Unemployment Cover the right way

While unemployment cover isn’t suitable for everyone, for those who do qualify and purchase a product it can mean the difference between struggling to find the money each month for your essential outgoings if you lost your income and knowing that if you came out of work, you would receive an income from your unemployment cover.

When unemployment cover is bought correctly and care has been taken to ensure that you fit the criteria outlined in a policy, it can be a very valuable product if through accident, sickness or unemployment you were to lose your monthly income. A good quality unemployment cover product should start to pay out from the 31st day you have been out of work and would give you a tax free income to ensure that you wouldn’t be left struggling to meet your financial commitments each month. The majority of providers offer policies which pay out for up to 12 months and in some cases a provider will offer a policy that lasts for up to 24 months.

Unemployment coveris divided into three different main types of policy; these are loan payment protection, mortgage payment protection and income protection insurance. All policies can be taken out to just safeguard against the possibility that due to unforeseen circumstances you should become unemployed, through such as being made redundant, or they can be taken out to include being out of work due to an accident or sickness.

While unemployment cover can be a great product it has to be understood in order to make sure that you would be able to claim on your policy, there are exclusions within all policies that mean you might not be eligible to claim, some of the most common include being retired, only working part time and claiming for an illness that was ongoing at the time you took out the policy. High street lenders are very reluctant when it comes to giving out information and policies have been sold by them which couldn’t possibly be claimed on due to the exclusions.

This led to a huge investigation into the sector and products by the Financial Services Authority (FSA) after a Super Complaint to the Office of Fair Trading (OFT) by the Citizens Advice. The Financial Services Authority fined many high street names for mis-selling the unemployment cover protection. The OFT recently referred the sector to the Competition Commission who is conducting an in-depth inquiry into the sector of which should be completed by February 2009.

There are some issues that need addressing in the unemployment insurance sector but unemployment cover is still a valuable product to have when purchased correctly. For the best advice and information regarding unemployment insurance look around and get several quotes from standalone providers for the cover and don’t be tempted to take the cover that is offered alongside loans, credit cards and mortgages. Taking the cover offered by the high street lender often means you won’t get the information needed to make an informed decision regarding the product and you will pay more for the insurance quote than you would have if you had gone a standalone specialist.