Get the Finder app 🥳

Track your credit score

Free

Redundancy Insurance

Do you have a backup plan? Redundancy insurance pays you if you lose your job unexpectedly.

Updated . What changed?

Fact checked

We’re committed to our readers and editorial independence. We don’t compare all products in the market and may receive compensation when we refer you to our partners, but this does not influence our opinions or reviews. Learn more about Finder.

Redundancy insurance is extra protection you can claim in the event that you are let go from your job. It is sometimes known as involuntary unemployment insurance and is usually offered as an extra to income protection insurance. It will generally cover you for up to $3,000 per month while you look for a new job.

The payout is designed to help you keep up with bills while you find a new job. Best of all, you might be able to claim it on your tax return which means you're essentially protected without being out of pocket. It's a win-win.

Get a quote for redundancy insurance cover

Some key features to keep in mind when comparing redundancy insurance include the maximum monthly benefit and the maximum payout period. This will give you a good idea of how much money you can expect to receive, and for how long, if you lose your job.

Name Product Involuntary Unemployment Cover Maximum Monthly Benefit Maximum % of Income Covered Maximum Payout Period Apply
Insuranceline Rate Saver Income Protection
Optional
$3,000
85%
3 months
loading

Compare up to 4 providers

Enter your details and one of our partner brokers will call you. They will discuss your quote, options and available products.

Sex
Do you smoke?

An adviser can help you find cover from trusted life insurance brands.

  • Get competitive quotes from multiple brands
  • Lower rate of declined claims (according to ASIC)
  • Save time and effort

Lender Logos

Which insurers offer redundancy insurance?

Redundancy insurance is not generally offered as a standalone policy. Usually, it comes as an optional extra with income protection policies.

Must read: Redundancy cover during COVID-19

Due to the current Coronavirus crisis, many insurers have temporarily paused 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 should always double check driectly with your provider.

Our table runs through the general offerings of involuntary unemployment for the brands that have offered it. Although some of these brands no longer offer this cover, we have left them displayed in case you have existing cover with them.

ProviderRedundancy cover conditions and featuresIs this option currently available to new policies?
AAMI income protection insurance

AAMI Income Protection

  • Up to $4,000 per month, for a maximum of 3 months
  • Optional add on
  • Up to 75% of income
  • Minimum of 20 hours a week eligibility criteria
No longer offered.
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
  • Minimum of 20 hours a week eligibility criteria
ANZ is not issuing new income protection policies.
Insuranceline income protection insurance

Insuranceline Time Saver Income Protection

  • Up to $3,000 per month, for a maximum of 3 month
  • Optional add on
  • Up to 85% of income
  • Minimum of 30 hours a week eligibility criteria
Not available online, call to apply.
NIB Income Protection protection

NIB Income Protection

  • Up to $3,000 per month, for a maximum of 3 months
  • Optional add on
  • Cover up to 85% of income
  • Minimum of 30 hours a week eligibility criteria
Not available online, call to apply.
NRMA income protection insurance

NRMA Income Protection

  • Up to $3,000 per month, for a maximum of 3 months
  • Optional add on
  • Up to 85% of income
  • Minimum of 30 hours a week eligibility criteria
Not available online, call to apply.
Suncorp Income Protection insurance

Suncorp Income Protection

  • Up to $4,000 per month, for a maximum of 3 months
  • Optional
  • Up to 75% of income
  • Minimum of 20 hours a week eligibility criteria
Not offered.
Virgin money income protection insurance

Virgin Tailored Income Protection

  • Up to $3,000 per month, for a maximum of 3 months
  • Optional add on
  • Up to 85% of income
  • Minimum of 30 hours a week eligibility criteria
Not available online, call to apply.

* Information correct as of October 2020. Please keep in mind insurers are rapidly changing their offerings and some information may have changed.

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.

Most standard income protection policies do not cover you for involuntary redundancy, which is where redundancy insurance comes in.

In Australia, you will find that most insurers offer redundancy cover as an optional extra with their income protection policies. We've outlined some brands who cover redundancy below for you to compare.

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.

If you think you may be made redundant in the future and are looking for income protection, be sure to check with insurance providers if they offer this type of cover as an extra. It will likely be an additional cost so will make your premiums more expensive. Be sure to factor this in when looking at this type of cover.

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.

See a larger list of eligibility requirements below.

Redundancy insurance eligibility requirements

If your income protection policy offers a redundancy policy, you'll need to meet some conditions. Generally, you must:

  • Be unemployed for a waiting period for 28 or 30 days from when you are made redundant.
  • You must be unemployed at the end of the waiting period.
  • You will need to be employed for at least 20 hours a week, or in some cases, 30.
  • You will need to have been continuously employed for six months prior to making a claim.
  • You must register with Centrelink or a recruitment agency, actively seeking work.
  • The policyholder can have no stream of income during this period whatsoever, this may include part-time or casual work.

Can I get redundancy insurance during a recession?

Yes, but it might be more expensive than usual. This is because job losses are much more common so insurers will need to compensate with higher overall premiums. Also keep in mind that you need to have held your policy for at least 6 months, so it might not be a solution if you're worried about losing your job soon.

Do I need redundancy insurance?

Redundancy insurance isn't compulsory, but it could be a good option for you if you're a sole breadwinner or your family relies heavily on your income. If you're unsure whether you need redundancy insurance or not, consider the following:

  • Do you, your partner or your family rely on your income to pay the bills and everyday expenses?
  • Is redundancy cover enough? Keep in mind that most have a monthly benefit limit of between $3,000 and $4,000.
  • What are your chances of being made redundant? Do you work in an industry with poor job stability? Is the economy weak? These could make your occupation vulnerable.
  • Could you find another job easily and one you like? Redundancy cover can give you the chance to focus on finding the right job, rather than jumping into the first thing.
  • Do you have any savings? Even if you have some money put aside, you need to make sure it's enough to cover the bills and expenses. You might also want to keep those savings for something else.

How to successfully claim for redundancy

In order to make a successful claim, you will need to meet and do the following:

  • Be involuntarily terminated
  • Have been in the role for at least 6 months
  • Serve the waiting period
  • Make a claim to your insurer

Keep in mind that every policy will have different exclusions and conditions before you sign on the dotted line. You'll also need to have a clear understanding of what the claim eligibility requirements are in order to receive the benefit offered, before you can work out whether income protection for redundancy is the right cover option for you.

Can I still claim on my insurance if I get a redundancy payout from my former employer?

Generally, yes. ANZ state that "the amount of money you receive from your former employer or the government in the form of a settlement or payout is irrelevant." So consider redundancy insurance as a nice little top up.

More guides on Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

6 Responses

  1. Default Gravatar
    ArjunFebruary 8, 2019

    Hi ,

    I am IT contractor who works on contract for 6 months and possibly extended beyond that , is there a policy that covers the situation when I am without a contract.

    I am assuming this work to a casual or temporary in nature , please let me know if this is correct ?

    Regards,
    AB

    • Avatarfinder Customer Care
      JeniFebruary 12, 2019Staff

      Hi Arjun,

      Thank you for getting in touch with finder.

      There are some restrictions on redundancy cover i.e. if an employee works in a casual or contractual capacity. You may get income protection for casual workers and you may use this page as guide on this matter.

      I hope this helps.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

  2. Default Gravatar
    RayFebruary 10, 2018

    Hi.

    I would like to enquire about Redundancy cover if I’m not required anymore.

    I’m a Casual worker, working a 3 weeks on and 3 weeks off roster for the last 2 years.

    Is there any benefit around that could cover myself?

    Kind regards.

    Ray

    • Avatarfinder Customer Care
      JoshuaFebruary 22, 2018Staff

      Hi Ray,

      Thanks for getting in touch with finder.

      Redundancy happens when you lose your job because your job’s function isn’t needed anymore.

      According to the information you gave, you might not be eligible for a redundancy cover.

      On our page, you will learn more about the eligibility requirements for redundancy cover.

      In your case, as a casual worker, you might want to consider getting income protection insurance instead. You will learn more about this option by clicking this link.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  3. Default Gravatar
    MarkFebruary 21, 2017

    Hi,

    I want to enquire about income protection for and if I possibly lose my job one day due to redundancy etc…

    I’m getting a mortgage loan soon for my land which will be settling in March/April 2017 and want to cover all bases if something were to occur, pretty much plan for the unplanned.

    If someone could get back to me with some information this would be fantastic.

    Kind regards,
    Mark

    • Avatarfinder Customer Care
      ZubairFebruary 22, 2017Staff

      Hi Mark,

      Thank you for your question.

      Currently, we have ANZ in our panel who offer cover for involuntary redundancy cover. You can view the product details in the table on the top of the page and please click on ‘Get quote’ button if you want to get an idea about the premium of cover.

      Please make sure though to read the eligibility criteria, features and details of the policy, as well as the relevant PDS/T&C’s of the policy before making a decision and consider whether the product is right for you. If necessary, speak to the insurance brand to verify any details.

      Cheers,
      Zubair

Go to site