Is redundancy cover right for you?

As the name suggests, redundancy cover is a protection product that will pay you a tax free monthly income if you were to lose your job due to involuntary unemployment, up to an agreed period of time and up to set financial limits. It may also be known as unemployment insurance or may form part of a payment protection insurance policy.

But as an employee do you need this cover?

If you are concerned about the stability of your job, you may want to consider protecting your income. There is no certainty in life, so the most you can do is prepare for the possibilities.

In order to make a claim, most providers require you to be employed for at least six months and if you were made redundant, typically you can only claim after a period of 30 to 90 days of continuous unemployment.

Once you take note of all the terms of the policy, you should be a position to make an informed decision on whether or not the policy is right for you.

Before taking you your policy, consider the following:

• the benefit payment will typically last for a period of 12 to 24 months depending on the provider or until you get back to work, if that is sooner;
• most providers have exclusions regarding existing medical conditions and employment circumstances that you should take note of;
• the unemployment insurance policy may typically pay a pre determined percentage of your salaried income and not the full amount. When choosing your benefit level, make sure you will able to meet your financial commitments with the payment;
• redundancy cover seems to be more necessary today than in the past years and this need stems from the volatile economy.

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