Unemployoment insurance was sometimes included in income protection insurance policies.
Most insurers have stopped it since the pandemic.
You may still be covered if you have already have a policy.
Although brands typically no longer offer unemployment insurance, we have kept the information on this page in case you have existing cover.
Is unemployment covered by income protection?
No, since the pandemic, most insurers will not cover you if you are become unemployed. In the past, certain plans offered redundancy cover as an option, which provided you with payments for up to three months. These payments will have a limit in maximum amount they'll pay.
Most plans will require you to have the policy in place for a particular length of time before you become eligible for this unemployment cover.
Speak to a trusted adviser to see if you can get income protection with redundancy cover included
Which brands offered involuntary unemployment cover?
Must read: Redundancy cover during COVID-19
Since the coronavirus crisis, insurers have 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 should always double check directly 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.
Provider
Redundancy cover conditions and features
Is this option currently available to new policies?
* Information correct as of October 2020. Please keep in mind insurers are rapidly changing their offerings and some information may have changed.
What are some conditions around cover?
Applicants must be aware of the restrictions of this feature and the criteria for them to receive a payout. Most of these policies will require;
The policyholder to prove that their loss of job was in no way related to their performance but a result of the businesses financial strength.
In order to receive the benefit, the policyholder must not be receiving any other form of income whatsoever. This includes payment from a casual or part-time position.
The employee to have been employed continuously for a specified period (usually around 6 months).
Employee will only receive a benefit payment after a number of weeks, from being employed.
Payment not provided to people finishing seasonal or contract work.
The employee must provide evidence that they are genuinely looking for new employment.
What does this mean for the policyholder?
They are dependent on their savings for the period between redundancy and when the benefit will be paid.
Benefits will cease once the policyholder has obtained paid work. This may be part-time or full-time employment.
Can be extremely difficult to show that their loss of job was not related to their performance whatsoever. This is especially the case if they were let go at a time when only a portion of the company lost their position.
Workers employed on a contract basis are not able to take out cover.
Taking each of these points into consideration, the applicant must really consider their own position. While the benefit payment might provide some support for a short period of time, most workers will still be entitled to some form of redundancy benefit from their company. Policyholders must weigh up the restrictions of the policy and what they will be paying in premium payments to assess whether they really stand to gain much in the long run.
Income protection insurance and unemployment cover from life insurers
There are some policies available that will give certain support to customers that become involuntarily unemployed.
Unemployment cover benefit
Commonwealth Banks Income Protection Policy Income Care will provide a benefit to cover the minimum monthly loan repayments held with commonwealth bank for a maximum period of three months. This means that if the policyholder has a mortgage or credit card debt held with Commonwealth Bank, they will cover the minimum monthly repayments on that debt for a three-month period.
Unemployment premium waiver
This feature means that the policyholders premium payments will be waived if they made involuntarily unemployed. This waiver will only be available for a certain number of months and they will usually have to show evidence that they are actively seeking a new line of employment.
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Frequently asked questions
Typically, no. Income protection insurance benefits usually cover situations where you are unable to work due to illness or injury, rather than loss of employment.
Again, no. That said, there are some policies available that will give certain support to customers that become involuntarily unemployed.
Eligibility for unemployment benefits in Australia, such as the JobSeeker Payment, is subject to criteria including that your age needs to fall between 22 and the Age Pension age. Visit the Services Australia website for more information.
Gary Ross Hunter is an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146).
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