Insurance Answers from Redundancy Protection

Before taking out any insurance policy you will obviously have many questions. Below we have tried to answer the questions we get asked most often. If your specific question is not answered please give us a call on 0161 368 4895 or drop us an email.

Who is redundancyprotection.co.uk?

We are a specialist comparison website providing financial products from some of the leading insurance companies.

How does Redundancy Protection get paid?

The protection insurance you purchase will not cost you any more as Redundancy Protection is paid a retainer by the insurance providers for approved insurance applications processed by this website. It is this retainer that enables Redundancy Protection to maintain this income and mortgage protection insurance comparison website and the telephone advice line, both of which we hope you and thousands of other people find useful.

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How much mortgage payment protection insurance cover do I need?

If you own your home, you should insure not only your monthly mortgage payment but also the premium for any endowment or insurance policy that supports the mortgage.
Whether you rent or own your home you could consider protecting any other regular payments you will need to keep up, eg. buildings and contents insurance, loans or HP, utility bills, credit cards and school fees.

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How does payment protection insurance work?

You pay a premium every month whilst you are working. If you become unemployed or unable to work because of redundancy, sickness or an accident and you make a successful claim and the insurers will pay you a monthly sum.

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Will I be protected as soon as the insurance policy starts?

To keep the cost of the insurance competitive insurers may not cover you in certain circumstances, so you need to check the policy.

Examples are:

. An exclusion period of up to 120days immediately after you take out the policy, during which claims for unemployment would not be met (although accident and sickness claims would be).

. A waiting period of 30 or 60 days for each claim depending on what policy you choose, during which no payments would be made.

. Excluding some pre-existing medical conditions.

. Your prior knowledge that you were going to become unemployed.

. If you have been sacked for misconduct rather than becoming redundant or unemployed through no fault of your own.

We advise that you check your policy carefully and try and keep enough money saved up to tide you over during this time.

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I am self-employed – does that matter?

You can still get mortgage or rent protection Read the policy carefully to ensure you understand when you would be able to make a claim.

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The mortgage or rent is in joint names – can protection insurance cover us both?

If only one of you is in work then there is no need to take insurance in both names. If both of you work the insurance can be split 50/50. In this situation the insurer would only pay out 50% of the amount insured if one of you became unemployed.
If one of you earns considerably more than the other it may be sensible to allocate a greater share of the insurance to that person. You need to consider the fall in total household income if either of you was out of work; ensuring that the income protection insurance provides enough for you to keep your home.

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I can’t decide what sum to insure as mortgage rates keep changing.

Mortgages, rent, council tax and insurance premiums can all increase over time. Insurers recognise that circumstances change and will allow you to alter both the amount of money you insure and the percentages allocated between joint owners or tenants. It’s important to review the amount of the insurance regularly and contact your insurer if you want to make any changes.

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What Government help is available?

Protecting your mortgage payments against accident, sickness or unemployment is increasingly important. Under new DSS regulations (see below) you will still not be eligible for any mortgage interest support for an initial period of 13 weeks. After this period help is available only towards mortgage interest, and not towards capital payments (for those with repayment mortgages) or payments for associated insurance products such as house or life insurance. You will get assistance towards the first £200,000 only of your mortgage. You may not be eligible for any help towards your mortgage costs if you have sufficient savings or another income (ie. your partner is still working).

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What is Income Support for Mortgage Interest (ISMI)?

In September 2008 the government announced a package of measures designed to provide assistance to struggling home owners facing the risk of repossession. The package included the reform of Income Support for Mortgage Interest (ISMI).
This announcement made on 2 September meant working age people, eligible for assistance with their mortgage interest payments, would benefit from a decreased waiting period of 13 weeks – down from 39 – before help could be provided and an increase in the capital limit covered from £100,000 to £175,000, effective from April 2009.

A further announcement made on the 19 December has pushed this capital limit up to £200,000 – double the previous limit and made this and the waiting period effective from 5 January 2009. Crucially the government also confirmed that claimants already waiting for payment would become entitled to the revised limits at the point at which they have served their full 13 weeks, an issue raised by the Association of Independent Financial Advisers (AIFA) back in October.

The announcement means that:

People in the system who have served 13 weeks or more of their waiting period by 5 January will become entitled to ISMI from that date.

Those who have served a period of less than 13 weeks at 5 January will become entitled to ISMI at the point at which they will have served a full 13 weeks.

The Standard Rate of Interest used as the basis to calculate ISMI has been frozen at 6.08% for the next six months for all customers including pensioners.

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