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Redundancy insurance

Redundancy insurance pays you if you lose your job unexpectedly, but insurers aren't typically offering it to new customers.

What you need to know

  • Redundancy insurance was sometimes included in income protection insurance policies.
  • Most insurers stopped offering redundancy cover during the pandemic.
  • We could not find any new income protection policies that cover redundancy cover.

Which brands offer redundancy insurance?

Must read: Redundancy cover during COVID-19

Since the coronavirus crisis, insurers have generally stopped offering redundancy cover options for new policies. If you have an existing policy with this type of cover, your insurance should still be honoured; but you may want to double check this directly with your provider.

Although brands no longer offer this cover, we have kept the information on this page in case you have existing cover.

ProviderRedundancy cover conditions and featuresIs this option currently available to new policies?Maximum monthly benefitMaximum payout period
ANZ Income Protection Insurance

ANZ Income Protection

  • Up to $3,000 per month for a maximum of 3 months, or $1,500 per month for special risk jobs
  • Standard inclusion
  • Up to 50% of income cover amount
  • Minimum of 20 hours a week eligibility criteria
No50% of the Income Cover amount up to $3,000 per month3 months

* Information correct as of July 2023. Please keep in mind insurers are changing their offerings and some information may have changed.

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What is redundancy insurance?

Redundancy insurance is made to provide you with short-term financial support if you unexpectedly lose your job. It will usually pay you up to between $3,000 - $4,000 a month to help you keep up with bills and everyday living expenses while you look for a new job.

In Australia, most insurers only offered redundancy cover as an optional extra with their income protection policies.

Does income protection cover redundancy?

Income protection insurance does not automatically cover you for redundancy. Redundancy insurance is usually an optional extra that is offered by insurers as part of income protection and not all providers who offer income protection have this option.

What does redundancy insurance cover?

Redundancy insurance covers you financially if you are sacked, fired or involuntarily unemployed. You need to hold the policy for about 6 months before you are made redundant. If your claim is successful, it will usually come with the following:

  • A monthly benefit payment: Your insurer will pay you up to 85% of what you earned at your job. Like a regular income, it's usually paid to you in monthly installments. For example, you might receive 75% of your income or up to $3,000 a month.
  • A benefit period: All types of insurance come with a benefit period. This is the length of time you will receive payments. For example, if your benefit period is 3 months, you'll receive 3 months worth of payments from your insurer. Often, you can choose how long you want a benefit period to last. However, it's usually capped at 3 months with redundancy cover. In most cases, it ordinarily also comes with an expiry age, e.g. 65 years old.

Keep in mind that like most policies, there will be a no claim period. In a nutshell, you need to have held the policy for a certain period of time before you are eligible to make a claim. With redundancy cover, this is usually around 6 months. This is different from a waiting period. After you are made redundant, you will usually need to serve a 28 or 30 waiting period before you are allowed to make a claim.

When won't I be covered by redundancy insurance?

There's a few sneaky exclusions associated with redundancy insurance. Make sure you're aware of them before you sign up for a policy, otherwise you could be in for a nasty shock.

Typically, you won't be covered if the redundancy occurs:

  • 6 months before your policy starts your employer made you aware of redundancy occurring
  • Within 6 months of your policy starting
  • Voluntarily or if you're self employed
  • Due to illness or injury
  • If you're living outside of Australia
  • After a public announcement of reduction in staff numbers through redundancy
  • Due to the seasonal, casual or temporary nature of your work
  • Due to unlawful acts
  • Misconduct or suspensions

You'll also need to work for a set amount of hours per week (usually 20-30 hours), and there is usually a waiting period of about 30 days you'll have to wait out before you're able to claim.

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