The decision to leave the EU has put jobs at risk. It does not matter what line of work you are in, or what position you have with your employer, there is nationwide concern over job losses as companies lose access to a market and/or decide to relocate abroad.
If you are worried about how quickly you could get back into work if you were made redundant, then there is a solution for you in a redundancy cover plan.
It is worth pointing out that although the redundancy cover is often referred to as ‘unemployment cover’ it will only, in the main, pay out in the event of involuntary redundancy.
If you know there is a real possibility of being made redundant then great care is needed when looking for redundancy plans.
Unfortunately, many people only start looking for this type of cover after their employer has made announcements about possible cutbacks. In this case they are not, in the main, eligible for the cover.
This is probably one of the most complex types of plan in the market because of the varied criteria applied by the providers at application and at claim stage. It is all too easy to buy a plan ‘off the shelf’ only to find it could never have actually covered you.
The plans have limits on the amount of cover provided, being either linked to a mortgage or rent payment and/or limited (at claim) to a maximum percentage of your gross salary. It is important to seek advice on the best type.
Benefits on claim are tax free and are dependent on your eligibility to receive Jobseekers Allowance (they don’t affect your ability to be paid this). They typically have a maximum claim period of 12 months per claim.
In almost every case the plan is reviewable, in some cases monthly. This means that the provider can with notice: change premiums, vary terms and conditions and even cancel the plan.
Which option is best for you?
Roxburgh Financial Management was set up to provide specialist help to people unsure how to go about choosing from the many Protection products available. For example, some insurers wouldn’t consider you if your company had made an announcement in the press of redundancies whilst others would unless you had received a formal letter stating that your job is at risk. So it’s important to make sure that if you’re buying a policy it’s the right one for you.
Our specialists will help you to navigate all the options to find the cover that is right for you and your family at an affordable rate.
Six reasons to use us
- We do not charge for our insurance advice
- We will explain the good, the bad, and the ugly
- We will ask the right questions
- We do all the work, right through to completing the application form
- We can access the full range of insurance providers
- We are regulated and authorised by the FCA
Types of redundancy options
As with all things, the more options you choose the higher the price. Redundancy protection is no different and different insurers load the options differently. It is therefore important to determine what you need and what you would like so we can find the best income protection policy available to you in the market place. Below are some of those options.
This is the period (in weeks or months) following a claim before the benefit you are expecting is paid to you. The longer this period is, the cheaper the premium cost of the plan. It is normally based on what your employer sick pay (if any) is, and how long you can survive financially (i.e any savings you would use).
This can be one year, two years, and five years per claim; or up to your selected retirement age. The shorter the maximum period per claim the cheaper the premium becomes; however, the plan will stop paying if you are still off work after the selected period.
Level or Indexed
‘Level’ means that the amount you receive will remain the same throughout the time you have the insurance, regardless of whether your income or expenditure increases. Alternatively, the amount you receive can increase each year in line with inflation, using either the retail price index or the consumer price index.
Guaranteed, Reviewable and Age Costed
With guaranteed premium policies, the basic premium you pay stays the same throughout the policy term unless you increase the required income amount (or if you have indexation). A plan with reviewable premiums (typically ASU) is reviewed by the provider each year (like home insurance) and a new set of terms are then issued for the next 12 months.
There may be no change. But, the provider can change the premium, and/or the terms and conditions; and, at worst, remove the cover.
Age-costed premiums, change each year based on your age. These changes are pre-set by the provider and are either ‘set in stone’ or can be reviewed. However, the provider cannot change the terms and conditions of the plan in any way or remove the cover.
Waiver of Premium
If ‘waiver of premium’ is selected then, when you begin receiving an income from the insurance policy, the premiums paid will be refunded back to you until the claim finishes. Most ASU plans do not offer a waiver of premium option, meaning you must pay for the plan whether in claim or not.