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What is unemployment insurance?

Unemployment insurance in the UK is a type of income protection insurance for job loss. It provides financial support when you’ve lost your job involuntarily, such as redundancy or forced job loss. It typically pays out a tax-free monthly payment for a set time. The payments will be a portion of your lost monthly income. You’ll have the option to bundle this insurance with others like accident and sickness cover for wider protection. 

What does unemployment insurance cover?

Coverage and exclusions are specific to individual policies. However, as a guide, here are some commonly seen in this type of coverage.

Usually included

  • Monthly tax-free payments, typically a percentage of your usual income.
  • Short-term benefits, usually up to 12 months.
  • Option to bundle with other policies.

Excluded claims

  • If you left your job voluntarily.
  • If you were dismissed for misconduct.
  • Job loss due to a self-inflicted injury.
  • Self-employed or contractor workers.

How does unemployment insurance work?

When applying for unemployment protection insurance, you’ll need to specify the percentage of your monthly income you want protected. Most people choose between 50%-70%.  

You must decide the term period of the payouts. Insurers typically offer benefits for up to 12 or 24 months, though some specialist insurers could offer longer terms.

You may be required to be registered with your local job centre. You could also be required to prove that you’re actively looking for work.

There is usually a waiting period between the time you make a claim and when it starts paying out. Generally, this period is 30-90 days.

Is unemployment insurance worth it?

Unemployment income protection insurance, or job loss insurance, offers financial support when you lose your job through no fault of your own. Statutory redundancy pay and Universal Credit may not be enough to service your monthly bills. This cover can stop you from falling behind and protect your credit health. With it in place, you won’t need to take out an extra loan or dip into your savings. It bridges the gaps while you look for new opportunities. 

How can I get job loss insurance quotes?

You can get access to quotes by filling out the form on our website. We’ll put you in touch with some of the UK’s reputable insurers. With the information you provided, they’ll offer you customised quotes. Comparing quotes can help you find cost-effective deals that sufficiently protect your income. 

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UK unemployment insurance FAQs

What affects unemployment insurance costs?

The unemployment insurance UK cost varies based on multiple risk factors. These include your age, occupation, monthly benefit amount, waiting period, and the length of cover you choose. If you want to reduce your insurance costs, consider reducing your cover amount or opting for a longer waiting period. 

Who is eligible for unemployment insurance in the UK?

Most policies offer coverage to those who are permanently employed or on a fixed contract. The minimum hours per week to qualify is 16 hours per week. To be eligible, there must be no awareness of impending redundancy or dismissal when taking out the policy. However, you’ll have to check the specifics of the policy to be sure. 

How do I make a claim on my unemployment insurance?

You’ll need to provide evidence of your job loss or a redundancy letter. Submit the claims form with all the required documents. Once you’ve met the required waiting period, your insurer will pay the agreed monthly amount into your account.  

Can unemployment insurance cover my mortgage?

Yes. The amount you’re paid per month can be used at your discretion. However, if you’re only concerned about your mortgage payments, you can take out unemployment mortgage insurance. Mortgage Payment Protection Insurance (MPPI) is more narrowly focused than standard unemployment insurance. It can be taken out to only cover your mortgage payments if you lose your job. 

How can I find the cheapest unemployment insurance in the UK?

There are several ways that you can potentially reduce your premium. Firstly, adjust the terms of your policy by choosing a longer waiting period or adjusting your monthly benefit. If you’re a member of a trade union or professional association, check if they have group policies. These can be cheaper or offer extra benefits. Review your policy regularly and only take the cover you really need. Lastly, compare quotes before you buy. Doing so can help you find competitive quotes that are more suited to your needs.  

Does unemployment insurance cover redundancy?

Yes, however, there are conditions. The main caveat is that your redundancy must be involuntary. This type of policy does not pay if you choose to leave your job. It also excludes being let go because of misconduct or self-harm. Involuntary redundancy is the most common scenario where unemployment cover pays out. 

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