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In Australia, income protection will cover you if an illness or injury puts you out of action. However, some policies also give you the option of adding what's known as 'redundancy cover'. This can help cover some of your income if you are made redundant.
Note: Be sure to understand the common exclusions for loss of job insurance. Please also note, than this sort of cover requires an application process, where the insurer can choose to accept or decline your policy request.
Redundancy insurance is not generally offered as a standalone policy. Usually, it comes as an optional extra with income protection policies.
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.
* Information correct as of October 2020. Please keep in mind insurers are rapidly changing their offerings and some information may have changed.
An adviser can help you find cover from trusted life insurance brands.
Not necessarily. Many Australians mistakenly believe that their income policy will cover them in the instance that they lose their job. Unlike policies in the United States and United Kingdom, however, income protection in Australia from life insurance companies will not provide a benefit payment if the policy holder is involuntarily unemployed or made redundant.
Unless you have selected an additional extra that is offered by the insurer, usually called involuntary unemployment cover, or redundancy insurance, you will not be covered if you lose your job.
There are a number of policies offered by general insurance companies in Australia that will provide a payout for a defined number of months (up to maximum amount) in the event that the insured is made redundant. This can sometimes be packaged together with income protection.
Some brands will cover products from both a life insurer and a general insurer e.g. ANZ's Income Protection Policy covers both
In addition, even though policies from life insurance companies may not provide a benefit payment, some policies do provide other support to the policyholder when they suffer the loss of their job. These include:
There are a number of different types of cover available on the Australian market that can provide financial relief in the event that you lose your job, both from life insurance companies and general insurance providers. These include:
However, a number of benefits and exclusions apply to each different type of policy, so before you rush out and buy cover, it’s important that you understand all the terms and conditions of the options available as different policies will suit different people.
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Mortgage protection insurance can also protect you when you lose your job, as it’s designed to kick in to cover you against any mishaps that may affect your ability to make loan repayments. If you lose your job, fall ill or even die, mortgage protection insurance will cover your mortgage repayments for a certain period of time to help either you or your family regain control of your finances.
Mortgage protection policies will generally include the following features:
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While it is illegal for Australian life insurance providers to offer redundancy cover, general insurance providers can and do offer different types of job loss policies:
However, a number of restrictions apply to loss of job policies from general insurance providers. First of all, while life insurance policies are guaranteed renewable, the provider can choose to end a general insurance policy at any time. For example, if the unemployment rate skyrockets and an insurer decides they no longer want to offer redundancy cover, they can cancel any policies already in place.
Other policies may require you to have signed up to their policy for a certain period of time (eg. six months) before you are eligible for cover, while there may also be a waiting period once you lose your job before the cover actually kicks in. Read the PDS of each policy closely so you know exactly what each policy covers.
You can find yourself unable to work for any number of reasons, from illness to injury and even involuntary redundancy, and often at the most unexpected times. With this in mind, it makes sense to have insurance cover in place to protect you should you find yourself out of work.
Compare the range of policies on offer and seek expert advice in order to find the most suitable policy for your needs.
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when you get sick and leave your job, whilst paying for income protection over 3 1/2 years is there any reimbursement from the company that is still taking my monthly payments.
Hi Dot,
Thanks for your comment. That will depend on your specific policy and if your sickness meets the policies definition for a payout. It’s a good idea to get in touch with your insurer directly.
Best of luck,
Maurice