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.
Related Posts