Redundancy insurance is needed more than ever

The “sensationalist” stage of the credit crisis seems to be drawing to a close, and we are moving on to the hard fact that large numbers of redundancies are being announced with regularity in most sectors of the economy. In addition, we are seeing large firms, some which have been in existence for close to one hundred years; go bust.

We shouldn’t be surprised, as if you look back at a FTSE 100 list of companies of one hundred years ago, not many are still around today. It is a hard fact of life; everything must come to an end.

Fortunately, Redundancy Insurance, a type of insurance that will pay out the benefit if you are made redundant is still available; for now. Unfortunately, this type of insurance comes under the banner of PPI, which has been in the press recently, due to an FSA and Competition Commission investigation into mis- selling and quasi conditional selling and other cloak and dagger malfeasances.

This has prompted a lot of people to cancel their policies, all at a time when they are likely to be most needed; so let’s clear up the nature of the Commissions investigation. The crux of the investigation by the Commission centered on point of sale transactions, where the unwary customer is taken out of the market, without having the opportunity to shop around for Redundancy Insurance; taking the time to examine, both price and quality.

In addition, Redundancy Insurance sold by credit providers, particularly the Banks, was found to be much more expensive than comparable alternatives that could be found on a stand alone basis i.e. not sold with or part of a loan or credit agreement. You would not be surprised to hear that the Banks are not happy with the Commissions ruling, as they derive a huge amount of their overall profit from the “easy sale”, of Redundancy Insurance.
 
Of course it’s an easy sale, who would not want to have a Redundancy Policy in times such as these? Just at the time that the Banks need some profits. The message is clear, if you want a Redundancy Insurance, spend some time to research the price vs. quality policy yourself; at your pace.

If you have a policy; maybe you bought it through a Bank, and feel that the price and claims situation are out of sync with the market, do shop around. There are some stand alone providers that will waive the 90 day initial exclusion period, if you have existing cover. Conditions vary, so do get confirmation that continuing cover is available in your circumstances.