Redundancy insurance is a very versatile form of protection as you can choose the most suitable type of policy for your needs. You could for instance take out mortgage cover if you had mortgage repayments you needed to maintain each month. Loan protection could be taken should you have repayments for secured or unsecured borrowings. You could choose income protection if you wanted to make sure that you would be able to keep up with all the essential outgoings if you became unemployed.
Once you have chosen the best type of redundancy insurance to suit you, you then have to choose how much of your income or repayments you want to protect. Generally providers will allow you to insure up to half of the gross monthly income you bring home or £1,500 whichever amount proves to be the least. This income is then paid back to you should you have to make a claim on the protection over the term of the policy, up to the limit if needed, which might be 12 months with some providers and 24 months of benefit with others, if you needed to claim that long. There is always a deferment period which you would need to wait before making your claim and this too differs. Some providers might pay out your benefit after day 30 of redundancy while others could state 90 days of deferment before claiming.
Redundancy protection would of course only cover the possibility of your losing your income to unemployment. If you wanted the added security of claiming in the event that you became incapacitated then you could pay more in premiums each month and then have the assurance of being able to claim if you became a victim to either of the events. You could also check with the provider to find out if you would be eligible to make a claim were you to have to give up work to stay home and look after a sick family member. A very generous provider would give you this added security but you would need to check the terms.
Mortgage payment protection as your redundancy insurance would allow an income that could stop you from falling into mortgage arrears. This of course always comes with the threat of losing your home if the arrears cannot be repaid. Loan payment protection would go towards you being able to service your repayments which again if you fell behind on secured loan repayments could lead to losing your home. Income cover would supply money that you could spread out between any essential repayments you have to ensure you would not lose your utility supplies or fall behind on rent.
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