Many people are taking out redundancy insurance. Here’s a little guide to what’s available.
It’s a common thought that Redundancy Insurance is Redundancy Insurance and there is very little to choose between policies. This would be an easy impression to get if you shopped around amongst the high street banks and building societies.
There are choices though, very many choices and often the non considered choices are much better than the ‘obvious’ ones. This is quite scarey when you consider the number of people who are paying for the cover.
These days Redundancy cover is almost always arranged in tandem with Accident and Sickness cover.
Right. A quick fact or two.
Redundancy cover is quite an unusual product to exist and actually doesn’t exist in most countries. But, it does exist in the UK, and for that we can be thankful.
Most policies pay out for 12 months in the event of redundancy. Some pay out for 24 months. You can arrange for the payout to start after 1,2,3 or even 6 months after your redundancy has taken place – the longer the cheaper the premium.
Accident and Sickness cover can be arranged on the same basis – 12 or 24 month payout, with a variety of periods before the payout starts.
Thing you need to know, Number 1: for most people there is also an option to have the accident and sickness cover run for any term up to age 65, and often at a similar monthly premium.
That makes sense – with Redundancy, you’d hope you’d find a job. With sickness, you may recover or you may not.
Thing you need to know, Number 2: If you get sick pay from work, say 6 months, you may want to have the redundancy part of the cover with a wait period of 1 or 2 months, but the sickness cover with a 6 month wait period.
That makes sense – no point paying for unnecessary cover.
Thing you need to know, Number 3: Accident Sickness and Redundancy Insurance is available to tenants as well as mortgage customers.
That makes sense, but most policies are for mortgage customers only.
Thing you need to know, Number 4: Most polices are capped at £1500 per month and are set up to cover your mortgage payment. For Redundancy there are some policies with higher limits.
That makes sense, these days £1500 isn’t a huge payment for a mortgage.
Thing you need to know number 5: For Accident and Sickness you can have virtually any level of cover – to roughly match your income when you are/were healthy.
That makes sense – if you are off sick for a long period, you’ll want much more money coming in than just enough for the mortgage.
So, when you are looking for Accident, Sickness or Redundancy Insurance you could buy ‘off the shelf’ or you could take Independent Advice and end up with a custom made policy designed for your circumstances, possibly at a lower cost.
That makes sense…
