Providing you did not take voluntary redundancy and you have checked other exclusions within a policy you could receive a tax free income each an every month you were out of work with which you could continue to repay your mortgage, loan, credit card and essential outgoings. This would greatly relieve the stress and of course means you would not have to break into any savings or redundancy money in order to be able to keep on top of things.
However while redundancy cover can be an essential lifeline it is not suitable for the circumstances of all individuals because there are exclusions which could mean you would be ineligible to make a claim. Some of the most common exclusions include if you are only in part time work, are self-employed, suffer from an ongoing illness or if you are only working in a part time position. Providers can add others so you have to check the terms and conditions of any policy you are considering taking out before you buy it.
Buying the cover that is offered alongside a loan or mortgage is the most expensive way of taking out the cover and very little information is given regarding the exclusions and key facts of the policy. In addition the cover will cost you up to 5% more than had you gotten quotes independently.
Providing a policy is suitable for your circumstances then it would begin to payout once you had been out of work for between 31 and 90 days and would then continue to payout for between 12 and 24 months depending on the provider in question. Mortgage cover taken out as redundancy cover would allow you to continue paying your mortgage repayments and so you would not be in fear of losing the roof over your head. Loan protection cover will give you money so that you can comfortably pay your loan repayments and income cover will protect your income in general so you can pay your essential outgoings.
Payment protection has come under fire for many reasons since the investigation by the Financial Services Authority began in 2005. Mis-selling occurred and fines were handed out to several names on the high street with the most recent being a mortgage firm of which not only the firm but also the Chief Executive received a personal fine. The Financial Services Authority investigated over 4,000 cases of mis-selling in 2007 alone including redundancy cover even though recommendations were outlined which were supposed to be followed. While some changes for the better have been made clearly many more need to be made.
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of redundancy insurance, loan protection insurance and income protection insurance.
