Obviously, if you are laid off, but when is it going to be the most use to you?
Often there are comments redundancy protection is expensive relative to the cost of income protection. For those looking at income protection under the age of 40 this is often the case. Income protection pays up to age 70, redundancy protection only pays up to 6 months, with redundancy protection sometimes costing more than income protection for those under 40. Cost is relative, for a 50 year old it can be less than 25% of your overall cost of income protection even though redundancy protection premiums are the same for all ages.
Let's have a closer look at this picture.
If you are under the age of 40
Through your current skills and training, you can probably expect to find work relatively quickly, your need to spend money on redundancy cover may not be the priority. You do need to make sure you have access to enough funds to get through the time you need to find a job. If you do not have sufficient funds or you are concerned about how long it might take to find a job, then you probably do need to consider redundancy protection.
In the 40 to 50 age group?
You need to start considering redundancy protection, as you are a bit older. If you have been with your employer for some time, your income has probably climbed, you are probably quite established, and maybe you are more specialised than you were in your 30's.
If you face redundancy, the unfortunate reality is it might take some time to find another job at a similar level, be that income, status or specialty. The added challenge is the younger generation is always knocking on the door. If you have not been in the job hunting market for some time, you may even need to retrain or up skill to get back into work at the level you were at. Looking at redundancy protection is something to consider if you do not have the resources to both up skill and cover an extended period of job hunting.
You need to be adding redundancy to your risk planning. Bang for buck this is the age group most likely to get value and return on the premiums paid. This is because age, education and your health all start to conspire against you. Those made redundant over the age of 50 have a harder time in the job market. Often it has been a long time since you were in a classroom, your health may have some limitations and the job market seems to conspire against older workers.
Throughout my working life, I have seen older workers retrenched over younger ones, usually for one reason, cost. It is not knowledge and skills, as often the older worker is top of their game and energy wise most have been more active than people half their age. This cost vs value approach undersells the older worker. Unfortunately, it is the world we live in.
Why at 50 do I say add redundancy to your risk planning? Yes for the reasons outlined previously but there is 1 fundamental reason I say this. Your health. Yes finding work if you have a health problem does not make it any easier but that is not the reason either.
The reason is making sure the insurance cover you have invested quite a bit of time and money in does its job. I have come across a number of people who have serious health issues and they let their cover go before they could claim. In almost every case they had been made redundant, they didn't have the resources to continue their cover and the cover lapsed. In all of these cases, if they had another 6 months of income support they probably could have claimed on their trauma, income protection or medical insurance. They would be in a much better position financially and possibly health wise too.
Yes, we arrange insurance, the value in the insurance we arrange is in it being there for you to use. Making sure you have the right cover in place to ensure it is there for you is also part of what we do. This is why we have often have a strong opinion on waiver of premium and redundancy protection on your policies.
The information is only intended to be of a general nature and should not be relied upon in any part without obtaining full details of the products and services by contacting Willowgrove Consulting Limited. All product and service details, terms, conditions and other information are subject to change at anytime without notice. Terms, conditions and fees apply to the various products and services and are available on request. A disclosure document will be provided to you on request free of charge.