Income protection - ensuring an incoming if you're made redundant

sillyme

I work in the city and although I haven't directly been told that I'm going to be made redundant, belt tightening within the firm is starting and I am starting worry a little.

I'm thinking about taking out income protection insurance. Basically where you pay a monthly premium and the insurance firm then allows you to claim an income (around £2k per month I'm looking at) for a fixed period of time, allowing you to cover your mortgage/rent, bills and debts.

My father has used this in the past, as has my uncle. My father actually did go on to lose his job so this incurance proved invaluable.

Does anyone know anything about it, that I should know?

See the link here that I'm looking at: http://www.moneysupermarket.com/ASU/IncomeProtectionDefault.asp

mattymoo

If a business reveiw is already underway then the insurance will not pay out if you are made redundant as part of that review.

sillyme

No Business review underway - certainly not that I'm aware of. Just general belt tightening, budgetary spends under review etc. General being careful. As I say, I've had no suggestion so far that my job is under threat, I just see what's happening in the city and it concerns me.

mattymoo

This type of insurance is not my area of specialty so the following is just from my own experience buying it.
You appear to be looking at ASU cover - accident sickness and unemployment cover. You can purshase the unemployment cover on its own though.

Most providers limit the cover you can purchase to the cost of your mortgage repayment plus 25% IIRC. They will not provide greater cover because they feel it removes the incentive to seek out alternative work if the cover is replacing your entire lost income.

In my case, net monthly income £2500. Mortgage = £400 plus 25% = £500 cover max.

dacouch

Go and see an Independent Financial Adviser preferably one that specialises in this field and take their advice. The cheapest policy is not always the best so you can use their experience to find you a combination of good value and cover. They can also go over the circumstances of your employer to make sure their will not be problems if you do need to claim.

Do it asap as the longer you leave it the more likely there is that the Insurer could say you were aware of possible reduncies

Tiney

I've recently moved all my debt into one place and didn't take the PPI with the loan as I wanted to get this separately and wanted to ask if anyone has advice on this? I know there has been lots of discussion of the insurance given with loans so thought it better to make sure myself I got the best deal...

What do you mean by business review? The company I work for has made one round of redundancies and currently there is no notice or discussion of making more but I'm sure it would be naive of me to rule it out as a possible. Would this mean that I couldn't get this type of cover for my loan or income?

dacouch

Tiney speak to a specialist adviser so they can go over your own circumstances as its important that whatever policy you take will pay out should you need to claim on it.

There is a lot of small print in these policies

payless

many providers are either not taking new policies at all unless taken at same time as a mortgage, and/or if they are taking on risks some are not commencing policies where employers have already started / announced a restructure, some use a risk based application , so harsher rules apply to certain sectors.

( at best for existing borrowers who are not just transferring policies ) you will find a exclusion period whereby notice of redundancy within 60, 90 , 120 or even- 180 days will invalid a claim
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Some of the more popular plans don't seem to be listed on those comparison sites... I am told by one ( unlisted/ competitive ) provider that they prefer only to take the risks from "advised cases" , as a lot of the web based sales end up in quick claims

Debt_Free_Chick

Are you sure you need income protection? What would you get if you were made redundant?

tightbarsteward

I applied for income protection insurance a week ago thru moneysupermarket. The firm were iprotect. Got an email last night saying I had been refused. I work in brick manufacturing which has endured a significant downturn in recent months so I can only assume it is because of this. Ours is a bit of a niche market tho as we rarely supply any large house builders, & we are bucking the trend somewhat.

payless

surprised it took a week to decline

speak to a insurance adviser ( you will find most IFAs and mortgage advisers can do this class of business ) and whilst may be slightly more expensive than cheapest "direct buy" they may well be able to place