Unemployment Insurance Worth It?

whambam

In this day and age where redundancy is high and companies falling like flies is it worth paying 10-20 per month to cover you for redundancy or sickness? My friend only pays £10 per month and covers him 100% of his salary for max of 12 months is that true? All you need is a letter to confirm your made redundant.

dunstonh

In this day and age where redundancy is high and companies falling like flies

Redundancies are falling. The peak was a few years back.

is it worth paying 10-20 per month to cover you for redundancy or sickness?

If you suffer a claimable event you will think it is wonderful. If you dont then you will think it is a waste.

My friend only pays £10 per month and covers him 100% of his salary for max of 12 months is that true?

£10 would suggest he hasnt got much of a salary. Plus, you are not allowed to go to 100%.

All you need is a letter to confirm your made redundant.

That is one bit. However, you also need to sign on to be registered as unemployed and the redundancy cannot be voluntary or known about in advance of having the insurance.

roonaldo

no doubt in a year it will be alleged to be mis-sold.

whambam

I hear a lot of firms if your claim is accepted is about 70% but there are 1 or 2 companies that cover you for the full amount if you have a mortgage or other products with the same company.

weighty1_2

whambam wrote: »

I hear a lot of firms if your claim is accepted is about 70% but there are 1 or 2 companies that cover you for the full amount if you have a mortgage or other products with the same company.

There are short term income protection providers who will cover you for up to £1,000 for 2-years irrespective of how much you earn! They tend to be marketed, how shall I say, at people who may receive a good portion of their income sans tax being declared!!!!

weejonnie

As a broker with some experience in this field my opinions are

1) The rate for unemployment insurance (unless there is a very large excess) is about £4.00 per month to cover £100.00 a month benefit for 12 months. (If Unemployment cover is defnitely wanted it is usually best to include a benefit for accident and sickness which is virtually a free addition)

2) This rate may be lower for mortgage protection policies - but the benefit would be limited to the amount of the monthly repayments (+ a bit)

3) No policy will cover your GROSS monthly salary in full - as if it did there would be no incentive for you to go back to work. Indeed as the benefits aren't counted as earned income you would be better off!

4) The traditional limits in the market are 50% of your gross income, increasing to 67% for mortgage protection insurance. I am aware of policies offering 90% of your NET income.

5) Many policies now operate on a declared expenditure basis. You declare what monthly expenses you have (excluding normal day-to-day expenses) and the policy will pay the sum of those amounts.

6) Many policies require you to be employed for a period before qualifying. Others will include the self employed or directors able to control their own employment - however they will want proof of earnings from your accountant and the definition of unemployment is changed to versions of 'cessation of trade'. The fallout from mis-selling of ASU/PPI to customers who couldn;t claim by reason of their occupation status is continuing.

7) AFAIK no insurance policy has ever been marketed towards the 'Black Economy'. Any insurance company found out to do this would be jumped upon by the FCA very quickly as having breached about 30 regulations in the handbook, would face a very substantial fine and, in all probability, having its authorisation to transact insurance revoked.