How to Insure Against Redundancy

How to Insure Against Redundancy?

Within recent years there have been so many workers made redundant in the UK that the average person is now in fear of losing his or her job.

Companies which we thought were solvent suddenly went under or downsized significantly and literally millions of workers became unemployed. If you want to protect your family during these trying economic times, you might want to investigate how to insure against redundancy. But first, take a look at how redundancy insurance works.

What Redundancy Insurance Covers

There are actually several types of redundancy insurance but the two main types would be a simple payment protection insurance plan and redundancy cover that specifies an amount you need monthly to meet your obligations. One pays only the bills you specify, the other gives a lump sum monthly based on the policy limits you establish when you purchase the cover.

Why Payment Protection Insurance Got a Bad Name

You have probably heard the horror stories of so many people having been sold payment protection insurance by their banks to guard against redundancy only to find they were not eligible.

Unfortunately, banks took a type of cover which most of us need and sold it to customers who would never be eligible and the banks knew that when selling that product. PPI or MPPI (mortgage payment protection insurance) sold as standalone policies by independent insurance companies were not party to the PPI scam.

How to Insure Against Redundancy

Guarding against Redundancy with PPI

There are a great number of good and reputable insurance companies in the UK that sell PPI and you have no fear of guarding against redundancy if you understand the cover along with any exclusions listed in the small print.

This type of redundancy insurance covers specific loans stated on the policy such as your mortgage, car payments, credit cards and other debts which you couldn’t meet if you were suddenly made redundant.

Again, it is a great cover to have if you understand the limitations of the policy and who is or isn’t eligible to draw benefits from a PPI policy.

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Protecting against Redundancy with Short Term Income Insurance

Many people prefer to calculate their monthly expenses and then purchase short term income insurance. This type of policy allows you to draw a certain percentage of your pay, based on policy limits. The amount you pay (premiums) will depend on the amount of money you need to draw monthly. Each insurance company has different policy maximums so you will want to compare several side by side to see which is best suited to your needs. Some may cover most of your income whilst others may only cover up to 50% or 75% of your current income. Do check out several before deciding.

Redundancy Insurance Exclusions to Be Aware Of

One thing you should understand before purchasing any kind of redundancy insurance is the fact that if you know or have been notified in any way that you may be made redundant in the near future, you will not be able to draw benefits. Of course, redundancy cover is only available to those between the ages of 18 and 64 years of age. There are other exclusions common to redundancy insurance and it is worth the time and effort to understand each and every exclusion prior to purchasing that particular policy.

To sum it all up, the time to purchase redundancy insurance is now. Don’t wait until you have been told you will be losing your job or that your post may become redundant. You would not qualify at that point and it would simply be too late. Redundancy insurance is meant to help you make payments should you suddenly become unemployed so that you don’t lose everything you have worked so hard to build. Protect your family against lost income before it is too late. Redundancy insurance is a great cover if you understand how it works.

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