MSE News: Warning over public sector unemployment insurance

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  • dunstonh
    dunstonh Posts: 116,260 Forumite
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    edited 21 October 2010 at 2:06PM
    Insurance insiders say many public sector workers are still eligible for unemployment cover, for now, as long as they are not aware of any direct threat to their job.
    Thats a risky statement to make. Many unemployment protection plans state that once you become aware of restructures or the potential for job losses with your employer or department then its too late.

    it may still be ok today as the cuts are not specific enough but the minute you hear there is a review in your department, office or building (wherever it happens to be), then that is usually a signal to say its too late.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • chattychappy
    chattychappy Posts: 7,302 Forumite
    Yes, I thought so too.
  • payless
    payless Posts: 6,957 Forumite
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    remember PPI/ MPPI are effectively underwritten at claim.. so just because they start a proposal and collect premiums doesn't mean they will pay out - ie they can argue the case individually at time of claim.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • ag359
    ag359 Posts: 333 Forumite
    If an insurance company refused to pay out on the basis that the insured person already had wind of possibly redundancies when they took out the policy, would the insured person legitimately be able to expect their premiums to be refunded? It would seem only fair, because if the insurer was never going to pay out, it was never actually bearing any risk, so the insured person wasn't getting anything for their money.
  • dunstonh
    dunstonh Posts: 116,260 Forumite
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    If an insurance company refused to pay out on the basis that the insured person already had wind of possibly redundancies when they took out the policy, would the insured person legitimately be able to expect their premiums to be refunded

    Possibly depending on the questions asked at application. However, many unemployment plans also cover accident and sickness so there would have been the benefit of that as well from day 1. So, they were getting something for their money.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • The premiums for this type of insurance are very high - you don't have to pay them for long before the premium paid exceeds any potential payout. Redundancy is an 'occupational hazard' in most workplaces these days - I've been aware of threats to my organisation for 15 years and it hasn't happened yet - so any insurer can find an excuse not to pay out. Only 1 in 20 public sector workers may lose their jobs. It will take months to decide who goes and who stays. Most people who are made redundant will have some skills - they are not the long-term unemployed - and will get another job within months. Most will get a redundancy payout to tide them over. On balance, I don't think it's worth taking out this insurance - save the premiums in a savings account and be 'self-insured'.
  • payless
    payless Posts: 6,957 Forumite
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    you don't have to pay them for long before the premium paid exceeds any potential payout

    not sure I agree

    premiums vary- lets say as a ball park £30pm for £1000 unemployment only cover

    so if you pay in for 3 yrs = £1080

    claim for 6 months = £6000

    now hopefully you won't need to claim, but for many the peace of mind is valuable, and the cost affordable
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • LDJ2009
    LDJ2009 Posts: 159 Forumite
    Hi, i'm hoping for some advice on my situation.

    I work for a Council and my department is not at risk of redundancy as we have already been restructured with 2 Senior Manager's taking early retirement.

    Other departments i work closely with are experiencing redundancies so to be on the safe side, i have been looking at redundancy insurance. I have been assured my job is not at risk for the forseeable future but how would i prove this to an insurance company to make sure i'd be covered if i lost my job in say, a year or so.

    Also, i'd get redundancy pay and my Hubby is in a secure job, would either make any difference on an insurance claim


    Thanks :)
  • pqrdef
    pqrdef Posts: 4,552 Forumite
    My local council has supposedly sent an HR1 form to the government anticipating more than 100 redundancies in total, and started talks with the unions, but won't make any specific announcements of redundancies until January.

    It has to be said that employees are well placed to know if their jobs are at risk. Especially as councils will already have been talking about where to make spending cuts.

    Any insurance company that would do business on that basis would be crazy. Might as well sell life insurance to the terminally ill.
    "It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
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