According to figures, UK companies seem to be getting better at managing their finances and the national average currently stands at fewer than 10 corporate insolvencies per 1,000 businesses.
However, for many people job security is under fire. If you are made redundant your salary stops but your bills don't, so how to cope if made redundant is a genuine concern for families across the UK.
Who needs income protection against redundancy?
Income protection insurance is designed to replace your previous income if you lose your job.
Policies pay a fixed monthly amount until you find new employment, although your redundancy payment will usually expire after a set period such as 12 months.
Employment insurance can be valuable for anyone who is concerned for their job, or with a large amount of borrowing to their name and no other means of repaying it.
Many unemployment insurance policies offer some level of redundancy cover, or you can opt for specialist redundancy insurance for mortgage.
Redundancy cover plans pay out based on involuntary redundancy only, so you won't be able to volunteer for redundancy and still claim.
Similarly, you won't be allowed to take out a new policy if you've already been told redundancy consultations are underway at your company.
Whether you take out redundancy income protection or not, you should draw up a spending budget for different lengths of unemployment because of redundancy.
If you have significant financial resources outside your salary, you may be able to cover your own financial commitments - at least for a while. Work out the smallest monthly budget you could live off to gauge how long you could cope after losing your job.
If you don't have savings, a secondary income or other financial resources you may want to consider income protection redundancy cover. Again, you should establish the minimum monthly income you'd need in order to maintain your current lifestyle and repayments.
How to choose the best income protection insurance redundancy cover
Setting a budget is vital if you're to get the best redundancy insurance cover; so you'll need to be realistic about your day to day living expenses and your bills. Compare your budget to the maximum annual cover offered by each policy.
Second, check what proportion of your current salary that budget represents. If you'd need to claim 70% of your existing salary, exclude all providers who cap their cover at less than 70% even if their maximumincome protection redundancy payment appears suitable.
Make sure you also check the monthly and annual maximum payments for each policy because these also restrict how much you can get paid.
You should also consider how soon you would need the first payment; for example you can sometimes get cheaper premiums by offering to defer the start date of your redundancy payments for 12 or 16 weeks after losing your job.
Finally, check the terms and conditions of each policy for your unemployment insurance eligibility. Make sure you'll be within any age limits for the full policy term; most income protection redundancy insurance expires once you reach your mid-60s.
You'll also need to check that your line of work is covered - that includes whether you're on a part time or permanent contract or if you're self employed.
If you choose a budget based on what your particular financial needs would be and compare policies against your needs, you can make sure you won't be left short if and when you need to claim.
More information on Income Protection Redundancy
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