What is unemployment insurance?
Unemployment insurance is a form of income protection that pays out if you become unable to work. This type of policy is often bundled with accident and sickness insurance.
Frequently asked questions
Why get unemployment insurance?
It’s important to think about how you’d manage if you or your partner lost your jobs, especially if you’re paying a mortgage, loan or other debts, or have children to support.
Research shows that a quarter of Britons don’t have any savings – and even if you do have money set aside, you could find it disappears quickly when it’s being used to pay for your monthly outgoings, food shopping and transport costs.
That’s why some people choose to buy unemployment insurance.
How does unemployment insurance work?
If you’ve bought an unemployment insurance policy and you lose your job, you’ll be paid a tax-free monthly income, which starts after you’ve been off work for 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, but make sure you could manage before your payouts kicked in.
You won’t be able to claim on your policy as soon as you take it out. There will be an exclusion period of between one and six months. This is likely to be longer with unemployment insurance than with sickness or accident cover, as insurance providers don’t want people to take out policies when they know they’re going to be made redundant.
What do I need to think about when comparing unemployment insurance?
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 need to cover:
- your mortgage
- loan or debt repayments
- your wages
If you work for an employer, you may already have some cover against accidents and illness. You should look into what you’d be due if you were made redundant, so that you know roughly how long you could last before needing 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.
Do I need life insurance too?
Many people who 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.
How can I compare unemployment insurance?
It’s easy with our comparison service. Just fill in a few details about yourself and whether you’re interested in covering your mortgage or your income. We’ll then list your quotes in price order, with the cheapest at the top. Don’t just look at price though – it’s important you get the level of cover you need at a price you can afford.