Redundancy Insurance

Does income protection insurance come with redundancy cover?

Most Income Protection Policies in Australia do not offer cover for involuntary redundancy. However, the increasing competition among many of Australia’s insurance brands has lead to the arrival of some products that offer a added protection against:

  • Redundancy
  • Loss of job

This usually comes as an bundled option, and will cover you in these situations for a brief period e.g. 3 months.

Which brands offer redundancy insurance in Australia?

ProviderStandard?Max percentage of income coveredMax amount of income coveredHow long will cover last?Minimum hours you'll need be working to be eligible
AAMI
  • Optional
75%$4,000Up to 3 months20
ANZ
  • Included
50%$3,000Up to 3 months20
Insuranceline
  • Optional
85%$3,000Up to 3 months30
NIB
  • Optional
85%$3,000Up to 3 months30
NRMA
  • Optional
85%$3,000Up to 3 months30
Suncorp
  • Optional
75%$4,000Up to 3 months20
Virgin
  • Optional
85%$3,000Up to 3 months30

Conditions for eligibility apply. Always check the Product Disclosure Statement (PDS) to see if you are covered.

How it works

Income protection brands will combine two seperate policies into one product e.g.

  • Income protection from a life insurer
  • Redundancy insurance from a general insurer

An example of a life insurance brand is ANZ Life Insurance who combines Income Protection from OnePath Life Limited and Involuntary Unemployment from OnePath General Insurance

Are you eligible for redundancy cover?

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

  • Be unemployed for a waiting period for 30 days from when you are made redundant.
  • You must be unemployed at the end of the waiting period.
  • 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.

Note: This list is not indicative of all policies on the market. Always check the wording of your product disclosure statement (PDS).

Redundancy cover if you have a homeloan

Some life insurance brands offer 'relief benefits' for redundancy. This can provide you cover during redundancy if you also have a home loan with the same brand. This benefit usually helps you with the minimum payments on the home loan.

Policyholder of:Home loan from:Monthly involuntary benefit
OnePathANZ
  • Lesser of your minimum loan repayments and $5,000
  • Up to 3 months of cover
ComminsureCommonwealth Bank
  • A benefit for up to three months

Conditions apply, make sure you read the product disclosure statement (PDS) before applying. Information last checked as correct in June 2017 and is subject to change at anytime.

What redundancy features available on regular income protection policies?

While traditional policies from life insurers will not provide policyholders with a benefit payout if they are to lose their job, their are certain features available on some policies to make this time easier so they do not default on their premium payments. These features include:

  • Involuntary Unemployment Waiver of Premium: This feature will ensure that premiums payable on the insureds income protection policy will be waived for a specified period if they are involuntarily unemployed. In order for this to apply, the policyholder will have to show that they are actively seeking a new position. This waiver is usually only available for a certain number of months.
  • Unemployment Benefit: A number of policies available from Australia’s major banks will cover the policyholders minimum mortgage repayments and credit card repayments for a set period of time if the policyholders mortgage was taken out with the same financial institution.

Weighing up the benefits and pitfalls of redundancy insurance

The good

  • Peace of mind. Redundancy cover ensures that if the worst happens and you lose your job through no fault of your own, you will receive financial support.
  • No money worries. Instead of worrying about paying the bills, redundancy cover allows you to put all your efforts into finding a new job.
  • Other benefits. You can also enjoy the security offered by income protection insurance, which provides cover if injury or illness prevent you from working.

The not so good

  • Confusing. Many people assume that all income protection policies automatically include redundancy cover, but this is not the case.
  • Extra cost. Redundancy cover is only offered as an extra-cost option, and only on some policies. You need to be sure that it offers value for money before adding it to your policy.
  • Conditions apply. From the details surrounding your redundancy to the time for which you can receive a benefit, there are several conditions you must satisfy in order to qualify for redundancy cover.

Additional features that help during redundancy

As stated previously, there are some policies offered from Australian life insurers that give policyholders assistance under certain events.

FeatureDescription
Redundancy OptionIf the policyholder is made redundant and has a redundancy option, then the policyholder may receive income protection for up to 3 months.
Unemployment WaiverIf the policy has been in force continuously for a set period preceding involuntary unemployment of a certain number of consecutive working days, premium and policy fee waived for a defined number of months at a time for the period policy holder is involuntarily unemployed and registered with an approved employment agency.
Unemployment BenefitIf the life insured becomes involuntarily unemployed for reasons other than illness or injury, the provider will pay the minimum mortgage repayments while the life insured remains unemployed for a set period of time.

Read the fine print

While redundancy cover may seem like an amazing offer on paper - and it can certainly provide very useful cover for some Australians - you should be aware of all of the policy exclusions and conditions before you sign on the dotted line. You’ll 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.

Picture: Shutterstock

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4 Responses

  1. 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

    • finder 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

  2. 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

    • finder 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

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