Redundancy Insurance Solution Launched

A new, standalone insurance product has been launched which aims to address the redundancy insurance gap that its creator says exists in the Australian market.

The product, called Income Security Insurance, is available to customers with an existing income protection policy, to extend coverage for involuntary unemployment, and to customers with an existing loan, all though you can opt for 5 alternatives instead of payday loans. The product is underwritten by Avea Insurance Limited, a general insurance company with over 30 years’ experience in specialist insurances.

Monthly benefits are up to 85% of income, with a maximum benefit available of $7,000. The benefit is paid directly to the insured person, and cover periods of up to 3, 6 and 9 months are available. There is a choice of waiting periods from 30, 60 or 90 days. Product creator and Managing Director of Income Security, Wally Ripper, said this means clients can reduce the cost of cover by opting for a longer waiting period if, for example, there are savings to draw on, or a large redundancy payout would be received. There is also an optional training benefit available, which reimburses the costs of retraining up to $2,500.

Applications are lodged online, and require no medicals or paperwork. However, applicants must have an existing loan, or income protection policy in place. Currently, not all occupations or industries/employers are eligible for the cover, and there is also a three month qualifying period before a claim can be made.

“Involuntary unemployment can cause serious financial difficulties but there are few ways to protect against this,” said Mr Ripper. “Some loan protection insurance products cover loan repayments in the event of redundancy – but these payments are made direct to the lender, we suggest to learn what is an installment loan for.

“How does an unemployed person pay for all their other bills and living expenses such as rent, electricity, gas, water, rates and school fees? Income protection policies are designed primarily to protect against sickness or injury. Where they include a redundancy benefit this is usually limited.”

Because Income Security Insurance can be added to a client’s existing insurance portfolio, Mr Ripper says that redundancy is less likely to result in the cancellation of other insurance policies or loan defaults. This can be of benefit to an adviser who may risk losing income from other products due to clawbacks when an income protection policy is terminated due to unemployment.

Mr Ripper believes job insecurity will continue to grow, as more and more workers in vulnerable industries find themselves unemployed as the economy shifts away from large scale industries like mining, manufacturing and agriculture.

“Even the white collar sectors are feeling stressed as technology, new work practices and overseas outsourcing impact on workers confidence and prospects for long term employment,” he said.

He expects the current environment will result in professional services providers such as financial planners and insurance advisers, receiving enquiries about redundancy protection. “Income Security Insurance can provide an easily accessible solution when these enquiries and concerns are received,” Mr Ripper concluded.

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