You have many choices for redundancy cover and the first you need to make is the most suitable type or policy. You could take out income protection if you want to ensure you would have money to put towards your general outgoings. You might choose to cover your mortgage repayments with mortgage payment protection or you could take loan protection so you could put money towards servicing your loan each month.
Having decided which form of insurance you then choose how much you want to protect against redundancy. This amount will need to be pre-agreed by the provider as it would be limited. For instance should you want to take out income cover you would usually be able to insure up to half of your gross monthly income or up to £1,500 whichever was the least amount. This amount is your tax free income once a period of deferment period had gone by which could be 30 days with some providers or it might be up to 90 days with others. Some might date back your income to day one of suffering redundancy but you need to check in the terms on offer. The same would apply when it comes to how long your policy would pay out your benefit. This could be for a period of either 12 months or 24 months and after this period of time the policy would cease.
Redundancy cover is a great way of having peace of mind for your repayments. However there is also the possibility that you could lose your income due to incapacity. If you are worried by this and your employer does not offer sick pay for long then you might want to pay out more in premiums for the policy and have protection included that would allow you to make a claim against either event if they were to happen. When checking the terms of any policy you should also check to find out if the provider would pay out carer cover. Carer cover would provide you an income in the event that one of your close family members should become incapacitated and you stopped at home to take care of them.
Your chosen form of redundancy cover could be a better form of cover than turning to the State for an income. Often an income from them would not match your own income in anyway which could leave you struggling to find the money needed to meet your repayments or outgoings. Should you claim an income for your mortgage then you would only be given help with maintaining the interest part of your repayments. You also need to wait for several weeks before the State would give you any money and by then you could be in arrears and the lender could be sending out letters reminding you of the missed repayments.
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