Can I take out unemployment insurance cover in Australia?
You can get cover for involuntary unemployment if your policy is from a general insurer. There are a number of policies offered by general insurance companies in Australia that will provide a payout for a defined number of months for a maximum amount. Some income protection policies will offer an additional option that covers redundancy for a limited amount of time.
Income protection policies that cover involuntary unemployment options
| Provider | Standard? | Max percentage of income covered | Max amount of income covered | How long will cover last? | Minimum hours you'll need be working to be eligible |
|---|---|---|---|---|---|
| AAMI |
| 75% | $4,000 | Up to 3 months | 20 |
| ANZ |
| 50% | $3,000 | Up to 3 months | 20 |
| Insuranceline |
| 85% | $3,000 | Up to 3 months | 30 |
| NIB |
| 85% | $3,000 | Up to 3 months | 30 |
| NRMA |
| 85% | $3,000 | Up to 3 months | 30 |
| Suncorp |
| 75% | $4,000 | Up to 3 months | 20 |
| Virgin |
| 85% | $3,000 | Up to 3 months | 30 |
Conditions apply. Always consult the Product Disclosure Statement (PDS) before making a decision to apply.
Can I get cover for longer than 3 months?
General insurance brands who offer pure unemployment insurance can cover you for longer than 3 months.
How else can income protection help me if I become unemployed?
In addition to these general insurance policies, there are number of features available on policies from income protection policies that while not providing a benefit payment, will provide other support to the policyholder during this period e.g. a premium freeze.
Income protection that provides financial relief during involuntary unemployment
Some life insurance brands will offer unemployment benefits if you also have a mortgage with the same brand. This benefit will help pay the minimum benefits you have on a home loan. For example:
| Policyholder of: | Home loan from: | Monthly involuntary benefit |
|---|---|---|
| OnePath | ANZ |
|
| Comminsure | Commonwealth Bank |
|
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.
Involuntary unemployment cover from general insurance providers
The growth in the number of people looking for protection in the event that they are made unemployed has given rise to a number of general insurance companies offering an unemployment cover option. Redundancy cover usually provides an ongoing contribution of 75% of the policyholders regular income, usually up to three months.
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 3 month period.
Unemployment waiver of premium
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.
