This type of insurance only covers periods when you're classed as unemployed. It doesn't cover absences due to health issues.
Unemployment insurance is a type of income protection insurance policy. It is often referred to as employment protection insurance or work insurance.
This type of cover provides financial security if you become unemployed due to redundancy. In this situation, your insurer would step in and pay you a monthly income.
Read more about income protection insurance.
You take out a policy and pay premiums each month. In return, you can make a claim if you become unemployed providing that:
You are not at fault for your unemployment
Monthly premiums have been paid on time
The initial claims exclusion period has run its course
When you make a claim, you usually need to provide proof of identity and address, along with evidence of your income such as payslips or confirmation from your previous employer. You may also need to list any financial commitments, including a mortgage, rent payments or dependents.
If you're employed with a business, it's always a possibility that you could lose your job, whether it's because of external economic factors or a change in the business’s priorities.
And if you've not been able to save up for an emergency fund to get you through periods of unemployment, then unemployment insurance could help you through the lean times.
This is especially useful if:
You have a mortgage, or other debt to repay
You have children
Your emergency fund isn't enough to cover all your bills
Remember that the point of income protection is not to improve your financial circumstances, but to get you through a difficult period.”
This type of insurance only covers periods when you're classed as unemployed. It doesn't cover absences due to health issues.
This insurance covers absence from work due to unemployment, illness or injury.
This type of insurance only covers periods when you're classed as unemployed. It doesn't cover absences due to health issues.
This insurance covers absence from work due to unemployment, illness or injury.
The amount of income protection you need depends on your monthly outgoings, including things such as mortgage or rent payments, credit card payments, utility bills and food costs.
If you add up all of this, you can calculate how much protection you need to survive while you're unemployed.
When working out how much you need, it's worth bearing in mind that the point of income protection is not to improve your financial circumstances but to get you through a difficult period and cover your most important expenses.
This is the reason insurers only pay out a percentage of your income – often up to 65%. Plus, the lower the level of cover you ask for, the lower your premiums will be.
There are two main types of unemployment cover:
Level cover: your payments and premiums are fixed for the term of your unemployment insurance policy
Inflation-linked cover: your payments and premiums increase each year, in line with inflation, until your policy ends
Yes, you can get income protection if you are self-employed. You will need to prove your income if you claim by providing accounts or other evidence.
To get a pay out, you’ll need to make a claim that’s accepted. Once done, you should be sent any income missed up to that point (subject to any deferral period), followed by monthly payments until you’re able to return to work.
Yes, you can cover 100% of your income but insurers usually set a maximum amount. You might, for example, be offered a policy that would pay out 100% of your income, but which is capped at £30,000 a year.
No, income protection does not pay out if you die. You should look for a life insurance policy to provide for your loved ones should you die. Income protection solely covers your income for the duration of your policy.
Income protection sometimes covers unemployment. It will cover you for a period of unemployment following the loss of a job or other earnings as a result of sickness, injury or disability. However, it might not cover you if you lose your job as a result of redundancy.
Income protection insurance typically pays out for up to 12 months, or until you secure a new job.
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