Unemployment insurance

All You Need To Know About Unemployment Insurance

It’s estimated that one in three Britons could not afford to pay their rent or mortgage for longer than a month  if they lost their job tomorrow and nearly 4 million people are one paycheque away from homelessness. They simply do not have enough money in their current or savings account to get by. On top of that, many more would struggle to keep up payments on their carscredit cards and personal loans if they didn’t get a new job immediately. So will could unemployment insurance really provide a lifeline should your circumstances suddenly change ? We look at the options. 

You’re probably here because you’ve been wondering how you might manage if you or your partner were unable to work for a while. It’s an important thing to think about, especially if you’re paying a mortgage, loan or other debts, or have children to support.

Even if you have some savings set aside, you could find that these disappear quite quickly once they are being used to pay for your monthly outgoings, food shopping and transport costs.

That’s why some people choose to buy unemployment insurance, or an extended version of this called accident, sickness and unemployment cover. It’s not be confused with health insurance, which covers the cost of private medical care.

How unemployment insurance protects you

Here’s how it works. If you have bought an unemployment insurance policy and you lose your job, you will be paid a tax-free monthly income, which starts after a pre-agreed waiting period. This is sometimes called the deferred period. The longer this period is, the lower your premium, so it’s worth looking at a couple of options.

If you have chosen accident, sickness and unemployment cover, you are likely to have higher monthly payments, but you will receive a payout not only for unemployment, but if you have an accident or an illness that means you are unable to work for a certain period of time. Again there is a waiting period with this policy.

If you’re thinking about buying this kind of policy, you’ll need to look at the level of cover you would need. Consider whether you only need to cover your mortgage, loan or debt repayments or whether you might need to cover your wages as well.

If you work for an employer, you may already have some cover against accidents and illness. You could look into what you would be due if you were made redundant, so that you know roughly how long you could last before you would need some financial help. If you’re self-employed you won’t have back-up from your employer, so this kind of policy might be very important for you.

Comparing cover

The good news is that it’s easy to compare the different levels of cover and the prices with comparethemarket.com. Just start a quote by filling in your details and the kind of cover you are interested in. We will ask whether you specifically want to cover yourself for loan repayments, a mortgage, your rent or your overall income.

You then put in the details of the loan or income, and choose which type of insurance you want to compare. You’ll then see a page listing all the quotes in price order, with the cheapest at the top. There are also different tabs you can select to view the different kinds of cover and how much they would cost.

Make sure you look at all the details of the policy, not just the price, as they will be slightly different in what they do and don’t cover, the waiting period and other features. You can also call to speak to an expert if you have any queries.

Once you have chosen the right cover for you, click to go to the insurer’s website and buy the policy. Again make sure you read all the details.

Do you need life insurance too?

Many people that buy unemployment insurance also buy life insurance. This product is designed to provide a large sum of money to your partner and/or children if you were to die. A lot of people buy life cover to provide enough money to pay off the mortgage, so that their family won’t have the worry of paying for their home when they aren’t around. The funds could also be used for funeral costs, debts or support in some other way.

There are a few trigger points in life that might make a person think about buying a life policy. Buying a home is one of these, as could mean that your partner or family could inherit a mortgage free home.

Another is getting married or settling down with a partner. A third is starting a family. It can be a pretty important cover to have in place and could mean a great deal to the people left behind if you were to die.

Looking at life insurance options

With comparethemarket.com it’s easy to compare life insurance. It only takes an average of three minutes (we’ve timed it!) to get to a list of life insurance quotes tailored to you.

First you need to decide whether you want to look at single cover or joint life insurance. With joint cover you may pay a little more, but you will get a payout upon the death of either of the insured people on the policy. Note that when this type of policy pays out once the policy will end, so the remaining person will need a new policy.

Next you need to set a time limit on the cover – enter the number of years you want it to last. This might match up with the amount of time left on your mortgage, or when you think your children will no longer need your financial support.

Then you just need to tell us whether you have smoked or used anything containing nicotine in the last 12 months. Because of the health risks linked with smoking, insurers usually charge more for a smoker’s policy.

Next you’ll see a page with every life insurance quote from the providers that can cover you, listed in price order with the cheapest life insurance at the top. Remember, cheap life insurance isn’t necessarily the best life insurance for you, so do read the details carefully before you buy.