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.

Related Posts

• How unemployment protection in Scotland can help people who are suddenly let go
• How income protection insurance Scotland cover could replace your wages after illness or redundancy
• Why payment protection in Scotland can help someone avoid a poor credit rating and even repossession
• Why redundancy protection in Scotland has provided a lifeline for workers who are let go
• Arranging affordable and effective loan protection insurance in Scotland