Critical illness and Unemployment Insurance  cover

In the current financial turmoil, with government cuts looming and with thousands of people at risk of redundancy every week in the UK, Unemployment Insurance cover is becoming more and more popular. Are you one of the 40% of people in the UK who have less than a month of salary set aside if the worst happens?

Read the policy documentation very carefully. No two redundancy insurance policies are the same and there will be one that will be more tailored to your needs than all the others. Once you have allotted to go with a particular income protection insurance cover there will usually be a cooling off period (usually 2 weeks), during which you may cancel your policy with no cost to you provided of course you have not claimed on your employment insurance cover in this period. Also note that you may have to hold your policy for a period of time before it becomes valid. This is to stop people taking it out only when they feel that their unemployment is imminent or that they have heard that it is likely. Currently few UK insurance companies are offering unemployment only insurance cover and these are disappearing quickly.

As with employment Insurance a number of caveats apply. If you are made redundant or formally put at risk of redundancy within a certain time period of taking out your policy your insurance company will reject your claim. This time period is usually of the order of 4-6 months, but check each insurance policy before you buy. The unemployment only cover will usually pay out for only a set period of time, often a year. Check all the small print to insure that you qualify before taking out a policy.

Critical illness insurance usually covers you for death or surviving a critical illness like for example cancer. Again like all other policies it is good to compare different policies and understand what the definition of critical illness is. No one knows what disease might strike them down, but ask yourself questions like.

What is the insurers definition of critical illness or unemployment.
What illnesses are covered.
Might this be regarded as a pre-existing condition.
How would the insurer feel about you going back to employment again and still claiming.

If you have decided to go ahead and get a quote or here are some hints and tips that may reduce the cost of you premium.

The cover on this site allows you to protect yourself against redundancy, accident and sickness, or accident and sickness only, or unemployment cover only. this flexibility allows you to decide which is the best policy for you.

There are several names for this type of cover and they can get confusing. ASU - Accident, Sickness and Unemployment Cover covers these three situations or one or two of Accident Sickness or redundancy. ASU can also be called Mortgage Payment Protection Insurance or MPPI the idea being that it will pay your mortgage in the event of redundancy. They can also be referred to as Income Protection Cover depending on whether you intend the redundancy insurance policy to protection your income or cover your mortgage in the event of redundancy or accident or sickness.

You may notice that there is a great difference between the costs of various policies in the marketplace. Often the cost of redundancy insurance policies offered by the company arranging your mortgage will be many times that of policies that you can find in the rest of the market. You will probably find that cover sold by your mortgage arranger and cover arranged by yourself will have very similar features, but you should always satisfy yourself that this is the case before entering into a financially binding arrangement. In particular checking that you are eligible for the policy, what the insurer regards as unemployment, for how long will the policy pay out and how soon after taking out the policy can unemployment take place and the policy be regarded as valid.

You need to decide what type of cover you need based on your personal circumstances. Do you require unemployment insurance only, do you require Accident and sickness insurance only or do you require a combination of the two in the form of combined unemployment, accident and sickness insurance. Obviously either of the separate policies will cost less than the combination policy.