Home / - Unemployment Insurance

Unemployment insurance, as the name suggests is an insurance that pays the claimant if they get made redundant.

This type of insurance is commonly known as “General Insurance”, (as opposed to long term life or health insurance).

This means that this type of insurance is generally renewable and/or reviewable, often on a monthly basis or annual basis, and can therefore be withdrawn by the insurer if economic conditions turn against them.

In practice the policyholder is usually not aware that a review has taken place as there is no change to the terms of the plan, but it is the ability to be able to increase the cost, reduce the benefits, or in some cases withdraw the cover altogether that makes Unemployment cover the least robust of all the covers available here.

Reviews are most likely during periods of rising unemployment levels generally and during an economic downturn. Reviews that affect just one policyholder are very unlikely.

Unemployment cover has and does provide many mortgage holders with valuable protection against involuntary unemployment.

It is important to read the terms and conditions to ensure that you are not excluded from cover, in particular,

• if you change jobs you need to tell the insurer as they may not be able to continue to offer you cover;
• if you knew you were going to be made redundant, or you could reasonably be expected to have known, then you will not be able to claim;
• you will not be able to claim if you are dismissed due to misconduct, including being dismissed for taking part in industrial action, your failure to meet the standards or targets laid down by your employer or any other circumstances that result in your employer taking disciplinary action against you;
• you normally have to have been continuously employed or self-employed for at least six consecutive months at the date of becoming unemployed.

There are many terms and conditions with this type of insurance. You need to be sure it suits your circumstances.