Although no one really wants to have to think about losing their job, many of us will become redundant at some point during our working lives. While some will receive generous redundancy packages from their former companies, others will be left with very little to survive on. If you have a mortgage, a family to support and other essential expenses, suddenly having to get by without your monthly salary can be a real challenge.
One way in which you can protect yourself from the financial strains of unemployment is to take out redundancy insurance. Having the extra support this type of policy provides can make a huge difference if you find yourself without a job.
Types of redundancy insurance
As @thisismoney says, “There is no such thing as fail-safe redundancy cover, but there are some ‘redundancy insurance’ policies that might help you.” Three of the most common types of redundancy insurance are mortgage payment protection insurance (MPPI), payment protection insurance (the now infamous PPI) and short-term income protection insurance (STIP). Most of these types of policies will pay out for between 12 and 24 months after you’ve been made unemployed.
As the name suggests, mortgage payment protection insurance is designed mainly to help you meet the instalments for your home loan but it is possible to take some additional cover out above this for the extra household costs. PPI policies are often taken out in conjunction with a credit card or personal loan and help you to meet these repayments while short-term income protection insurance will replace a proportion of your monthly income if you lose your job.
Why take out insurance when my job is safe?
All too often, employees overlook redundancy insurance because they believe their jobs are safe. However, the number of large, well-known companies that have gone bust, or significantly reduced their workforce over the past few years shows that no one’s job is ever 100% safe. From Toys R Us to Lehman Brothers and Maplin to BHS, some of the biggest names in business have packed up shop in recent years, resulting in the loss of tens of thousands of jobs.
Is redundancy insurance worth it?
According to recent research, a quarter of British adults don’t have any savings at all. Even more have just a few hundred pounds in the bank. This means that most of us would be in severe financial difficulty very quickly if we lost our jobs. Although redundancy insurance costs money every month, the financial security it can provide in the case of unemployment can make all the difference during a difficult time.
If you’re thinking about taking out redundancy insurance and want to find out which type of cover is right for you, get in touch with a member of our expert team today.
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Written by: Editorial Team