Redundancy Insurance – Do You Need Cover?

With the global economy being in the doldrums, a lot of people are seeking to protect themselves against potential redundancy and unemployment by taking out a redundancy insurance cover.

Also commonly known redundancy protection cover or unemployment insurance, such policies guarantee regular financial payments in the event of loss of income due to redundancy, thereby allowing the policyholder to meet his or her financial commitments until he or she can find alternative employment.

Redundancy insurance cover can help you protect either your salary and also your mortgage repayments if you face redundancy. There are two types of redundancy cover, comprising Mortgage Protection Insurance and Salary Protection Insurance.

Through Mortgage Protection Insurance, you can protect your monthly mortgage repayments to your lender. Some lenders may make this type of insurance a requirement when a consumer takes a loan or mortgage. Sometimes such redundancy insurance cover may even be provided along with the loan. In such cases, the payment made by the policy will go towards settling the specified debt. However, you can decide how to use the payments in case your policy is a standalone one.

A Salary Protection Insurance policy will in addition cover your living expenses. As you will be entitled to a higher payout than in the mortgage protection insurance, the premiums tend to be higher. Usually, you can receive up to 50% of the income you earn on a regular basis.

Redundancy cover can also cover your credit card dues and insurance payments during the time when you are unable to work due to an injury or temporary illness.

Redundancy insurance policies vary widely depending on the insurer, each having different terms and conditions as to what is covered and what not covered. So please look into the details of what level is being provided by each insurer, before you take out a policy.

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