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So, Brexit is upon us and regardless of whether you are vote in or leave, no-one knows what the consequences will be.

There have been numerous warnings that if the UK leaves the European Union trade deals will be stopped and firms will move their operations to other countries. Now, this may or may not be the case but as with anything in life it can sometimes be beneficial to prepare for the worst.

Now that the UK is set to leave the EU we are facing changes to our economy that no-one can predict. Brexit could result in a revitalisation of the UK economy or it could lead us into another recession, no-one knows. However, it is sensible to plan for the potential that things might take a turn for the worse, one possibility is with unemployment insurance, also referred to as redundancy insurance.

What is Unemployment Insurance?

Redundancy, or Unemployment Cover, provides a regular monthly income to replace your earnings if you are made redundant. The cover is generally set at a maximum of 65% of your gross income and if you are made redundant you will receive the benefit for 12 to 24 months. Some unemployment insurances are set to a maximum of your actual expenses e.g. mortgage repayment, related insurances, etc, whilst others allow you to cover a percentage of your income without naming specific bills. These are often referred to as mortgage protection policies and income protection policies respectively.

The cover can be essential to make sure that your regular monthly bills are met. Any claim benefit that you receive will be paid directly to you after you have passed your chosen deferment period. The deferred period is the amount of time that you will need to wait from becoming unemployed to receiving a payout and is often around 30 days; you should choose a deferment period that suits your budget and savings that you have.

How Much Does Redundancy Cover Cost?

Bit of a difficult question to answer really. The cost of unemployment insurance is dependent upon your age, where you live and most significantly the amount of income you want replacing each month. Other factors contributing to the cost are the amount of time you want the policy to pay out for and how quickly you want to receive the payments once you are made unemployed.

For a 30 year old earning £22,000 per year the maximum benefit they could typically apply for redundancy cover would be £1,191 per month. The costs of this cover would be:

Deferred period Cost (per month)*
30 days back to day 1 £26.44
60 days back to day 31 £23.34
90 days back to day 61 £22.75

Where possible we would generally recommend that you choose the shortest deferment period possible. Whilst this option will cost the most, it provides you with a policy payment one month quicker than the next, which can help ease financial stress if you were to become unemployed.

Some Extra Bits to Consider

  1. One important aspect of unemployment insurance is that you cannot be aware of any potential redundancy talks within your company when you take the cover out. Notification of a redundancy consultation period would invalidate your policy and you would be unable to make a claim.
  2. Unemployment insurance is available to the self-employed, however the claim criteria is so strict that you should make sure that you speak with a qualified insurance adviser before purchasing the cover. This is not normally something we would recommend to people. This usually applies to company directors with shareholding in their company too.
  3. Payment in lieu or garden leave can impact claims that you place. The insurer will most likely consider you to be unemployed from the actual date that your contract ceases. So if you are given a months pay in lieu but do not actually cease being employed for another month, the insurer will consider you to be unemployed from the later date.
  4. Most policies come with an initial exclusion period that must be passed in order for a policy to remain active. If you are notified of potential redundancies within the initial exclusion period then the policy will not pay out.

How do I get Redundancy Insurance?

You are welcome to use our online quote tool to compare policies here. However, be careful as there are lots of quirks in the wording of redundancy cover, our advisers are experts in the cover and can advise you on which plans will best suit your requirement. As a company we do not charge you for our advice and you are then in a position to know that you have gotten advice from someone who know what they are on about!

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