Unemployment income protection insurance would allow you an income towards being able to maintain all of your essential outgoings. You would be able to use the replacement income as you wanted towards any bills that had to be met while you were unemployed. The policy would supply you with an income once you had suffered from redundancy for a certain period of time and would continue to payout for so many months before ceasing.

Usually you would need to have been unemployed for between 30 and 90 days with some providers offering to date back the cover to the first day. Payments would then continue by providing 12 monthly repayments or 24 monthly repayments depending on your provider and after this period of time it would stop paying out regardless of your situation at this time. However this can be more than enough time for you to have found a suitable job. The income the policy supplies would be the amount you have chosen to protect of your own monthly income which the provider would pre-agree with as will set a limit as to the amount you can protect.

If you sit down and work out how much you do have to payout each month you would realise why giving consideration to protecting yourself against a lost income is worthwhile. Without unemployment income protection insurance to fall back onto if you became a victim of redundancy you could have a struggle on your hands to be able to maintain such as your monthly food bill or your utility bills. Not having money for these alone would cause enormous stress not only you but also for the whole family.

While you can just taken protection for your income for unemployment you could for a little extra take out cover to safeguard against both redundancy and incapacity together. You would then be able to make a claim on the insurance should you suffer from either event which would provide you with total protection. Of course you might also choose to look into taking out cover just for incapacity alone if this would suit your circumstances better.

Unemployment income protection insurance can be a better form of backup plan than risking turning to savings as a means of getting through your unemployment or incapacity. You would need to take into account that if using savings to maintain all of outgoings you could have to turn to them for many months and your incapacity or unemployment could outlast your savings. If this happens then you would have a struggle on your hands again. If you were considering being able to apply for State benefits then you would also have to think again as you would have to prove your circumstances would allow you to make a claim. Should you be entitled to receive an income you could find any income you might receive could fall short of the income you brought home when working.

Unemployment income protection insurance is protection for your own monthly income against redundancy and can be taken out with a specialist provider which would allow you to be able to search for the cheapest premiums. Suddenly losing your income can have devastating consequences on not only you but also the rest of household and a policy could stop you from having to face these.

You can take out unemployment protection insurance by choosing the amount of your income you want to cover. This amount, providing it is pre-agreed by the provider is the sum of money that you would get back should you find yourself a victim of redundancy. You would be eligible to make a claim at anytime in your life should redundancy happen as long as you were paying the monthly premiums. You would get the income back each month for the term offered, as tax free payments, which would usually be between the 30th and the 90th days of your unemployment. Some providers will offer to date back the protection to the first day of you losing your income to redundancy so check this in their terms before taking on the policy. Once you have begun to receive payments you continue to receive them on a monthly basis until the 12th month or the 24th month, depending on the provider, if you should need to claim for this length of time. After this period of time the protection policy ceases, however during this time you could have found work or have made a recovery.

With your unemployment income protection insurance behind you and the income you would gain back each month from it you would not have to make the drastic changes you might have to if you did not have the income fall back onto. You could use this income in any way you wanted by paying any essential bills that might drop through the letterbox during your unemployment. You could for example choose to use some of the replacement income to meet the demands of your utility bills. You would also have the money to be able to do the monthly food shopping without worry. If you had rent to pay then you would also not have the worry of finding that money each month, at least for the term of the cover.

Unemployment income protection insurance could be more reliable as a backup plan than considering using your life savings. For one you could make a huge dent in these savings and they might not last for the duration of your unemployment, which again would leave you struggling. A policy could also provide more financial security than if you risked applying for State benefits. You would have to prove you were entitled to receive benefits and even if you should be eligible the little money you might get might not be enough to maintain all of the essential outgoings you need to service each month.

The best time to buy unemployment income protection insurance is when you don’t need it – but the if you wait until you are likely to lose your job then you will find it won’t pay out.

The rule is if you know you’ve lost your job, then you can’t apply and as a buffer, most policies have a qualifying period of 60 to 120 days from the start of the policy when you can’t claim.

If you are worried about paying your mortgage and other bills if you lose your job, do some research about the best unemployment income protection insurance to suit you.

First, know your rights. Your employer has statutory obligations to pay you redundancy compensation but most only match the statutory requirements and the amount of compensation can be low.

Redundancy packages depend on your time with the company, your age and weekly pay.

To qualify, currently you must have worked for your employer for two years or more, then:

• If you are aged less than 22 years old the entitlement is half a week’s pay for each complete year of service
• If you are between 22 and 40, it’s a full week’s pay for each complete year in the job
• If you are over 40, the amount rises to 1.5 week’s pay for each complete year with the employer

Employers can cap redundancy payouts at a statutory level of £330 a week, so you may not get as much as you think if you are a high earner.

Now you know how much cash you will get from your redundancy package, you can work out how long this will last before you need to top up you income by claiming on your unemployment income protection insurance.

The longer you can eke out your own money, the cheaper your policy cover – it’s like paying an excess on your car or house insurance. Because you are taking some risk, it reduces the risk of the insurer so they can cut their price.

You must tell your insurer if you know you may be losing your job. If you don’t, you may find later that the insurer won’t pay out on your claim.

Most policies have exclusions as well that mean unless your job loss is beyond your control, they won’t pay – for instance they are unlikely to pay if you take voluntary redundancy, resign, get sacked or retire.

Unemployment income protection insurance is a standalone policy, but can come as an add on to accident and sickness cover to give comprehensive protection not only against losing your job but being unable to work due to ill heath or injury.

Given the rising tide of unemployment that accompanies the UK’s accelerating slide into deeper recession, unemployment income protection insurance is something practically everyone should be considering. It is a simple and straight forward financial product which does very much what it says it does – namely, it protects a vital source of income in the event of the policy holder’s unemployment.

Unemployment in the UK has already outstripped two million and continues to rise from wave after wave of new redundancies as companies fail in their battle to secure ever declining credit. A jobless total approaching three million is widely predicted by many commentators. Against this background, any insurance that promises to deliver an assured monthly replacement income in the event of an individual’s redundancy will represent an extremely attractive, yet still modestly priced, investment.

Unemployment income protection insurance fits that bill perfectly. In return for a remarkably reasonable premium each month, the policy holder is financially covered to face the worst of the fall-out from a redundancy if ever it should occur. Armed with this sort of cover, it is possible to continue to enjoy a replacement “income” on a regular monthly basis until alternative employment has been secured, or failing that, for up to a typical maximum of 12 months. There are even policies, with enhanced premium rates, which will continue to pay out for up to a maximum of 24 months.

In terms of the level of income that can be enjoyed in this way, most policies will apply an upper ceiling equivalent to 50% of the policy holder’s normally earned income, or up to £1,500 a month, whichever is less. In this way, the whole, or a significant proportion of the income usually earned from working can be preserved even when the job itself has been terminated. Furthermore, some policies even include in the definition of the policy holder’s “unemployment”, his or her need to leave work in order to care full-time for a member of their immediate family.

Unemployment income protection insurance is available to anyone of working age who permanently resides in the UK, Channel Islands or Isle of Man, and is currently regularly working for more than 16 hours a week and has held regular employment for at least the previous six months. Naturally, there must be no impending redundancy or notice of redundancy at the commencement of the cover and most policies operate an initial “exclusion period” (typically of 120 days) before claims can be made under the redundancy provisions of this insurance.

One of the country’s leading specialists in unemployment income protection insurance – whose policies also include the above-mentioned provisions for providing full-time care for a member of the policy holder’s immediate family – is British Insurance. Managing director, Simon Burgess, says: “the spectre of redundancy, followed by several months or more of unemployment, is something that is not going to go away soon. Things will be getting worse before they get better. During these difficult times, therefore, practically anyone’s job remains at risk. As a result, practically everyone should be giving careful consideration to the security of unemployment income protection insurance”.

An unemployment income protection insurance policy could supply a replacement income if you become unemployed through no fault of your own, such as being made redundant. As no one can say that their job is safe, thought should be given as to how you would manage to maintain your outgoings after losing your income. Of course you could consider using any redundancy money or savings you have, but you could soon put a huge hole in them if it took you many months to find work. State benefits could also be a let down as often the little money you are entitled to receive falls short of your own income. Income payment protection could be a far better way of ensuring you would have money each month.

You would choose the amount of your own monthly income that you wanted to protect, which the provider would pre-agree with, and this would be your replacement income if you had to make a claim. If you chose to take out unemployment income protection insurance with standalone specialist British Insurance your income would come tax free. You would be eligible to claim on the policy once you had been unemployed at least 30 days and British Insurance pay back the income to the very first day you became unemployed. Following the onset of your income you then have 12 monthly payments to rely on, which allows you time to find another job. After this period of time the cover would cease paying out regardless of whether you had managed to find work.

You can of course choose to search with other standalone providers and compare the cost of the premiums. If you were to do so you would need to take a look at the small print in the policy as there are some providers that can state 90 days deferment period. You also need to check how long you could benefit as some providers offer to payout for 24 months before the policy would cease. When looking at the terms and conditions also check to find out what exclusions the provider has included in the policy as there are some in all, with British Insurance adding in just the most frequently found exclusions. These need checking against your lifestyle as they could make a policy useless if you found you were unable to claim if needed.

The income gained from your unemployment income protection insurance would allow you the peace of mind of knowing that you at least had some money coming into the home. You would be able to use this money in anyway you wished, to pay whatever essential outgoings you needed. It would certainly allow you to keep food on the table for your family and you could also use some of the replacement income to keep your utility bills up to date. As the money from the policy is yours each month, you would be able to use it just as you did your own income.

The Confederation of British Industry (CBI) expressed a grim outlook for the next few years when a spokesman said: “What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting”. Reported in The Independent newspaper on the 17th of November 2008, the forecaster added: “An unwelcome consequence of the downturn will be a significant loss of jobs, many of them in sectors that have been relatively insulated until now”. That significant loss of jobs will leave millions of people in severe financial difficulties and make unemployment income protection insurance a lifeline needed by almost everyone.

Unemployment, of course, is not just about a traumatic change in the routine of normal life, it is about the loss of an income until alternative work can be found. This is where income protection insurance comes into its own. With an adequate level of insurance, the policy holder facing redundancy will have the considerable comfort of knowing that when the normally earned income stops, an insurance payout takes over and delivers a regular, monthly replacement income for as long as it takes to find another job.

The amount of replacement income depends, of course, on the level of cover decided by the policy holder from the outset and can typically be as much as 50% of his or her normally earned income, or £1,000 a month, whichever is the lower figure (remembering that policies will vary from insurer to insurer, so that these limits might also be different). In any event, however, unemployment income protection insurance will help to ensure that critical household bills and expenses will continue to be paid whilst searching for another job and that re-employment will not have to be started with a mountain of unpaid debts to clear.

Although unemployment insurance is available to anyone of working age, who is currently in regular employment and has been so for at least the previous six months, it is nevertheless important to move relatively quickly to ensure that cover is in place before the signs of impending redundancies start to appear at your particular place of work. All policies will have an initial “exclusion period”, during which time it will not be possible to make a claim. This is to ensure that the insurance is not unfairly taken up by those who have already received, or have a reasonable expectation of receiving, a redundancy notice in the first month or so of starting the cover.

In the event of a valid claim, however, unemployment insurance will continue to pay out the insured benefits every month until alternative work is found or for up to a maximum period of time that is typically 12 months (though some policies will offer an optional extension of a further 12 months on payment of an additional premium.)

As Simon Burgess, of market leaders if the provision of unemployment income protection insurance, British Insurance, says: “The CBI is well-placed to comment on the long road ahead before its members can look forward to any economic upturn. In the meantime, however, unemployment will continue to rise and, with it, the need for individual employees to ensure that they have adequate unemployment insurance”.

What is unemployment income protection insurance anyway? This type of insurance is designed to pay you an income if you were to lose your job due to involuntary unemployment, particularly unforeseen redundancy.

This is a short term policy which pays the benefits for 12 or 24 months depending on the provider but it should not be confused with ‘income protection insurance’ which covers unemployment as well but the difference is the latter policies can pay out for years.

The unemployment income protection insurance will pay the benefit free of tax so there is more money in your pocket each month to spend how and where you like.

Very often the policies are used to support the payment of mortgages, loans or credit cards as they are a form of payment protection insurance (PPI).

Beside the benefit of the monthly income, even if you never use the benefits, the peace of mind you receive is priceless. When you have income protection you won’t have to worry about the possible fall out of losing your job. It will be a case of should it happen, you will be prepared and your life will not have to be adversely affected.

As good as these policies are you do need to express wisdom when making your selection.

The biggest danger is being sold a policy that is no good to you, one you will never be able to claim on. Is this possible? Unfortunately it is more common than you might think.

In 2005, a complaint was submitted by Citizen’s Advice to the Office of Fair Trading (OFT). This prompted an investigation by the Financial Services Authority (FSA) into the practices of high street protection providers. What they found was that providers were not taking the time to evaluate consumer’s circumstances and did not explain the policy terms either. This resulted in many consumers being sold policies that were very good in theory, but they just did not suit their circumstances.

Needless to say huge fines were handed down and the industry providers are keenly monitored.

To avoid being a victim of mis-selling, all you have to do is evaluate your circumstances against the policy terms and conditions by asking questions and doing a bit of research. Look at what independent providers have to offer and pay attention to how they treat their customers.

Simon Burgess, managing director of ethical protection provider British Insurance says ‘At British Insurance we are guided by our ethical practices. We aim to ensure each policy we sell is beneficial to the policy holder. We take pride in having an honest reputation and will do what ever it takes to keep that reputation in tact’,

I hope this guide to choosing your unemployment income protection insurance has been helpful, hopefully you should now be in a position to make an informed decision.

With the economy forever changing, redundancies are being regularly announced and you never know if you could be the next person to lose their income due to unemployment. However your financial worries could be greatly eased if you had given some thought to taking out unemployment income protection insurance.

Unemployment income protection insurance can be taken with a standalone provider or the high street. If you choose to shop around with a specialist provider you can make some great savings on the premiums. One of the cheapest premiums is offered by ethical British Insurance who is one of the leading providers in the UK. You would insure so much of the monthly income you bring home against the chance of unemployment. The amount would be pre-agreed by the provider and this would be the sum you would get back each month you continued to be unemployed.

Your benefit would begin providing you with an income once you have been unemployed for 30 days. It would supply you with 12 monthly payments before expiring and this provides you with ample time to search for another job. If you should shop and compare with other independent providers you need to check when cover starts paying as some might state a deferment period of 90 days before claiming. Some providers could also offer a 24 months policy so again checking how long it would continue paying is imperative. Also find out what exclusions have been included in the protection as these too can differ. Independent British Insurance adds in just the most common ones but other providers could add in many more.

Unemployment income protection insurance could make a great deal of difference to your life if you have been redundant. During the term of the protection you would be able to fall back onto the income the policy provides. While this might not be your full income it would provide a large amount of it. This income could be used towards being able to maintain such things as your monthly shopping bill or your utility bills. However of course it would not be limited to these payments and in fact you could use your income towards anything you wanted. It would save you having to dig into any redundancy money you were entitled to receive which could soon put a huge hole in it. Of course you would not be able to claim State help if the redundancy money was over a certain amount as they would ask that you use this before you would be eligible to claim.

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”.

If you are concerned about the effects of job loss especially when the economy is volatile, you might want to consider taking out unemployment income protection insurance. This policy is designed to pay you a monthly income in the event of involuntary unemployment such as accident, sickness or redundancy.

Main Features and Benefits

Firstly the income you receive will be tax free which is quite good since the benefit will not cover your entire salaried income. Because there are maximum benefit levels associated with these polices, the provider will pay a percentage of your gross salaried income.

The benefits from unemployment income protection insurance are paid for a period of 12-24 months depending on the policy conditions of the provider you choose.

In addition these policies can be linked to mortgage or loan products and if they are, then the payments for these debts will usually be taken first.

When deciding on your cover, you may be able to choose the number of incidents you want to be insured against.

Policy premiums can be very low, but you have to know where to shop (we will touch on this later)

Most providers have a 30 – 90 day deferment period before a claim can be made so you will need to take out your policy while you are employed and not aware of any impending redundancy.

Just to clarify, the unemployment income protection insurance discussed in this article is not the same as the longer term protection product which pays out in the event of sickness only and benefits usually cease when the policy holder retires.

More On Premiums

As stated earlier, if you know where to purchase your protection policy, you can save on premiums. If you choose the policy provided by your mortgage or loan provider, you are guaranteed to pay more in premiums than if you obtained your policy from a stand alone company.

Simon Burgess of British Insurance says ‘Many high street providers charge customers above average premiums, but at British Insurance we believe in providing quality products at cost effective premiums. We will keep our premiums low as it is the ethical thing to do’

Terms and Conditions
In order to enjoy the benefits of your unemployment income protection insurance policy it is important to ensure that your circumstances match the policy terms and conditions. The easiest way to do this is to read the policy conditions carefully and ask the provider about any points that are unclear.

You want to make sure the provider is aware of your job situations, medical history etc so if in the future you do need to make a claim, you will have a successful outcome.

Unemployment income protection insurance will protect you from loss of your main income. It will help you keep food on your table and a roof over your head. It will also greatly reduce your stress levels because while you are off sick or looking for another job, you will be able to maintain your current lifestyle.