Protection specialists ASDA Life reveal the 5 most important areas for you to consider when buying unemployment cover.
Do not buy with PPI
Do not wait
Unemployment cover has become increasingly popular in these uncertain economic times for people who want to protect themselves against redundancy. It is not a product that many people are familiar with, which is why ASDA Life has come up with a quick guide to help you understand what to look out for when buying this type of policy.
1. Do not buy with PPI
It is important, particularly in the current economic climate when worried about job security, that you are not led into believing that you have to buy PPI to get unemployment cover. Unemployment cover can be bought stand alone or as an addition to a policy like income protection.
2. Qualifying period
This is the period of time between the policy starting and the earliest point you are allowed to start claiming. If you find out you will be made redundant in this period you cannot claim. You want this to be as short as possible so that you have as much opportunity as possible to claim.
3. Do not wait
Once you have specific knowledge that you are going to be made redundant you cannot take out a policy. Also, if it is left too late to take out a policy and you are made redundant before the qualifying period, you would not get paid. So anyone who is concerned should make enquiries as soon as possible.
4. Deferred period
This is the period between when you start claiming and the time you start being paid. Some policies will backdate this. The shorter the deferment period the more expensive the policy, but the quicker you can get paid.
5. Maximum benefit
Do not take out more than the maximum that is allowed. If you ask for more the premiums will be higher, but you will not receive any money above the policy's maximum benefits, so should make sure you know what's allowed.
Matt Morris at ASDA Life says: "There is more interest in unemployment cover at the moment than there has been in a long time and we are receiving more enquiries about this product than ever before. It seems a simple product in that it pays out if you are made involuntarily redundant, but there are several areas, other than price, that you need to consider before buying. You should always double check the small print before buying."
Income protection insurance: News update: December 2008