Fool advises caution in rush for redundancy insurance
Financial website, Fool.co.uk, has issued a warning about redundancy or unemployment insurance.
With a recession looming and unemployment having risen by a dramatic 164,000 over the three months to the end of August (taking the total to 1.79 million) there may be a rush of people seeking to protect themselves from job loss.
However, this type of insurance may not pay out as people expect and it is essential to read the small print.
Like the notorious payment protection insurance, policyholders can pay dearly for the cover only to find their claim rejected when the worst happens.
Generally, redundancy insurance pays out in cases of compulsory redundancy, but not if the policyholder has opted for voluntary redundancy.
As with Jobseekers Allowance, claimants must be actively seek work during the period of their claim.
Claimants typically need to have been continuously employed for the six months prior to their claim and to have held their policy for 120 days, to qualify.
People who buy the insurance because they are aware redundancies are imminent need to check this aspect of cover carefully.
In addition, payments may not kick in for between 30 and 60 days.
Fool’s head of personal finance, David Kuo, explains that deciding to insure against job loss as the economy slows is understandable, but people must be confident that what they are buying will work for them.
Category: Insurance News
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