Unemployment protection is a type of insurance that protects your income and it falls under the payment protection insurance (PPI) banner.
Despite a lot of news about mis-selling a few years ago, this policy is very attractive especially in today’s economy. If you faced involuntary unemployment the policy will provide a financial benefit in the form of a monthly tax free sum for 12 to 24 months. The exact maximum period will depend on which provider you choose.
In case you have any doubts it should be noted that claims of mis-selling had nothing to do with the policies but more to do with how they were sold. Providers were not taking the time to explain how policies worked and who they covered so consumers, who could never claim on the policy, ended up purchasing products. The Financial Services Authority (FSA) fined several companies at the time and continues to monitor the market closely.
Right, now that we have cleared that up, let’s look at some policy features.
You will need be at least 18 years, a UK resident and meet the employment criteria before you can apply for a policy. Even if you qualify at this stage there could still be exclusions that would affect you and prevent you from being able to make a claim. It is vital that you read your terms and conditions well and make sure your circumstances are covered.
Although the policy is for redundancy, for an additional premium you could add on cover for accident and sickness for added peace of mind.
You can begin claiming on your unemployment protection policy after the deferment period has passed. Generally this period is between 30 and 90 days after the start of your redundancy.
The provider will make payment in accordance with the maximum benefit rules. These rules restrict payments to 50% of your gross salary or £1,500.00 whichever is lesser.
Not everyone has a rainy day fund, friends and family or access to state funds. If you are one of these people and you lost your regular income, it may not be long before you have creditors calling. With protection in place your bills will be paid up to the maximum period or until you find another job if this is sooner.
When purchasing unemployment protection, you will have many options to choose from. While most of the benefits will be the same across the market, the cost of premiums tends to vary. .
To secure the best bargains however, you should shop at independent providers. The premiums on stand alone policies are much lower than those of high street providers or even the banks.
As you can see the benefits of unemployment protection makes the policy very attractive. You can relax and continue working even in a difficult market. This is because if you were to lose your job the policy will kick in and begin to take care of your finances.
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