Insure against redundancy

Rocketing redundancies – two million by Christmas and many economists are predicting a possible three million by the end of 2010 – have brought into sharp focus the wisdom of taking out insurance to cover the frightening prospect of losing your job.

Iconic names such as Woolworths and MFI – frightening predictions that 70,000 jobs could disappear in the Square Mile and Canary Wharf – the news gets worse and the casualties keep mounting up. Redundancy can have devastating consequences. It can result, of course, in the terrifying prospect of having ones home repossessed.

Eva Financial, of Welling, in Kent, is a specialist house which is expert in redundancy insurance. To get a £1000 worth of cover of cover every month costs about £35 a month. Although there are special introductory offers available which can halve the premium. More about that in a moment.

So who can get them? Redundancy insurance policies are available to the employed and self-employed. The policies pay an income if somebody is unfortunate enough to lose their job. Most of the polices are for a year – but two-year policies are also available. There are no early repayment charges so the policy can be cancelled at any time if, for instance, the policy holder is lucky enough to suddenly find another job.

There are certain stipulations with which applicants must conform. Redundancy policies are only available if the applicant has a mortgage and the payments are up to date. Applicants must have been in work for a minimum of six months and not currently under the threat of redundancy.

The last bit raises an interesting point. Nobody’s job is safe today. You might think you are in a secure position – but being realistic, and without wishing to add to the already widespread alarm, the Great Crash is spreading like a contaminant through every sector. So if you’re in work – and even if you think you’re safe as houses ( no joke intended) - if you’re considering such a policy it’s worth acting swiftly before the unexpected happens.

As with so many other aspects of the financial sector there’s a tightening up which is beginning to happen across the board.

Legal & General announced on November 26 that with immediate effect redundancy only policies can now only be taken out at the time of a new mortgage application. There is a possibility that as unemployment grows other companies will follow L&G’s lead. The cost of getting cover might also rise as unemployment soars and the insurance companies are faced with having to pay out on more and more claims.

Such factors – once again – underline the importance of prompt action by people who are in a position to consider these specialist policies.

Redundancy can trigger an appalling chain of events. Perhaps the worst is the loss of ones home. Many people don’t realise that if they lose their home there’s an awful rigmarole to endure before a local authority will help them.

Imagine this: you’ve lost your job, pride, dignity, you’re shell-shocked, you can’t think straight and you can’t keep up with your mortgage repayments. Your home is repossessed. It doesn’t matter what pledges the government is giving. It doesn’t matter that they’re imploring mortgage lenders to be more compassionate. Repossessions are happening now and at a frightening rate. In all the turmoil one thought burns bright. What’s going to happen to you and your family? Where on earth are they going to live?

To get council help you have to meet a range of qualifying standards. You have to prove that you’re homeless.

You will need to supply proof of your predicament, court-papers and the like. Unless there are special circumstances you have to prove that you were not in arrears before you were made redundant. You must have children or suffer from a disability. You have to have lived in the borough for six of the last twelve months, three out of the last five years, or have a close relative living in the borough for at least five years.

Such misery could be avoided for about £1.15 per day.

So what about the cut price introductory rates? Alex Francois, a principal of Eva Financial, quotes the case of a woman who worked in a high street bank who was convinced that she was in a secure job but wanted to be on the safe side .. just in case.

She took out a policy for just under £900 a month for a monthly cost of £33.99. However, as she considered herself low risk the company was able to offer her the policy ‘free’ for six months. This was the equivalent of £17 a month. And guess what? The worst scenario came true. Mrs.Safe-as-Houses-Banker was made redundant. Even though she was still in her ‘free’ period the insurer coughed up and she now receives just under £900 a month.

For more information on redundancy insurance or a quotation please click here or call Eva Financial quoting TheLettingSite.co.uk on 0208 304 0755.