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What is redundancy protection for?

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Redundancy protection is a policy feature included with some income protection cover. With standard income protection cover, the insured individual is covered for events like injury and illness, with the redundancy insurance feature, the insured may be excused from paying their premiums for a set amount of time while they are involuntarily unemployed. Redundancy protection does not mean that the insured will receive any benefits payments in the event of unemployment.

As it relates to income protection insurance in Australia, redundancy protection would be a policy option that can be added to some income protection plans. Not all insurance providers offer redundancy protection and in the current market there are no plans that offer benefits payments in the event of redundancy. The reason that redundancy insurance is available for some income protection policies is because the insured would be ineligible to collect their benefits is they were to become injured while already redundant. If you are interested in redundancy insurance, it is important to inquire about what type of redundancy options a particular insurer has and how the additional coverage works.

Even with some level of redundancy insurance added to an income protection policy, it is important to realize that the insurance will not cover the individual to the same degree for involuntary unemployment as it will for injury and illness. How the policy accounts for redundancy will vary depending on the insurance provider and the particular policy.

In most cases the redundancy protection will only cover a premium waiver for a few months and there are some exceptions regarding events that will qualify for the redundancy waiver. For redundancy, the policy will typically only provide a waiver for up to three months by which time the insured will be expected to resume their payments.

Even though redundancy protection does not provide any benefits in the event of unemployment, it is still an important policy feature to consider. If you find that you are temporarily unemployed, not having to pay the premium on your income protection insurance can provide some much needed financial relief.

When you are shopping for income protection insurance in Australia, it recommended that you try to find a policy with at least some level of redundancy protection. It may not provide financial support, but they can at least relieve some of the financial burdens that will accompany temporary unemployment. As you compare your income protection quotes, read the product disclosure and determine if there is any provision for redundancy protection.

Does income protection cover me for redundancy? What is redundancy insurance for?.  Find out more about Personal insurance quotes. Apply now.