Income Protection Insurance Redundancy Cover – How does it Work?
It is important to have as much security and certainty in your life as possible, especially when it has to do with your financial stability and being able to meet your family’s needs. One of the forms of financial security that is available for Australians who work for a living is income protection insurance quote. When you have this type of cover, you get to receive up to 75 percent of your normal salary should you suddenly be unable to work as a result of serious injuries or illness.
Level of income protection cover
One of the most common questions for a lot of people when taking out their income protection policy is “Does income protection cover redundancy?” Learn more at SUPER SA website about Redundancy and job loss are very common and unexpected, and seriously compromise your ability to provide for your loved ones. Although income protection insurance typically covers redundancy in the U.K and U.S, this is not the case in Australia. Individuals with income protection are only covered against injury or illness that hinders them from working and earning their income.
However, there is a provision known as income protection insurance redundancy cover. With this provision, your premiums payments are waived for a given period, usually 6 months, if you become involuntarily unemployed. However, you are required to provide evidence that you are looking for alternative employment. If you have taken out a mortgage with the same provider, your mortgage repayments could be made on your behalf by the provider.
Income protection insurance redundancy cover protects you from defaulting on your credit card fees, mortgage payments and other financial obligations you may have when you become redundant. Unlike income protection benefits, redundancy cover isn’t an income. Instead, it is meant to be a method to ensure that your financial obligations are met as you look for alternative employment. Note that you can structure your redundancy cover to provide monthly payments for up to 6 months.
It is worth noting that if you have not been in a permanent position for 12 months prior to becoming unemployed, you may not receive redundancy benefits. In addition, if your unemployment occurs as a result of drug abuse, misconduct or a pre-existing medical condition or injury, the cover will not be applicable. The same applies if you are unemployed because you were working in a short-term project or business. Depending on your insurer, certain occupations are excluded from income protection insurance redundancy cover. Read: How to get the best Gap Insurance
For many people, insurance against redundancy is meant to guarantee the protection of their long-term assets. The ability to guarantee your mortgage repayment regardless of your employment status provides a lot of relief. Income protection insurance redundancy cover is especially important if you have family members who depend on your care. Australian insurers are hesitant to provide income protection against redundancy because of the amount of risk they would essentially be taking up. However, due to competition, many insurance firms offer products such as redundancy cover as an alternative. As such, you can easily find an insurance provider that includes this provision as part of their income protection policy.