Do you have unemployment protection for yourself and your family? If not, you need to learn about this protection and how it can benefit you. Many people do not consider this insurance necessary because they assume involuntary redundancy cannot happen to them, or they mistakenly expect that the government will provide assistance. How, being made redundant can happen indiscriminately. But by having an unemployment protection policy in place, you can receive a monthly tax free sum that can help you cope financially until you find new employment.
You need to become familiar with payment protection insurance and its three common products, which offer your best alternatives to getting protected for redundancy. Mortgage payment protection, loan payment cover, and income payment cover are the solutions that make up the payment protection umbrella of products. Mortgage cover is useful to meet your ongoing mortgage obligations. This is essential to holding onto your home while you are out of work. Loan cover is helpful for meeting loan and credit card payments. Income payment insurance can help you pay bills and put food on your table. Although they are a bit different in purpose, these products all serve you by paying monthly benefits to replace your lost job income during redundancy.
An overview of unemployment protection
To really understand how unemployment protection can benefit you, you first need to get comfortable with the characteristics that define typical payment protection policies. First, know if you are eligible to collect benefits. Retired people, part time employees, and people with pre-existing medical conditions are not able to get benefits. You have to be employed on a full time basis for at least six months to be eligible for payment protection benefits.
After it has been established that you are eligible for cover, you need to consider the payout period for benefits under your prospective plan. Some policies pay benefits over the course of a 12 month period while others pay out for 12 months. The length of your benefits indicates how much security you have as you look for new work.
Another issue is the benefits starting point. Most policies begin to pay benefits at 30 days, 60 days, or 90 days after the insured event occurs. While some people with savings or other funds might manage for 60 or 90 days, others cannot wait that long between the last income paycheck and the first benefit. If this is you, perhaps you should restrict your search to just those policies that pay out after 30 days.
You need to also think about how much protection to buy. For most people, it only makes sense to get as much cover as possible. Since you already realize you need the insurance to cover your financial needs, you should also know that your benefits are only worthwhile if it is enough to sustain you. The maximum monthly benefit you can get is usually around 1500 Pounds or half the normal monthly gross income, whichever is lower. As mentioned before, benefits are tax free.
Protected events with unemployment protection
You might recognize that involuntary redundancy is a common event that is insured under the payment protection policies. However, you might not be aware that many policies allow you to include protection for situations of prolonged illnesses or accidents that cause injury. This makes it possible for you to have a fairly broad cover.
Not everyone wants to cover both events, though. Some people just want accident and illness benefits because they are comfortable that they can quickly fund new work after displacement. This can be risky, but if you have savings or a good severance package, it might work out okay. Others actually have adequate illness and injury benefits through their employers and elect to save on premiums in this area.
Additionally, there are some providers that enhance the value of their unemployment protection by adding a benefit known as carer cover, free of charge. This protection pays the monthly benefits when you are forced to leave work to care for the health of a sick or injured family member. It is a nice benefit to have should this occasion arise.
A comparison of your payment protection options
Financial institutions were in control of payment protection for a long time because consumers did not realize there were other, less expensive options. Financial institutions are companies that sell in a variety of financial product categories. On the contrary, independent insurance specialists are companies that are focused on the insurance sectors and therefore offer more expertise and service with unemployment protection.
Things changed for the betterment of the marketplace in 2005, when the Citizen’s Advice filed a super complaint with the Office of Fair Trading (OFT), regarding payment protection. The complaint pointed out that many lenders were bundling their insurances with loans, often leading to pressure or deception of consumers to get them to buy cover. It also noted mis-selling of policies to ineligible consumers, which was fairly common among some financial institutions.
The OFT referred the payment protection insurance sector to the Competition Commission for further review. The review led to the issuance of several resolutions to improve fair selling practices in the sector. One of the more notable actions was the introduction of a seven day waiting period to prevent lenders from selling payment cover to new borrowers for seven days. This removes some of the pressure selling and allows the customer several days to explore the market for a better deal. And, there are better deals and more affordable rates through independent insurance specialists. The Financial Services Authority dealt with the mis-selling of policies by fining several high street companies it found guilty of mis-selling payment cover.
Your ability to find great rates on unemployment protection has never been better. You can find loan payment cover that is about 10 times less expensive through an independent insurer than it would be from a financial institution. Loan payment cover is four times cheaper, usually. Mortgage payment protection is about five times less expensive from a specialist. With the level of expertise available through a specialist company and the affordable rates mentioned, there is no reason for you not to consider purchasing unemployment protection for you and your family.
Related Posts