Unemployment insurance - Two policies and Redundancy Pay question.

ukbondraider

I have a couple of questions that I cant seem to find answers for.

I would like to protect myself from redundancy only (as I have accident and sickness cover free from work). However the max limits of around £1800 for 12 months which insurance companies provide is not enough.

I already have one policy for income protection at £1800 per month for 12 months and understand that this policy will simply pay me £1800 in the event of redundancy for me to use for which ever living costs I deem necessary.

I also have a second policy for Mortgage protection for £1500 for 12 months. My understanding is that this policy will simply pay directly to my mortgage provider £1500 thereby effectively reducing my mortgage by this amount in the event of unemployment.

The question I have is whether both policies will pay out in the event of redundancy? Is there a rule that one person can only have one policy at any one time? The last thing I would want is for the mortgage protection policy not to pay out as I will already receive money from the income protection policy or vice versa.

Another question I have is with regards to redundancy pay. If for example I receive a payment of £30K on redundancy and I still entitled to my £1800 + £1500 payments from the policies or will they only pay out following exhaustion of the £30K redundancy pay? i.e do policies take into account redundancy pay before paying out?

Thanks in advance for the replies

dogbot

The question I have is whether both policies will pay out in the event of redundancy? Is there a rule that one person can only have one policy at any one time?

My understanding is that the policies you are talking about are classed as benifit policies. In the context of such a benifit policy (as uposed to a contract of indemnity like home or motor insurance) you can purchase as much cover as you like/can afford. There is no limit unless stated in the policy wording.

Another question I have is with regards to redundancy pay. If for example I receive a payment of £30K on redundancy and I still entitled to my £1800 + £1500 payments from the policies or will they only pay out following exhaustion of the £30K redundancy pay? i.e do policies take into account redundancy pay before paying out?

If I am correct and they are benifit policies then they shouldn't take it into account, but, again, this would be in the policy wording. Hopefully someone more clued up on income protection will be along soon to clarify.

To be honest, it sounds like you could benifit from a chat to a good IFA to review your needs.