Suddenly losing your income due to involuntary redundancy is a frightening thought. Unemployment is such an unexpected situation; this is why anyone who is in full-time work should consider investing in an unemployment protection policy. These are widely available, and also very affordable. For what can be a small fee, every month, should you suddenly be made redundant, you will receive a tax free monthly benefit for a set period of time.

There are many such policies, all coming into the bracket of payment protection insurance (PPI), which cover various different eventualities; unemployment protection, however, is one that only covers instances of redundancy. While there are others that also insure against loss of work thanks to accident or illness, this one is restricted to involuntary redundancy. However, it is possible to have accident and illness cover added as a clause for an additional monthly fee, giving you better all-round protection.

The small print

The policyholder is advised to go into detail with the provider with regard to the terms and conditions attached, particularly in relation to who is eligible for such cover and under what conditions the policy becomes a possible; of particular interest is the rule regarding how long, following redundancy, you will begin to receive payments.

This can be anywhere from 30 to 90 days, and in addition it is vital that the policyholder knows whether this blank period will be covered in the final payments. While many policies will back date all pay to the date of redundancy, it is also so that many policies will not – checking with the provider before committing is highly recommended in all cases.
There are many other things that the policyholder needs to know, not least how much they will be paid in the event of the policy kicking in. This varies among providers but typically the highest amount can go up to either £1500 or half your gross monthly salary at the point of redundancy, dependent upon which is the lesser amount.
Furthermore, when taking out a policy it should be investigated as to how long it will pay out for following redundancy: while some will cover a 24 month period, others will apply for a year, and this must be fully understood when buying.

In addition, the policy will share common exclusion rules with others in the market place, and these are pretty much blanket across the PPI industry; for instance, employment – full time, that is - for at least six months is required, and there are a large number of illnesses and conditions that will preclude you from being covered in the result that they are the cause of loss of earnings. Among these are any self inflicted conditions – including those related to drug or alcohol abuse, as well as any time off work as s result of cosmetic, or other non-essential, surgery.

These exclusions come into the picture as being of particular importance when we read the paragraph below, as considerable tightening up of the eligibility regulations has been undertaken in recent times.

The sector came under close scrutiny in 2005, when the Citizens Advice put forward a super complaint tothe Office of Fair Trading. This concerned allegations of the mis-selling of payment protection insurance, and the OFT instructed the Competition Committee to begin a thorough review of the market sector.

At the same time, the Financial Services Authority was conducting its own investigation into the arena, and discovered instances where mis-selling had been taking place. There were cases of policies being sold to those who would not be able to claim, and as a result several high street names were handed fines in 2007. Recommendations were made as to revisions in the way payment protection insurance can be sold, which has given the consumer a fairer market place. In particular, it has been suggested that there should be a period of seven days, following the granting of a loan, that must pass before the borrower can be sold payment protection insurance, thus giving the customer the chance to shop for the best deal.

What has come about as a result of this is that the consumer is more aware of where payment protection insurance, and unemployment protection, can be purchased from; whereas there had been a popular belief among many that it needed to be purchased from high street named brands, it is now so that the public is aware of the much cheaper route of going through an independent provider; there are many of these about, and they are practically guaranteed to provide a better deal than the high street.

Comprehensive cover

Unemployment protection is just one of a large family of policies, and one that is very specialised; it is important to be aware that this policy only covers you for redundancy, and not for accident and sickness related loss of work. Other such policies include those that are designed to keep up mortgage repayments in times of need, and others that cover additional loans.

While it is not unusual for people to dismiss optional insurance such as this as a needless luxury, we need to consider the available alternatives with great care; state benefits such as jobseekers allowance will not provide anywhere close to the cover provided by a viable payment protection scheme, and as such are rendered incomparable as a result.
Unemployment protection makes a very viable investment; the monthly sum concerned is not one that will equate to a great deal of your earnings, and the benefits are considerable after all. None of us is capable of predicting the future, and the days of a ‘job for life’ have been long gone for some time. It is foolish to consider that all will be fine for yourself, that such things only happen to others, while all the time ignoring the very real possibility that it could, indeed, is a very serious situation indeed.

Taking out unemployment protection is not difficult, and nor is it something that should be done on a whim; careful consideration of what is needed, coupled with good expert advice, and an independent provider, will find you the right deal at the right time.

There are three products that offer you a good opportunity for financial security through unemployment protection. These three insurances; mortgage payment protection insurance cover, loan payment protection insurance cover, and income payment protection, form a portfolio of products known as payment protection insurance, or PPI for short.

These insurances are your best opportunity to get financial security for involuntary redundancy. The government has maintained a stance that ultimately leads to a small percentage of unemployed receiving State assistance. Those that do get State aid, often receive less support than is necessary to sustain them. Therefore, your best bet for unemployment protection is to by it for yourself.

Although they all offer the basic benefit of monthly replacement income payments following a covered event, the payment cover products are unique in nature. Mortgage protection is intended to help you keep your home by paying your monthly mortgage repayments. Loan payment cover is intended to preserve your credit rating through payment of your monthly loan and credit card minimums. Income payment cover helps you to meet bill demands and other basic financial requirements you face.

Profiling unemployment protection features

Eligibility for benefits with one of the payment cover products is based on your employment status. If you are employed full time for at least six months, you are likely able to get benefits. If you are retired, employed part time, or dealing with pre-existing medical conditions, you are probably not eligible.

One thing to be aware of with regard to eligibility is that a customer’s lack of eligibility has not always stopped some financial institutions from selling products. In 2007, the Financial Services Authority concluded its investigation of the payment cover sector by fining several known high street companies that were found guilty of mis-selling. Just be aware that this has happened in the past, though the fines have helped halt the regular mis-selling of policies.

There are several important features of payment protection that you need to consider, to ensure your unemployment protection is optimized. One is the usual period of benefits payouts, which could last for 12 months, or 24 months, depending on the provider and the policy terms.

Compare protection insurance products

Another thing you need to focus on when you compare products is the point at which you would get your first benefit payment. If you rely on your monthly income to keep up with bills and obligations, you would probably want a product that pays just 30 days after the insured event takes place. If you have more financial flexibility, you might find a product that pays after 60 or 90 days to be reasonable.

How much cover is the right amount? Although you might be able to save a small amount on premiums by taking on less cover, it is usually financially practical to get the best benefits you can. Remember, you want a policy that would help you get through your period of unemployment in good financial position. Your highest monthly benefit is usually the lesser of 1500 Pounds or half your normal gross monthly income. Benefits are tax free.

Events to protect with unemployment protection

Along with the common involuntary redundancy cover, you can usually add benefits for prolonged injuries or illness with your policy. Many providers allow you to get a full protection with each type of protection. You could potentially determine that your best value comes from only insuring one or the other, though.

Some people don’t need the accident and sickness insurance because they get benefits for these issues through their employer. Others that do have to buy benefits for disability and health, many decide to save on premiums by not taking on redundancy benefits. Only do this if you are extremely confident that you could get another job very quickly, and you have enough in savings to make it through.

You might also insist on Carer cover benefits in your policy. Some provides add this important protection at no extra cost to give you a better value. Carer cover pays monthly benefits if you have to leave work to take care of a sick or injured family member who relies on you.

Where to find payment cover

There are a couple common types of companies you can shop to find the common unemployment protection solutions. Financial institutions dominated for a long time by selling their insurance in combination with loan products. This process has been recently ridiculed, and was the prime subject of a 2005 super complaint to the Office of Fair Trading (OFT) by Citizen’s Advice.

Following the complaint, the OFT asked the Competition Commission to examine this sector of the insurance industry and to recommend any necessary changes. The Commission did just that, and among the several recommendations for improvements, was a resolution that placed a seven day waiting period on the sale of payment protection to new loan borrowers.

With the new freedom to explore the market without pressure from lenders, consumers are experiencing much better value from the second type of provider – independent insurance specialists. Independent insurers are better experts on insurance products, have better support, and better service. They also have much cheaper rates on premiums for unemployment protection.

It is not uncommon to find loan payment cover for as much as ten times less expense from an independent provider compared to a financial institution. Similar savings can found with mortgage protection, at around four times cheaper rates, and income payment cover, at rates that are around five times cheaper.

How you can benefit from cover

Many people can benefit from having a good unemployment protection plan in place. Even if you never use the benefits of a policy, the peace of mind that comes with knowing you are insured is a benefit in itself. Your family would experience a very challenging and stressful burden if you are forced out of work and have no financial recourse in place. Take advantage of the willingness of specialists to help you get a good policy at a fair rate. Many consumers did not have the same fair opportunity that you do today to get fair value on a policy. Those customers that overpaid for policies with financial institutions would appreciate the position you have if you are not yet covered.

There is an old joke that the only way to protect yourself from unemployment is not to work. Whether you find that amusing or not, you will probably agree that unemployment can cause financial catastrophe if it strikes. There are ways you can insulate yourself from some of the worst financial effects of such a serious event through unemployment protection in Wales.

Unemployment can come about in many different ways but can broadly be seen as falling into two categories. There are those situations where it is inflicted upon you – this is usually redundancy. Then there are those situations that you may have contributed to or initiated yourself. Typically this latter category includes things such as resignation, voluntary redundancy, career breaks, returning to full time education and some types of dismissals.

If you come into the latter category, then unemployment insurance isn’t going to be of much use. Few if any policies of this type exist to protect us from our own decisions. This insurance is aimed at the first category, those people that through no fault of their own suddenly find that they have lost their income.

In such a situation, it is very likely that credit card, mortgage, hire purchase and other loan repayments are all going to suddenly become unserviceable. The demanding letters are going to start arriving and there is always the real possibility of repossession and debt recovery actions commencing. This is not likely to help you concentrate on finding a new job.

Sadly, government help is also limited. Although recent changes have meant more help is available than previously, it is still restricted to mortgage help only. Even there, it will only cover 70% of the interest – you’ll have to find the remaining 30% yourself and it won’t touch the capital debt. You may also find that the government scheme is only available to those with savings lower than a relatively modest amount.

Fortunately, unemployment protection in Wales can be achieved through specialist insurance policies. They work on the basis that if you lose your job for reasons beyond your control, they will step in to help with financial assistance.

There are various types of such policies and they provide differing forms of help. It is possible to have a policy that will pay your mortgage directly in such a situation. Another policy type could be used to pay a wider variety of regular payments such as the credit cards and HP agreements. Yet another policy offers a monthly income that you can do with, as you will.

All these policies have certain things in common. As stated above, they only cover involuntary unemployment. The amounts paid out in the event of a problem will depend upon the policy type you selected and paid for but typically the amount can be as high as 1500 pounds per month or up to 50% of your gross income – whichever is the smaller. Most of them will pay out until such time as you find another job or to a maximum of 12 months (this can be 24 months in the case of some policies).

In an unemployment and loss of income situation, these payments could help you keep a relatively normal life going.

If you do make claim through an unemployment protection in Wales insurance policy, you will need to show evidence of the reason for your unemployment such as a statutory redundancy notice. During the period you are claiming, you may also be asked to produce evidence that you are actively seeking employment and are legally registered as unemployed.

These policies were at one time pushed hard by the mortgage, credit card and other lending companies. During the loan application process it may have been suggested that a favourable outcome to the application was somehow linked to taking this insurance whereas in fact it was not. From 2009 this practice will be banned and lenders will have to wait for a full 7 days after loan approval before offering this insurance.

That could be helpful to you because unemployment protection in Wales insurance sold by the lenders is usually several times more expensive than policies sold by the specialist providers of such policies operating in the open insurance marketplace. Many of them can be found through the Internet and not only are their policies significantly cheaper than those of the lenders but they may also offer better cover. If you’re looking to protect your interests and save money, they may well be worth looking at.

Payment protection insurance is a portfolio of insurance products that you are likely unfamiliar with. However, this set of three basic product types gives you the best chance for unemployment protection in London. With appropriate insurance, you could protect your family financially for situations such as involuntary redundancy or incapacity for accident or illness. Some people don’t think about these issues until they come up. Others make the assumption the government will pitch in while they are out of work. Neither scenario leads to you getting into a good policy for financial security.

The three insurance in payment cover are mortgage protection, loan protection, and income payment cover. Mortgage protection helps you to make monthly mortgage repayments. Loan protection is used to help you make your monthly loan and credit card payments. Income payment cover is for bill management and other financial necessities. Despite their specific intentions, the products all provide you with monthly income replacement benefits to help you survive a brief period of lost job income.

Getting the right cover

So how do you find out about getting the right unemployment protection in London? Before you begin a journey of exploration to seek out the best insurance policy to meet your needs, you should first make certain that you would be able to collect benefits. Retired people, part time workers, and people with pre-existing medical conditions are usually not eligible. If you work full time for at least six months, you generally are.

After finding out that you are eligible, you need to sort through some important terms and conditions of various products to make sure that you select the right policy. The benefit payout period is one of those key issues to address. Some policies pay benefits over 12 months, while others pay over 24 months.

Are you on a budget? If you are, a gap of two to three months might be a long time to wait between your last job pay cheque and your first benefit payment. However, there are policies that don’t issue the first payment for 60 to 90 days. Others do offer a 30 day delivery following a covered event.

The most income you can protect is usually half your gross income or 1500 pounds, whichever of those amounts is less. As payments are tax free, this gives you the chance to replace a substantial portion of your net income.

Levels of protection with your policy

The best financial security with a plan comes when you get the broadest protection available with your insurance. This means protecting the two common events of involuntary redundancy and incapacity for accident or sickness. You might also find some add-ons like carer cover.

Some people don’t pay for benefits for redundancy and incapacity. Why not get the most protection possible? In most cases, you should. However, some people don’t buy for redundancy as they have savings and think they can find work quickly. Others don’t need incapacity benefits as their employer provides ample benefits for extended period of lost income from injury or accident.

Carer cover is actually included in policies for no additional charge by some providers. Getting a well-rounded policy that includes this benefit is exceptional value. It pays you replacement income when you need to leave work to help a family member struggling with injury or sickness.

Where to buy cover

So, what is the best source for unemployment protection in London? There are two types of providers that sell most of the payment protection policies. They are financial institutions and independent insurance specialists. Financial institutions sell various financial products and have higher premium costs. They got away with this for a long time because they were able to bundle the insurance with loan products and pressure borrowers into buying it.

Despite the fact that this practice was unfair to consumers, it went on for years because most were unaware of their options. In 2005, Citizen’s Advice filed a super complaint with the Office of Fair Trading, which started the beginning of the end of this pressurized selling. The Competition Commission was asked to investigate, and the result was several improvements resolutions, including a seven day ban on the sale of payment cover to a new borrower.

Changes in the marketplace have benefited consumers as they now have more opportunities to get better deals on unemployment protection in London. There is definitely much better value available to consumers today than there used to be for payment cover, meaning that even those with little cash to spare each month can still afford to take this invaluable cover.

When many people think of being made redundant they imagine an inevitable race against time to find a new job before their cash runs out completely and they start to struggle. In many cases this may be what people end up facing, as those with particularly ungenerous redundancy payouts and nothing to fall back on can find all of their regular costs mount up quickly. Of course there are state benefit systems in place, but these too are very limited and often not enough to cover some of the regular household outgoings like mortgages, repayments on loans and even basic costs. But there is a form of personal insurance dubbed unemployment protection which would payout a regular tax-free cash lump sum to somebody who was let go through no fault of their own.

Designed to cover against involuntary redundancy, unemployment protection is a form of cover which can be bought by just about anyone working in the UK. Although there will be some requirements and limitations, this kind of cover is available from a wide range of insurance companies and can also be inexpensive.

It works by providing somebody with a monthly agreed amount after they have been made involuntarily redundant, and this continues all the way up until they are employed again. Alternatively it stops when the payout period expires, however, a normal payout period for a deal like this will last to a maximum of 12 to 24 months depending on the cover plan.

Financial worries

Besides worrying about everyday expenses like utility bills and groceries, somebody who ends up unemployed after redundancy can also face significant concern over any debts or other financial commitments they may have. For example, credit card companies and loan providers do not simply except that repayments will stop if somebody is made redundant. Commitments will still have to be met, and an unemployment cover plan with its regular tax-free flexible sums can help somebody deal with their debts as well as their regular costs.

This means in the long run somebody gets support not only with the most basic expenses but also with some crucial commitments which would otherwise see them with a poor credit rating, affecting their ability to borrow in future, or in a worst case scenario, having their property repossessed, particularly in the case of a mortgage, because they have not kept up.

Unemployment cover also allows you to typically name the amount you would want to get each month, so you simply tell the insurance company the sum you would expect on a regular basis. Although strict limits will apply, beyond which you cannot insure any further amount, you can often expect a reasonable slice of your current income, although perhaps not an equivalent amount which would cover all of it. So somebody earning £2,000 a month after tax may well not be able to get this much per month, but at least a suitable slice of their regular expenses. The idea with this kind of cover is not to replace the income you get from your job, but to provide you with regular financial benefits which can be used to help you keep up with your most common forms of outlay.

Another benefit to this is that following compulsory redundancy trade unions and employees sometimes have to spend a long time negotiating over what kind of redundancy package workers can expect. There is no such negotiating with the insurance company if you have a cover plan, as they simply begin to provide you with the payouts after a successful claim.

How long will you wait before you receive benefits?

However it is important to bear in mind that a first payout does not arrive immediately but a set amount of time following your initial successful claim. For example, a deal may provide you with a first payout 30, 60, or 90 days after your initial successful claim. You can often usually choose how long you would wait, and those prepared to wait all the way up to 90 days may pay less for a premium than somebody who would prefer to wait only 30.

Unemployment protection is also different to various kinds of deal which are designed to provide support with specific loans. Although it is part of the wider payment protection insurance industry, this kind of insurance is not the same as loan protection or mortgage payment protection insurance, both of which are targeted to help somebody only with the repayments on a specific debt. Also, unemployment protection does not payout if you lose your income due to illness or injury after an accident, as other forms of payment protection do. It is only geared to cover the eventuality of involuntary redundancy.

However, a lot of insurers will be prepared to provide you cover for these circumstances too, possibly in exchange for a regular premium and in effect setting you up with a general income protection plan, which is also known as accident sickness and unemployment insurance, or ASU.

Redundancy cover is also geared towards just that, meaning involuntary redundancy, and it will not provide payouts if you claim having accepted an offer of redundancy from the company. It also does not apply if you’re sacked from a job or resign.

Moreover, your policy will be invalid if it can be shown that you knew you were going to be made redundant before you bought it. So you cannot receive some form of initial notification that jobs in your company are going to go, and then take out a policy and expect to be able to claim successfully. If you are unsure of the details, check with your insurer, but in general the deal will be invalid if you have already been given some proper notification that you may be made redundant.

So you may find that unemployment protection is more effective and worthwhile than the state benefit system, providing you regular agreed cash sums which you can spend how you wish. These continue either until you are back into work or until the agreed payout period expires, providing you with consistent support up to this point. In the long run it could help you to meet some of your more pressing financial commitments while you concentrate on finding a new job.

Unemployment protection Bristol insurance is protection for your repayments and outgoings against redundancy. If you do become a victim to unemployment that is no fault of your own then you could have to struggle to find the money each month just to keep your head above water with your repayments and outgoings. With cover behind you there would be money coming into the home that you could use towards these which would ease the stress and worry.

How does the protection work?

When you take out unemployment protection you would have to have been a victim to involuntary redundancy for a certain period of time before you can claim on your insurance. The provider will determine the deferment period so you do have to check with them to find out what that deferment period might be and how long you could continue claiming on your policy.
You could choose to take out loan, mortgage or income protection depending on what outgoings you have to make each month.

How long would the waiting period be?

You might need to wait for a period of 30 days of continuous unemployment before being eligible to make a claim on the insurance. However with some providers this could be as long as the 90th day so there is a huge difference and it is therefore essential that you check and know when your cover would payout from.
90 days can also be a long time to wait before being able to claim as you could have fallen into debt by this time and have lenders on your back wanting their money.

How long could I continue with my claim if it were needed?

With some providers you would have an income that would continue for as long as 12 months if you should have to rely on it for that long. With others you could be given a policy that might continue providing you with your benefits for up to 24 months should it be needed.

Of course should your policy continue for up to the 24th month then you would have to find money during this 3 months waiting period for your outgoings or repayments yourself.

How much benefit is given from the cover?

You choose at the time of taking out your chosen form or protection how much you want to cover of your repayments or outgoings. There will be a limit as to how much you could protect so your chosen sum would have to be within the guidelines of the provider and they do have to pre-agree.
You could generally insure up to half of the gross monthly income you bring home or up to £1,500 whichever was the least amount.

You could insure up to a percentage of the monthly outstanding balance on your credit card or a portion of the loan or mortgage repayment you make.

The different forms of unemployment cover

Mortgage protection would provide you with money that you could use towards your mortgage repayments. This could stop you from falling into arrears which could greatly ease your search for work.
Loan payment protection would secure a portion of your unsecured or secured loan repayments. This could help you to avoid debts which could see the lender taking you to court.

Income protection could protect so much of your income which you could then use towards maintaining any essential repayments such as your rent or your utility bills.

Credit card payment protection could help you to keep your bills up to date which again could help you to keep out of debt and out of the courts.

Choose to add in protection for incapacity too

If you wanted to take out protection for incapacity then you could add this in for a little more in premiums each month. You would then have security and be able to claim if you were to become a victim to either of these events.
You might be able to claim on the unemployment protection Bristol insurance for carer cover. This means if you had to stay at home to take care of a loved one that fell sick or suffer an accident you would have an income from the policy towards being able to maintain your repayments whilst also taking care of your family member.

Would you be eligible to make a claim on the policy?

You do have to check any form of unemployment protection Bristol cover to find out what exclusions there are in the policy as there will always be some. Some providers add in just the most frequently found ones while others could include a great many more. These exclusions do have to be checked against your lifestyle as they can stop you from being able to claim successfully on your policy.

Many UK workers experience the familiar feeling of cash going into their account and then disappearing again on a number of commitments. It can be frustrating but necessary if somebody has a number of things they have to keep up with. For the unlucky people who end up being made redundant from a job, financial considerations can quickly become even more stressful, as a lot of people would face a race against time to get back into employment again before they started to really struggle. Some people may have little or no savings to fall back on, while some people might be able to turn to other things like a wealthy and generous relative or investment interests which would be able to keep them going. Four others unemployment protection UK cover is something to consider as a way of guarding against ending up with little or no money quickly after having been made redundant.

This is a type of personal financial cover which provides short-term financial support after somebody is let go by their employer. It involves a regular monthly premium in many cases, and can be bought from a wide variety of insurance companies. In general it will provide a consistent sum per month towards your essential costs including some debts.

Normally it starts to payout after somebody loses their income due to involuntary redundancy, meaning they have been told they are being made redundant or have accepted an offer or resigned from a job. For the payments to start somebody will need to have been unemployed due to redundancy for at least 30 days, essentially meaning they will need to have been without their income for about a month before payouts start. This is a kind of condition and may be worth bearing in mind, so someone who is thinking of taking out a policy and would start to struggle immediately may want to think about how they would get buy for this 30 days.

Tax free cover

Then after a claim has been approved and payouts have started, somebody can expect a tax-free amount of cash per month until they are working again, or until the payout period expires, which is often about 12 months. The amount someone gets is often actually named by them when they order a policy, although most companies put a top limit of perhaps £1,500 per month or 50 per cent of someone’s gross monthly income, whichever amount is smaller. Of course, the more you protect, the more your premium may cost.

Insurance like this is often active as long as someone keeps up with the premium payments. If someone chooses to renew, the protection can keep going until someone retires from their job or reaches a certain age, about 65 with many companies. To qualify for an insurance policy like this, many firms require that the person is at least 18 years of age and works a minimum amount of time per week. Other firms also require that somebody is a full UK resident.

As with all types of insurance, unemployment protection UK policies do not pay out for every set of circumstances. Normally to qualify somebody will need to have been made redundant from their job, as opposed to accepting an offer of redundancy or been sacked. Likewise, if somebody resigns from a job they will also not be able to claim successfully. To get a full idea of what the company will and won’t pay out for, it can be worth carefully checking the terms and conditions or asking the potential provider directly.

Unemployment protection UK can also often be tailored to protect against other circumstances, possibly in exchange for a higher premium. For example, you might be able to upgrade to a deal which will payout if you lose your income due to being off sick for a long period, possibly past your company’s sick pay entitlement. Other common circumstances include protection if you end up out of work and an income due to injury after an accident.

Unemployment protection UK does not have to be bought from a high street insurance company. It can come from more independent specialist providers who may be cheaper yet provide just the same level of protection. As it is a payment protection insurance product, forms of this kind of insurance have at times been sold or pushed to consumers at the same time as they take out borrowing from banks and other lenders. Again these may be best avoided as cover which is tacked on to a debt may be poor value.

There are three basic insurance products that make up an umbrella of insurance products known as payment protection insurance (PPI). Unemployment protection usually takes on the form of one of these three solutions - Loan payment cover, mortgage payment insurance, and income payment insurance. This insurance is your best choice to protecting your family from involuntary redundancy and the resulting lost job income. The State offers little assistance and to very few people during redundancy. You must look out for yourself.

The three types of payment protection insurance are very similar in general nature. They provide benefits in the form of monthly payments that replace your lost job income. Mortgage payment cover is intended to help you keep your home by managing your monthly mortgage repayments. Loan payment insurance is useful for debt management. Loan and credit card balances must be dealt with even when you are out of work. Income payment protection is general income for use in meeting your basic financial needs.

The basics of unemployment protection

The first thing you need to consider before looking for unemployment insurance is whether you are eligible for protection. Retired people, part time employees and those with pre-existing medical conditions are all ineligible to collect benefits payments based on the terms of the policies. You must be employed full time for a period of at least six months to benefit from payment cover.

You also need to be aware of some of the basic elements that make up the typical payment cover product. This is how you select the right product for your situation and how you can best protect yourself. The first major consideration is the length of the repayment term. Some policies pay benefits over the course of 12 months. Others pay out over a 24 month period. How long do you need to collect benefits? This is a key question.

Another important question is how long can you wait to collect your first benefit payment? Most people on a tight budget cannot wait too long because that leaves a gap between the final income paycheck and your first benefits paycheck. Thus, you might need a plan that kicks in benefits 30 days after the insured event. There are policies that begin benefits payments 60 days or 90 days after the insured event occurs.

You must also think about how much cover is the right amount. Policy features and terms can vary but typically, the maximum monthly benefit is half of the normal monthly gross income or £1,500, whichever is lower, under most plans. The payments are tax free so your net pay is more significant. This means that you can more easily sustain yourself during the period of unemployment.

The levels of unemployment protection

Many people have good illness and accident protection from work. This means that if they become ill for an extended time or are seriously injured, they are protected. However, others do not have this advantage. Fortunately, many providers sell products that allow you to cover accident and illness along with involuntary redundancy. Other plans enable you to protect just one of the events if that works better.

There are also people who just want accident and illness protection because they feel confident in their ability to find work again should they face redundancy. This is usually because they have a high level of education and skill, or have a good severance package or adequate savings.

There are also providers that offer an extra benefit called carer cover. This additional protection pays your monthly benefits when you must leave work to care for a sick or injured family member. This is an exceptional advantage that helps with the stress of trying to balance work with care for a loved one.

Comparing independent insurance specialists to financial institutions

Independent insurance specialists and financial institutions are the two basic providers of unemployment protection. Specialists are quickly becoming the preferred source for most consumers now that they are aware that independents offer the best rates and service in payment cover. They are experts in the industry and are therefore more helpful before, during and after the process.

Independent providers also offer rates that are much less expensive than those available through large banks. For instance, loan payment cover products are about 10 times less expensive when bought through and independent. Mortgage payment insurance is four times less expensive. Income payment protection insurance is about five times less expensive from a specialist.

Financial institutions used to have the market corned for payment protection. They did this by leveraging their broad portfolio of financial products. Lenders would often sell their insurance products to a new borrower at the point of loan deal. This bundling of products allowed them to cover up the expense of their premiums by spreading them over the course of the loan repayment. The details of the insurance would be hidden in the fine print of the disclosure document.

Fortunately, a 2005 Citizen’s Advice super complaint and a simultaneous investigation by the Financial Services Authority (FSA) changed the nature of the market. The FSA concluded its investigation in 2007 by issuing fines against many companies on the high street that it found guilty of mis-selling of insurance. The Office of Fair Trading (OFT) took the complaint by Citizen’s Advice and turned their review over to the Competition Commission.

The Commission subsequently reviewed the sector and has issued several recommendations for improvements in the market. One of the more important resolutions places a 7 day waiting period on banks that want to sell their unemployment protection to new borrowers. They must now wait seven days. This allows the customer opportunities to explore the market to get the best deal possible. This has opened the eyes of many to the benefits of buying through independent insurance specialists. Do not wait too long to get protection, though. You must be responsible for ensuring that your family is taken care of during a period of redundancy.

Anyone in employment is likely to tell you that the regular monthly income from work is by no means a foregone conclusion. The steady inflow of income each month can be interrupted – for a longer or shorter time – for any number of reasons. Given the present state of the world economy, and Britain’s in particular, however, perhaps the greatest risk to the individual employee is posed by the threat of redundancy. There is much to be said, therefore, for making a start with unemployment protection.

If any evidence were needed for the widespread risk of redundancy it is necessary to look only as far as the national unemployment statistics. They presently stand at something over 2.2 million and further redundancies are forecast to push that total to way beyond three million during the course of the next 12 months or so. Few – if any – sectors of the labour market appear safe from the threat of redundancy.

Unemployment protection cannot actually make that threat disappear, of course, but it can provide the individual an element of financial security during whatever interval it takes to find alternative employment. A straight forward insurance policy pays out a predetermined monthly benefit, for use as a replacement income, soon after the policy holder has been made compulsorily redundant. There is an initial, brief “waiting period”, which can range from 30 to 90 days, depending on the particular cover chosen, and the payments are made either immediately after that interval, or, in some cases, backdated to the very first day of the policy holder’s redundancy.

This form of unemployment protection ensures that there is a regular, tax-free, replacement monthly income every month that the policy holder remains involuntarily unemployed, or for up to a typical maximum period of 12 months, whichever is the shorter period.

The amount that is paid in benefits will have been chosen by the policy holder from the outset and it is this, of course, that also determines the level of premiums to be paid. This allows unemployment protection to be entirely flexible in terms of its cost and the benefits paid out in the event of a claim. Generally, it is possible to insure as much as 50% of the policy holder’s normally earned gross income from work, or up to a typical £1,500 a month, whichever is the lesser amount.

Having started with unemployment protection, however, there is no need to stop there. For the payment of only a marginally increased premium each month, it is also possible to cover the risks of accidents and illnesses incapacitating the policy holder from work and therefore needing to take unpaid leave of absence. Such a combined accident, sickness and unemployment insurance policy thus offers cover against the principal threats to and interruption of regular income.

In this day and age, with the British economy shrinking in recession and further redundancies announced at seemingly every turn, unemployment protection will appear to be a very sensible precaution to many people. It doesn’t actually protect you from the fate of unemployment, of course, but it can certainly take more than the edge off the financial stresses and strains that a period of temporary joblessness will inevitably entail.

The overall picture is pretty bleak for anyone committed to earning a regular livelihood. Unemployment already stands at 2.2 million, whilst the current political storms of Westminster and the struggling economy, seem set to combine in a prolonged period of recession. The steady loss of more and more jobs to redundancy is expected to result in well over three million unemployed during the course of the next 12 months.

For the individual caught up in all of this, probably the most critical preoccupation is how they will cope financially if their own job is lost and they have to face an indefinite period of unemployment whilst searching for alternative employment. During this time, most individuals will be looking for unemployment protection that offers a steady source of alternative income to help stay on top of the ongoing bills and expenses of everyday life – without such support, after all, the search for another job is likely to be severely hampered.

It is at times such as these that unemployment insurance can come to the rescue. In return for a modestly priced monthly premium, in the event of involuntary unemployment, the policy holder’s chosen level of benefits are paid out every month, just like a replacement income – with the added bonus that the benefits are paid completely free of tax. Such an alternative source of income, of course, can prove the saving grace to the unemployed individual’s financial standing and allow him or her to make sure that all the important bills and outgoings continue to be paid whilst looking for another job.

The actual amount of the insured benefits that come with such unemployment protection are, of course, determined by the prospective policy holder when first setting up the insurance. The level of cover is determined, in turn, by the amount of premiums paid and the latter are invariably quoted in terms of the price per £100 of replacement income that is guaranteed. The typical maximum level of such cover is set at the equivalent of 50% of the policy holder’s normally earned gross income, or £1,500 a month, whichever is the lesser amount.

Once the insured benefits are in payment, this type of insurance generally provides unemployment protection every month that the policy holder remains unemployed, or for up to a typical maximum of 12 months, whichever is the shorter period.