Redundancy protection can ease any financial difficulties you might find yourself in if you were to become unemployed and lose your monthly income to redundancy. Without something to fall back onto you could have a huge struggle on your hands to be able to maintain your repayments such as rent, mortgage, loan and any other essential outgoings. Going out and finding work can be hard enough without the added worry of where to find money to continue meeting your financial demands each month. A policy could make a huge difference to the outcome of redundancy.
First you would have to decide which type of redundancy protection you wanted. Your choices are income, mortgage or loan payment protection. Each of these protects the repayments of what their name suggests. In the case of income cover this policy would protect any essential outgoings. You then need to decide how much of your repayments or income you wanted to cover. This amount needs to be passed by the provider as it would be the amount of money that you get back each month for the term of the policy once the deferment period has passed. All providers will state a minimum amount of time that you would need to be unemployed before a claim can be made on the policy and this varies between 30 and 90 days. Some will also offer to date back the income to the first day that you become redundant. Payments then continue for either 12 months or 24 and then the policy ceases.
You would have to check the small print to find out when you provider would pay out from and for how long. You should also bear in mind that 90 days can be a long time to wait before seeing any money. You could already be in 3 months rent or mortgage arrears by this time and this could add on a great deal of stress. Also consider that 12 months can be a long time and you could have found work well within this period and a policy paying out for 24 months would cost a lot more than one paying out over 12 months.
If you have mortgage payments to maintain each month then mortgage payment protection can be a huge relief. The income supplied from the policy would go a long way towards you being able to maintain your repayments and stop you from falling behind into mortgage arrears.
Loan repayments can be protected in the same with loan insurance. The income supplied from this policy would go towards you being able to maintain your loan repayments each month which is essential in the case of a secured loan as your home is at risk. You could also be taken to court if you fall behind on repayments for an unsecured loan.
Redundancy protection in the form of income payment protection would provide you with an income that would allow you to maintain any outgoings that came into the home each month. You would have money towards your rent, your utility bills and your grocery bills for example.
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