The old idea of leaving school and staying with the same employer, or even in the same job, until retirement faded a generation or two ago.
Technology has already eliminated many jobs. Now AI is threatening many more.
Todays’ workers may be wondering if they’ll be working at all in a few years’ time.
But if you can’t count on job security, you may be able to count on income protection policies covering illness, injury and involuntary redundancy.
At Continuum we are looking at redundancy protection.
What exactly is redundancy protection?
Redundancy can come as a shock, and as a blow to your self-confidence, but its most serious effect is the loss of income.
Redundancy protection aims to replace that income.
Redundancy protection cover, also known as unemployment protection or redundancy insurance, is a short-term income protection policy that can provide a financial safety net if you lose your job due to involuntary redundancy.
If you’re made redundant, it pays a monthly sum, usually between 50% and 70% of your usual income for 12 to 24 months, depending on the policy. This helps cover essential expenses like mortgage or rent, bills, and other living costs while you look for new employment.
Part-time, temporary, or self-employed workers are not eligible, and you usually need to be in permanent, full-time employment for a certain period before you can take out a policy. You can’t take out cover if you already know your job is at risk.
Payments don’t start the moment your paid work stops. There’s typically a period of 30 to 90 days before payments start after you lose your job, and policies do not cover voluntary redundancy, or dismissal for misconduct.
Types of Redundancy Protection
Redundancy protection is not usually provided as a standalone policy, but as one of the benefits of a broader type of cover.
One of the most common is Accident, Sickness, and Unemployment (ASU) insurance, which as the name suggests, could provide cover for redundancy as well as illness and injury. Mortgage Payment Protection Insurance (MPPI) specifically covers your mortgage repayments if you lose your job, while Payment Protection Insurance (PPI) covers loan or credit card payments if you can’t work.
Short-term income protection could provide a temporary financial buffer for between six months and two years if you’re unable to work due to ill health or injury. Some policies will include redundancy, but you need to check carefully if you are shopping around for cover.
Should you have redundancy protection?
Economic upheavals and automation and now AI are all making the future look less certain. If you are an employee, you may need to face the fact that redundancy is possible. In some sectors, it may even become likely.
Redundancy protection can provide peace of mind and financial stability during periods of unemployment. It could be essential if you are a sole breadwinner, and if you have significant financial commitments or dependents.
Some brokers are reporting an increase in enquiries about redundancy cover. It is probably due to uncertainties about the future and unemployment figures that seem to be edging up.
Whether it’s a growing fear of losing jobs or increasing awareness that a quick move into a new job might no longer be so easy, it seems many people are choosing protection.
Getting the cover that is appropriate for you
As with any type of insurance, the cost will vary with your personal circumstances and the level of replacement income you need.
Finding the cover to help meet your needs at a time when insurers are becoming wary of offering it can be a challenge. Fortunately, a call to us at Continuum can help you find the suitable cover you need, and at the most competitive price in the market.
If you’re worried about the future, call us today.
Can you insure yourself against redundancy? | MoneyHelper
Redundancy Insurance | Compare the Market
This article is intended for general guidance only and is based on the opinion of Continuum it does not constitute financial advice. Individual circumstances vary, and you should consider seeking advice from a regulated financial adviser before making any decisions about your insurance planning.
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