Why Redundancy Insurance?

Have you ever wondered how you’d pay the bills if you were made redundant? This might not be something you’ve considered before, but in our increasingly turbulent political climate, it’s an important question.

From our homes, our cars, our gadgets and holidays, to our beloved family pets, most of us probably insure at least one aspect of our life, but for some reason, our income is often last on our list of priorities.

You may not think you need Redundancy Insurance, particularly if you’ve been working for the same employer for a number of years, but it’s impossible to predict what’s around the corner. Whether you’re self-employed or are working for a large multi-national company, job security is no longer guaranteed.

According to the most recent Labour Market Bulletin (October 2019), the unemployment rate in the UK is estimated at 75.9%, and as many as 41% of people will be made redundant during their working lifetime.

Worryingly, research by the ONS also shows that a quarter of households have less than £95 to fall back on, and although there’s the option of Job Seeker’s Allowance, at just £73.10 per week for adults over 25, this wouldn’t be enough to cover everyday necessities, let alone any rent or mortgage repayments.

Statistics such as these might sound alarming, but it’s reassuring to know that there’s something you can do to protect yourself and your family against the unexpected.

Protecting up to 65% of your monthly income, Redundancy Insurance offers a financial safety net, helping you cover any essential bills and outgoings if you lose your job through no fault of your own.

With up to 12 monthly payments available in any one claim period, you’ll be free to devote your time and efforts into finding a job that suits you, without having to worry about how you’ll keep up with your usual outgoings.

In the event that you’re made involuntarily redundant and need to make a claim, you’ll receive each payment (known as a monthly benefit amount) tax-free and straight into your bank account.

Because the money is paid straight to you, there are no conditions relating to how you spend it. If you wish, you can use it to cover your rent or mortgage each month, but the money you receive doesn’t need to be linked to a particular financial commitment.

The amount of money you receive depends on how much you earn, and is designed to cover a percentage of your gross monthly income, but not all of it. You should choose an amount that gives you enough to cover your essential living costs, making sure that the monthly premium you pay is still affordable, even without your usual wage.

More than just monthly payments, Redundancy Insurance gives you peace of mind in the knowledge that you could continue to support yourself and your family if your regular income were to stop.

To be eligible for Redundancy Insurance, you must be a permanent resident of the UK, Channel Islands or Isle of Man, aged between 18 and 64, and in full-time work (more than 16 hours per week).

As long as you can prove that you’ve been working for the same employer for more than 6 consecutive months and are not subject to any kind of disciplinary procedure or investigation, you should be able to purchase a policy.

When you buy Redundancy Insurance, you’ll be asked to confirm that you are not aware of any impending redundancies or restructuring in your place of work. If you are informed that your job is at risk after taking out cover, you’ll need to cancel the policy as this information renders it invalid.

If you’re made redundant and need to make a claim, you’ll need to serve what’s called an Initial Exclusion Period (IEP). Lasting between 60 and 120 days, this is the amount of time you must wait after purchasing a policy before a claim will be valid.

To find out more about Redundancy Insurance, or to purchase a policy, it’s a good idea to speak with an advisor. Our income protection specialists are experts in the industry, so they’ll be able to search the market to find the best policy for you.