If you are considering unemployment cover then you have to choose between loan, income or mortgage cover. Mortgage payment protection insurance (MPPI) and loan payment protection insurance cover will protect the repayments as their names suggest while income cover will protect your general outgoings. The policy could make a huge difference as to how you will be able to manage while you searched for work.

What exactly does a policy do?
Unemployment cover will provide you with an income that is tax free, every month, if you are made involuntarily redundant. You then use it towards the repayments you chose to protect. For example, if you have taken out mortgage cover then your policy will provide an income that you could put towards you being able to maintain your mortgage repayments. The income supplied from your chosen policy will begin to pay out after you had been redundant for a period of time and it will continue for a set period of time before ceasing.

When does the benefit begin?
Your policy could begin paying out once you have been redundant or unable to work for a period of between 30 and 90 days. You might want to ensure that your policy will begin to provide you with an income sooner rather than later as 90 days can be a long time before seeing benefit from your policy. You could already have fallen behind on your mortgage, loan or essential repayments and this could cause you to struggle to catch up on them. Some providers could also date back your income to the first day of redundancy but you will need to check with the provider before you took out your unemployment cover policy.

How long will the policy continue to payout?
Your provider could continue for up to a maximum of 12 months if it was needed. Other providers might offer you a policy that will continue paying out for up to 24 months. If considering taking out cover that paid out over the longer period then of course you will need to pay more in premiums than if considering taking out a policy paying over 12 months.

You will also have to weigh up the fact that if you should have to claim on your unemployment cover for up to the term then it will cease upon reaching the term whatever your circumstances were at that time.

How much income could I expect?
The amount you get back is the sum of money that you decided to protect when you applied for your policy and which was pre-agreed. For instance the majority of providers will allow you to insure up to half of the gross monthly income that you bring home or up to £1,500 whichever amount was the least. You then get this back as tax free payments for up to the term.

Choose to take out incapacity protection too
While you can just take out unemployment cover you could also decide that you also want protection against incapacity in with your policy. If this is the case then you could add it in for a little more in monthly premiums. You then have security of being able to make a claim should you suffer from either event. Also check the terms of your policy to see if the provider has been generous enough to have included carer cover in with the policy. If they have you could claim on your policy if you needed to stop working so you could take care of a loved one.
The types of cover you could take

Income protection might be taken should you want to ensure that you will have money that you could use towards meeting your essential repayments. These could be your rent, your utility bills and even the grocery bill for the month. You could spread the income as you wanted and use it as you did your own income.
Mortgage cover could be put towards you being able to maintain your mortgage repayments. This policy could be enough to keep you out of mortgage arrears which could eventually lead to you losing your home if you should be unable to catch up on them.

Loan cover supplies an income that you could use towards keeping your loan repayments up to date. You will be able to maintain secured or unsecured loan repayments which could stop you losing your home or having bailiffs come into the home.

Shopping for the best deal on a policy
Shopping around and comparing for the best deal with your unemployment cover is one of the best ways that you can make savings on your cover. Standalone providers will generally save you a great deal on the cost of your policy in comparison to taking your policy with one of the lenders on the high street. You will also be able to check the wording of the policy to ensure that you will be eligible to make a claim on the insurance which is essential before you take it out.

Why you might want to consider a policy
You could consider a policy as opposed to relying on savings or the State as a means of maintaining your repayments or outgoings. Your savings could run out before you had found work or you had recovered and if claiming an income from the State you will have to be eligible to claim. Even if you are then you will only get help with the interest part of your repayment and up to so much of it. You will not see any money until you had been redundant or unable to work for a period of 13 weeks which means you could be in arrears or debts by this time.

Summary of the main benefits
With unemployment cover to fall back onto you will not have to make the lifestyle changes that you might have to make if you do not have a policy to fall back onto. The income supplied from your cover will give peace of mind which will leave you free to worry about finding work or recovering and getting back to work again. You will know how much income you had to rely on, when a claim could be made and for how long you will continue receiving your tax free income.

Anyone who has experienced unemployment before knows how difficult it can be, particularly if you have held down your previous job for a number of years and of finding it difficult to get back into work. But what can add to the pressure is the thought of having to keep up with several debts and even the thought of paying even the most basic of household costs when the cash starts to run out. There are of course redundancy bonuses and state benefits, but both can prove inadequate for various reasons. One option for workers is unemployment cover Leeds, a brand of personal protection available around the UK which can act as a kind of extra safety net. It involves a simple premium and can pay out regular monthly tax free sums in the event someone is made redundant.

The benefits of this are obvious as falling behind with certain debts or being unable to meet basic costs cannot only be financially damaging but can also be stressful and may affect somebody’s concentration when it comes to getting back into work. Failure to keep up with certain commitments can also hit someone’s credit rating, possibly affecting their ability to get a form of credit in future.

What can help after being let go is a redundancy package, although depending on how long somebody has been with a company, this may be hardly generous or effective. The welfare state system can involve payments which are barely enough for somebody to even feed themselves, let alone keep up with something like rent, council tax, utility bills, phone bills, and then basic household costs like food.

In exchange for the premium, unemployment cover Leeds will guarantee to give somebody a tax-free amount of cash straight to their account each month after they have been made involuntarily redundant. It keeps on arriving while somebody goes out looking for a job, giving them a kind of financial cushion which can help them to keep up with commitments in the meantime. Payouts continue on a monthly basis, either until the person has found a new occupation and started to receive an income again, or until the maximum payout period is met.

This kind of insurance is a short-term product but most basic deals will pay out for a maximum of 12 months or until the person is working again. Longer payout periods may be available depending on the level of cover and the insurance company. Firms also apply strict limits as to how much they would give somebody per month.

When you apply for a policy you will perhaps be asked to name how much you would expect per month after a successful claim, and it can be useful to add together some of your most important costs to get an idea of how much you might need. However, it is worth noting that insurance companies may not protect any more than £1,500 per month, or perhaps 50 per cent of your income, whichever amount is least, as an example.

After you have claimed one of the most significant things about unemployment cover is that you can often use the money how you wish, spreading it around all kinds of costs and the insurance company will not normally put any kind of strict stipulation on how you spend the money.

This is a bit different to some other variations of this kind of insurance, including mortgage cover, which can guard specifically against someone falling behind with their home loan in the event of involuntary redundancy, accident, or sickness. The payments on this kind of protection are designed to help only with the home loan.

Mortgage protection can often include payouts if somebody loses their income due to the diagnosis of a long-term illness which lays them up out of action, or if somebody is incapacitated and loses their income due to an injury. Unemployment cover Leeds can often be upgraded to include these eventualities too, providing a general income protection policy which guards against most of the common threats to someone’s income.

Unemployment cover in Leeds is not as much of a niche product as some people might think as it is sold by many of the high street insurance companies. However these types of company have been known to charge very high prices compared to some other firms. For example, independent specialist providers who only deal in this kind of cover can often offer cheaper deals which are also just as effective, if not more so, than the insurance offered by high street brands.

Involuntary unemployment cover in Glasgow does not have to work out expensive if you take the option of shopping around for the policy with an independent payment protection provider. You can save on the cost of loan, mortgage or income cover with them and choose the most suitable policy for your needs right from the comfort of your own home.

What is involuntary unemployment cover and how would I benefit?

When you take involuntary unemployment cover you are taking out one of the three forms of insurance, loan, income or mortgage protection to provide you with an income in the event that you were to lose your own income through involuntary redundancy. If you were to be unlucky enough to become a victim you would then have the insurance to fall back onto which would provide you with benefit which you would use towards being able to keep your repayments or outgoings up to date.

When applying for the policy you would have to bear in mind that you need to have been unemployed for a certain period of time in order to be eligible to make a claim on your chosen policy. This amount of time would depend on the provider so always check with them at the time of applying for the cover.

How much benefit would I receive from the policy?

You could choose how much of your monthly income or loan/mortgage repayments you wanted to protect when taking out involuntary unemployment cover in Glasgow. However the provider would have to agree to the amount that you choose as they would set a limit. This is your tax free income in the event that you had to make a claim on the insurance due to becoming a victim to redundancy.

Should you be taking out income payment protection you would usually be able to cover up to half of your gross monthly income or £1,500 whichever of these amounts was the least.

How long would the deferment period be before claiming?

Your provider might allow a claim to be made on your redundancy insurance after day 30 of your involuntary unemployment has passed. Other providers could ask that you wait for up to a period of 90 days and then make a claim on your insurance.

90 days can be a long time to manage without any benefits and this could mean that might fall into arrears and debts of some 3 months before seeing any money. With this in mind you could want to take out cover that pays sooner rather than later and check to find out if the provider backdated your benefit to the first day of your redundancy.

How long does the monthly benefits continue?

This again would differ with providers with some offering your involuntary unemployment cover in Glasgow that would continue paying out over a period of 12 months if you were to have to claim and need to continue claiming for this length of time. Others could offer you a policy that might payout, if needed, for up to a period of 24 months.
24 months cover would of course work out dearer in premiums as you could potentially claim for twice as long. You also have to spare a thought to the fact that whether you take out cover for 12 or 24 months if you should have to continue claiming for as long as the term the benefits would cease at that time regardless.

Could I claim for incapacity?

If you are just taking out a policy for redundancy then no you would not be able to make a claim if you were to become incapacitated. However you could offer to pay more for your monthly premiums and have incapacity protection too. You could then claim if you were to suffer from either of the events.

Check the terms offered by your provider to find out if you would be eligible to claim on your insurance if you were to have to give up full time work to stay home and take care of a loved one that became incapacitated. Carer cover might be offered by the more generous of providers but not all are generous enough to do so.

Ensure suitability before buying

You do have to ensure that an involuntary unemployment cover in Glasgow could be claimed against before you rush into taking on the cover. There will be some exclusions in the small print of any policy and these would need to be checked against your lifestyle as they can mean you would be unable to make a successful claim.

It would be nice to have some form of ‘shield’ we could use to protect ourselves from the traumas and crises that come with unemployment. Unfortunately no such thing exists and unemployment can hit any of us at anytime. The good news is that if you have an insurance policy providing unemployment cover in Manchester then you may at least be able to avoid some of the worst effects of redundancy should it strike.

This form of insurance exists to protect you against the unexpected loss of a job and the loss of income that will go with it. Of course you may get lucky and find another job immediately meaning that you wouldn’t need such insurance but it would be a brave person who relied on that as their only contingency plan.

Typically such contingency plans ARE needed. In today’s uncertain world it can take a long time to find alternative employment and therefore income. Unless you’re very lucky, your debts will quickly start to pile up and it won’t be long before you start to receive the threatening letters and perhaps even repossession notices relating to your car, furniture and perhaps even your house.

It is possible to adopt a philosophy of “I’ll let the government sort it all out if it happens” but that might be a very brave course of action! In reality the basic social unemployment benefits will offer little more than basic subsistence support and will do nothing to help you keep up a relatively normal life and your possessions where they belong – i.e. with you.

Even the government’s mortgage aid is limited. For a start if you hold savings above a certain level then you’re not going to get any help. Even if you are eligible, they will only pay a percentage of the interest of your mortgage and will offer no help at all with the capital. You will also have to find the balance of the interest yourself and will need the support and agreement of your mortgage lender to an interest-only payment period.

For many people, the above sounds too much like being hostage to fortune and they would prefer to have a plan in place that gave them greater certainty and control over their own affairs. To achieve that they turn to insurance that provides unemployment cover in Manchester.

These policies operate simply and effectively. If you lose your income for involuntary reasons they can pay you a monthly income of up to 1500 pounds or 50% of your gross income (the smaller of the two). This could be an invaluable cushion that helps keep your normal life going around you while you search for that new income.

The money can be paid to you each month or alternatively you could arrange for some of your loans to be paid directly such as the mortgage. This situation can continue until you find a job up to a maximum of 12 months though some policies may cover for up to 24 months.

One of the key words above though is ‘involuntary’ because these policies cover exactly that. You may wish to think carefully before losing your income due to your own actions that result in dismissal, voluntary redundancy, resignations or career breaks – because the unemployment cover in Manchester policy would be unlikely to cover those circumstances as they could not being seen as ‘involuntary’!

To obtain this cover you will need to be in permanent and verifiable employment – that need not mean full time though. The policy may specify a minimum number of hours per week that you need to work to qualify. Some policies may demand that you have been in the job for a minimum amount of time and others may say that you need to have held the policy for a qualifying period before any claims could be accepted.

You may also find it difficult to obtain cover (or have to pay more for it) if you are spending time working outside of the UK (this does not usually include occasional business trips) or in some types of self-employment.

You can find these policies via two major sources.

The lending companies sell this insurance but their prices are typically several times more expensive than those from the second source.

That second source is the Internet and the specialist providers of unemployment cover in Manchester than operate on it. They have a range of such products that will suit almost any set of requirements and the expertise to back that up. Having a look at their products and prices might be a good idea.

Being made redundant is something most people don’t even want to consider but taking some time to think about what could happen and how best to manage it could pay dividends in the long term. Finding out about unemployment cover in Liverpool may be a good start.

Unemployment cover in Liverpool is a form of insurance that can provide a tax-free sum of money to cover credit repayments or other monthly outgoings. It is part of a family of products known as Payment Protection Insurance (PPI).

Payment protection insurance has a number of levels of cover. One level, Loan Protection will provide cover for one or more individual loan repayments. These could be for credit cards, car or home improvement loan etc. Another product, Mortgage Payment Protection Insurance has been designed specifically for mortgages. Yet another, Income Payment Insurance can provide you with a monthly lump sum replace your regular income.

For types of insurance related to specific loans including mortgages, the insurer would normally transfer the repayment directly to your loan account and you would not even need to be involved in the process. With Income Payment insurance however the lump sum would be yours to use as you see fit to best manage your monthly outgoings and commitments.

Payment Protection insurance is not restricted to circumstances changing as a result of redundancy only. For a little extra the cover can be extended to include loss of earnings as a result of incapacity to work due to an accident or illness. Likewise accident and illness cover is available without redundancy cover.

The amount of cover you may need will depend on your own personal, family and employment circumstances. If you are lucky enough to be in employment that already provides you with generous sick pay cover, then you may not need additional illness insurance and may opt only for unemployment cover.

It may be worth noting that although this form of insurance can be called ’unemployment’ cover, it only applies to unemployment as a result on involuntary redundancy. If you are unemployed because you resigned, were dismissed or accepted voluntary redundancy then a policy of this nature will not cover you. Some of these policies can provide cover in the event that you have to give up work to become a full-time carer for a close family member.

If you do become unemployed you should contact your insurer as soon as possible after the event to get things moving with respect to your claim. One of the first things you may need to do is to officially register as unemployed. Your insurers may insist on this and they will probably expect to see evidence that you are actively seeking work on a regular basis throughout the period of your claim.

Once your claim has been made you could expect to have to wait anything from between 30 and 90 days for payments to start. Following the waiting period, there are some policies that may backdate payment to the start of the claim. Others may not though and it may be in your best interest to carefully read the terms and conditions of your unemployment policy so you fully understand the position. This may also apply to your mortgage or loan company. They may be more sympathetic to a delay in payment if they are kept informed of what is going on.

Unemployment cover Liverpool is a form of insurance that has been designed as a short-term solution to what is hopefully a temporary problem. The maximum level or cover you can expect to find is 24 months although this is not the norm and 12-month policies are far more common.

The maximum amount of cover you could insure for per month is 1500 pounds or 50 per cent of gross monthly income. The actual amount you receive depends on the type of cover you buy. If you decide to cover a single loan or your mortgage for example, the amount your policy would pay would be the monthly repayment amount (up to the maximum limits). For mortgages any related buildings insurance can be included.

To be eligible for unemployment cover you need to be employed. This doesn’t have to be necessarily full-time but it should be permanent and the policy may specify a minim number of working hours per week to qualify.

You could buy unemployment cover in Liverpool at any of the big high street lenders but you may find that their policies are expensive. Another option would be to check out the independent insurance providers on the Internet. They specialise in this type of insurance and you may be surprised at how much cheaper their policies can be. It may be worth checking out further.

While most people might be quite confident about approaching companies for car insurance or home cover, they may be more hesitant when it comes to protecting their personal finances. Some consumers are already familiar with protecting their credit card debts and other loan insurance policies, but to other people the concept might be an entirely new thing. However, this kind of protection can be useful for anyone who is worried about how they would keep up with their regular commitments if they were ever made redundant. While some people will be able to get back into work quickly after being given a notice, others may struggle and could fall behind with their debts, rent, or even mortgages. Unemployment cover in Scotland is designed to protect against this by providing tax-free support for a set time.

Policies which protect against redundancy like this are part of the payment protection insurance market, and are therefore closely related to the deals which protect people’s credit cards and loan repayments. However, they are a little different because they are used to protect somebody who is let go by their employer, whereas some other deals will pay out if somebody is left without their wages due to illness or injury after an accident.

Unemployment cover in Scotland is seen as crucial by some workers because the welfare state system can prove inadequate. Disability and job seeker’s allowance may not be enough to help somebody who has a sizeable mortgage and other debts. Likewise, redundancy rules mean that people of a certain age and who have been working for a company for a set amount of time can end up with a package which would then get them through little more than a week.

Getting protected

This is why some people turn to personal insurance deals as a way of ensuring they would get viable support if they were told they would no longer needed by their employer. Someone simply pays a regular premium to an insurance company, who in exchange would pay them a monthly tax-free amount straight into their account to go on essential outgoings while they look for a new job.

The idea with the payouts is to allow somebody some breathing space with their regular outgoings, meaning they can perhaps better concentrate on finding suitable new employment. For some people redundancy could mean a poor credit rating in future, or even repossession in some circumstances. Unemployment insurance payments can help guard against this as people can often protect a sizeable slice of the current income.

While companies often don’t allow somebody to insure all of their wages, they often say somebody can protect to a certain percentage or top limit which will often be enough to cover someone’s essentials, or at least to provide viable support with them. The policyholder can often actually name the amount they would get per month, with insurance companies charging them more for the higher amounts.

Eligibility

To claim on the policy, someone will have to show that they have been made redundant involuntarily, rather than accepting an offer of redundancy, or been sacked from a job, or resigned. Crucially, the policyholder must have had no notification that they were going to be let go before they take out the policy, otherwise it will be invalid. An announcement, memo or phone call will often be enough to invalidate someone’s policy if they have received this before taking out the insurance.

But following a successful claim, someone’s monthly payments simply arrive straight into their account tax-free to spend as they wish. The first payment arrives 30 to 90 days after the successful claim, and this is a kind of exclusion zone which must pass before the cash begins to arrive. This can often be named on the policy, and somebody who has a 30 day waiting period will often pay more than somebody who has a 90 day period.

Someone’s payouts will arrive all the way through to the end of the policy limit if they don’t find work again within that time. Many deals payout for 12 months, while some will go as long as 24 months depending on the policy and the insurer. It should be made clear to the policyholder how long the payout period would be when they take out the insurance.

Unemployment cover in Scotland can often be bought from the usual well-known high street insurance firms but can also be bought by companies who deal specially in this kind of cover. In many cases these firms may prove the cheaper option, although this does not also typically mean that they supply inferior cover. As with those common car insurance policies, shopping around can help someone to get more for their money.

In order to prevent your family from facing financial ruin should you have to deal with involuntary redundancy, it is necessary to buy an unemployment cover in Northern Ireland. You could also protect against incapacity for illness or accident. Government assistance for people forced out of work is very minimal and a small percentage of people get aid. You have to take action yourself by purchasing one of three common products that are utilized to fulfill unemployment protection needs. These three products, mortgage payment protection, loan protection, and income payment cover form a sector of the insurance market known as payment protection insurance.

Mortgage cover helps you to manage your monthly mortgage repayment obligations. Keeping your home secure is a first priority when you are out of work, and this product is focused on that. Loan payment protection is great for meeting your monthly personal loan and credit card payment obligations. Income payment cover is good for managing various financial expectations. While each of the products has its unique niche, they all effectively serve as unemployment cover in Northern Ireland because they provide monthly benefits that replace lost job income from a covered event.

The features of unemployment protection

There are some common components with payment protection products that you need to weigh as you look to get the best protection possible. One is the length of benefits payout, which is usually either 12 months long or 24 months long.

Another is the origination of the first payment. Some policies pay you the first benefit as soon as thirty days after a covered event occurs. This is the ideal situation if you are on a budget, and without a job income. Other plans promise to deliver the first payment at 60 days or 90 days following the event.

The highest level of protection you can usually get with a payment protection policy is the lesser of half your regular gross income or 1500 Pounds. This doesn’t replace all of your lost income but since the payments are tax free, it should give you enough support to make it through the unemployment period.

Your eligibility for unemployment cover in Northern Ireland is dependent on your status as a full time employee. You usually have to work full time for six months to get benefits. Retired people, part time employees, and also people with pre-existing medical conditions are not typically able to collect.

Your protection with payment cover

With payment protection, you generally get insurance against involuntary redundancy, which enables you to collect during redundancy. Many providers also allow you to add benefits for incapacity from accident or illness. This makes for a potentially broader insurance package.

Some people choose only to insure against one event or the other. Typically, you can cover redundancy and leave out the incapacity piece, which some people do because their employers cover accidents and extended illness. Others do need accident and sickness protection but leave out redundancy to save premiums. This is only a good idea if you have savings and an ability to quickly find new work.

You might also want to watch for policies that include carer cover. This is a nice extra protection that some providers include for free. With this cover, you get monthly benefits if you have to leave work to manage the health of a sick or injured family member.

Getting the best deal on unemployment cover in Northern Ireland

You can generally buy payment cover policies from either financial institutions or independent insurance specialists. However, most discerning consumers are starting to realize that the best deal most often comes from independent providers. Financial institutions usually have much higher premium rates and in the past, have often pressured customers by bundling their plans with loan products.

In 2005, Citizen’s Advice filed a super complaint with the Office of Fair Trading (OFT) regarding the bundling of loans and insurances, and other unfair selling practices. The OFT asked the Competition Commission to further review. After its review, the Commission made some recommendations, including the placement of a seven day ban on the sale of payment protection following a loan sale.

Thanks to the heightened awareness in the sector and the resolutions, consumers are now experiencing better service and lower rates from standalone providers. You can usually find unemployment cover in Northern Ireland for rates as much as five times less on mortgage cover. Income payment protection runs about five times less through an independent provider. Loan protection can be as much as ten times less expensive. These savings and the benefits of protection make it very important that you insure your family right away.

In tough economic times, it is always good to have as much financial security as possible. One way to give you more security is to prepare for the potential of involuntary redundancy. Are you comfortable that your job is secure? Even if you are, realize that a lot of people that are now unemployed felt the same way before being displaced from work. As companies look to costs, labor is one of the first areas hit. If you lose your job, you lose your income and your livelihood. With the protection of unemployment cover, you are paid a monthly benefit pay cheque after the insured event occurs. For a modest premium investment, you can give your family the peace of mind and security that comes from knowing a plan is in place.

Mortgage payment cover, loan payment cover and income payment cover are the products that commonly are used as unemployment cover. These three insurance solutions make up an umbrella of products known as payment protection insurance. This sector within the insurance industry is specifically designed to protect you with replacement income when you face involuntary redundancy. The product itself is not as important as the protection it offers. There are some differences in purpose among these three products, but they all pay replacement income benefits.

Understand the terms and conditions of unemployment insurance

Your education in unemployment cover begins with an understanding of the common terms and conditions that may these insurances what they are. To get the best deal in the marketplace, you must know the differences in common terms that may affect the value of a given product for you. First, consider the length of the plan. Is it a 12 month plan or a 24 month plan? A 12 month plan might be possible if you are confident that you can quickly find a new job. A 24 month plan gives you a bit more flexibility given the longer period of protection.

The maximum monthly benefit with most redundancy covers is 1500 Pounds or half of your standard monthly gross income. This means that you are not able to cover your full normal payment, but given that the benefits payouts are non-taxed, the protection does replace a significant portion of it. You do have the option to take on a lower amount of cover. Though most would prefer to secure as much of their normal income as possible, some who have other income or savings might want to save money by taking out a smaller amount of cover.

When do benefits begin? This is an important question since you will be waiting for the benefits pay cheques to take the place of your lost job income. The answer is that the point at which benefits kick in does vary by provider. Some providers offer policies that begin payouts 30 days after the insured event. This means there is not a gap between your last regular pay and your first insurance payment. Other plans start benefits 60 days or 90 days after the event. Can you wait that long to begin collecting payments? You might, but most people cannot go that long with an income payment as they have bills and debt obligations to pay.

Know the eligibility guidelines for unemployment cover

Unemployment protection is not open to all people. Since the insurance is intended to protect regular income, it is only available to full time employees who have been employed for at least six months. This means that retired people, part time employees, and people with pre-existing medical conditions cannot collect benefits payouts from the insurance policies. Know whether you meet this set of criteria before buying cover. Though insurance providers should help you figure this out, some financial institutions have used mis-selling tactics in the past, including selling to non-eligible people.

Know your options in payment protection

So you now know the basics of getting protection against involuntary redundancy. What if you become sick for a prolonged time or are injured in an accident? Does your employer have a solid health scheme in place that covers you in these situations? If not, you will be glad to know that many providers allow you to buy cover for accidents and illness that keep you out of work. You can usually take on one, two, or all three cover types (accident, sickness, or unemployment). For maximum protection, you would obviously want protection against all three events.

Some people may decide they only need insurance for cases of accident or sickness. This is true for people who do not have this protection from their employer. What about unemployment? Some opt to not take unemployment because they either receive nice severance packages from work, or are confident they can quickly find a new job. There are other people who want just unemployment cover but do not need the accident and illness since they do have this cover at work.

Another add-on protection that many people elect to include in their unemployment cover is a carer cover benefit. Carer cover offers replacement income for situations where you must leave your job to care for a sick or injured family member. Unfortunately, people sometimes have loves ones (parents, spouses, siblings, children) who become seriously ill. When this happens, your family member might need you to take care of them daily. Having carer cover allows you to leave work and help out, while collecting the benefit payments for the length of the policy. This is a nice added value for a policy.

Be familiar with where to buy unemployment cover and how much to pay

You basically have two options when looking to buy payment protection. The first option is financial institutions. In reality, this provider has long targeted people like you without you even being aware. These large banks are general providers of financial products and are not as technically sound on the cover products. Insurance specialists, though, are experts in the unemployment insurance products as they are a part of their emphasis on insurance solutions.

Financial institutions long controlled the PPI marketplace because of consumers that were unaware of the sector. Consumers would go to a bank for a loan and end up buying both the loan and the insurance bundled with it. How did this happen? Sometimes the consumer felt pressured to take on the bank’s product in lieu of getting the loan. Other times, the lender would simply add the insurance and only make note of it in the fine print of a disclosure document. By spreading out the costs of the insurance with the loan repayment, the bank could hide the tremendously expensive nature of their products.

Price is a big differentiator between large banks and insurance specialists. Generally, loan payment cover is about 10 times less expensive to buy from an insurance specialist than from an institution. Similarly, mortgage payment cover is about four times less expensive and income payment protection is five times less expensive. These cost savings are well received by consumers today, though consumers in the past were unaware that they could by protection in the open market.

The 2005 Citizen’s Advice super complaint

In 2005, leading consumer advocate group Citizen’s Advice filed a super complaint with the Office of Fair Trading (OFT). In the complaint the group brought up the bundling of loans and insurance and the pressure selling tactics it felt were unfair to consumers. It also alleged mis-selling against several companies that were selling products to those ineligible to collect benefits.

After launching their own investigation, the Financial Services Authority (FSA) charged fines against many well known high street companies that it found guilty of mis-selling. This penalty communicated that the agency was no longer tolerating any mis-selling and would watch for similar practices in the future. The fines also put consumers on alert to watch out for pushy selling tactics and to learn more about open market buying of unemployment cover.

The OFT completed its investigation by referring the PPI sector to the Competition Commission for further review. Following its review, the Commission placed a 7 day waiting period on lenders, banning them from selling payment cover to a new borrower. This gives the consumer more freedom to shop around for the best deal.

The Commission also recommended that all payment cover sellers report the costs of their premiums per £100 of benefits. This ensures more consistency in premium price reporting that also helps eliminate some types of deceptive selling. Several other resolutions from the Commission are to be in place by the end of 2009.

Act soon to cover your family from involuntary redundancy

Now that you are familiar with the benefits that make unemployment cover unique and valuable, do not wait long to go shopping. Keep these factors in mind when looking for the best value you can find:

• You can buy protection for unemployment, accident and illness
• You can add an extra benefit with carer cover
• You can find the best value unemployment cover with independent specialists who are more knowledgeable and offer better rates on payment protection insurance products.

Unemployment cover can be taken out to ensure that if you were to be made involuntarily redundant, you will still have an income. Without anything to fall back onto you could have a real struggle on your hands to be able to keep servicing your repayments and outgoings each month at an already stressful time.

What will protection do?

Your chosen unemployment cover will provide you with an income that is tax free and which will go towards you maintaining your chosen repayments each month, or just to provide a general income. Your benefit will begin once you have been unemployed for so long and will then continue providing you with an income for so long before stopping.

When could a claim be made on the policy?

You can typically make a claim on your policy between day 30 and 90 after you are made redundant, subject to the policy terms and conditions. As there are differences between policy providers, you will have to read the small print to find out when your particular provider will pay out from.
Also check the terms to find out if the provider will date your protection back to day one of your redundancy as some providers will do so.

How much benefit will be paid?

The amount given back from the policy will be the sum that you had decided to cover at the time of you taking out your chosen form of unemployment cover and will typically be around the £1,500 mark, or half your earned income.
This sum of money is paid to you after the period of deferment and for up to the term. How much you choose to protect will be paid back tax free and will need to be pre-agreed with the provider at the time of you applying for the cover.

How long will I continue to get benefit?

Some providers might offer to pay out on your policy for a period of 12 months and others could give you protection that will continue providing you with an income for up to 24 months. The latter will typically cost you more in premiums.

Always check for suitability

As with all things financial, you should check over any cover you are considering as there are always exclusions in a policy. Some providers could include many exclusions while others could add in just the most basic ones.

Exclusions you could find in the cover

In order to be eligible for unemployment cover usually you will have to working in the United Kingdom, the Channel Isles of the Isle of Man if you want to take out a policy. You will also need to be in full time employment and have been working for a period of no less than 6 months prior to taking out the cover.

Those who are self-employed will have to check for suitability as usually you will only be eligible put in a claim on your policy if you have to stop trading on a permanent basis.
You will also have to take care and check the small print if you suffer from a pre-existing medical condition and want to take out cover.

Choosing the level of protection needed

You can of course take out unemployment cover just for redundancy. However you might want to pay a little more each month and have protection against accident and sickness too. Alternatively you could just choose to take out a policy to protect against being unable to work if this suited your needs better.
The level of protection taken will reflect on how much you will need to pay for your cover so you will only have to pay for cover that was needed.

The types of payment protection to consider

You could choose to take out mortgage payment protection insurance (MPPI) as a form of unemployment protection if you have mortgage repayments to protect. The policy will then provide you with a sum of money that will be used towards your repayments each month and could stop you from falling into debt with the repayments and be at risk of mortgage repossession.

Loan cover will provide you with an income that will go towards you managing to continue meeting your loan repayments each month. Both loan and mortgage insurance are debt specific. If you want to receive an income that is not debt specific, then income payment insurance could fit the bill. Income payment protection insurance cover gives you a sum of money each month that will go towards you servicing the demands of your essential repayments and can be spent however you wish.

Why a policy might be considered

You could consider unemployment cover as a viable alternative to applying to the State for benefits. State benefits might pay an income if you were eligible but it is very likely that they might not meet the income you are used to bringing home each month.

Even if you were entitled to receive an income from the State towards your mortgage repayments, then you will only get help towards the interest part of the mortgage.
Savings could also be a letdown as you could remain unemployed long after the policy has reached its term.

Getting a good deal on the policy

The good news is that protecting your income can be very affordable, too. You can get the best deal on your policy by looking around with an independent payment protection provider and comparing the cost of the insurance. Providers can differ so always compare as independent research shows that you can get loan protection up to 10 times cheaper, mortgage cover up to four times cheaper and can get five times the savings on income protection by going with a standalone provider.

You can also compare the exclusions and small print of a policy with the independent provider as all ethical providers will ensure you have the information needed to determine suitability before you take on the policy.

A summary of some of the main benefits

• You can choose how much of your mortgage/loan repayment or your monthly income you want to protect
• You can compare the cost of your policy with an independent provider to make the biggest savings
• You could take out unemployment cover just to protect against redundancy or you could pay more each month and have protection for incapacity as well.

Unemployment cover usually comes through one of three common products that make up the payment protection insurance (PPI) portfolio. Mortgage payment protection insurance (MPPI), loan payment protection and income payment protection are your three best options to financial security should you be forced to cope with involuntary redundancy. Opportunities for assistance from the government are limited, as are the amounts of funds given to those selected parties that do get some assistance.

Mortgage payment cover is an insurance solution that benefits you with monthly replacement payments for use in keeping up with your mortgage repayments. Loan payment cover is also a monthly benefit that helps with payments of personal loan and credit card balances. Income payment protection is a more general purpose application that supports your ongoing financial needs including bills and groceries. Although they have slightly different intentions, the basic idea of the payment protection products is to serve as your unemployment cover.

The basic features of unemployment cover

To be eligible to get benefits from unemployment cover, you must be employed full time for a period of at least six months. It is not designed for retired people or part time employees. Also excluded from most protection insurance policies are people that deal with pre-existing medical conditions.

Once you have determined your eligibility to get benefits from payment cover, next consider key elements that make these insurances unique. One of the important aspects to payment protection is the length of the benefits payout period. Some policies pay benefits over the course of 12 months, with others delivering payouts for a 24 month period of time.

When do benefits kick in? This is another very important question to ask before purchasing a policy. Policies usually make the first benefit payment 30 days, 60 days, or 90 days after the insured event takes place. There is a big difference between getting the first benefit at 30 days versus 90 days. If you have savings you might have the flexibility to have a plan that works either way. But, if you are on a monthly budget, you might have to stick to a policy that starts sooner to avoid a gap in income.

You also need to think about how much cover to buy with your policy. Some people take on a lesser amount to save on premiums. However, unless you have significant fund from other sources, you should have its much protection as possible. The incremental cost as you add cover gets less. The highest monthly benefit allowed can vary among providers but generally is the lesser of 1500 Pounds or half the standard gross income being replaced.

Levels of unemployment cover

Involuntary redundancy is the common event most people are familiar with when it comes to buying unemployment cover. Many providers, though, offer products that enable you to combine redundancy protection with cover for periods of prolonged illnesses or accidents. This makes for a broad protection.

Not everyone gets this combination of covers. Some people decide they just need one or the other. For instance, if you have good accident and illness benefits available from your employer, you probably don’t want to pay for them on your own. In the same way, you might need accident and sickness cover, but you save on premiums by not insuring against redundancy. This is usually because the insured person is confident in his ability to quickly gain new work, or he has good savings or funds available.

There is another nice add-on benefit that some providers include at no extra charge in their unemployment cover solutions. This protection is known as carer cover. It is designed as a way to protect people that have to leave work to care for the health of a sick or injured family member. It can be a very nice benefit should you face such a scenario.

Understanding unemployment cover providers

There are two general providers of payment protection products – financial institutions and independent insurance specialists. Financial institutions sell a broad array of financial products including loans and insurances, which many have bundled in the past. This has often led to pressure on consumers to take on the expensive policies sold by their lenders. Independent insurance specialists focus on insurance and therefore offer more expertise and service in this industry. They also have much more affordable rates.

In 2005 a super complaint was raised with the Office of Fair Trading (OFT) by the Citizen’s Advice. This complaint brought up the bundling of loans and insurances that prompted many consumers to feel pressured to buy protection from their lenders. The group also mentioned mis-selling of policies to ineligible consumers that some unscrupulous banks participated in.

The OFT turned the payment protection insurance sector over to the Competition Commission for further review. The Commission did review the sector and made several recommendations for improvements of practices. It addressed the bundling of solutions by instituting a 7 day ban on lenders before they can sell payment protection to new borrowers. This frees the consumer to look to more affordable independent insurers for unemployment cover.

The Financial Services Authority (FSA) also at the same time investigated the payment protection sector. The FSA concluded its investigation in 2007 by issuing fines against many high street companies it found guilty of mis-selling. This helped call attention to this practice and alerted banks to stop such mis-selling.

Unemployment cover is much more affordable through independent providers. Loan cover, for instance, is about ten times cheaper when you by it from a standalone provider as opposed to a financial institution. Mortgage cover is around four times less expensive, and income payment protection is about five times less expensive. These discounts account for great savings opportunities for consumers who should now have no reason not to explore the marketplace for a good deal on payment protection insurance. Do not make the mistake of waiting around and assuming redundancy, or accidents and illnesses cannot happen to you. Be practical and proactive in giving your family financial security and peace of mind with a payment protection policy.