Unemployment protection insurance is a policy you take out to replace your income in the event of your losing your employment. For most basic unemployment insurance plans, it is not necessary to have a mortgage. However, there are still quite a number of strict criteria for eligibility. In fact, a large number of applications for unemployment protection insurance are turned down.
So why might your application be rejected?
• In the current uncertainty of the employment climate, there are a number of occupations that insurance companies are wary of, as they are seen to be precarious. This is nothing to do with the actual work being dangerous! It is to do with the stability of that particular sector of the economy. Such occupations currently include travel, finance, banking and IT. However, even if you are employed in one of these occupations, it is usually possible to find an insurer somewhere who will accommodate you. If you are turned down for this reason, talk to a broker who should be able to find you an alternative provider. Or, of course, you could talk to a broker initially, to avoid being turned down in the first place!
• To be eligible for unemployment protection insurance, it is essential to be in permanent employment – that is, in a post that is not subject to a temporary or seasonal contract and not an agency position. You need to have held this post continuously for the last six months and not have had any period of unemployment of more than two weeks during the last 12 months. Most policies specify a minimum of 16 hours per week, but check each individual plan carefully as requirements differ. And, of course, it’s no good applying for insurance after you have been given notice to leave!
• When applying for unemployment protection insurance, you choose the level of monthly payout that you require. Most standard policies pay out around £1,500 per month – a few go up to £2,500. If you will require a higher monthly payout, it is possible to take out more than one policy at a time. However, if you apply for a second policy without disclosing that you already have a policy in force, or have applied for another one, you will almost certainly be rejected. Your best plan would be to talk to a broker, who will be able to identify plans that can be combined to offer a larger monthly payout.
Redundancy and joblessness are becoming an increasing fear as we enter 2009, and to many it seems a good idea to look for some protection against loss of income. But bear in mind that the more precarious the job situation becomes, the more cautious insurers will be. So if you think you may require unemployment protection insurance, the sooner you apply for it, the better.