Reasons to Take out Unemployment Cover
Unemployment Insurance to Assist with Household Bills and Expenses
Jan 30, 2009
The purpose of unemployment insurance is to provide an income in the event of involuntary unemployment. This helps with paying bills, such as: mortgage payments, energy bills and general household bills. The absence of an income from redundancy insurance would almost certainly create financial issues.
Unemployment Insurance Helps to Cover Household Bills
If made involuntarily redundant, how would that person manage to pay household bills, such as: mortgages payments, food costs and utility bills? State benefits aren't sufficient for paying bills and covering expenses, especially for homeowners who are given less financial protection than tenants.
After as little as 30 days, unemployment insurance pays out a tax-free income of 50 to 50% of previous earnings for up to 12 months. This can be used to cover household bills and gives a person that has been made involuntarily redundant sufficient time to find a suitable job.
Claim More than Once under an Unemployment Insurance Policy
If someone is made involuntarily redundant, it is still possible to make a claim under the same unemployment insurance policy later on. This is provided that the insured continues to make their premium payments and complies with the T&Cs of the policy.
Redundancy Insurance Helps People Feel More at Ease
In an uncertain world, unemployment insurance provides real peace-of-mind for the insured. Unemployment cover is particularly important for those with a young family or a mortgage to pay. With levels of home repossession on the increase, help with mortgage payments is essential.
Reduction in the Number of Companies Offering Unemployment Cover
The current recession has meant that the risk of involuntary redundancy is the highest it has been in decades. Emma Walker, of price comparison website MoneySupermarket.com, stated "Many of the biggest suppliers of unemployment cover have withdrawn their policies from the market recently."
Whilst it is certainly harder to find a source of unemployment insurance than it was 12 months ago, it serves to illustrate how worthwhile the cover actually is. Why else would it be withdrawn? Use a broker or price comparison service to identify the few sources of unemployment cover that are now available.
Whilst unemployment insurance can be a real life-saver when involuntary unemployment raises its ugly head, there are certain pitfalls to be aware of. Those that are working part time, on a contract, above 64 or haven't completed their probationary period won't qualify for unemployment cover. Beware of unscrupulous sellers as none of these groups stand to benefit.
Those with young families or mortgages should also consider income protection insurance or mortgage insurance in the event of ill health or involuntary redundancy. People that are concerned about the future may also be interested in saving for uncertainty by starting a cash ISA.
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