New insurance protects against pay cut
A new insurance product to be launched next month will allow UK workers to insure themselves against a pay cut.
Salary gap insurance, unveiled this week by Salisbury Underwriting Service, will cover workers who are made redundant and then find a new job at a lower salary.
“A lot of people are having to take work that pays less money, but they still have to pay the same bills, still have the same financial commitments,” says Bill Graham of Salisbury Underwriting Services.
Graham, a North Carolina-based lawyer, thought up the cover when a factory near his home closed and many of its workers struggled to keep up with financial obligations because they were forced to take lower-paid jobs.
The policy is only activated when the holder has found a new job, and pays out the difference between their old wages and their new salary.
The holder is not required to look for work of a similar nature to their previous job, or even to take full-time employment.
“They can flip burgers one day a week as long as they have a contract of employment,” Graham said.
However, Highclere Financial Services warned the product is not “overly exciting”.
“There is a worrying counterpart to this that when you take out temporary cover and when it is done without any specific relation to your needs but just based around the loss on your previous salary, there is an underlying suggestion that you have the cover you need,” said Alan Lakey, Highclere partner.
“I don’t think it can take away the fact that everyone needs independent advice.”
Category: Employment News, Insurance News
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