Despite the government’s best efforts with furlough payments, and lending packages the lockdown has already meant that many small businesses have struggled.
Many have had to shut their doors because of lockdown, and some will not be opening them again.
At Continuum we are looking at income protection insurance – and why you may need our help to arrange it.
Income protection insurance can include redundancy
Income protection is a type of insurance cover designed to pay you a regular income if you can’t work due to illness or injury. Most policies are designed to keep paying out until you retire or are fit enough to return to work.
There are two main types.
The first is Permanent Health Insurance or PHI. This pays a proportion of your salary if you have to stop work permanently and can continue until your normal retirement age.
The other is Accident, Sickness and Unemployment (ASU) cover. This can provide a replacement income in the event of illness, accident or – crucially in the current environment – redundancy.
If you become ill, this cover could provide an income until you are fit again – and if your employers business fails and you find yourself being made redundant, it could offer a replacement income until you find other work – for 12 or even 24 months. But things may not be quite so clear cut in practice.
The problem is that the pandemic has changed the statistics that insurers rely on. Like the rest of us, they cannot predict what comes next in the coronavirus saga, or the kind of costs that they will be faced with. Fearing being deluged with claims, some insurers have already started to pull their unemployment insurance products altogether in the wake of the coronavirus outbreak.
Meanwhile others have started to add exclusions to new policies, which would exclude payouts for those off sick with the virus. Existing policyholders should not be affected and unemployment may still be covered – but in some cases the insurers may take a less than sympathetic view.
Some insurers have stopped offering their Mortgage Payment Protection Insurance*. This type of cover is supposed to protect you if you are unable to pay your mortgage due to illness or redundancy, and again, it should pay out if the problem is caused by Covid, but you need to be sure.
Some policy providers will take the position that illness caused by the coronavirus was not foreseen when the policy was taken out, and therefore cannot be covered by it.
Can you get cover now?
In light of the insurance industry’s response to the developing outbreak it’s vital to check the policy wording on any new insurance policy you take out. In many cases coronavirus will be excluded for a sickness claim, but unemployment cover may still be in force.
However, it is vital to understand that you will not be able to get unemployment cover if you expect to be made redundant when you arrange it.
If you have any doubts, get some independent advice. At Continuum we can help you look at the content of any insurance policy and can help you find insurers offering the cover you need – even in the current challenging circumstances.
Insurers may have changed the cover they offer and the charge they make for it, but the protection you need may still be available. But the sooner you act, the better the chances are that we can help you get the cover you need.
Call us on 0345 643 0770, email us at [email protected] or click on the ‘Contact Us’ link below.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products, you should seek independent financial advice before embarking on any course of action.
*Your home may be repossessed if you do not keep up repayments on your mortgage.