Unemployment Insurance

Anyone who would face financial risk from suffering accident, sickness or unemployment should consider taking out a policy to protect their living standards. With statutory sick pay standing at £79.15 per week (lasting for 26 weeks), government incapacity benefit standing at £95.15 per week (after 26 weeks) and jobseeker's allowance of £59.15 per week it makes sense to arrange private insurance protection.

According to figures from the Department for Work and Pensions there were over 370,000 people claiming incapacity benefit in August 2009, and in this same month figures from the Office for National Statistics (ONS) show there were over 1.6 million people claiming jobseeker's allowance. In this light, assuming that 'this won't happen to me' is a large financial risk.

Everyone potentially has the need for unemployment insurance as job security can never be guaranteed but those who have an income protection plan provided by their employer as part of their employee benefits package may not need accident insurance or sickness insurance.

Unemployment insurance provides cover in the event of forced unemployement i.e. redundancy. Should you unexpectedly be out of work the unemployment insurance would pay you a tax free monthly benefit until you have returned to work or the policy has paid out for the maximum benefit period, which you will determine at the start of the policy as either 12 months or 24 months.

Length of cover
Whether you are combining the redundancy insurance with accident and sickness or not the policy is designed to provide short term protection.

When buying redundancy insurance you have the option to choose a benefit period of either twelve or twenty-four months. The longer the benefit period the higher your premiums.

Level of cover
The amount you can insure will often depend on whether you are linking the protection to your mortgage. As a general rule you are able to insure the lesser of 65% of your pre tax earnings or £2,500.

Redundancy insurance is no exception to this rule, the greater the level of cover the higher your premiums, however, premiums are likely to be less than a full accident, sickness and unemployment policy as you have stripped out a proportion of the cover in just choosing unemployment.

Setting your deferred period
Again this is a short term protection product and thus tends to have shorter deferred periods than the long term income protection products.

The longer the deferred period the lower the risk to the insurer and thus the cheaper your premiums.

If you were to be made redundant your employer is required to pay a statutory level of redundancy pay. This varies depending upon your age and years of service however the maximum benefit is based on a weekly gross income of £350 (2009/2010).

Essentially your employer is required to pay 1 weeks worth of salary for every full year of employment, roughly depending on age.

For many of us this leaves a gaping hole and a vast shortfall in income. Redundancy insurance is used to fill this gap to ensure your financial obligations are met so you can focus on finding employment.

If you would like some competing quotes please complete your details in the quote box provided above. On the other hand, if you would like to speak to someone to run through your requirements and policy options then one of our expert advisers would be more than happy to help.

As Drewberry is independent of any insurer we can arrange a suitable unemployment protection plan from any one of our large panel of insurers and can therefore provide truly impartial advice. We want to provide you with all the information you require in order to make the best decision on your protection needs.