Worried about forced job loss? Insuring your income for being made redundant is possible as part of your income protection planning
Unsure about your job security?
Your income is important, you use it to pay your bills and maintain your lifestyle.
Uncertainty about your income can cause stress and loss of your income can be devastating to your financial wellbeing. Insuring your income for medical and accident disability is important, but forced job loss is also important to cover too.
What is redundancy cover?
Redundancy cover is insurance cover to cover forced job loss. Situations where you have no choice about continuing to work for your employer, but you're not disabled and could work, if there was a job to attend.
In certain situations if you are self-employed it can also cover you for bankruptcy too. The time while you work through sorting things out with your business and you still need to be paying your bills. There may be other considerations at the time that impact your cover that needs further discussion.
Redundancy cover is:
- Able to be put in place relatively quickly but it does need some information from you and an adviser will discuss this detail with you.
- Can be the higher of 110% of your mortgage payment or 40% of your income.
- On forced redundancy it pays for up to 6 months from the end of the 4 week waiting period. (any final pay, redundancy and annual leave provisions are expected to see you though this first month)
- The cover needs to be in place for 6 months before a claim will be considered. (most providers)
What's the claim process?
Have your cover in place. Any indications at application that you may be made redundant or restructured may impact your cover for what you may or may not go through. Once this situation is clear and clarified then cover typically is able to be relied on.
Once your cover is in place for 6 months then you can rely on it working. Insurance companies insist on this, as the average claim when this requirement wasn't there was about 8 weeks from application to claim. Indicating people took cover because a restructure was imminent. For the insurers, this costs a lot of money and makes offering the benefit unprofitable and premiums unreasonable. The 6 months stand down means these benefits are available at a reasonable premium, which has been relatively stable even with the 2008 financial crisis.
If you find yourself in a redundancy situation, get it in writing. With this and registration with WINZ to be actively seeking work we can start the claim process. And completing a claim from will be required.
With all providers you will have to manage the first month on your own, from final wages paid and annual leave entitlements.
If you're still unemployed after the end of 4 weeks, then the redundancy cover starts paying a benefit. This will continue for up to 6 monthly payments while you find work.
If this is something you wish to have a closer look at, you can get started now by providing us with a little bit of pre qualifying information: