Unemployment Cover from British Insurance
Many Brits are recognising the great benefits of coverage available through a unemployment cover which is a form of payment protection insurance (PPI) plan. Unemployment cover is a short-term financial assistance product designed to support people who have become out of work due to unforeseen redundancy, for example. A policy will typically run for 12 - 24 months, depending on the plan’s terms and conditions and It is not intended to offer long-term protection. With incapacity as an additional event covered, unemployment insurance can also be known as ASU insurance because of its coverage protection - the insurance usually covers accidents, sickness and unemployment, or involuntary redundancy. It is the best option available that provides people unemployment benefits.
For years, people misunderstood or were unaware of payment protection insurance protection. For various reasons, however, more and more Brits are taking advantage of great insurance products from reputable standalone providers. Only about one in three Brits currently have payment cover, but about 60 per cent of new homeowners are buying the products. Some Brits have mistakenly believed the State would support them financially in the event of temporarily unemployment. This is generally not the case. Very few Brits receive any type of government assistance, and those that do typcailly receive it only after several months of waiting.
There are three basic types of payment protection plan insurances: Income payment protection, mortgage payment protection, and loan payment protection. All three can offer the same basic protection, although there are some slight differences in coverage purposes and benefits. Benefits are paid monthly over the course of the payout timeframe and are tax free. Most plans also will start to pay out typically 30 to 90 days after the first day of unemployment. If a covered event occurs after that point, benefits begin. All three types can cover the standard accident, sickness, and involuntary redundancy events.
Income payment protection insurance is the staple of the unemployment cover and payment protection insurance product category. It is intended to support the monthly income needs of displaced workers. Allowable coverage is usually up to 50 per cent of normal monthly income. This is the lowest income percentage of the three payment cover types. Income cover is needed by many people who do not have savings or other funding options to cover short-term monthly income and expense needs.
Mortgage payment protection insurance is similar to income payment protection insurance other than it is more intended as a way to help displaced workers meet monthly mortgage obligations. Benefits for mortgage payment insurance are usually up to 75 per cent of monthly income, or the full mortgage amount, whichever is lower. Many banks package payment protection plan products with consumer mortgages. There is nothing wrong with this if it is done ethically. Unfortunately, many banks and high street lenders have often deceived or used high pressure tactics to sell their protection products.
The third payment protection plan product is perhaps the broadest in coverage. Loan insurance offers support for employees who rely on income to meet monthly debt obligations. It can offer coverage for 100 per cent of monthly debt payments plus up to 25 per cent extra for expense needs. There is a maximum of 1,500 pounds of cover for a plan, or up to 75 per cent of monthly income, whichever is lower. For people burdened with significant outstanding debt, this type of short-term cover can be a great way to satisfy creditors when involuntary redundancy occurs. It is commonly sold by lenders in combination with various types of loan products.
Because of a lack of consumer awareness, many large institutions have successfully sold high premium unemployment protection products to borrowers for years. Some lenders imply to borrowers that the protection is necessary with a specific loan product. Others do not even discuss it with the borrower, they simply add the premium into the cost of the loan repayment and make note of it in the fine print of disclosures. Very rarely have these leading banks made mention to consumers that they could find payment protection products at 40 to 80 per cent discounts in the open market.
Perhaps even worse than the aforementioned pressure tactics some banks and high street lenders have engaged in unethical selling practices. In 2005, a leading consumer advocate group, Citizen’s Advice, brought a super complaint to the Office of Fair Trading (OFT). The OFT and the Financial Services Authority (FSA) both began an investigation of the protection insurance industry. After discovering that some insurance providers were selling plans to ineligible customers, such as part time employees, the retired, or people with pre-existing conditions, the FSA placed stronger regulations on the industry and fined several sellers. The OFT appointed the Competition Committee to further investigate and reports its findings.
The good news about the investigations is that it has helped make consumers more aware of their unemployment cover and payment protection plan options. With the expansion of the internet and the reputable practices of insurance specialists, consumers can easily find great unemployment insurance products in quick fashion. Independent providers offer information and resources through their web sites. The standalone provider typically maintains a better focus on customer service and ethical business practices.
Brits need to be proactive and explore the opportunities available for unemployment cover. A payment protection plan should not be as expensive as what many large institutions suggest. With the low costs available through the independent market, any family that relies on monthly income should consider protection. As with any insurance product, it is better to never have to receive the payouts, but the peace of mind that protection is there is a benefit in itself. The stress of dealing with unemployment can be challenging enough without taking into account the financial burden from lost income.
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