Today no ones job can be classed as safe, even in industries where once jobs were thought to be safe redundancies happen. As you will have outgoings that have to be kept up with each month giving some thought to how you would continue to repay them is essential. One way of gaining peace of mind against the uncertain is to take out unemployment insurance. Looking for and comparing quotes with a specialist provider as opposed to adding protection into the loan is the best way to take out a policy.
Unemployment insurance can cover a huge range of financial outgoings which include allowing you to be able to maintain your mortgage repayments, loan repayments and your monthly living expenses. You would not be left struggling to mind money or have to rely on savings or help from the State. State benefits can be applied for but to be able to receive them you must meet certain rules. You must not have savings in the bank over a certain amount or have a partner living with you who is in full time employment. If you are claiming for help with your mortgage you would only get so much towards the interest part of your mortgage and you could have to wait several months before seeing benefit. If claiming for a loss of income in general then you would not receive an amount equal to your lost income which would leave you having to juggle bills around.
A far better solution to protecting against a loss of income is to take out income payment protection. This would allow you to cover up to a certain amount of your own income each month and this is the sum you would receive if you were made redundant. With income protection you would be able to continue paying your mortgage to keep the roof over your head. You would also be able to maintain loan or credit card repayments and keep up with all other outgoings each month.
If you just wanted to protect your mortgage repayments then you should consider taking out mortgage payment protection insurance. This would allow you to cover your repayments up to a certain amount and the claim this each month tax free if you were unemployed. An age based policy is great for the younger generation who stretch their budgets to the limit each month as the younger you are the cheaper the premium will be. In some cases by buying from an independent payment protection specialist you can make savings of as much as 40% on mortgage payment protection.
Income, mortgage and loan unemployment insurance would begin to provide you with an income between days 30 and 90. Some providers would backdate their policy to the first day of becoming unemployed. Once the policy has started to pay out it would then continue to do so for between 12 months and 24 months and then it expires. In the majority of situations this would provide ample time for you to recover and get back to work or to have found another job.
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of unemployment insurance. |
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