Compare unemployment insurance
Due to the current unfortunate circumstances in the market, there is a level of uncertainty among some of our insurance providers. Therefore regretfully at this moment in time we cannot provide you with a comprehensive panel of insurers for a comparison, however please do check back at a later date.
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.
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 that 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. If you choose a longer waiting period, make sure you can manage while you wait for your payouts to kick in.
You won’t be able to claim on your policy as soon as you take it out. There’ll be an exclusion period, which is normally between 90 and 120 days. This protects the insurance provider from people taking out policies when they know they’re going to be made redundant.
Why get unemployment insurance?
It’s important to think about how you’d manage if you or your partner lost your job, especially if you’re paying a mortgage, loan or other debts, or have children to support.
Even if you 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.
Frequently asked questions
What types of unemployment cover are there?
Unemployment insurance policies can vary a lot in terms of the benefits and protection they offer, as well as how much they pay out, so it’s worth shopping around to find cover that fits your circumstances. Broadly speaking, you can choose between policies that offer fixed premiums and payouts, and others that increase with time, as your salary might.
- With level cover, the premiums you pay and any pay out you receive are fixed for the term of your policy.
- With inflation cover or index-linked cover, your premiums and pay out amount will go up each year – in line with inflation or according to a measure of inflation, such as the Consumer Price Index (CPI) or Retail Price Index (RPI).
- With a guaranteed premium, the premium you pay is fixed for the term of your policy – although if you have inflation-linked cover, your premium will still increase each year in line with inflation.
- With a renewable premium policy, you’ll be able to review and adjust the premium and pay out amount after a fixed period of time.
Unemployment policies usually pay out for 12 months per claim, although some insurance providers will offer 18 or 24 months. If you’re incorporating accident and sickness cover as well, it will usually pay out for the same period.
The length of cover you choose is entirely up to you. You can opt for long-term cover that lasts until you return to work or retire, or a cheaper short-term policy that will pay out for a limited time, usually 12 or 24 months.
If your employer offers some long-term sickness pay, you could consider a separate accident and sickness policy as you can opt for long-term cover that lasts until you return to work or retire.
How do payouts work?
After the deferred period specified in your policy, your insurance provider should credit you for any income missed during this period. From then on, you’ll receive monthly tax-free payouts.
The monthly payouts are normally an agreed percentage of your income - often between 50% and 70% of your monthly salary.
Alternatively, insurance providers may pay out a certain percentage on part of your income and a different percentage on the rest.
Am I eligible for unemployment insurance?
You can buy unemployment insurance if you’re either full-time employed or you work part-time for at least 16 hours a week.
You can also buy unemployment insurance if you’re self-employed, but the circumstances in which you can claim are quite different from those of employees. It’s worth speaking to an adviser if you’re self-employed and considering unemployment insurance.
Are there any exclusions I should look out for?
Unemployment cover usually stipulates an exclusion period from the date you first take out your policy, during which time you won’t be able to make a claim. This is to stop people taking out a policy if they find out they’re likely to be made redundant soon. The length of the exclusion period varies from policy to policy but is typically between 90 and 120 days.
Unemployment insurance doesn’t cover you if you quit your job or get fired due to misconduct, fraud or dishonesty. You also won’t be able to claim if you accept a voluntary redundancy package.
If you’re thinking of buying accident, sickness and unemployment cover, it’s worth checking if it will cover you for any pre-existing medical conditions. Some policies might not. To that end, it’s also important to be completely honest when taking out cover. Insurance providers are unlikely to pay out if they believe you withheld or falsified information when taking out your policy.
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 think about the level of cover you’d require. Consider whether you need to protect:
- your mortgage
- loan or debt repayments
- your wages.
If you’re an employee, your employer may already provide some cover against accidents and illness. Find out what you’d receive if you were to be made redundant, so 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 could be 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.
Price is a big consideration, but it’s important to make sure you get the level of cover you need too. By comparing a range of quotes, you’ll find the protection that’s right for you at a price that works with your budget.
What do I need to get a quote?
When you start an unemployment insurance quote with us, try to have the following information to hand so we can match the right deals to your circumstances:
- details of your income
- details of your current employment
- the length of cover needed
- details of what you would like to cover, ie your mortgage payments, bills etc.
Life insurance expert
“Many of us don’t have the luxury of a financial cushion to fall back on if we find ourselves unable to work. With unemployment insurance, you can get a monthly income to help you pay the bills if you lose your job - to keep you, and your family, on your feet.”
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**On average it can take less than 2 minutes to complete an Accident, Sickness and Unemployment insurance quote through Compare the Market based on data in November.
***For the period 1st September to 30th November 2020, 12,477 people responded to the recommend question. 11,706 responded with a score of 6 or above, therefore 93.8% are likely to recommend.