Why Unemployment Insurance?

Find out more about Unemployment Insurance, to see how you could insure your income against the unexpected job loss or redundancy.

When it comes to planning for the future, most people will probably have purchased insurance at one stage or another. Whether it’s for your home, car or annual family holiday, it’s reassuring to know that there’s some form of protection in place, should anything go wrong.

But what about your income? Have you ever thought about how you’d cover the cost of your monthly outgoings if your regular wages were to stop without warning? This might not be something you’ve ever considered, particularly if you’ve been in the same job for a number of years, but now it’s more important than perhaps ever before.

Do I need Unemployment Insurance?

In our ever-changing economic climate, financial stability can be hard to come by, and even harder to maintain. In an ideal world, we wouldn’t need to worry about protecting our income, but it’s impossible to predict what’s around the corner.

According to research by the ONS, as many as 41% of people in the UK will be made redundant in their working lifetime, and a quarter of households have less than £95 in savings to fall back on.

When claiming Job Seeker’s Allowance, adults aged 25 or over receive less than £75 per week, an amount which for many, wouldn’t be enough to cover rent or mortgage payments, let alone other household bills.

Fortunately, this is where Unemployment Insurance comes in. Protecting up to 65% of your gross monthly income, this form of income protection provides you with a personal safety net, helping take care of any essential financial commitments while you look for another job.

Without having to worry about how you might pay the bills or put food on the table, you’ll be free to put more time and effort into finding work that is most suited to your skills and qualifications.

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How long does Unemployment Insurance pay?

When you purchase Unemployment Insurance, you’ll receive up to 12 monthly benefit installments in any one claim period, giving you and your family the stability and security you need in the short-term.

If you lose your job and need to make a claim on an Unemployment Insurance policy, you’ll get a tax-free payment straight into your bank account, which you’re free to spend however you choose. Most people use the money for everyday necessities such as rent or mortgage repayments, food and household bills, but the policy doesn’t have to be linked to any sort of loan financial commitment.

The amount you receive depends on how much you earn, and is designed to cover a percentage of your usual wages or salary, but not your total income. You should choose a benefit amount that is enough to meet essential living costs, while making sure that the monthly premium you pay is affordable, even in the event that you’re made redundant.

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What are the qualification factors for Unemployment Insurance?

To qualify for Unemployment Insurance, you’ll need to be aged between 18 and 64, and a permanent resident of the UK, Channel Islands or Isle of Man. You don’t have to be a homeowner, but it’s important to note that you can only take out a policy if you’ve been working full-time (over 16 hours per week) for at least 6 months consecutively.

In the event that you’re made involuntarily redundant and need to make a claim, our Claims Team will ask you a set of simple questions to find out a bit more about your situation.

They’ll ask you about how you came to be unemployed, and will contact your employer to verify the details. The team will also make sure that when purchasing Unemployment Insurance, you weren’t aware that your job was at risk, as this would invalidate your claim.

As long as you can prove that you lost your job through no fault of your own, and you haven’t a taken voluntary redundancy package, you will be eligible to make a claim on Unemployment Insurance.

When you purchase a policy, you’ll need to wait a certain amount of time before you can claim, known as the Initial Exclusion Period (IEP). This ranges from 60-120 days depending on the individual policy, but once it has passed, you’re free to make a claim.

Just like other types of insurance, unemployment policies also come with an excess period (also known as a deferred period or waiting period). Chosen by you at the time of purchasing a policy, this simply refers to the amount of time you’ll have to be unemployed for before you receive your first payment.

For more information on Unemployment Insurance, we recommend speaking to one of our advisors. As dedicated income protection specialists, they’ll search the market to find the right policy for you, at the best possible price.

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