Redundancy Insurance

We’ve got you with our made-to-measure protection against redundancy, so you don’t have to worry about anything but finding the job that suits you Best should the worst happen.

Our redundancy insurance policies have been specially designed to protect your finances from the fallout of redundancy, which can otherwise carve quite the significant hole in your pocket – and your sense of mental wellbeing, too. By guarding your income – and by extension, your bills, housing situation, and lifestyle – we can help you find the new job that’s Best for you; not for convenience.

Don’t worry, we get this question all the time. That’s why we’re here to break it down for you.

We get this question all the time, and we’re here to break it down for you.

Like our unemployment protection insurance, redundancy protection insurance acts as a financial safety net if you lose your job. In today’s job market, where redundancies are on the rise (according to the ONS), it’s natural to worry—but with Best Insurance’s redundancy protection insurance, you don’t have to.

If you work in the UK for 16+ hours a week, a redundancy protection insurance policy can protect your income by covering up to 65% of your salary if you’re made redundant. That money is yours to use as needed — whether for rent, bills, or essentials — helping you stay afloat when you need it most.

What features make up a redundancy protection insurance policy?

Redundancy protection insurance provides income replacement if you’re made redundant, covering you for up to 12 months — A.K.A. your ‘benefit period’ — while you look for work. That means that if you’re made redundant, you could claim income replacement for as little as a month or as much as a year; however long it takes for you to find a new job.

Policies typically have an Initial Exclusion Period (IEP) of 90–150 days, during which you can’t claim, and an excess period (set by you) before payouts begin in the event of a claim.

Some policies include optional add-ons like career support or training to help you get back to work faster — worth considering before you buy!

Key Benefits of Redundancy Protection Insurance

Redundancy protection insurance offers many different benefits — most obviously, the actual benefit payment we make out to you if you lose your job. But that’s not the only pertk that comes with redundancy protection insurance. There’s also:

• Financial stability while you’re unemployed;
• Coverage for essential expenses (including your grocery shop or rent);
• Peace of mind for you and your family during what’s otherwise a very stressful experience;
• Coverage customised by you, including benefit amounts, benefit periods, and IEPs selectable by you at purchase;
• The flexibility to find the job that’s perfect for you.

Eligibility Criteria for Redundancy Protection Insurance

You’ll be eligible for redundancy protection insurance coverage if you:

• Are between the ages of 18-64;
• Reside permanently in the UK;
• Have been in permanent, continuous employment with the same employer for the last six months, working more than 16 hours a week;
• Are not self-employed, a contract worker, or an agency worker;
• Are not subject to any kind of disciplinary action or ongoing enquiry by your employer;
• Are not aware of any circumstances that might lead to you either becoming unemployed or a carer;
• Are not currently off work or working reduced hours because of ill health.

What’s the process for redundancy protection insurance?

When it comes to buying redundancy protection insurance, you’ll want to start off by researching and comparing options to find the product that fits your needs best. The best way to do that is by first determining exactly what you want to get out of your redundancy protection insurance, then checking price comparison websites like comparethemarket.com or Go Compare.

For tailored advice, you’re better off getting in contact with brokers or insurers directly. For example, if you wanted Best Insurance to guide you through your options, you could give us a call on 0330 330 9465. You’d then be walked through the eligibility criteria and asked questions about what exactly you want covered and how you want it covered; for example, how long an excess period you’d prefer.

Once your policy’s been set up, you won’t have to do anything until you’re made redundant. At that point, you’ll need to get in contact with your claims administrator (whose details should be in your policy documents) to start your claim. They’ll ask you a series of questions about your circumstances and request evidence from you to back up your claims. They’ll also usually request that you sign up with the Jobcentre, though they won’t expect you to apply for anything else.

After your claim has been processed and accepted, you’ll have to keep your claim administrator updated about what’s going on with you and what you’re doing to get back into the work force. Also, depending on the length of your excess period, you might have to wait a bit until you receive your payout — but once you’ve got it, all your financial woes should disappear until you find a new job.

When it comes to redundancy protection insurance premiums, a lot of things can affect how much you’re paying for coverage. Under-25s often get the cheapest rates, but younger policyholders in general can enjoy lower premiums because they have fewer pre-existing conditions or age-related issues.

Your salary also affects your premium since it determines your benefit amount; the higher the payout, the higher the cost. You can lower premiums by extending your excess period (the waiting period before payouts) or reducing your benefit amount.

Shopping around with different insurers is a good way to find the most cost-effective policy. Price comparison websites (e.g. comparethemarket.com or Go Compare) are also a good way to get a good deal — or you could call us on 0330 330 9465 for expert advice.

To give you a sense of the kinds of costs you might be looking at, we’ll go over a policy with a £1,400 monthly benefit amount and a back-to-day-1 excess period. This might cost about £50-£60 per month for someone under 25. By extending the excess period to 30 days, you could pay £45 instead; pushing it to 60 days would make it £30. On the other hand, reducing your benefit to £1,000 a month might bring your premiums to £35-£40, even with a back-to-day-1 excess period.

Make sure you’re realistic about your choices. If £1,000 won’t cover your expenses, a lower premium won’t do much for you at the point of claiming.

1. Best Insurance: We’ve had over a decade of experience offering both bespoke and market-wide redundancy protection insurance policies, which makes us unique in the industry.
2. Aviva Life & Pensions UK: Aviva are well-regarded across the market for their wide coverage and high claim payout rates, making them a great choice for your redundancy protection insurance provider.
3. British Friendly Society: British Friendly have over 115 years of experience providing redundancy protection insurance to people in need, which means they’re very well-practiced in broking insurance for people like you.
4. LV=: LV= are another insurer with a long history of handling redundancy protection insurance, and are known for their many coverage options and high claim payout rate.

The best place to start is by taking an inventory of your finances, which means both your income and your outgoings (e.g. rent/mortgage payments, bills, and expenses). You should then make a note of how much you’d need at minimum to keep up with your current expenses — this will be your desired benefit amount.

Once that’s done, it’s time to shop around! Have a look at redundancy protection insurance on price comparison websites or call up brokers to get the ball rolling and find out what you could get. You’ll have to give them information such as your average outgoings, your monthly income, and your employer’s details (though they won’t contact them, so don’t worry!)

Whoever you go with, make sure you ask as many questions as possible to fully understand your policy and avoid any nasty surprises when it comes to claiming. Examples of good questions are: ‘What is an excess period?’, ‘How does an initial exclusion period work?’, and ‘What benefit amount could I get with my income?’ There’s no such thing as a silly question when it comes to insurance!

To file a redundancy protection insurance claim, you’ll want to get in contact with your claim administrator (details will be in your policy wording) as soon as you’ve been made redundant. They’ll then take you through the process; how to fill out your claim form, when to register at the Jobcentre, and what documentation you’ll need to give them.

Claims usually take about 30 days to process, but if they’re taking longer, contact your insurer to see if anything can be done to speed things up. If the delay is excessive or your claim is unfairly denied, you can escalate the issue to the Financial Ombudsman Service (https://www.financial-ombudsman.org.uk/).

1. What does redundancy protection insurance cover?

Your redundancy protection insurance will replace your income if you lose your job because of redundancy, layoffs, or downsizing. That means that your financial responsibilities — your rent/mortgage payments, bills, and everyday expenses — will be taken care of, so you won’t have to worry.

2. Can I get redundancy protection insurance if I’m self-employed?

Self-employed individuals can get redundancy protection insurance, but it’s a little more difficult to get hold of than it is for traditional employees. Redundancy protection insurance policies for self-employed individuals are tailored, usually requiring proof of income (e.g. tax returns or bank statements) to purchase. Accident and sickness policies are easier to get.

3. How long will redundancy protection insurance pay out for?

Payments under a redundancy protection insurance policy will last for as long as you’re out of work, with a maximum benefit period of 12 months. You can claim again after that 12 month period has ended, but only if you’ve been back in work for at least 6 months.

4. What are common exclusions in redundancy protection insurance?

When it comes to redundancy protection insurance, common exclusions usually include voluntary resignation, fair dismissal (for example, if you lost your job due to your conduct), pre-existing conditions (which in redundancy protection insurance, generally just means knowing you’d be made redundant at the point when you purchased your policy), and redundancy during the IEP. Your policy wording will have the full list of exclusions, so it’s worth checking that for more information.

5. Is redundancy protection insurance tax-deductible in the UK?

According to UK tax laws, any benefit given to you as part of your redundancy protection insurance is tax-exempt, meaning you’ll get the exact amount you’re expecting. However, your premiums aren’t tax-deductible, unfortunately — though that’d be nice!

6. How soon after losing my job can I make a claim on my redundancy protection insurance policy?

You can start your claim as soon as you’re made redundant (so long as it hasn’t happened in your IEP) — in fact, we recommend you contact your claim administrator as soon as possible to minimise delays. However, once your claim has been approved, you’ll generally have to wait out your excess period before you receive any benefit payments.

7. Can part-time workers apply for redundancy protection insurance?

Some redundancy protection insurance policies do cover part-time workers, but they’re in the minority. That’s because part-time jobs are seen as higher-risk, so coverage is rarer and often has more restrictions. Some insurers offer coverage for part-timers, but only if they work more than 16 hours a week.

8. How much does redundancy protection insurance cost?

There’s no set price for redundancy protection insurance, but premiums can be affected by your salary, your benefit amount, the length of your excess period, and your job role. As a very rough guide, generally a policy wth a £1,000 benefit will cost around £30 a month, while one covering £2,500 might cost at least £60 per month. If you’d like a more exact estimate, it’s always worth calling up a broker for a quote!