Unemployment Protection from British Insurance
Falling foul of involuntary redundancy is, thankfully, not something that happens with regularity for most people. In some cases, you will be fortunate enough to find alternative employment quickly and easily, as well as walk away with a healthy redundancy package from your previous employer. However, it doesn’t always turn out that way and you could find yourself unable to get another job for weeks’ or even months. And if the worse happens, and you will are without an income, you will worry as to how you are going to keep up with the monthly payments you usually make on credit cards, loans, and the mortgage. This is where an unemployment protection policy can help.
Unemployment protection insurance is one term among dozens used in the payment protection insurance (PPI) industry, such as mortgage payment protection insurance. And loan payment protection insurance.
How it works is that should you become involuntarily unemployed, the insurance will provide a monthly tax free amount for a set period of time, replacing up to a percentage of your monthly income.
Will You Qualify?
To qualify for unemployment insurance, companies will often need you to fill a set criteria which will often mean you must be aged between 18 and 64, have been in work for a long period already and be a UK resident. You will probably have to work at least a certain number of hours per week too.
Accident sickness insurance – which is an extended form of unemployment insurance where you pay for additional events to be covered - is handy for people who are worried specifically about being injured or becoming unwell rather than unemployed.
Normally, and importantly, unemployment insurance cover plans are not typically 'medically underwritten' meaning you do not need to fill out detailed medical history questionnaires and your doctor will not be asked to fill out a report on you, which can feel intrusive and awkward. Life insurance and long-term income protection policies are the types of insurance that will normally require this.
However, if you do make a claim for illness, medical evidence will be asked for and a payout is not likely to arrive unless a doctor certifies your condition. A doctor's note or even detailed notes or a report could be required. To further complicate things, a doctor representing your insurer may need to agree with your own doctor to get the payments moving. It gets more confusing when considering conditions that were pre-existing when you took out the policy. Many firms differ wildly in their approach to this. Some will flat not cover you for pre-existing conditions, while other will require you to have been symptom-free for a period of time.
Of course, there are common exclusions, as with all forms of insurance. These can include mental or nervous disorders, including, perhaps controversially, stress. Some firms may need you to prove that a severe case of stress is the sole reason you can't work. Some will not even cover it at all. Injuries suffered through self harm, war, pregnancy or childbirth, and HIV.
Critical Illness and Permanent Health Insurance
Also often slotting in under the sickness insurance umbrella as opposed to just the unemployment protection banner, is critical illness insurance. These types of policies are designed to provide a replacement income stream if you contract a specific condition, usually serious. Types of condition that could be covered include terminal cancer, heart problems, a stroke, lung disease and kidney failure among others. When you are diagnosed, a limp sum is paid, designed to ease worries about money while undergoing treatment or while recovering.
Often attached as an optional extra on a life insurance policy, critical illness cover will also pay out if you are affected by a much longer list of illnesses too, but these policies will naturally involve and increase in the premium. Permanent health insurance is another term under the health insurance umbrella that should be distinguished from accident sickness insurance.
Permanent health insurance will pay an income when an accident or illness means you can't continue to work and will pay up to perhaps 60 per cent of your income per month up to 65 years of age or earlier death. The policy will not be able to go beyond the individual's intended or actual retirement date.
The Risks When Uninformed
One or two areas of concern should be taken into account when taking out or being offered unemployment cover insurance. Firstly, as a payment protection insurance policy, the product belongs to a market still being investigated by the Competition Commission, after some customers were found to have been mis-sold policies by high street names.
Secondly, insurance firms have in the past been warned to improve standards when cold calling to sell policies over the phone, including accident sickness insurance cover. In 2007 the Financial Services Authority warned some members of the industry to stop pressuring customers into making fast decisions and to ensure everyone was dealt with fairly.
Many lenders will also try to tack on an accident sickness insurance policy onto your loan or mortgage, or even offer you one for free. In the case of the 'free' policy the cost could be simply passed on to the cost of your loan, and independent experts recommend you shop around, getting as wide a variety of quotes as possible, rather than take what is offered to you by the person selling you the loan. The smaller standalone firms can offer much cheaper alternatives to the bigger names. Bear in mind some firms offer commission to the people selling these products – as much as 50 per cent in some cases.
However redundancy is an unpredictable thing in all our lives, perhaps more so than you realise. Therefore, unemployment insurance or accident sickness insurance can therefore be extremely worthwhile if bought from the right place at the right price, and could ease the anxiety and unpredictability of a work or health crisis. In such situations, being financially prepared could make the difference not only to yourself but also to those close to you.
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