Redundancy Protection Insurance
Compare redundancy insurance policies from leading UK insurers.
Get cover if you’re made redundant and protect your monthly income.
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Think of redundancy insurance (sometimes known as ‘unemployment insurance’) as financial protection for the moments when life doesn’t go to plan. If you lose your job through no fault of your own – like company restructuring, role elimination, or insolvency – redundancy insurance can help replace your income.
It’s important to know what’s not covered: if you’re dismissed for misconduct or resign voluntarily, you won’t be able to claim. That’s because redundancy protection is specifically designed for involuntary job loss.
You’ll also choose a deferral period (sometimes called a ‘waiting period’). This is the time between claiming and receiving your first payout. Shorter waiting periods cost more; longer periods lower your premiums. The right choice depends on how long you can comfortably manage without financial support.
If you have dependents (whether that’s children, a partner, or anyone relying on your income) redundancy protection can provide invaluable peace of mind. Even if you don’t have any dependents, though, the stress of losing your income unexpectedly can take a toll. That’s what redundancy insurance is for; to give you a safety net so you can focus on finding the right next step.
How exactly does redundancy insurance?
Make a claim if you lose your job
The claims process is simple, even if it might seem overwhelming at first. After you’re made redundant, you’ll need to contact your claim administrator to make them aware. You’ll then need to submit a claim pack with evidence and details explaining the exact circumstances of your loss. Your insurer will begin by looking at your claim, which typically takes up to 30 working days.
Receive ongoing financial support
Once that waiting period ends, you’ll start receiving monthly payouts – usually for up to 12 months, though some policies extend to 18 or 24 months for an added premium. Payments stop sooner if you find a new job, which is a win-win either way.
Claim again if you have to
You notify your claims team about the job loss and provide a timeline, They send you a claim pack to complete, which often includes employer verification, You may need to share additional documents during the assessment., Once approved and after your deferral period, your monthly benefits begin and continue until you’re working again or your benefit period ends.
Do I need redundancy insurance?
Redundancy insurance may be worth considering if you rely on your salary to cover essential expenses, have a mortgage or loans, support dependents, or have limited emergency savings. It can provide monthly financial support if you lose your job involuntarily, helping you manage bills while looking for new employment. However, if you have substantial savings, strong employer redundancy benefits, or can comfortably manage without your income for several months, you may not need it. Before choosing a policy, check the eligibility criteria, waiting periods, payout limits, and exclusions, as voluntary resignation, dismissal for misconduct, and known redundancy risks are generally not covered.
What does redundancy insurance cover?
What is covered by redundancy insurance?
The biggest thing redundancy insurance covers is exactly what it says on the tin involuntary redundancy. But it also supports you when unexpected job loss happens for other reasons beyond your control, including employer insolvency. Contract workers can also benefit. If you’ve worked for a company under two years and your contract ends unexpectedly, redundancy cover can pay out for the portion of time you expected to continue working. If you’ve been at the company for more than two years, you’re eligible for the full standard benefit period, just like permanent employees.
What is not covered by redundancy insurance?
Some situations fall outside the scope of redundancy protection.
These include: Voluntary resignation, Dismissal for misconduct, Standard fixed-term contracts ending, Most self-employed scenarios (though there can be exceptions) If you’re unsure whether you qualify, it’s always worth checking with an advisor.
Ultimately, redundancy insurance is designed to protect you against involuntary job loss beyond your control, but understanding the exclusions and checking your eligibility carefully ensures you choose cover that truly fits your employment situation.
How much is redundancy insurance?
redundancy insurance premiums are affected by a whole range of factors, which include:
How much is income protection insurance?
Income protection insurance premiums are affected by a whole range of factors, which include:
Your age
The older you are when you purchase your cover, the more you’re likely to pay in premiums because there’s a higher risk that you’ll fall ill and need to claim.
Your job
If your job is considered to be ‘risky’, you’ll pay more in premiums. For example, if you’re a builder or a mechanic, you’re likely to pay more than an office worker would.
Cover length
Generally speaking, the longer your policy is, the more expensive it’ll be. If you’re looking to cut costs, taking out a short-term policy is a good idea — but check how much cover you need first.
The waiting period
The longer you can wait before receiving your payout, the cheaper your premium will be. Generally, waiting periods start from about 4 weeks and go all the way up to a full year.
Your lifestyle
If you smoke, drink, or have pre-existing health conditions, you might be more vulnerable to severe illnesses, so you’d be more likely to claim; making your cover more expensive.
What are the benefits of redundancy insurance?
There are a number of benefits to redundancy insurance cover, including:
A regular, tax-free income during periods when you can’t work because you’ve had an accident or fallen sick
The peace of mind that comes with financial security
Provides a financial safety net for self-employed individuals, freelancers, or employees without employer-provided paid sick leave
Flexibility to choose how your cover works for you, with customisable qualifying and waiting periods, as well as a benefit amount that’s entirely up to you
How much redundancy insurance do I need?
Working out how much redundancy insurance you might need is easy when you break it down into three quick steps:
Work out your monthly take-home pay and how much your usual monthly expenses are, including bills, rent or mortgage payments, and day-to-day costs
With that worked out, you then want to take away the amount of money you’d get in state benefits as well as any work-related costs (like the cost of commuting, for example)
Make sure to take into account any extra expenses you’d need to cover if you fell ill or became disabled (for example extra heating, medical equipment, mobility aids, etc)
How much will my redundancy insurance pay out?
Most redundancy protection policies let you cover up to 65-70% of your income, capped at £2,500 per month. If that’s not enough to cover your pre-redundancy monthly income accurately, you can combine more than one policy for additional coverage. Benefit periods typically range from 6 to 12 months, meaning you can spend as much as 12 months seeking out the right job for you without worrying about paying your bills. You don’t need to claim the full term, though; your payments stop once you’re employed again.
What do I need to get an redundancy insurance quote?
Once you’ve figured out how much redundancy insurance cover you want, we’ll need some information about you, your occupation, and the type of policy you’re looking for.
Your personal
details
We’ll need info about you and your employment, including your name, age, and address; the type of job you do; and whether you’re employed or self-employed
Your income & cover details
To make sure we’re finding the right policy for you and your individual circumstances, we’ll need to know a couple things, like your annual income pre-tax and how much cover you want
Your chosen waiting period
Your waiting period is the amount of time you agree to wait before payouts begin (usually between 30 days and 60 days). The longer your waiting period, the cheaper your premiums
Frequently Asked Questions
Redundancy insurance isn’t a one-size-fits-all product; like most insurance, it works for some people and doesn’t for others. If you rely on your income to keep you and your family afloat, then protecting that income in the event of redundancy is a no–brainer. On the other hand, if you have robust savings, for instance, you might be able to handle your finances in times of redundancy yourself. Everyone’s circumstances are different, just like everyone’s needs are different. If you’d like to know whether redundancy insurance is for you, give us a call on 0330 330 9465.
No, you can’t claim on your redundancy insurance straight away. You’ll have to wait out your Initial Exclusion Period (IEP) before you can claim, which tends to be about 120 days. If you’re made redundant during this time (or even just find out redundancies are happening at your company during this time), you won’t be able to claim at all.
Yes, you can cancel your redundancy insurance whenever you like. If you cancel within the first 30 days of your policy and you haven’t made a claim in that time, your premiums will be refunded in full – a time known as your ‘cooling–off period’. If you cancel after that, though, you won’t be able get a refund – but you’ll still be able to cancel at any time.
Your redundancy insurance payments might be considered income when calculating your Universal Credit entitlement, which could affect how much you receive in benefits.
Yes, redundancy insurance payouts are tax–free, so you’ll receive exactly as much as you’ve selected when purchasing.
No, you can’t buy a redundancy insurance policy if you’re aware that your job is at risk. Any risk you’re aware of when purchasing is considered ‘pre–existing’ and will not be eligible to be claimed on.
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