How to Survive Unemployment Through Redundancy Insurance 

Before, redundancy insurance is usually overlooked by the consumers. But with the economic recession that has hit the world recently; many people are starting to realize its importance. Losing your job can be one of the most frustrating and tormenting events that may happen to your life especially if you have a family to support. Every day, we see it on the newspapers – more companies are closing while the others are trimming down their operational costs by reducing the number of their employees. Every year, thousands of people in the country finish college. But sad to say, majority of them remained unemployed regardless of their qualifications. While the economy is still trying to recover, we still can’t tell what will happen in the global market. Most of us know only one thing – we can’t afford to lose our jobs.

Mortgage payment protection – this is a type of redundancy insurance that allows you to continue paying back your loan without letting you spend for it. If you’re like most people who purchase a house through a home loan, you understand how important your monthly repayment is. A default on your loan can put your property at risk and it may end up being foreclosed by the bank. Or, you might have taken a car loan or a student loan. Missed payments can badly affect your credit score. With a mortgage payment protection cover, you will not have to worry about your monthly loan repayments, at least for a year or two starting from your unemployment. If you have this policy, you can focus on your household expenses better. You can also take more time to look for a nice job and worry less about your mortgage.  

Salary protection – also called income protection, this kind of insurance will pay you with a tax-free monthly salary during the period where you have no fixed source of income that has resulted from unemployment, severe illness, or accident. With this, you will not feel jobless at all. It is as if you are employed because you get to receive a fixed amount of money from your insurance provider. Being unemployed for just a month can totally mess your finances.

Rental protection –this cover will shoulder all your rental expenses (home, car, office, etc) or any of your rental property while you’re still incapacitated to pay for it. If you and your family are just renting a house and you suddenly lost your job, it can be a nightmare for all of you especially if you don’t have savings. Rental insurance is considered to be a short-term policy.

In America, 75% of the population is living in a paycheck to paycheck life. Majority are still uninsured despite the fact that that many people are losing their jobs, their homes, and all of their property. Most people don’t have savings – AT ALL. Because people think that they don’t have much to lose, they don’t really consider the idea of taking redundancy insurance. If you live in a nice house with a huge swimming pool, a beautiful garden, and a car, you will not really think that there’s a possibility of losing them right? If you have a very small house and you only have a secondhand car and a low-paying job, the more you will not think of getting an insurance as you will not having anything to lose. Basically, people are very comfortable with the idea that nothing’s going to change. This is true even in the case of the middle class and with those people living below the state median. Even if you own a small house or you’re just renting it; even if you have nothing but your car, or you only have a few of certificate deposits, these things are your asset. Just imagine if someone suddenly takes all of them from you. This can be a tragic and traumatizing experience that will not just affect you but the rest of your family as well.

That’s not impossible to happen if you become ill or you have been injured. A certificate of deposit that’s worth $10,000 is surely not enough to cover for your medical bills and support your family in a few months. If you live in the US, you understand how expensive it is to get sick. Even if you have health insurance, you may not be able to pay the hospital and buy your medicines especially if you only have the basic policy. If you have been reading the news, you must be aware of the insurance cases wherein majority of clients don’t get enough assistance from their insurance providers.

What about your mortgage? What about the tuition fees of your kids? What about your daily expenses? These are the monthly financial obligations that almost every one of us are duly bound to prioritize. But how can you manage them if you’re unemployed and can’t find any other source of income? What you need during crucial times like this is a fixed and regular income to cover for your expenses and a relief from your monthly bills.

If the injury you had or the illness you acquired is job related, you can count on to the worker’s compensation benefits provided by the government. Your employer is required, under federal laws, to provide you with medical and financial assistance that may be equivalent to 60% of your regular earnings. But if the injury or illness is not connected to the job, you may not receive any benefit at all unless you have redundancy insurance. During the times of being redundant, there’s no better place to seek help than your own insurance policy.

Do You Qualify for Redundancy Insurance?

It is important that you are highly informed about the insurance policy you’re getting. There are hundred types of protection plans and redundancy insurance is just one of the most complicated policies. Before anything else, you want to know if you’re entitled for this policy.

Generally, people who can file claim are the following:

Those who have acquired an illness (which must be covered by the insurer) or injury at work

Those who have lost their job because of poor performance or those who have been laid off from their companies as a result of economic downturn

Those who have paid for their monthly premiums on a regular basis

Has been unemployed and currently looking for a new work

Those who have been declared redundant but unaware of it when they took the policy

Where Do You Apply for Redundancy Insurance?

It’s easy to obtain redundancy insurance. There are numerous companies that offer this kind of policy. There’s the internet that makes it possible for anyone to search for insurance companies in their area. There are comparison websites as well that help consumers compare various policies and finally choose the one that is most suitable for them. It always pays to take advantage of the online resources including insurance directories. Examples of comparison websites that you can visit are www.comparethemarket.com and www.incomeinsurance.co.uk. If you will just depend on the details recorded on your phone directory, you will not be able to know which company is the best to deal with. You can also seek recommendations coming from your friends or relatives who have taken the same policy.

Selecting the Right Insurance Provider

This is perhaps the biggest challenge. While it is true that there are many providers, finding the right one can be a daunting task especially if you know very little about how insurances work. You see, insurance policies are commercial products too. Many companies will lure you with low premiums and comprehensive covers but somewhere along the contract, there are some shady terms. So how do you select the right insurer?

Read customer reviews and consumer feedbacks which can be obtained online. You can also join the online forums. You can search Google for forum sites. These are helpful ways on finding the right provider. It is also a must that you call the authorized regulatory agencies to inquire about the customer relations as well as the legitimacy of a particular insurance company. Once you have identified the right provider, it’s time that you decide on the kind of cover you are going to take.

In the UK, the biggest companies that offer unemployment protection cover are GE Capital, Liverpool Victoria, and Alliance & Leicester.

How Much Coverage Do You Need?

The most important step on getting redundancy insurance policy is to know how much you need. How do you know that this particular policy you’re taking is enough to provide you with your monthly expenses? It’s relatively easy to compute for the cost of coverage you need. First, you need to gather all your monthly bills, expenses, and your financial obligations. Sum it all up and multiply the result by 6. This will be the amount that you need to provide for your needs during unemployment.

There are also some other factors to consider when determining how much redundancy cover you need. First, you need to consider your job. What kind of job do you have? If you’re earning low, you may need a smaller cover. But if you are earning big and you have more financial obligations, you may need a more comprehensive (which is also more expensive) cover. You also need to consider the number of your dependents. If you are living alone, a basic redundancy policy may be enough to protect you in times of unemployment. But if you have more than two children who are all studying and your partner doesn’t have enough income, you may want to ensure that their needs are met by getting a larger policy.

You must also check if you can afford to pay the monthly premium. Always weigh all your monthly finances. Make sure you have enough for your savings and for your monthly premiums. If you can’t afford the premium, it only means you’re taking the redundancy insurance that is more than what you need.

You can also consult an insurance broker or agent who has the expertise and knowledge to help you choose the cover that best suits your needs. When negotiating with the insurer, always ask them to explain their policies. Make sure that you understand each and every term. Ask for the exclusion policies. These are things that they may not tell you during your initial consultation. Don’t sign the contract until you have carefully studied it and you conform to their terms.

Income Protection Insurance and Redundancy Insurance: What’s the Difference?

There’s a great deal of difference between an Income Protection Insurance (IPI) and redundancy insurance. IPI is a policy that entitles you for a financial benefit in case of disability, sickness, or injury. This policy doesn’t cover unemployment. Some people find it more sensible to get an IPI than unemployment insurance. This is because illnesses and injuries are usually the major causes of their unemployment. While an income protection cover doesn’t protect you from unemployment, it can actually replace your lost salary when you become physically incapable of working. There are also some other benefits provided under an IPI policy which are not offered on redundancy insurance. For instance, you may receive income benefits until you reach the age of retirement if in case your disability has barred you from returning to work. The downside of PPI is the high premium rates. If you are pretty sure about your health and you’re the type of person who gives high value in maintaining a healthy lifestyle, you can just settle on redundancy insurance.

Tips to get Redundancy Insurance

Check your unemployment benefits first. It really pays to go back to your employment contract and find if the company you’re working for has some unemployment benefits. For sure it has. These benefits are guaranteed by national laws. You should take a look at the labor code of your country so you will be guided. The government also has financial assistance programs from employees who have been unemployed. If you think the unemployment benefits you can get from these resources are enough to cover your expenses while you’re still looking for a job, then you may not need to apply for redundancy insurance. 

Have a seat and contemplate on your monthly outgoings. How much do you spend every month? How much exactly do you earn? How many financial obligations do you have? What are the things you can take out at least during the time of unemployment? What are your priority expenses?

Determine if you really need this policy. If you have enough savings, it really makes no sense to obtain redundancy insurance. Always consider your financial resources and circumstances before deciding to get this particular cover or not. You can choose to be self-insured. Meaning, you should start saving the moment you got a job. This way, you will have something to take from your pocket the moment you got laid off from your job. If you can pay the monthly repayment, for sure you can also take out a small portion from your salary and put it in your savings account.

Ask for insurance quotes. When you’re pretty sure that you really want to buy unemployment insurance, shop around. Talk to at least three companies and ask each one for an estimate of the redundancy cover you wish to take. By doing this, you will have a clearer understanding of the usual terms and costs of unemployment insurances. This will also help you find the lowest possible deal for a comprehensive policy.

Take out unnecessary policies. Once you have computed the amount of cover you will need, it will be easier for you to take off the unnecessary costs. Unnecessary policies will just increase your monthly repayments without giving the benefits you’re looking for. If you have some other insurance plans, always make it a habit to check and cross out the services that are already covered by your existing insurance policy. This way, you will not be paying for duplicate services.

Consider your savings. Decide whether your savings are enough to cover a large portion of your monthly expenses until such time you can get back to work again or you have find another job. If you have bigger savings, the lesser the amount of your insurance becomes.

Despite the fact that redundancy insurance is a worthwhile cover to avoid financial tremors during unemployment, there are some things you should watch out before taking this cover. There are situations wherein this form of insurance is not suitable. For instance, if you are self-employed or you are over 65 years or over, you may not be able to take advantage of this cover. If an insurance provider offers you the redundancy cover when without considering you age, you shouldn’t take it. If you were fired from the job because of misconduct or you resigned, you may not be eligible for the policy benefits. You must remember that such insurance only covers involuntary unemployment. The rise on premium costs is also possible. If redundancy is foreseeable in the company, you may not be able to apply for unemployment insurance. For instance, if you received a note coming from the management that you belong to the group who will be laid off from the company, you may not be able to take advantage of the claim this policy offers.

By reaching this far, you must be well-equipped with the facts, tips, and ideas you need to survive the painful impact of unemployment. While redundancy insurance may not be the sole answer to your problem, it can be a great help and a cheaper alternative.

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