Unemployment cover is a type of payment protection insurance (PPI) which caters for individuals who have lost their jobs due to unforeseen redundancy. The policy pays a tax free cash sum for 12 or 24 months subject to the terms of the provider. If you returned to work within the maximum period then your benefit will simply cease.
Although the policy caters for redundancy, for enhanced protection you can request for sickness and accident to be added to your policy. If you take up this option you will have to pay a small additional cost.
Unemployment cover provides peace of mind as well as the financial benefit and that is what makes the policy so attractive. If you were to lose your job, do you have savings to rely on or access to state benefits? If not, then protecting your income maybe the only way to help you through a very stressful period.
Applying for a policy is very easy and there are numerous sources you can explore. Your credit provider may be the first to offer you a policy. Despite the provider you choose, you will need to meet the stipulated entry requirements.
The basic requirements for entry relate to your age, residency and employment status. Once these are covered your policy would be up and running. It is important to note that not because you meet the entry requirements you are automatically covered. Like many payment protection insurance policies there are exclusions that could nullify your policy. If you read the terms and conditions of your policy it should indicate what the exclusions are and you can identify if they apply to you.
Once you are satisfied that you are covered by the policy you can relax in the knowledge that if you need to make a claim, the policy will pay out. When making a claim you will need to wait out the deferment period as set by the provider. The typical period is 30 – 90 days after the redundancy began.
The amount of benefit you receive will not equate to your employed salary however. Unemployment cover providers have maximum benefit levels that prevent them from paying over 50% of your gross income of £1,500 if the latter amount is lower.
Despite this the benefit provided under this protection cover is usually enough to help you maintain your lifestyle.
If you want to secure the best deals on your policy you might want to consider policies from independent providers. The stand alone policies are often much cheaper than products from high street companies and banks.
Generally you can expect to pay between £4 and £6 for ever £100 of cover but other providers may have even lower premiums.
As the economy continues to slow down some providers are experiencing more and more applications for protection. As a result some companies are pulling their products from the market.
If you want to enjoy the peace of mind and financial benefit of unemployment cover, then the time to act is now. If you wait until you know of an impending redundancy then that will be too late.
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