Income Protection Insurance and Redundancy
In general, income protection insurance policies do not cover redundancy or job loss. If ever you hear of any type of insurance product that offers to do so, be wary because it could be too good to be actually true. As for income protection insurance, it could only provide you income with up to 75% of your monthly earnings if you have incurred any injury or if you have gotten seriously ill that you may not be able to work for some time. There is an assumption that you would be able to go back to work and earn income after recovery. This assumption could not be applied to redundancy or sudden loss of job.
However, the stiff competition among Australian insurance firms could offer products that could somehow function as an income protection insurance against redundancy and job loss. For instance, an insurer’s unemployment cover benefit program offers to provide a policy owner with monthly benefits up to three months so he/she could still cover any loan repayments and necessary expenses during the period.
One setback is that such a program could be considered as a promotional scheme as it could not be universally implemented and duration of coverage is fixed at three months at the most. Loan repayments should also be under specified local lenders. Two such lenders are ANZ and Commwealth Bank who offer 3 months redundancy cover in there income protection policies.
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You may consider some forms of credit protection insurance. Such insurance policies could very well serve as your protection in case you become involuntarily unemployed. It is advisable to explore possible options now.