There are good reasons, these days, to be worried about redundancy. A good deal of the worry and concern can be lessened considerably, however, by a very basic safety first measure by the name of unemployment income protection insurance.
Three million of the workforce unemployed by the end of the decade is a tally that of course gives cause for concern. This is the total forecast by some analysts looking ahead to the year 2010 and the basis for a report in The Independent newspaper on the 24 October 2008. For many people currently in work, the prospect of redundancy seemed little to worry about – most of their jobs appeared to be reasonably secure. Things changed in the wake of the credit crunch, of course, as the British economy slid into recession and the rate of unemployment rose to its steepest in at least 17 years. Already, it is commonly expected that some two million people will be without a job by this Christmas.
The risk of any particular, individual job being made redundant, of course, is extremely difficult to calculate. Some sectors of the economy will be more vulnerable than others, but it will be difficult to predict exactly where the axe might fall. The simple fact of the matter is that it could be yours.
Those prudently acting on the safety first principle, however, will have forearmed themselves with unemployment income protection insurance, an eminently simple and straight forward measure which guarantees a regular, monthly replacement income in the event of compulsory redundancy.
The level of cover required is chosen at the outset and will be determined by the prospective policy holder’s decision to balance the cost of the monthly premiums against the amount of income that would be required to tide him or her over in the period between a possible redundancy and the first day in a new job. Typically – but depending on the particular insurer chosen – the maximum amount of cover that can be bought in this way will be 50% of the normally earned salary whilst in work or £1,000 a month, whichever is less. Once the cover has commenced the benefits become payable in the event of redundancy and will continue to be paid each month until the policy holder returns to work in a new job, or for up to 12 months. Depending on the particular policy chosen, the option might be given, on payment of an additional premium, to extend this maximum period of payment to 24 months.
Leading specialists in the provision of unemployment income protection insurance are British Insurance, whose managing director, Simon Burgess, asks: “will your job survive the round of redundancies that lies ahead? Who can tell? Many, though, will be more than a little worried. The modest cost of premiums for reliable and effective redundancy insurance, however, is a small price to pay for putting the safety of your finances first”.
For many years I have been a staunch campaigner against the major names in finance who, I believe, rip-off their customers by selling over priced, often unsuitable payment protection insurance (PPI) cover.