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Unemployment insurance: Help and advice

Unemployment insurance, or redundancy cover, is an increasingly popular form of insurance that provides financial protection if you find yourself out of work. In today’s uncertain employment climate it is prudent to take out this form of insurance which will cover your mortgage or rent, loan repayments and utility bills if you find yourself out of work for no fault of your own.

Tax free income

This form of insurance pays out a monthly amount free of income tax. It can also include accident and sickness insurance as part of the policy, so you are covered in all eventualities.

How it works

Like any other form of insurance, unemployment insurance is activated when the insurer makes a claim through their policy. Once the claim has been approved, the insured will begin receiving regular monthly income which can be used to meet their financial obligations. This insurance can be designed to pay specific bills such as a loan, mortgage or credit card debt or can be a general financial cover that can pay any bill.

Things to look out for

Most unemployment insurance policies will only cover you for the first 12 months and most will have an excess period of 30 days during which you will not receive a penny of income. Some policies quote 180 days excess periods, so make sure you read the small print before agreeing to take the policy. Most policies stipulate a minimum period during which the insured must have been paying the monthly policy amount prior to making a claim and insurers also expect claimants to continue paying the policy during the claim period.

Final word

Before you take out unemployment insurance, you should check if you are already insured through a payment protection plan against a loan or mortgage or through an existing life insurance policy. If you find that you require the cover, the best places to look for an appropriate policy are price comparison websites and insurance brokers, as both will offer policies from a range of insurers.

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