Redundancy insurance is a form of income insurance where, if you are redundant, a percentage of your regular income will be paid to you until the payments reach the terms of your policy or you secure another job.
Redundancy insurance differs from income protection insurance as with the latter your regular income is protected if you happen to be injured or getting sick.
Many consider that income protection insurance is more valuable, but comparing the two types of insurance is a little like comparing apples with oranges.
Similarly, each type of insurance has a definite place in the insurance industry and it is ultimately up to the potential consumer to study all types of insurance and different types of income insurance and determine which one fits best for his or her situation.
So how does Redundancy Insurance work?
This type of insurance is one of the least insured types of insurance and it is probably one of the newest offerings of insurance companies. Redundancy effectively insures a portion of your income generally 75] if you become redundant in your workplace.
Remember if you are offered a redundancy package and your package is optional, you are not entitled to claim your insurance. Also if you have been divorced from your workplace that is not classified as appeal and your policy will not pay.
How long will this type of coverage be paid after I have become redundant?
Usually, the policy pays for twelve months, but you must carefully assure your insurance company that you are actively seeking work.
You can arrange a policy that pays you up to 24 months after being redundant, but usually such a policy will be a premium and I question the value of such a policy.
You can also find that some insurance policies cover you only for 6 months and may prove more convenient because the prizes are more reasonable.
How much are premiums for this kind of insurance?
Premiums can vary greatly from insurers to insurers and it can be difficult to compare one policy to another on the price alone because no two policy measures will resemble.
But on average you can expect to pay up to $ 60 per month premium for a $ 2,000 per month benefit that is hardly cheap when comparing Redundancy Insurance with other types of insurance.
Even if you bundle income protection insurance with Redundancy Insurance, you can generally get a healthy premium tax on both types of insurance.
What about self-insurance for redundancy and income protection?
Self-insurance is a very effective redundancy strategy, which means you assign the premiums you would otherwise pay to an insurance company to a high interest rate account and if you became redundant you can use these savings as your financial pillows.
The big thing about self-assurance while redundancy is concerned is that if you never claim your self-assurance strategy you will have an extra small nas egg for retirement.
The only disadvantage of this strategy is that it takes at least 2 to 3 years to build up enough money on your self-insurance bank account to effectively cover yourself in the unfortunate case you will be redundant.
A good strategy is to take out an insurance policy for termination for 12-24 moths while you can make sure that after twelve to twenty four months you can terminate your termination insurance with the insurance company and continue with yourself insurance.
Surprisingly, the Self-Insurance Strategy is less worthwhile if you only need insect protection or income protection along with termination, but self-insurance for both types of insurance should be a good consideration for anyone looking at these types of insurance coverage.
In all, it is about each person and the individual circumstances of the type of insurance that best suits your specific situation and what represents the insurance value for you.
What matters most is that you know exactly what the terms of your future insurance policy and how much you actually pay for your protection and all possible options available.