Income Protection Insurance Cover Redundancy - How It Works

Income protection insurance today comes with a feature that covers you if you become redundant. The cover is usually provided by general insurance companies and will cover you for a maximum of three months so you can pay your bills as you figure out your next move. An unemployment cover has also been introduced in the market under the income protection insurance cover. Redundancy is covered by providing you with a monthly benefit of 3000 dollars for up to three months once you are unemployed.

Unemployment Cover

The unemployment cover is an additional feature that you can incorporate into your income protection cover. This feature is normally not offered by life insurance companies, but by general life insurance companies. The unemployment cover will temporarily replace your income when you are suddenly laid off from work. You can use this money to pay for your bills, school fees, rent and mortgage, and other debts.

Income Protection Cover

The first thing you will be asked to do when you need an unemployment cover is to choose the type of income protection cover you need. You can either decide to have the fixed income protection cover, which has pre-set premiums and benefits. You can also request for a tailor-made cover that takes your circumstances into consideration. This cover will have higher premiums, but will cover you comprehensively.

Income To Be Covered

You have the option to cover up to 85 per cent of your income if you work more than 20 hours a week. If you work less than 20 hours a week, you may be able to access a cover of up to 3000 dollars a month. You are eligible for the involuntary unemployment cover if you work full time on a permanent job for a minimum of 30 hours a week.

The cover will provide you with 3000 dollars per month for up to 3 months. The insurance provider calculates your income by taking the average of your pre-tax income for the 12 months prior to your redundancy.

Waiting Period

You will be given a chance to select the waiting period, which is the amount of time that will elapse before the benefits are released to you in the event that you are made redundant. If you choose a longer waiting period, then the cost of your premiums will reduce.

Redundancy Features

Life insurance companies may not be able to offer an unemployment cover, but there are features incorporated into the income protection insurance cover. Redundancy features enable you to have a soft landing in the event that you are suddenly out of work.

In case you become unemployed involuntarily, your insurance provider may waive your premium payments. The premium payments are waived for a few months. In order to get a waiver for your premiums, you need to convince your insurance provider that you are in the process of looking for new employment.

If your income protection insurance was taken out with a bank, the bank will cover your credit card and mortgage repayments for a specific number of months if you had taken out your mortgage with the same bank.

Kerrie Peacock constantly analyses available options for insurance cover within the personal insurance industry and elaborates the benefits of super funds when buying TPD insurance wiki. Visit for more information on TPD insurance.

This article was published on 11 Aug 2014 and has been viewed 515 times
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