Archive for the ‘Redundancy Insurance’

The spectre of redundancy is returning to haunt the country’s work force. According to the government’s own figures, the rate of unemployment is rising faster than at any time in the past 17 years and some commentators fear that the total number of unemployed could top three million before the decade is out (in the opinion of The Independent newspaper 24 October 2008, for instance). Involuntary unemployment will strike many in the year or so ahead. There is no time like the present, therefore, to consider cushioning that impact with redundancy insurance.

How does redundancy insurance help to sweeten the bitter pill of sudden and unexpected unemployment? In a very simple and straight forward way, in place of the income regularly and dependable earned from the job, it steps in when that job is lost, to provide a temporary, replacement income that is designed to make the transition from the previous employment to a new job more than a little easier.

It is the loss of a regular income, of course, that is one of the toughest hardships of redundancy. One moment, there is just about enough money coming in each month to pay all the bills and to keep your head above water; the next moment, that life-support system is gone and there is nothing at all to pay all the household expenses. By providing an alternative, replacement source of income, redundancy insurance can cushion the impact of being out of work and missing that all-important pay-cheque.

In the words of Simon Burgess, managing director of one of the country’s leading providers of this kind of insurance, British Insurance, puts it: “none of us can predict when redundancy might strike. But when it does, the abrupt loss of a regular, dependable income hits us hard. That’s why redundancy insurance is so effective in cushioning the impact”.

The amount of replacement income provided by this type of insurance – the amount needed to cushion the impact of redundancy – can be determined by the policy holder from the very outset. In most cases – though the actual limits will vary from insurer to insurer – this can be as much as 50% of the policy holder’s normally earned income, or £1,000 a month, whichever is less.

Designed to provide an essentially temporary cushion between compulsory redundancy and the finding of a new job, redundancy insurance generally pays out for up to a maximum of 12 months, which is quite sufficient in all but the most exceptional circumstances, when some policies will provide the policy holder at the outset to extend the maximum payout period to up to 24 months.

If you are asked whether or not you need redundancy insurance, you may not be able to give an affirmative answer. If you look at your current circumstances the answer may be No, but when you think of what the future could bring, it’s a different story all together.

According to the Office for National Statistics (ONS), the UK redundancy rate is rising. Figures show that the redundancy level for the months of July to September 2008 was 156,000. This figure was by up 29,000 over the quarter and up by 27,000 over the year.

The economy is not in the best shape at the moment and because you never know what lies ahead, it is probably better to prepare for the uncertainty of redundancy.

Main Features and Benefits

Redundancy cover is a type of protection policy that will pay you an income if you were faced with involuntary redundancy. You will not be covered if you knew about the redundancy before hand.

The benefits are paid tax free and for a period of up to 12 months.

You can use the income to pay credit card bills, loan or mortgage instalments. If your policy is not linked to any specific debt, you can use your cash to maintain your every day expenses.

The benefit paid will not cover your entire salaried income; instead payments are based on a percentage of your gross salary.

If you do need to make a claim there is usually a 30 - 90 day waiting period before you can receive benefits. In addition providers normally require six months of continuous employment before you are eligible to take out a policy.

Most providers have maximum benefit levels so you will need to ensure the income you are due to receive will be adequate for your circumstances.

If you were interested and if the provider allows, you could request to add on other cover like sickness and accident but generally as a redundancy insurance policy your premiums will be lower.

Getting The Most For Your Money

The benefits provided by redundancy insurance are pretty much the same across the market, where you will find a huge difference is in the premiums charges.

Simon Burgess of British Insurance states ‘Consumers should be aware of the different premiums that providers can charge. If a quote is obtained from a high street lender then compared to that of an independent provider like British Insurance, the latter will offer huge savings that will benefit the consumer’

Many providers will try to sell you their insurance on the back of their loans or mortgages, but you can feel free to shop at independent providers.

Conclusion

While it may be difficult to predict when you will need redundancy insurance, it is probably wise to have it in place just in case you need it in the future. With the policy requirements relating to minimum employment periods, if you wait until you are out of a job, it will be too late to reap the benefits of the policy.

Redundancy insurance can help you to maintain your monthly repayments after you lose your income. It can be taken out in the form of loan, mortgage payment protection or income payment protection. You agree with the lender to protect a portion of the loan or the mortgage repayment or so much of your income against the possibility of being made redundant. If you become a victim you could claim this sum back and it would be used towards meeting the repayments you had insured.

You would have to wait for a period of time after being made redundant before you would be eligible to claim. If you have chosen to take out the protection with standalone provider British Insurance you can make a claim from the 30th day and British Insurance backdate the protection to day one of your redundancy. Following your claim you then receive a payment each month for up to 12-24 months and then cover expires. You can shop around with other payment protection specialists but you would need to read the terms and conditions as some providers ask you to defer from making a claim until as long as 90 days.

If you take out redundancy insurance as mortgage payment protection you would have an income towards maintaining the repayments of your mortgage. You would not have to struggle to find the money and worry about falling into mortgage arrears. If you should fall into arrears with the mortgage you would be at risk of lender repossession. While the majority of time lenders will allow you to make an agreement with them to catch up without any money coming into the home it would be impossible.

Income payment protection would allow you an income that would ensure you had money towards servicing your essential outgoings. These can be any bills that arrive on your doorstep each month and a policy makes life a lot easier as you would not have to juggle around with what little money you might have nor would you have to make cutbacks.

Loan cover would allow you to maintain any loan repayments you have each month. A policy would ensure you would not fall behind on the payments and have the lender starting proceedings to take you to court to recoup what you owe. It would also preserve your credit score and this is essential if you want to borrow again in the future. Providing you have checked the exclusions against your lifestyle redundancy insurance is a lifeline if you should lose your own income after becoming unemployed.

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”.

If you have ever been made redundant you will know it is a very scary experience, especially if you don’t know when you will next have an income. Sure you may be entitled to statutory pay, but that is usually next to nothing. If you’ve never had that experience, count yourself lucky, but don’t rely on luck for too long as you never know what will happen. If you are concerned about this situation then, redundancy insurance is one way of making sure your lifestyle is maintained if the unexpected were to happen.

The good thing about this policy is that for an additional fee it can also cover you if you are out of work due to other involuntary reasons as well, namely accident and sickness.

The policy will pay a tax free income for anywhere between 12 and 24 months but the maximum times will vary from provider to provider.

What Does Redundancy Insurance Entail

• You can decide on the level of benefit you want to be insured for up to the provider’s set limits!
• The level of cover will be reflected in the cost of the premiums
• You can choose the number of eventualities you want to be covered for e.g. redundancy and sickness only etc
• As there are maximum benefit levels, you will need to make sure the amount you choose is suitable to your needs
• Many providers will only allow you to make one claim per policy
• These policies usually carry deferment periods

Purchasing Your Insurance

Many high street providers have sold protection products along side loans at very high premiums, but the Competition Commission is not in favour of this and this practice may be reviewed in future.

If you were to obtain a quote at an independent provider you will find the premiums are much lower and therefore the product is more affordable. One such independent specialist provider is British Insurance.

Managing Director Simon Burgess says ‘The practice of providing protection products that piggy back on loans and mortgages is not in the interest of customers’. As a result British Insurance offers stand alone policies with savings of as much as 40% of that of high street lenders.

Another thing to note when making your decision is the terms and conditions. You should read these carefully so that you know exactly what is covered.

Summary

Having redundancy insurance is a good way to obtain the peace of mind you need. With your policy in place you can rest assured that if you were made redundant, you won’t have to lose the lifestyle you’ve grown used to because you will still be able to meet your monthly expenses.

Redundancy insurance can be taken out to cover your loan or mortgage repayments up to a pre-defined amount each month, or a portion of your income which would be pre-agreed against the possibility that you might lose your income to involuntary unemployment. The sum that you chose to insure would be the payment you would receive back each month as a tax-free income. All providers will set a deferment period which you must wait before claiming on the protection and all will state how long you would receive your income.

Leading payment protection specialist British Insurance offers redundancy insurance that would have no excess as they back date the cover to the first day that you become unemployed. You would begin to receive the benefit from the 30th day and would then have a period of 12 months in which to find work before the protection would cease. If you chose to shop around with other providers you might find that you could take out protection for up to 24 months but you would have to check the small print before taking on the policy. You also have to check with them to find out when they would begin to supply you with benefit as some policies come with a deferment period of up to 90 days. Exclusions would also have to be checked as all providers add in some. Ethical British Insurance includes a few exclusions and you can check for suitability because they provide you with the information on their website.

Mortgage payment protection should be considered by all homeowners who work full time and are the main wage earner in the family. A loss of income and nothing to fall back on could mean you might fall into arrears with the repayments of the mortgage and not be able to catch up. If this happens the lender could choose to repossess your home and you could be evicted. The money you received from the protection would go towards maintaining the repayments and gives peace of mind that mortgage arrears would not occur. With British Insurance you would save up to as much as 40% on the cost of the premiums.

If you have loan repayments to keep up with then loan payment protection would provide you with a sum of money towards servicing your loan repayments each month. It would help you to maintain your credit file and stop you from falling behind and British Insurance saves you up to 80% on the premiums.

Income payment protection taken as redundancy insurance would provide you with an income to be used towards maintaining all of your essential outgoings. These can be any bills that come into the home each month. You would not have to struggle and make changes to your lifestyle or worry about being able to put food on the table or keep the home running.

Redundancy insurance can be taken out in the form of loan, mortgage or income payment protection policies to protect your monthly repayments against the possibility that you could lose your income after being made redundant. The three policies can all be taken in the same way with an independent payment protection specialist by insuring a pre-agreed sum of your loan or mortgage payment or up to a certain amount of your income which would be defined by the provider. You would then receive this sum of money back, tax free, if you were to become redundant.

Mortgage payment protection insurance (or MPPI for short) would provide you with a sum of money to be used towards the repayments of your mortgage. This money would go a long way towards you not falling onto arrears and being at risk of losing your home to the lender as a result of not being able to catch up. If you chose to take out loan payment protection this income would be used towards keeping the repayments of loans up to date and so ensure that you do not fall into debt. If you were to miss payments it would affect your credit rating at the very least and you could find the lender taking you to court. Income insurance would allow you the income towards being able to maintain all of your essential outgoings without having to make drastic lifestyle changes.

You can save up to 40% on mortgage payment protection insurance and up to 80% on loan payment insurance if you choose British Insurance as your provider. They will also offer a quality policy that is backed with experience in selling payment protection. Cover from them would begin to provide you with your income after the 30th day of being unemployed and they backdate the insurance to day one of your unemployment. They would then continue to payout an income each month for up to 12 months and then cover would stop.

If you want to look with other providers and compare redundancy insurance you need to look at the small print that comes with the cover. Some providers would begin to payout on the insurance policy only after you have been unemployed for at least 90 days. You would also need to find out how long the protection would last as with some providers might payout until as long as the 24th month. You would also need to consider the exclusions that can be found in all payment protection policies. Some providers can add in more than others with British Insurance adding in the least. They will provide you with this information on their website so that you would know whether the protection was suitable for your needs.

Redundancy insurance can bring great peace of mind against the possibility of you losing your job. Redundancies can often happen without much warning and this would leave you without an income to fall back on to continue meeting your outgoings. You could choose to cover loan or mortgage repayments or insure your income up to a certain amount. This sum of money would be pre-agreed with the lender at the time of taking out the protection and would be the income that you would receive back as a tax-free sum.

If you take out redundancy insurance with a standalone provider this is one of the best ways to make the biggest savings on the cover. Loan protection taken with specialist provider British Insurance would save you up to as much as 40% on the premiums. Mortgage cover come with up to 80% savings and you would have access to all the information on their website so that you would be able to check the exclusions. It is essential that you do check these against your circumstances as they could stop you from being eligible to put in a claim on the cover.

Mortgage insurance would allow you peace of mind that you would not be at risk of falling into arrears with the repayments. Mortgage arrears can lead to the lender choosing to take repossession of your home through the courts. If you fall into mortgage arrears of just a couple of months you would be breaking the contract signed with the lender and you are at risk of losing your home.

Loan payment protection would go a long way towards you being able to maintain the repayments of your loans and so not have your credit file affected. If it was then you could find borrowing in the future very hard. You would of course still have to pay what you owe. Income cover would go towards you being able to service all the essential outgoings that came into the home each month.

All redundancy insurance protection would payout with British Insurance from the 30th day of you being unemployed. British Insurance would date back the cover to day one of your redundancy and would then provide you with an income each month you remained unemployed for up to 12 months. Shopping with other providers would mean you would have to check the terms of the cover as some could payout for 24 months. You would also have to see when the cover would begin to payout from as some would offer 24 months of protection before the policy would simply expire.

Loan, mortgage and income payment protection are all ways of you being able to take out redundancy insurance. By insuring up to a pre-agreed sum of your loan, mortgage or income each month you can then claim this sum back as a tax-free income which would go a long way towards you being able to maintain your outgoings should you become unemployed via involuntary redundancy.

The sum of money that was paid back could help you to meet loan payment, mortgage payments and all essential outgoings depending on the policy you have taken. If you choose a standalone specialist provider to get a quote for redundancy insurance then you will be able to make savings on the protection. British Insurance a leading payment protection specialist will save you up to 80% on loan payment protection and 40% on mortgage payment protection.

British Insurance offer age based protection which means that the younger generation can take advantage of covering their repayments. High street prices for cover are very high and in the past this has stopped many of the younger generation from being able to afford to cover their loan or mortgage repayments. A policy from British Insurance would begin to payout once the policyholder had been unemployed or incapacitated for at least 30 days. They would also back pay on the protection to day one of your unemployment or incapacity and would then continue to pay your income each month for up to the 12th month. If you look around you might find that some providers would extend the payments to 24 months. You would also have to check the small print of a policy to see when the cover would begin as with some providers this could be as long as the 90th day of unemployment.

You can take out insurance by way of mortgage payment protection and this would help you to be able to continue meeting the demands of your mortgage repayments each month. Without an income you would be at risk of falling into arrears and of the lender taking your home.

If you wanted to be able to service any loan repayments each month then loan payment protection could be taken. The sum of money would go towards keeping on top of your repayments and would ensure that you would not get into debt. If you were to miss payments then you would see your credit rating being affected and this could make borrowing in the future next to impossible.

You essential outgoings could be protected with income payment protection as a form of redundancy insurance. This would allow you to pay any bills that came into the home on a monthly basis and would ensure that you would not have to make huge changes to your current lifestyle. You would have to check the small print of any policy you were considering taking out as there are some exclusions that you would need to check against your lifestyle.

There are many ways of choosing  redundancy insurance cover if you should be one of the unlucky ones that become a victim of involuntary redundancy. There are three payment protection insurance policies that can be taken out to cover it depending on what you pay out each month.  If you are having trouble with mortgage repayments then there is a mortgage payment protection, loan cover is for loan repayments and income protection covers your income in general.

Do not ever think that your current employment is 100% safe as redundancies can happen.  If you become redundant and you have loan repayments, loan insurance taken out as redundancy insurance can stop you from getting behind with your payments.  If you look around with specialists in payment protection you can save up to 80% if you go with the independent payment protection provider British Insurance. They also save you up to 40% on mortgage payment protection.

When taking out mortgage and loans you may find that you have to pay huge sums back and failure to do so can mean you could lose your home or be taken to court by the lender in the case of missed loan repayments. If you choose British Insurance they can provide you with the details on each policy, then all you have to do is check the terms and conditions and find out if a policy is right for you.

If you want to be covered with a sum of money towards all your outgoing payments then income payment protection should be an option to look into. You could be insured up to a certain amount of your income and then if unforeseen circumstances happen and you become unemployed you would have to wait between 30 to 90 days and then you would be able to claim on your policy.  The policy will last for a certain period of time with British Insurance this is 12 months, which can give you plenty of time to find new employment. You might find cover with other providers for 24 months and some may ask that you have a 90 day waiting period before you can claim.

When taking out any kind of  redundancy insurance it stops you getting into debt you are able to claim the sum back you insured against when you took out the policy and this goes a long way towards you being able to maintain payments. If redundancy occurs it is better to be well protected than have it come upon you suddenly and protection does not have to cost a fortune.  British Insurance can give you peace of mind for the small premium that is charges. If redundancy does occur, you never know when or how long it will last so relying on savings could be a mistake. Relying on State benefits as a way of getting by can also be a mistake as you could have to wait months to see any money and then it often falls short of being enough.