Can you insure against the loss of a job?

With the prospect of an increase in unemployment as a result of the COVID-19 outbreak, you may be wondering how insurance can protect you from loss of income.

So, can you insure against the loss of a job? The answer is broadly yes, but there are caveats to keep in mind.

Redundancy cover

For anyone with a mortgage or other substantial financial commitments, the prospect of being made redundant can be unsettling to say the least. If that happens and you have redundancy cover in place, you’re likely to be entitled to receive a monthly sum for a set period of time.

Redundancy cover is often an add-on to other personal risk protection and pays out a similar amount to income protection, after a short stand-down and for a more limited period – usually a maximum of six months.

As always, it’s important to understand the fine print, and what your redundancy insurance policy does and does not cover. There may also be tight terms and conditions that have to be met to make a claim, so it’s important to get advice – we’re here to help.

However, if you’re considering taking out redundancy cover to protect you from the loss of your job in the foreseeable future, keep in mind that COVID19-related redundancy may now be excluded, or redundancy cover might not be available from all providers. Generally speaking, insurance is designed to protect you against the risks you cannot see coming, rather than those that are existing and widely known.

What about income protection?

The latest wave of uncertainty has seen many New Zealanders enquire about income or mortgage protection insurance. While these are powerful protection tools, keep in mind that they only pay out if you’re off work due to serious illness or injuries – not for redundancy, self-isolation or business interruption reasons.

As Insurance Ombudsman Karen Stevens recently pointed out, it’s important that you understand what you are and are not covered for. So please don’t hesitate to get in contact with us: we can help you take stock of what protection you have in place, and assess whether your insurance needs have changed.

We’re one phone call away

Like to discuss your options? We’re here to help you feel a bit less nervous about the future. Whether it’s redundancy cover or something else, we can talk to you about how insurance can provide a safety net for you and your family.