Unemployment Insurance

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Drewberry™ provide pensions, investment and insurance advice for Money to the Masses readers throughout the UK.

 

Why Unemployment Insurance?

Unemployment insurance, also known as redundancy insurance will pay you a monthly income should you get made redundant from your place of work and are unable to find another job.

 

Unemployment insurance covers you if you suffer forced redundancy.

 

Designed to cover expenses such as your 🏠 mortgage payments and bills until you are able to find another job.

 

41% of employees have been made redundant or suffered long term ill health during their working life. Met Life 2012

 

Speak to our expert independent advisers or get an instant online quote to compare the UK’s leading insurers.

What is it for?
 

What does Unemployment Insurance cover?

Redundancy Cover

The policy will payout should you suffer forced redundancy. The payout length for unemployment cover is usually 12 or 18 months as this is the length of time most of us will have been able to find alternative employment.

The policy will begin to pay a claim after your chosen deferred period and will continue to pay you a monthly income until either you return to work or reach the maximum benefit period.

Dismissal
Some policies also pay out if you are dismissed from your job although this is less common, it is best you speak with one of our experts to understand which policies offer this additional protection

What does it cover?
 

How does Unemployment Insurance work?

  • You are made unemployed.
  • You register as unemployed with the Job Centre and start claiming Job Seekers allowance.
  • Your insurer will assess your unemployment claim and start paying out your monthly benefit after your deferred period.
  • Your policy will continue to pay out either until you start a new job or reach the maximum number of payouts which could be either 12,18 or 24 months depending on the terms of your policy.

With redundancy insurance should you be made unemployed again in the future you would be able to claim again in the same manner you did the first time round. There is no limit on the number of times the policy could pay out.

How does it work?
 

Do I need Unemployment Insurance?

We are all optimists at heart but when it comes to our financial protection it is important we know all the facts to ensure we can weigh up the risks and make the right decisions.

The Unemployment Risk: 7.8% of people were unemployed in February – April 2013 according to ONS statistics.

The Consequences: Job Seekers allowance is a maximum of £71.70 per week which means that someone on a salary of £30,000 could suffer from an 88% fall in weekly income.

The Question: If you lost your income how would you continue to meet your essential monthly outgoings if you didn’t have any unemployment insurance?

Do I need cover?
 

Your Key Options

Choose your level of cover
Some insurers will look at covering a percentage of your monthly income whereas some look to see how much your mortgage payments are and cover them plus an additional percentage.

Choose your excess period
You can opt for a policy which will pay out after 30, 60 or 90 days of unemployment. Some policies will pay you back pay of a month when you claim.

Choose your payout length
Unemployment plans are designed to protect against short term loss of income due to redundancy and thus tend to have a maximum claim period of 12 or 18 months.

If all these options seem a little overwhelming and you would like some support please do not hesitate to pop us a call on 0208432733 or email help@drewberryinsurance.co.uk.

What are my options?
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This Guide

Andrew Jenkinson - Drewberry
Written by:
Andrew Jenkinson
Director at Drewberry
⏰  10 min read
 

What is unemployment insurance?

Unemployment insurance provides cover in the event of forced redundancy. Should you unexpectedly be out of work the policy would pay you a tax free monthly benefit until you have returned to work or the policy has paid out for the maximum benefit period, which is often 12 months or 24 months.

You can opt to include accident and sickness cover in your plan to ensure you are financially protected should you lose your income due to ill-health, accident or redundancy.

Our online comparison service allows you to compare unemployment insurance quotes side by side, there can be a few nuances so it is important to have a good read through the T&Cs. If you need any help with this we offer a free of charge advice service so please do not hesitate to give us a call on 02084327333.

Very happy with the advice I received from Jake Beale at Drewberry on my income protection. All sorted in two short easy phone calls.

Phil Walker
07/11/2017
 

How does redundancy cover work?

Unemployment insurance provides cover in the event of forced unemployment i.e. redundancy. Should you unexpectedly be out of work the unemployment insurance would pay you a tax free monthly benefit until you have returned to work or the policy has paid out for the maximum benefit period, which you will determine at the start of the policy as either 12 months or 24 months.

Unemployment Cover and Job Seekers Allowance

If you are made unemployed you will need to register with the Job Centre and start claiming Job Seekers Allowance. You will need to submit a claim with your insurer, they will then assess you circumstances and assuming the claim is successful will then start paying you the agreed monthly benefit to replace your lost income.

Your claim will continue either find a job and return to the workplace or you reach the end of your claim period which will have been defined as either 12, 18 or 24 months when you set-up the policy.

Are there any exclusions?

The standard exclusions will vary from insurer to insurer however the vast majority have a few general exclusions which are consistent across the board. The most common exclusions are detailed below:

  • You have become voluntarily unemployed
  • You have chosen to take a career break
  • You become unemployed due to your own misconduct, fraud or dishonesty
  • Your unemployment is the result of industrial action

You are unlikely to get cover in the first place if you are a temporary worker.

Do you get income protection from your employer?

If you receive income protection from your employer then it may be worth taking out unemployment insurance as a standalone policy, which will exclude cover for accident and sickness.

If you do not receive income protection cover from your employer (as part of an employee benefits package) then it is well worth considering including accident and sickness insurance in your plan.

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Do I need unemployment insurance?

Anyone who would face financial risk from suffering accident, sickness or unemployment should consider taking out a policy to protect their living standards. With statutory sick pay standing at £79.15 per week (lasting for 26 weeks), government incapacity benefit standing at £95.15 per week (after 26 weeks) and jobseeker’s allowance of £59.15 per week it makes sense to arrange private insurance protection.

unemployment protection statistics

Unemployment statistics

According to figures from the Department for Work and Pensions there were over 370,000 people claiming incapacity benefit in August 2009, and in this same month figures from the Office for National Statistics (ONS) show there were over 1.6 million people claiming jobseeker’s allowance. In this light, assuming that ‘this won’t happen to me’ is a large financial risk.

Everyone potentially has the need for unemployment insurance as job security can never be guaranteed but those who have an income protection plan provided by their employer as part of their employee benefits package may not need accident insurance or sickness insurance.

The Unemployment Risk
7.8% of people were unemployed in February – April 2013 according to ONS statistics.

The Consequence
Job Seekers allowance is a maximum of £71.70 per week which means that someone on a salary of £30,000 could suffer from an 88% fall in weekly income.

The Question
If you lost your income how would you continue to meet your essential monthly outgoings if you didn’t have any unemployment insurance?

Do I get any support from my former employer?

If you were to be made redundant your employer is required to pay a statutory level of redundancy pay. This varies depending upon your age and years of service however the maximum benefit is based on a weekly gross income of £350 (2009/2010).

Essentially your employer is required to pay 1 weeks worth of salary for every full year of employment, roughly depending on age.

For many of us this leaves a gaping hole and a vast shortfall in income. Redundancy insurance is used to fill this gap to ensure your financial obligations are met so you can focus on finding employment.

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What factors affect the cost of redundancy insurance?

Length of cover

Whether you are combining the redundancy insurance with accident and sickness or not the policy is designed to provide short term protection.

When buying redundancy insurance you have the option to choose a benefit period of either twelve or twenty-four months. The longer the benefit period the higher your premiums.

unemployment insurance advice

Level of cover

The amount you can insure will often depend on whether you are linking the protection to your mortgage. As a general rule you are able to insure the lesser of 65% of your pre tax earnings or £2,500.

Redundancy insurance is no exception to this rule, the greater the level of cover the higher your premiums, however, premiums are likely to be less than a full accident, sickness and unemployment policy as you have stripped out a proportion of the cover in just choosing unemployment.

Setting your deferred period

Again this is a short term protection product and thus tends to have shorter deferred periods than the long term income protection products.

The longer the deferred period the lower the risk to the insurer and thus the cheaper your premiums.

tomconnerportraitround

“To ensure you are correctly protected it is best to speak to an adviser, particular if you are self employed. Unemployment insurance for the self employed or for company directors is not something we recommend given the ambiguity when it comes to the terms and conditions. So please be careful and make sure you read the T&Cs.”

Tom Conner
Director at Drewberry Insurance

 Need help with Unemployment Insurance UK?

Need Unemployment Insurance Advice?

If you would like some competing quotes please click here to get quotes comparing the best 10 UK insurers. On the other hand, if you would like to speak to someone to run through your requirements and policy options then one of our expert advisers would be more than happy to help, call us on 0208 432 7333 or email us at help@drewberry.co.uk.

As Drewberry is independent of any insurer we can arrange a suitable unemployment protection plan from any one of our large panel of insurers and can therefore provide truly impartial advice. We want to provide you with all the information you require in order to make the best decision on your protection needs.

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