unemployed for a period of no less than 30 days. They would also offer to back date the cover to the first day of your unemployment and would then continue to provide you with an income that would span 12 months. If you chose to shop around with other providers to compare insurance you would have to read the terms of the cover as some providers can offer to payout for up to 24 months. You would also need to check the terms to find out when the protection would begin to provide your income as with some providers it could be as long as 90 days before you are able to make your first claim.

Redundancy cover can be taken in the form of three payment protection policies that would all pay back an income that was tax-free should you become involuntarily unemployed. You can choose to take out income payment protection, mortgage payment protection and loan payment protection. If you choose to take out the cover independently as opposed to just adding it into the loan or mortgage then you will be able to make savings on the cover.

All redundancy cover policies are taken out by you insuring up to a pre-agreed amount of your loan or mortgage repayments or a portion of your income. This sum is then given back to you as a payment each month you are out of work up to the period of time stated in the terms and conditions of the cover.

Ethical standalone payment protection specialist British Insurance would give you protection for 12 months after making a claim from the 30th day and they would date back the protection to day one of you being unemployed or incapacitated. One the term of the protection has been reached it would then simply cease to exist. However this is usually enough time for you to have found work. You would need to check in the small print of any policy that you are considering taking out as some providers might offer 24 months of protection. You would also need to check when you would be able to make a claim on the cover as with some providers this could be from the 90th day of unemployment and not all providers may date the protection back to day one.

Mortgage cover taken as redundancy cover would ensure that you would not be at risk of losing your home to repossession by the lender. The money you received back on your protection would go towards you being able to service your mortgage repayments each month. If you were to fall into arrears with the mortgage by just a couple of months this might be enough for the lender to start repossession proceedings and you could lose your home to eviction.

Loan cover would supply with money towards being able to maintain the repayments of the loan each month and so keep your credit rating in good order. This is what all lenders take into consideration whenever you apply for credit of any kind. A bad rating due to missed repayments would mean that borrowing in the future could be almost impossible. If you were given approval you might have to pay a high rate in interest.

Income payment protection taken out as redundancy cover would ensure that you would have money to service all the bulk of your essential repayments. You would have peace of mind that you would be able to put food on the table for your family and be able to keep the home lit and warm while you searched for work. It could take many months before you would be able to get another job once you had been made redundant so relying on being able to use savings could be a mistake. With savings of 80% on loan cover and 40% on mortgage protection protecting against redundancy should be considered by everyone.

Redundancy cover could be taken out for payment protection security against unemployment. You can choose to protect with loan, mortgage and income payment protection by insuring a pre-agreed amount of your loan or mortgage repayments or a portion of your income. This would be the sum of money you would then receive back as a tax-free income if you were to become unemployed by redundancy.

You could choose loan payment protection if you have loan repayments to make and this would then go a long way towards you not falling into debt. Depending on the type of loan you had taken out would all depend on the consequences. If the loan was secured on your home then you could be at risk of losing it to the lender through repossession. Unsecured loan debts could see court proceedings by the lender to recover back what you owe. In all cases your credit rating would be affected and this could mean you would not get approval for credit of any kind in the future. If you do manage to get approval then you might have to payout a high rate of interest.

Mortgage repayments can be secured with mortgage payment protection for up to a certain amount and this would you would not fall behind with the repayments of your mortgage. Even if just miss a single payment on the mortgage the lender would send a letter and if you miss more payments you would need to work out an agreement. Without an income you would not make an agreement and this could mean them taking you to Court and could lead to repossession of your home.

You could chose income payment protection as redundancy cover to ensure that you have money towards of all the bills that come into the home each month. Cover would stop you from having to make drastic changes to your lifestyle or having to juggle about bills and then hope that you would catch up on them in the near future.

All forms of redundancy cover could be taken out for a small premium each month with ethical payment protection provider British Insurance. Loan cover with them can save you as much as 80% and mortgage payment protection for up to 40% less than with the high street lender. Your protection with them would begin to provide you with an income once you had been unemployed for 30 days. They would then back date the protection to day one of your unemployment and would then continue to provide you with a payment each month for up to the 12th month. If you shop around with providers you could find that some might continue paying up for up to 24 months. You would need to check the starting date of any policy you are considering taking out as some providers might ask that you wait for up to the 90th day before you would be able to put in your claim.