Is redundancy cover worth it?

inglorius · 20 December 2017 at 12:21AM

I've been recently looking into taking out redundancy cover and need some advice please as to whether these policies would be of any benefit to me given the below:-

1. All the policies I've seen state that you have to be in possession of JSA to make a claim, I would not be eligible for contribution based JSA as my earnings over the past 2 years would have had to be circa 40k p/a to reach this threshold and they are nowhere near that and as I have savings of over 16k I wouldn't be eligible for income based JSA - does just the fact of claiming stamps qualify you for this even though you receive no pay out?

2. Do these policies only cover redundancy, I have only been in my job for 14 months, what happened if the company one day just decided to let me go and give me my notice period (not sacked for gross misconduct, just given notice), would this qualify as redundancy, are there policies which would cover this?

3. I have also looked at income protection plans, do the same rules apply as above? As I have no mortgage would this be even worth it?

TIA

antrobus · 20 December 2017 at 8:47AM

inglorius wrote: »

...1. All the policies I've seen state that you have to be in possession of JSA to make a claim, I would not be eligible for contribution based JSA as my earnings over the past 2 years would have had to be circa 40k p/a to reach this threshold ...

Err, no.

You can get contribution-based JSA if you’ve paid enough Class 1 National Insurance contributions in the two previous tax years. You only need earnings of about £8k a year to pay class 1.

inglorius · 20 December 2017 at 12:20PM

antrobus wrote: »

Err, no.

You can get contribution-based JSA if you’ve paid enough Class 1 National Insurance contributions in the two previous tax years. You only need earnings of about £8k a year to pay class 1.

Thank you, my understanding was that you had to pay 50 times the Lower Earnings Level in NI contributions in the previous 2 tax years to qualify for contribution based JSA, I assumed then that this would mean you would have to pay £5600 in NI contributions meaning earnings of circa £50k each year to generate this amount of NI payments.

Comms69 · 20 December 2017 at 12:46PM

inglorius wrote: »

Thank you, my understanding was that you had to pay 50 times the Lower Earnings Level in NI contributions in the previous 2 tax years to qualify for contribution based JSA, I assumed then that this would mean you would have to pay £5600 in NI contributions meaning earnings of circa £50k each year to generate this amount of NI payments.

You think the only people who get contribution based JSA were on more than £50k? Come now let's think about that

Scorpio33 · 20 December 2017 at 2:41PM

For (2), if they were to "let you go", techinically this would be dismissal, so same rules would apply.

For (3), I think the income protection plans are similar to what you are talking about, although some of them cover only specific costs, ie: mortgage.

For me, I had cover for year, then went to make a claim which I could only get when on JSA.
Now JSA takes a while to get onto, then after that the claim is paid in arrears, by which time I would have got a job. So for me, not worth it.

Is it worth it for you? Well it depends on your circumstances. If you were to lose your job today, how easily could you get another role quickly?

Hippo · 3 January 2018 at 2:14PM

I had cause to make a claim on such a policy.

I was only eligible for JSA for 6 months. What the insurance company wanted was seeing me sign on for the duration of my claim. So after the initial 6 months my JSA payments stopped but I had to continue signing on. Oh what fun that was

Is redundancy cover worth it?

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