Why do I need insurance?
Just about everyone has financial responsibilities that need to
be met every month. Think about your mortgage payments or rent, the
loan repayment on your car or just water, TV licence and council
tax. What would happen if you did not have enough income to meet
those costs?
There are a variety of reasons why you cannot work. Below we
explain what that would mean financially to you and how Income
payment protection cover can help.
Unemployment through redundancy
If you are made unemployed due to involuntary redundancy, you
can register for Jobseekers allowance. Depending on your working
history, you may get contribution-based (non-means-tested)
Jobseeker's Allowance or income-based (means-tested) Jobseeker's
Allowance or a combination of both.
Contribution-based Jobseeker’s allowance will be paid for a
maximum of 6 months, after which you will rely on income-based
Jobseeker’s allowance. The latter will take your savings etcetera
into account when the allowance is calculated. The weekly
benefit is just £65.45. There might be some additional benefits
such as Child Tax Credit, Council Tax Benefit and Child Benefit
available.
If you have Income Protection Insurance it can pay you the
monthly benefit you covered (£1,500 or 50% of your income,
whichever is the lesser) up to 12 months, direct into your bank
account, without having to pay income tax on it.
You cannot work because you need to care for someone in your
immediate family who has become ill
Even if you select unemployment only insurance, ‘carer cover’ is
included, which again can pay you up to 12 months of the monthly
benefit you selected, and no income tax is payable.
If you do not have Income Protection cover in place, the
alternative would be to rely on the government weekly Carers
allowance of £53.90, or less if combined with income support or
other benefits.
You have an accident or a long term illness and you therefore
cannot work.
If you, as well as redundancy cover, also select Accident and
Sickness insurance you will additionally be covered if you cannot
work for those reasons. It is worth considering this cover as it
will only add a few pounds a month to your redundancy insurance,
and if you are ill it can allow you to concentrate on getting
better, rather than worry about your finances.
What income you would otherwise get depends very much on your
employer. They have to at least pay you Statutory Sick Pay, the
standard rate for which is £79.15 a week, for 28 weeks. Often,
employers have their own, more favourable, arrangements in place.
It is worth checking your contract of employment. After that, you
become eligible for the Employment and Support Allowance, starting
at £65.45 if you are over 25.