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Articles to help you choose - updated for Autumn 2009
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Income Protection Insurance Buyers Guide
If you were suddenly out of work due to accident, sickness or unemployment could you cope financially? How long would your savings cover your essential outgoings before you ran into serious trouble? These are the questions this type of insurance is designed to help you address.
State benefits are frighteningly inadequate when compared to the true cost of living with the bills and expenses we all have to pay. Income Protection Insurance or Lifestyle Protection, as it is frequently called these days, offers hope to people who don't have substantial savings to fall back on. It has been designed to address the impact of lost earnings in times of unemployment resulting from involuntary redundancy, accident or sickness.
In short, it would enable you to pay your most important bills and provides the security no longer offered by the state.
Who should take out this Insurance Cover?
Anyone who does not have savings equivalent to at least 6 months earnings should be seriously considering Lifestyle Protection Insurance. The risk is more than just redundancy. "People are 26 times more likely to be incapacitated and off work more than 6 months than die before the age of 65"** this draws attention to the fact most people protect their families with life insurance should they die. However few realise it is just as import to insure their family against financial hardship when they are alive! What's more, the likelihood of needing to claim on a Lifestyle Protection policy is many times greater. So, in summary, if you have little saved but lots of financial commitments, you probably need this insurance.
Are you in full time employment where there are no issues with redundancy at the moment?
This is the ideal time to buy this cover. You will then have the security of knowing you can call upon this insurance if things change for the worse. If your employer has made an announcement regarding major layoffs, you are probably too late to buy unemployment cover.
If you already have this insurance, perhaps just covering your mortgage payments or a single loan, you should check what you are paying at present. If you meet the criteria above, consider switching to an on-line provider as you are almost guaranteed to make a significant saving AND improve the total benefits payable. The high street names have a reputation for offering this cover at sky high premiums. You owe it to yourself to compare prices and take advantage of the stand alone premium rates that can be 30% of what you are paying at present.
How much cover do you need?
Many providers, including the leading comparison web sites, give you a simple calculator. However, all you need to do is to add the following together to understand the minimum amount you require to cover your essential monthly outgoings.
- Payment of your mortgage or rent
- Home improvement and/or car loans
- Important insurance premiums
- Credit card repayments
- Utility bills
- Food bills
Once you have this figure in mind, consider if you need Accident and Sickness cover, or the more popular Accident Sickness and Unemployment cover. Some people opt for just unemployment cover, however this is not so widely available. It is also hard to recommend, as a serious injury or illness have just the same devastating effect on personal finances as redundancy.
Features to look for
Virtually all Income Protection / Lifestyle Protection Policies start paying out once you have been off work for an unbroken period of between one and 180 days. The longer you can do without the payment of benefits, the cheaper the cover. This is called the deferment or excess period.
The better providers enable you to vary this excess period so you can reflect any sickness benefit scheme your employer might have. Typically, your company scheme might pay you in full for 3 months, after which you would want your own policy benefits to start. Equally, if you were made redundant, you might need your payment period to start without delay. So select excess periods to suit your circumstances, especially where you need to vary the excess period between unemployment and accident/sickness cover. You are also likely to save money this way.
Most policies will pay out for a period of 12 or 24 months. Think very carefully if considering anything less than 12 months cover, especially in the current economic climate. By far the majority of providers offer 12 months as standard. Cheaper 6 month and 3 month benefit period policies are available, however you must be very confident you could get back into work within this short period.
You will always be limited to receiving benefits that do not exceed your take home pay. Some policies are more restricted than others. Many only offer up to £1000 per month. Several more are restricted to 50% of your gross salary. However, there are policies that offer 60% or more of gross earnings and a higher maximum monthly benefit. Both are better matched to modern needs and give you more scope should you need to increase your benefits in the future. Claim payments are not subject to tax or national insurance.
Securing best value
Premium rates vary widely and it pays to shop around. The leading price comparison websites like Moneysupermarket are very useful for this. Moneysavingexpert.co.uk is also a very useful guide to finding the best value. Generally speaking, the lowest premium rates are charged by the internet providers simply because their costs are lower. They are able to handle the majority of applications without complex underwriting or interviewing the customer.
For those that fall outside of the criteria that are easy to underwrite on line, the strongest recommendation is to seek the advice of a specialist independent broker. They can tailor a Lifestyle Protection policy for you, it may contain one or two restrictions (for example in respect of pre-existing medical conditions) however this personal service will be reflected in the premium charged. Try on-line first. You may be pleasantly surprised just how low cost this cover can be.
Questions when you go on-line for a quote
- Your name, age and contact details
- If you are employed or self employed
- The company you work for - sometimes details about any redundancies
- Your role within that company
- How much money you need to pay your unavoidable outgoings each month
- Would you want Accident, Sickness and Unemployment cover (recommended) or only an element of this cover? Note providers of unemployment only are limited.
When you want payments to commence - the majority of buyers ask for the compensation period to commence immediately ('day one cover'). You will usually be offered a choice of 'day one cover', 30 day, 60 day or 90 day excess periods. Some even offer 180 days or more - choose what suits you.
If you want the insurance to pay for 3, 6, 12 or 24 months (most people select 12 months)
On-line premiums are usually only payable by monthly direct debit. This is ideal as you can keep the cover for as long as you need it. Say you have a change of circumstances, you can always contact the provider to increase your benefits or indeed cancel your direct debit if you come into money. There is no need to pay a full year's premium in advance.
Buying - value for money
You can choose up to 60% or more of your gross monthly income paid free of tax or NI contributions (usually subject to a maximum payment between £1000 and £2000 per month)
A back to work service - this is surprisingly undersold by the majority of providers as it offers genuine assistance for people getting another job. This includes advice, CV writing etc. Some go further and assist with managing medical conditions including arranging physiotherapy for example.
The providers terms vary to some degree, many policies offer individual help with redundancy matters and tax information. It is worth noting that these services are delivered by contracted specialists and not by general insurance company claims departments. They deliver help - usually phone based - when you most need it.
How much will it cost?
It depends on your age and occupation, plus of course the level of compensation you choose and deferment period. Generally speaking, with age comes higher premiums that reflect the regrettable truth that, as you get older, it is harder to get back into work and takes longer to recover from an accident or medical condition.
If you are in a relatively low risk occupation and are one of the majority who can be insured without any query, you will be in a position to take advantage of internet rates. If so, your premiums will be very competitive indeed. It is likely you will receive a good level of benefits for just £30 to £40 per month.
Equally, if you already pay for 'Payment Protection' with your mortgage or loan, a stand alone policy could save you a small fortune. Check if it would pay you to switch.
And finally
With widespread reports in the press about the majority of employers either freezing recruitment or contemplating redundancies, please don't fall into the trap of thinking you could simply walk into another job like in 2007. The landscape has changed fundamentally. We have entered a period where, once you lose your job, it is very hard indeed to get back into work and the competition for vacancies is fierce.
Research in 2008 published by the Yorkshire Building Society*** identified that if their earning power was lost, a third of people are just 11 days from financial meltdown. Already juggling bills with the steep increases in fuel and food, most could never save £1000's necessary for a rainy day fund. However £30 to £40 per month for Lifestyle Insurance to deliver the equivalent security is practical and this premium can be absorbed within most household budgets.
If this is your financial situation, please give some serious thought to buying Lifestyle Insurance. It could protect your family from the misery of mounting debts, credit blacklisting and potentially losing your home.
** Source IAD Information Centre (DWP) 5% sample, 2005, ONS Annual Abstract of Statistics 2005
*** Source Yorkshire Building Society Survey Daily Mail 25 July 2008
Dennis Haggerty FCII M IDM
Marketing Manager iprotectinsurance
Wessex Group
Winchester
Hants SO23 8RZ
Original Article Dec 2008 updated 24 August 2009
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Top Ten Tips
Buying Mortgage Protection, Income Protection, Payment Protection Insurance
1. Why take out this cover?
State benefits are pitiful compared to the real cost of living for the average family or young couple living in the UK today. Just because you are unable to work does not mean your financial commitments are put on hold, typically mortgage, personal loan and credit card repayments will rapidly turn into red demands and place your credit worthiness at risk. This is one of the greatest concerns in the post credit crunch era. Trying to secure a re-mortgage deal with an impaired credit history is becoming a major challenge.
Recently the Government announced changes to Income Support Mortgage Interest (ISMI) - benefits would meet mortgage interest payments after 13 weeks of unemployment. Disregarding any issues created by second charge mortgages, this measure may allow many families to keep a roof over their head. However there is no such thing as a payment holiday for all those other expenses such as council tax, utility bills, loan repayments, food bills etc that cannot be avoided.
ISMI appears to be a safety net to endeavour to keep a customer in their house rather than losing it - a last resort. Mortgage Payment Protection Insurance does far more to protect a customer's financial standing by maintaining their mortgage repayments and associated costs - a first resort.
Key things to bear in mind when considering ISMI and how it might affect you decide the cover you need in the event of being off work in respect of Accident, Sickness or Unemployment.
- ISMI is means tested - there is no guarantee it will be paid
- Means testing is based on circumstances at point of claiming, which would take into account factors such as partner's income and savings
- ISMI would ordinarily only have parallels to the Unemployment element of MPPI but not the Accident & Sickness
- ISMI pays interest only - it is not at the customer's rate of interest, it is based on a Government rate. For customers on fixed rate mortgages, this could be considerably lower than their actual repayment
- ISMI is capped at £175,000 interest
- ISMI doesn't cater for further advances not for renovation (e.g. debt consolidation is not included)
- ISMI doesn't pay until after week 13
- ISMI isn't payable for those aged 60+
- ISMI doesn't include additional costs such as home or life insurance
- ISMI provides no "back to work" assistance which is common in Mortgage Payment Protection Insurance
2. When to apply for Income Protection or Mortgage Protection Insurance
Are you in full time employment where there are no issues with historic job cuts or impending redundancies at the moment? This is the ideal time to buy this cover. You will then have the security of knowing you can call upon this insurance if things change for the worse. If your employer has made an announcement regarding job cuts or imposed wage freezes, you are probably too late to buy unemployment cover.
If you already have this insurance, perhaps just covering your mortgage payments or a single loan, you should check what you are paying at present. Consider switching to an on-line provider as you are almost guaranteed to make a significant saving AND improve the total benefits payable. The high street names have a reputation for offering this cover at sky high premiums. You owe it to yourself to compare prices and take advantage of the stand alone premium rates that can be 30% of what you are paying at present.
3. Know what is available to you and what you should buy to meet your needs
Mortgage Payment Protection Insurance (MPPI) is designed to cover the amount you pay for your mortgage each month. You can usually top up the amount by up to 25% more to contribute toward other household expenses. Premiums are very competitive and this probably represents just about the minimum amount level of protection for a couple/family if one wage earner is unable to work. It will meet most commitments in the short term, however almost certainly after a few months the average family will need to have some savings they can dip into.
Income Protection Insurance (often called Lifestyle Protection) is very similar to MPPI however the approach is essentially different. The cover offered to you is to replace the bulk of your post tax income if you are unable to work. When calculating the benefit you need you can take into account all of your significant outgoings. You are not limited to your mortgage repayments. As with all providers there are limits. For example iprotectinsurance restrict the maximum monthly benefit to £1500 or 65% of GROSS monthly salary whichever is the lesser. It should still be more than sufficient to meet the needs of the majority of people who do not want to fall back upon savings, go into serious debt or make major sacrifices in terms of their lifestyle.
Critical Illness or long term Income Protection Insurance - there are different sorts of Income Protection policies, iprotectinsurance for example sell what are called short term policies that pay for up to a year for any one claim. These are low cost and easy to buy. They should not be confused with Critical Illness policies or other long term Income Protection policies that are usually sold by Life Insurance companies and require long forms to be completed with medical evidence. With individual underwriting and a commitment up to retirement age, these are understandably far more expensive. These are mainly bought by those who fear long term disablement, rather than to people with immediate concerns of being off work for up to a year due to accident, sickness or unemployment.
Payment Protection Insurance (PPI) - none of the above should be confused with Payment Protection Insurance that is often sold alongside loans or linked to credit card debt. Payment Protection has gained a very bad reputation for offering poor value for money and many High Street names and suppliers have been vigorously dealt with by the FSA and Competition Commission. Due to the adverse publicity this has created, many people are finally realising they are paying far too much for this cover each month and are replacing it with Income / Lifestyle Protection insurance at a fraction of the cost.
4. Calculate how much cover you need
Here is an example of Mortgage Payment Protection it is a very simple calculation:
Average monthly cost of mortgage repayments: £700 plus (up to max) 25% for additional expenses : £175 = £875 benefit required.
Is this enough to meet your needs? If not consider an Income Protection Policy like i:protect Lifestyle
Here is an example of how to calculate an i:protect Lifestyle/Income Protection monthly outlay/benefit required
Assumes insurance is sought by an individual with a typical annual wage of £35,000.
- £500 Mortgage or rent
- £ 200 Home improvement/car loan
- £400 Food, utility bills and fuel
- £150 Essential insurances/council tax
- £150 Credit card minimum repayment
Total £1400
These examples also illustrate to greater scope for Lifestyle Protection / Income Protection to cover far more than mortgage related expenses
5. What do you want to be covered for?
In this respect, Mortgage payment protection and Lifestyle / Income Protection are just the same. You will find this to be the case with the large majority of policies on the market. They offer cover for Accident and Sickness or Accident Sickness and Unemployment. Most people will only be interested in Unemployment cover in the mistaken belief Accident and Sickness will not be an issue for them. It may come as some surprise that iprotectinsurance for example paid more claims for people off work due to Accident and Sickness in 2008 than for Unemployment. It should be remembered that a person who is fit and well can start looking for work immediately. Someone who is ill may have nowhere else to turn when their company sick pay scheme runs out as they cannot earn again until they are well. By 2009 the balance had changed and more people claimed for unemployment. However the level of Accident and Sickness related claims remained unchanged and generally speaking it is more likely for someone to be unable to work for over a year for medical reasons than due to unemployment.
Always look for policies that will cover you for back related injuries and nervous disorders/stress. Some older policies will exclude one or both of these. It is recommended you replace these with a modern policy where the cover was written with treating customers fairly in mind. Nervous disorders and back injury accounts for approximately half of the accident and sickness claims submitted to iprotectinsurance for example. Bear this in mind when comparing policies and considering your needs. Please note that certain limitations may be imposed by providers such as requests for medical evidence before they will make payments for back related or nervous disorders. It is well worth a read through the Key Facts or Policy Wording when comparing insurers.
6. How long could you afford to wait before you need to claim under your policy?
The longer the excess period, (that is the time you wait before the policy benefits are paid), the cheaper the policy will be. Some insurers refer to this as the deferment period. The flexibility of the insurance products you consider is very important as only you will know when your policy needs to pay out.
This will depend upon your current contract of employment and any company benefits you enjoy, particularly the generosity of the sick pay scheme that may allow up to 6 months off work at full or half pay. Therefore anyone with this level of benefit may wish to take an excess of at least 90 days in respect of accident or sickness. Conversely, you may only be entitled to statutory redundancy benefits, in which case you may feel only a 30 day excess would be sustainable before benefits commence for unemployment.
Most policies have excess periods that are the same for Accident and Sickness as well as Unemployment. As you would expect from a guide provided by iprotectinsurance, we would want to draw to your attention to both our Mortgage and Lifestyle (Income) Protection policies having independent excess periods for Accident / Sickness and Unemployment.
7. Best Prices
The best rates are available on line where Protection Insurance can be bought without supporting the cost of providing a telephone sales, broking or advice service to customers. Not paying for the services of an intermediary or commission to a High Street Bank will produce the biggest savings. Anyone who already holds a monthly paid Payment Protection Insurance, perhaps linked to a personal loan, will almost certainly find they can make a significant saving by cancelling this and buying the same level of protection on-line.
However a word of caution, in the current economic climate NEVER cancel an existing Mortgage or Income Protection policy until you are accepted in writing for a replacement or alternative policy. This is because policy underwriters have significantly changed their acceptance criteria as the UK economy has moved into recession. For example, at this time, the majority of people in Financial Services and in the Building Industry are not accepted for unemployment benefits. This was not the case prior to 2007.
Moneysupermarket are a good source of comparison quotes however always read the cover offered very carefully. Some policies look very cheap, but are often restricted. For example, not all are 12 months benefit. All providers vary in terms of the individuals who they will cover (acceptance criteria). Ultimately price comparison sites compare price, they are not always the best measure of quality. Because only the lowest priced products feature, there is a tendency for providers not to put all of their product range on the Price Comparison websites. It pays to shop around and to be prepared to compare the small print.
A favourite for consumers looking for forthright advice regarding how to get good value is MoneySavingExpert.co.uk. They have a specific section on buying Mortgage Payment Protection Insurance (MPPI) that is well worth reading. They offer shortcuts to several lost cost providers.
As a final source of comparison information, try the FSA website. They are entirely independent and not trying to sell you anything. Their tables also include quality measures. As a result, these tables are not necessarily easy to use, however they represent a good place to research a shortlist of suppliers who may meet your needs. A link to the FSA is provided from the iprotectinsurance home page.
8. What happens if your application is not accepted when you apply on-line or you prefer to speak to someone to get advice?
Applying for Income Protection, Mortgage Protection or Payment Protection Insurance on-line is a great way to save money. However it is not for everyone. For example, iprotectinsurance have found that the majority of applications are accepted automatically, however occasionally applicants are asked for further information before the underwriter will accept/approve an offer of cover.
Unlike some providers, iprotectinsurance underwrite business at inception. This means endeavouring to do all that is humanly possible to ensure anyone who takes out a policy will be able to claim on it. If iprotectinsurance reject an application, it does not mean that, say, a Mortgage Protection Policy would not be offered elsewhere. The acceptance criteria of different underwriters varies.
If applying on-line does not work out for you, it may simply mean that you are one of the many people in circumstances where they really need advice on what to buy. This is where the specialist broker or Independent Financial Adviser can add value to their clients. Ultimately this advice will be reflected in the price of the product or their charges. The restrictions necessitated by an on-line application process are appreciated. For example, iprotectinsurance now provide their customers with a bespoke service through a link to a trusted specialist broker who is authorised by the FSA to give advice. Their advisor will assess your needs and entirely free of charge, provide a no obligation quotation.
9. If your circumstances change
You might get another job, it may offer better benefits for sick pay but, as a new starter, you will not qualify for redundancy terms. In this situation you will want to tailor your policy to your needs by, for example, having an increased excess for accident and sickness benefits and have back-to-day-one cover for your unemployment benefits. Also, it is ESSENTIAL to tell your Protection Insurance provider if you change your job so they understand your situation. There is every possibility you could save some premium if better employment terms enable you to increase the excess period on your policy
At iprotectinsurance for example customers are encouraged to keep in touch and to email or ring to keep their policy up to date.
10. The assurance of dealing with a Bona fide supplier and underwriter
Look for providers registered with the FSA, this means they are regulated, closely monitored and the underwriters must meet strict rules concerning their solvency to be allowed to trade in the United Kingdom. Regulation is thorough and the FSA can impose huge fines or simply close a provider down who does not comply with the standards they have laid down. So FSA registration is important.
A note regarding your free download
We hope you have found Top Ten Tips for Protection Insurance useful. We seek to revise and constantly improve the scope and content of the information we provide to customers and potential customers of iprotectinsurance. Therefore we would like to encourage you and other readers to ask questions and feedback on any aspect of our Buyers Guide, Top Ten Tips etc - please use our website and select the 'contact us' option. We believe in acting upon customer led improvement.
Please bear in mind one very important point, iprotectinsurance is authorised to provide insurance by the FSA however we are not authorised to offer advice to individuals in respect of their individual insurance needs. We cannot offer what is called an 'advised sale' this is where specialist brokers and IFA's can assist you.
We do however hope to provide potential purchasers, through our website, a wealth of general information, including links to other relevant resources. These should enable you to make up your own mind. Treating customers fairly is a core value of iprotectinsurance and therefore we have only used examples which relate to this company and have avoided comparison with others with the intention of being as objective as possible.
Dennis Haggerty FCII M IDM
Marketing Manager iprotectinsurance
Wessex Group
Winchester
Hants SO23 8RZ.
Top 10 Tips.doc version 2 16.12.08 revised 24 August 2009
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Articles published by i:protect
Fear of Spiraling Claims For Unemployment Scares Insurers Into Demanding Record Premium Hikes
Published November 2009
The much talked about green shoots of recovery have made precious little difference to the number of people looking for work in the UK. In fact the jobless total has increased. Financial commentators tell us that unemployment lags behind growth for some 12 to 18 months, so it seems at least 2.5 million of us will still be looking for work until the spring of 2011. By then we can only hope that new jobs will start to exceed those being lost.
Following the last recession in the early 1990's, the number of unemployed increased steeply in 1991 and remained consistently high until 1993. It then gradually declined until 1997 when finally returning to pre-recession levels. There is every reason to expect this pattern to be repeated once more. This is certainly the financial analysis being factored into the planning of leading UK protection insurance providers.
Underwriters are still counting the frightening cost of unemployment claims they have paid so far this year. These have leapt up. This is not just because their results are affected by the sheer number of people claiming. In fact it is the cost of individual claims that have rocketed as well, because once out of work, people take much longer to get another job. No surprise given the huge number of applicants chasing every vacancy. The Marketing Manager of a leading provider confided "We are paying five times more claims than we did this time last year and these numbers are set to continue for some time to come."
Insurers are now looking to charge the premium they need to continue paying this level of claims. There is further worry for consumers, due to the dire warnings about job prospects, some underwriters may decide to pull out of the market entirely. Potentially this could mean those remaining pile on yet more increases.
For the average family, unless they are one of the small percentage with substantial savings they can call upon, this type of insurance is no longer a luxury. Income or Lifestyle Protection insurance as it is often called, will pay them enough to meet their essential bills each month for up to a year. It can be bought from Banks and Building Societies, or much cheaper from specialist providers, particularly on-line. For anyone hesitating, it would be better to buy this cover now than face the prospect of paying much more, or even not being able to buy it at all.
To find out more search 'Lifestyle Protection Insurance' on-line or, try the leading consumer websites for money saving expertise and recommendations for buying Mortgage Payment Protection Insurance. Not all price comparison websites support these policies, however the largest feature 'Payment Protection' or 'Mortgage Insurance' and are very useful for checking prices.
Finally, with such premium volatility, expect major increases from January 2010 when insurers calculate their losses for 2009 and seek to rebuild their profit margins. If offered a fixed rate for a year, take it, this cover will not get any cheaper for at least the next two years or possibly more.
Government Employees are Next in the Firing Line
Summary
A huge number of Government, Local Authority and Public Service employees will very soon join the thousands of people already denied access to Income Protection and Mortgage Protection Insurance. Their jobs will be at risk due to deep and inevitable cuts in public expenditure forced on the next Goverment that will be struggling to recover from record national debt. Whilst the window of opportunity is still open, now is the time for anyone employed in the Public Sector to secure this cover.
Article dated 8 June 2009
Efficiency savings, cutting back of bureaucracy and reform of public services are just some of the phrases used by politicians to avoid actually spelling out the truth about jobs. A huge number of Government Employees are about to discover that they will very soon join the thousands of people in the building industry and financial services who were denied access to Income protection and Mortgage Protection Insurance because their jobs are at risk. Those people in building related industries, everyone from ground workers to estate agents, lucky enough to have secured income protection insurance before the bubble burst, are insulated from the financial consequences of widespread redundancies. Many of their friends and colleagues, who never bought this cover in time, are now worried sick about paying their bills.
The downturn for the private sector continues with over 2000 redundancies announced every week. Financial services, big ticket retailers, motor and engineering industries continue to suffer. However the cold wind of secession has yet to be felt by Civil Servants, Town Hall employees and anyone in public services. The Government may say they are waiting to see some green shoots of recovery before tackling the alarming budget deficit. More cynical observers may suggest it is the last throw of the dice that might keep a few more Labour MP's in their jobs after the next election. Either way, irrespective of the political hue of the next Government, 2010 will see an unprecedented cut back in public expenditure. It should be remembered that even the Thatcher Government only managed to slow down the rate of public expenditure. Whoever wins the next election will have to achieve an absolute reduction in real terms to tackle the enormous budget deficit - its going to be bloody.
Unlike those in the private sector, who just may begin to see some light at the end of the tunnel by 2010/11, for the public sector, that light is a fast approaching train. The gloves will be off politically with the next Government demonstrating it will balance the books before they are shredded by the international exchange traders or brought to book by IMF. The fact remains, with a combination of record borrowing and far less tax revenue from the battered private sector, there is no alternative.
For a long serving civil servant or town hall employee, the consequences of suddenly losing what was thought to be a job for life, will come as a terrible shock. When savings run out, bills turn red, letters get nasty and in as little as 16 weeks, mortgage companies can take repossession. The huge majority will incur £1000's in debt for deferred mortgage interest to hang on to their home. This could take a lifetime to repay and is no joke.
Income Protection Insurance is available as an alternative to anyone who does not have ready savings to keep paying the bills when they are looking for work. This cover will usually include a back to work service from re-employment experts. At least this cover can still be secured by people in steady work and not yet under threat of redundancy. For those in the public sector there remains a window of opportunity to buy this cover. The underwriters will close this as soon as Government plans become clear. The financial impact of not being able to get another job for months is something most people under 40 have never experienced in their working lives.
The more fortunate with safe jobs may be thinking they have no need for this cover. The greatest issue for so many employees these days concerns knowing if their job is truly safe. It is fair to say that anyone with the equivalent of six months wages in ready savings might consider the risk worth taking. After all, no one wants to pay for insurance they could survive without. However, the majority of low paid people in public services have nothing like this to fall back on. For those who qualify for this insurance, it is something to consider buying right now.
Some of the best income protection insurance deals are on-line. Money Supermarket and recommendations from consumer websites such as Money Saving Expert are a great place to start any investigation. Income Protection Insurance and Payment Protection Insurance are fundamentally the same. They cover the individual for up to 50% or more of their gross monthly salary that will be paid for up to a year to any individual who is unable to work due to accident, sickness or unemployment. Most importantly, it would pay enough for a family to get by financially. It is not subject to tax and does not preclude them from claiming for state benefits.
Dennis Haggerty the Marketing Manager of on-line specialist provider commented "By shopping around, it is still possible for the majority of working people to buy this insurance for under £10 a week paying £1000 benefit per month for time off work due to accident sickness and unemployment. This premium drops to just £7 per week for the under 25's"
From the senior managers in Whitehall down to the mostly unseen millions employed by local authorities and in the public services, the one thing they can guarantee is that jobs will disappear. To protect their families, or simply to cover substantial debt repayments, paying £10 per week for Income Protection Insurance may be well worth the peace of mind in these troubled times.
Link to ezine article: Government Employees are Next in the Firing Line
Income Protection Insurance - Have you left it too late?
"You have left it too late." Thousands of people are hearing this every day and experiencing that sinking feeling when they realise something once so freely available, is now denied to them. People without savings or perhaps with less than 2 months wages in the bank (that's the majority of people of working age) were able to buy Income Protection insurance very easily. This insurance policy provides a financial lifeline for them and their families if their income is interrupted by Unemployment, Accident or Sickness.
Its seems almost overnight that people who were considered the best clients of insurance providers, typically banking and financial services, are now struggling to find cover. They have joined people in the building trades and estate agents who were in the first wave of occupations to fall victim of the credit crunch. We are now seeing the impact of the wider recession.
Take cover
For families and individuals with minimal savings, it will be vitally important for them to move quickly before their sector is the next to suffer the same fate. For many it is only a matter of time before either Mortgage Payment Protection Insurance or Income Protection Insurance is denied to them as well.
One in ten jobs in the UK rely on the retail. It does not take a genius to calculate that the retail sector will see significant contraction and job losses, particularly those handling big ticket items or discretionary purchases. Think in terms of the bad news already filtering through about a down turn in car sales, kitchens, and furniture. After all, most people can put off big purchases, especially as the property development frenzy of recent years peters out.
Engineering is another where shrinking order books see managers beginning to check their company redundancy terms. This may prove to be a precursor to one of many 'difficult conversations' with employees. Indeed, they may find they are soon to join their fellow ex-employees looking for alternative work.
For the majority of people in Britain, money for savings simply does not exist. Up until now this has not been a problem as jobs were plentiful. Unless signed off from work on a long term basis following an accident or due to sickness, being out of work was very temporary indeed. How long can people expect to be out of work as Britain falls into recession? Though everyone will have a different experience, any job search is guaranteed to be much harder than it was last year.
6 months to get another job
In the spring of 2008 a specialist consultant working with ManPower, who asked not to be named, was advising his white collar clients they should think in terms of 2 - 3 months between jobs. He is now saying think six months or more and this will just be for temporary contracts. The Telegraph (10.10.08) were reporting a contraction in full time posts in the UK with the number of temporary vacancies still holding up. The selection and interview process for any job is far more intense and time consuming than in the past. One thing is for sure, it is not going to get easier and the competition for the few full time jobs available will be very tough.
Financial meltdown can be avoided
Check out the Web to search on Income Protection or Lifestyle Protection (very popular alternative name that used by the Post Office for example). Money Supermarket has a buyer's guide and price comparison. People who try on-line quotations and find they have issues with acceptance criteria due to their occupation may need to approach a specialist broker instead.
Just don't leave it too late and be forced to join the increasing numbers facing financial melt down who have nothing to fall back if their wages stop rolling in.
Got Recession Depression? Cheer up by Protecting Yourself from Redundancy Worries - click here to read
Added 24 January 2009
Summary
Fear redundancy in recession, but can't afford to save for a rainy day fund? Help banish recession depression with low cost Lifestyle Protection Insurance. Find out how to get £1000 per month tax free for premiums as low as £10 per month.
"Woe, woe and thrice woe" the catch phrase from the much loved TV show Up Pompeii with the character Lurcio played by the late and great, if a tad dubious, British comedian Frankie Howerd. For the kids watching his show back in the 70's, it all sounds so familiar when they turn on their TV today. Except rather than a repeat of Up Pompeii, it's the news and current affairs programmes that start with almost the same opening lines.
After a while we give up on this gloom and doom to watch something else. However there is only so much Big Brother and Police Camera Action any one person can take. Just ignoring a problem does nothing to help the onset of 'recession depression,' its time to take back control. To start feeling good about ourselves in broken Britain it is all about being prepared should the worst happen. It is time to think about cash flow. For example, it is a foolish man who piles all his surplus income from falling interest rates into just paying down his mortgage. Seems a great idea to reduce debt, however, if he was made redundant in 3 months time, the bulk of the mortgage repayments would still be there and so would all those other bills.
Smart people think about building up a cash nest egg - equivalent to 6 months salary is the minimum these days. Unfortunately, just as many know they are already stretched and saving is simply out of the question. There is an alternative, think about taking out an Income Protection or Lifestyle Protection Insurance. These are not expensive, especially if bought on line from an independent provider. What's more, they pay out for up to a year if the insured person is unable to work due to accident, sickness or unemployment.
Unlike car insurance, younger people get the cheapest Lifestyle Protection rates. For £30 to £40 a month benefits of over £1000 a month are available tax free for a year. These policies also include services to help people get back into work. Having someone help with a CV or interview techniques can make all the difference with competition for jobs now so tough. It is much easier to find £30 a month premium than it is to save up £1000 each month to put in a rainy day fund. People who take out this cover know their job is safe enough at the moment, but have no idea what might be coming around the corner.
To find out about this insurance and to compare products from the many
providers visit www.fsa.gov.uk/tables/bespoke/PPI and www.moneymadeclear.fsa.gov.uk. Also, try some quotes on-line to get a feel for the market. For example iprotectinsurance.co.uk with their Lifestyle Protection policy can cover a 30 year old for over £1000 per month cover with premiums starting at under £10 per month. Being made redundant and suddenly finding no money coming in, is never going to be a good experience. Nevertheless, knowing all the bills will be paid for up to a year before salary from a new company rolls in, certainly helps to banish recession depression. I am feeling more cheerful already.
Click here to see what i:protects product range could do for you...