What is unemployment protection insurance? Do I need it?

What is unemployment protection?

Unemployment protection is a short-term income protection policy, also known as redundancy insurance. Unlike income protection insurance—which covers partial loss of income due to illness or injury—unemployment protection offers financial protection in cases of involuntary redundancy.

It can be used to safeguard your monthly expenses, as well as to protect your mortgage, loan or credit card repayments. Overall, unemployment protection covers up to 70% of your gross monthly income (before tax) for a maximum period of 12 months.

How does unemployment protection work?

Once your claim for redundancy insurance is approved, you will start to receive tax-free monthly benefits. As previously mentioned, these are no more than 70% of your annual income, paid either immediately or after a set period of time. The payouts will continue until you return to work, although the maximum length of cover is 12 months.

Do I need unemployment protection?

If you are concerned about becoming involuntarily redundant, redundancy insurance can offer some financial reassurance. It helps cover your monthly expenses while you search for a new role, really taking the pressure off job hunting. Also, if you heavily rely on your income to pay for the majority of your household bills, unemployment protection is a wise choice.

It is important to consider the cost of the premiums against the possibility of you actually becoming redundant. Ultimately, it may be wiser to save this money instead if you think you are in a secure position with your employer.

At Vincent Burch, when we quote for accident, sickness and unemployment cover, we will separate the unemployment cover required. Often, having accident and sickness cover with one insurer and unemployment cover with another will reduce the monthly premiums.

Am I eligible for unemployment protection?

To be eligible for redundancy insurance, you must:

• Be a full-time employee (not self-employed or part-time)
• Have been employed by the same company for over six months
• Prove your redundancy was involuntary (not behaviour, conduct, or performance-related)

Unemployment protection does not cover individuals fired from their jobs rather than being made redundant. Similarly, if you are aged over 65, volunteered to take redundancy or resigned from your job, you will not receive financial protection. Insurers will check your circumstances rigorously, so beware.

For more information about our unemployment protection, call us on 01603 340644.