Many people perhaps understandably believe there is virtually no measure they can take to protect themselves against the dreaded redundancy notice. Beyond savings and the kindness of friends and family, people may think there is nothing they can fall back on, but there are some specialist insurance policies designed to cover just this sort of circumstance. In the same way you cover against the chances of having an accident with your car or a break-in at your home, you can cover against the chances that you will be made unemployed due to redundancy. Typically called unemployment cover, this kind of protection is provided by a wide number of insurance companies and can also be relatively inexpensive.
It works by effectively guaranteeing a certain amount of your regular income should you be made redundant. Note redundant means involuntarily redundant, not accepting an offer of redundancy or being sacked. To get a policy simply contact the relevant insurance companies, who will ask a bit about what you want to protect and your employment status. Most will require that you have been in a job for a set period, perhaps around six months.
You can normally backup a percentage of your income, perhaps 50 per cent and above, and this fee would arrive straight into your bank account as a payout each month after a successful claim. So somebody with 50 per cent protection who earns £2,000 a month would get £1,000 a month payout after a successful claim, although there will be a cap put on how much you can insure.
The redundancy insurance money arrives in your account tax-free and is designed to help keep you going while you search for a new job. Typically people have things like debts and bills and other commitments to keep up with, which can land them in serious difficulty if they are ever made redundant suddenly. People may expect they can rely on things like the state benefit system and redundancy packages, so insurance is not necessary.
The reality is the state benefit system is in many ways designed simply to feed you, while depending on your age and job circumstances, a redundancy package can stretch to just a few days’ worth of pay in equivalent cash. So, unemployment cover is a viable and often cheap way of protecting against the unpleasant circumstances of being let go. Although payouts do not arrive until 30, 60 or 90 days after an initial claim, you can often specify this.
Unemployment cover is also normally available from a wide range of firms, not just the really big insurance companies, and specialist providers can typically save you money on a policy without cutting back on the effectiveness of the cover – so a good deal need not be hard to find and may keep a poor credit rating and creditors at bay in the long run.
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