Unemployment/sickness insurance

Charlotte_Ca

Does anyone have experience with unemployment insurance? If so, what is your opinion and if you ever had to use it.

I'm just thinking that you never know how life might turn out. For example, you might get redundant or get sick and not be able to work. There are certain benefits one can claim but these might not cover everything e.g. if you have a mortgage and other expenses.

I'm just mostly thinking what happens if you get sick and for a certain time you cannot work. The company you work for might lay you off so how will you get some income? I'm not sure if this would be covered by an unemployment insurance or sickness insurance.

Marcon

Charlotte_Ca said:

Does anyone have experience with unemployment insurance? If so, what is your opinion and if you ever had to use it.

I'm just thinking that you never know how life might turn out. For example, you might get redundant or get sick and not be able to work. There are certain benefits one can claim but these might not cover everything e.g. if you have a mortgage and other expenses.

I'm just mostly thinking what happens if you get sick and for a certain time you cannot work. The company you work for might lay you off so how will you get some income? I'm not sure if this would be covered by an unemployment insurance or sickness insurance.

The main forms of sickness insurance are Permanent Health Insurance/aka Salary Replacement, and Critical Illness Cover. The former pays you a %age of your salary after a 'waiting period' (6 months off sick before payments start is typical). Payouts will be made until you regain the ability to work again, or (if earlier) the maximum age/length of sickness absence you have insured. Critical illness pays a lump sum if you develop one of the serious illnesses (e.g. cancer) included in the policy.

Unemployment insurance often includes the above. There's a good explanation here: https://www.comparethemarket.com/unemployment-insurance/

Like all insurances, you need to make very certain that you understand exactly what you have insured and that it is what you wanted to insure. If you meet the terms to make a claim, it can be hugely valuable; if you don't, then you could have paid out a lot in premiums with no return - but that's the nature of any such insurance.

MovingForwards

Have a read through this board:
https://forums.moneysavingexpert.com/categories/insurance-life-assurance

Undervalued

Charlotte_Ca said:

Does anyone have experience with unemployment insurance? If so, what is your opinion and if you ever had to use it.

I'm just thinking that you never know how life might turn out. For example, you might get redundant or get sick and not be able to work. There are certain benefits one can claim but these might not cover everything e.g. if you have a mortgage and other expenses.

I'm just mostly thinking what happens if you get sick and for a certain time you cannot work. The company you work for might lay you off so how will you get some income? I'm not sure if this would be covered by an unemployment insurance or sickness insurance.

If you want insurance that kicks in almost immediately if you are too unwell to work you will find the premiums expensive. Similarly in the event of unemployment.

Most people who consider this type of insurance opt to "self insure" for at least three (often six) months and pay a significantly reduced premium for this sort of deferment period.

As stated above, you do need to fully understand the terms and conditions and make sure you are comfortable with them before signing up. 

DullGreyGuy

Charlotte_Ca said:

Does anyone have experience with unemployment insurance? If so, what is your opinion and if you ever had to use it.

There are a number of solutions out there to cover what you are talking about but they are very different products. 

ASU (aka PPI) was the most common as this, as the acronym suggests, covers Accident, Sickness and Unemployment but its a basic/budget product and critically its a 12 month policy so each year premiums will go up and as many found during covid, the insurer can choose at any point not to renew you. The other downside is that it normally only pays out for 12 or 24 months meaning any long term sickness is only covered for a short while.

PHI us the full fat version of accident & sickness (but traditionally doesnt cover unemployment) and its long term insurance and so the insurer cannot just choose to end the policy (except for non-payment or fraud). Similarly many will choose guaranteed premiums and so pricing doesnt change because your getting older or due to a spike in claims etc. Traditionally it'd also payout until a set date (eg 65th birthday) rather than a set period therefore you were assured no matter when you got a serious illness your working life income was guaranteed.

These days the lines are slightly more blurred, you can get a PHI lite that is a fixed payment period rather than to a date. Likewise some will attach an unemployment section to a PHI policy etc. 

eamon

When I bought my first house (with mortgage) over 30 years ago I took out redundancy & health insurance. Claimed on it twice when I was made redundant. For me it was well worth it as it paid the mortgage and also got £100 per month as well. As others have said it is probably really expensive now and from memory there was also a 2 month waiting time as well. Do your sums for what you need to insure for and shop around for a product that works best for you. Also read all the T&C's for all the exclusions and understand them.

SensibleSarah

I have critical illness cover. Payment deferred for 13 weeks (so I have a fund saved in case of that). Pays out until I recover enough to work again or die. Obviously, something I hope that I'll never need, but as a single income household, the stakes are high.

DullGreyGuy

SensibleSarah said:

I have critical illness cover. Payment deferred for 13 weeks (so I have a fund saved in case of that). Pays out until I recover enough to work again or die. Obviously, something I hope that I'll never need, but as a single income household, the stakes are high.

That isnt critical illness... critical illness pays a lump sum on diagnosis of a predefined list of conditions to a required level of severity. 

MalMonroe

When I was employed, I never gave this a second thought because the jobs I had all paid me when I was off sick. (Fortunately, I'm quite healthy and didn't cost my employers a lot!)

However, my daughter began working for herself from home as a freelance PA some time ago and when she was ill she had to accept that she wasn't going to be paid. She realised that when working for herself she did need to have some insurance cover. She now has a permanent gig working from home and is paid when she's ill so doesn't need the insurance. She didn't have to claim on the insurance but was reassured by the fact that it was in place if she needed to.

I think it really is a great thing. My friend's son is a self employed builder and he fell off a ladder a few years ago and hurt his back quite badly so couldn't work for four months. If he hadn't had any insurance at all, he and his family would really have been struggling. His health and safety methods have now been tightened up (no climbing ladders until someone else is there for one) and he was able to return to work but he still has the insurance. Better to be safe than sorry, he's always saying!

As others have said, you need to do a bit of research to find the one that is most suited to your situation but I think you're sensible to think about this. So many people think that things will never happen to them, until things do.

I hope that's helpful. As ever, my own opinions. 

Clownfish68

I’ve had it for 10 years used once due to a car accident and as I was paying the premium I thought might aswell claim and get paid my salary plus insurance. I have probably broke even on what it’s cost me over the years with that claim so hasn’t been wasted money.   

It’s currently £43 quid a month. Up until the start of the year I worked in private sector and went through a few rounds of redundancies in recent years so was worth having. Since then I have moved into public sector and took quite a big drop in pay. Although I have better security I have kept it on just in case but I think these policies have become rare since covid at least for unemployment element of the cover so make sure you look at the details/ask advisors if it’s included. I’m keeping it ticking in the event of job loss or if I move back to private sector.  

Marcon

SensibleSarah said:

I have critical illness cover. Payment deferred for 13 weeks (so I have a fund saved in case of that). Pays out until I recover enough to work again or die. Obviously, something I hope that I'll never need, but as a single income household, the stakes are high.

That's an income replacement, or Permanent Health Insurance, policy. You may find critical illness cover (if you can afford to have both) would be no bad idea, although hopefully you'll never need either.