Protecting your Mortgage with Redundancy Insurance
Life is unpredictable and there is not much worse than losing your job. Redundancy insurance, also known as unemployment insurance or income insurance, can guarantee income should you find yourself in this unfortunate situation.
How does Redundancy Insurance work?
Redundancy insurance will pay you a monthly sum after you have been made redundant or lost your job through no fault of your own in order to support you during your search for employment.
In order to claim this insurance you will probably need to provide evidence of income and expenditures. You will also need to provide proof of address and identification.
Types of Unemployment Insurance
There are a few different types of insurance policies to protect you should you lose your job.
STIP: Short-term income protection insurance will replace a proportion of your income (usually around 50% to 60%) for a fixed period of time (usually around 12 months). The payments will continue until you find new employment or the agreed policy duration comes to an end.
MPPI: Mortgage payment protection insurance will cover your mortgage payments after you have lost your job for around 12 months. Read our guide on MPPI here.
PPI: Payment protection insurance will cover loan or credit card repayments should you find yourself without a form of income. Typically payments start around 3 months after your earnings stop.
When Should you Think about Buying Redundancy Insurance?
You should start thinking about buying unemployment insurance if you know that redundancy is a possibility, but you haven’t already been given notice. It is unlikely that you will be able to purchase cover if you know you will be made redundant.
Another reason to consider purchasing is if you know that you will be unable to find employment within 3 months of losing your current job.
You should only start thinking about taking out this insurance if you are fully aware of the exclusions.
What isn’t Covered by Redundancy Insurance?
Before buying unemployment insurance, it is important to understand what is not covered in the policies.
Unemployment insurance will not cover you if you willingly quit your job or if you are fired. You will also normally not be covered if you voluntarily take redundancy.
You will only be covered for reasons out of your control.
How much will I Pay for Redundancy Insurance?
Unemployment insurance rates will depend on a number of factors, such as your employment status and your earnings, as well as your health and the duration of cover you wish to purchase.
Take a look at our quote generator to get your personalised redundancy insurance quote!
This information is a guide only and should not be relied on as a recommendation or advice that any particular mortgage is suitable for you. All mortgages are subject to the applicant(s) meeting the eligibility criteria of the specific lender. You should make an appointment to receive mortgage advice which will based on your needs and circumstances.