Income protection cover for redundancy insurance

Compare redundancy insurance quotes so you could find a deal that could protect your income if you’re made redundant.

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Last updated: 13 August 2020

Can you get redundancy insurance?

Not all income protection policies include redundancy insurance. UK insurers in this comparison do, however. Find the cover you need for the cheapest price by completing our quotes form.

When you purchase redundancy insurance, UK providers will often include clauses such as an exclusion period. Make sure to compare redundancy protection insurance from across the market. This way you can ensure you get the best price for your redundancy cover, while also getting the best level of protection.

What does redundancy cover include?

Each insurer lets you choose an income, but with the following restrictions:

  • Maximum cover: This is the highest percentage of your income an insurer will cover

  • Maximum benefit: This is the highest amount of income an insurer will cover

The maximum benefit can affect the percentage of cover you get, for example:

If you want to cover 60% of a £30,000 annual income (£18,000), but an insurer has a maximum benefit of £15,000, you can only cover 50% of your income.

Here is more information on income protection

What else is covered?

Most policies that include redundancy insurance also pay out if:

  • You are ill and cannot return to work

  • You get injured and cannot return to work

Whichever reason you have to claim on an income protection insurance policy, you could get an income for as long as you need it, up to the end of your policy.

Here is help deciding if you need income protection

When will it pay out?

This depends on what you choose when you apply for a policy. You usually get two options:

  • Have an income paid to you as soon as you become redundant

  • Defer your income payout for a fixed term, e.g. 12 or 24 months

If you choose a deferral period, your premiums are likely to be cheaper. Only do this if you can afford to replace your income until your policy starts paying out.

What cover do you need?

To decide what cover you need, think about:

  • How long you want a policy to pay you an income for

  • The percentage of your income you want covered

  • How much cover do you need?

Most insurers let you specify an amount or choose a percentage of your existing annual income, for example 65% of your yearly salary.

Most insurers have an upper limit on the amount you can cover, for example 65% of your income but capped at £40,000.

To help you decide how much income protection to choose, write a budget to work out which outgoings you need to cover.

Income protection cover for redundancy insurance FAQs

Can I get redundancy protection if I am self-employed?

Yes, but you will need to provide a year's audited accounts to prove your income when you apply. Find self-employed cover here.

How long does an income protection policy last?

Most insurers offer cover up until you retire, but others specialise in shorter term cover for 12 or 24 months.

Can I cover 100% of my income?

Some insurers could offer to cover 100% of your income, but still set a maximum amount, e.g. 100% of your income or £50,000 a year.

Does income protection payout if I die?

No, income protection only covers your income for the term of your policy. Look for a life insurance policy if you want a payout when you die.

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