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Unemployment Insurance Policy Options in Australia

Last modified: 29 Apr 2013

 

Being made redundant can be a stressful time but being made redundant and then finding out that the income protection policy you bought from your life insurance company doesn’t cover redundancy can put you in a very precarious situation financially. Unfortunately, a lot of Australians find out too late that this is the case. The policy you have from your life insurance company may include features that will help during periods out of work but it won’t pay a benefit equal to your lost income.

What to do to guarantee unemployment insurance cover

Life insurance companies in Australia don’t offer policies that pay a benefit in the event of redundancy. They do sell income protection plans and they can add provisions onto your life insurance policy to help should you lose your job, but they won’t replace your income.

The only way to guarantee an income during times of unemployment is to buy a policy from a general insurance company. This type of insurance policy provides a maximum amount of money as a single payment each month for a set number of months, normally three to six months. It won’t provide you with an amount equal to your lost income but it will often pay up to 75% of the amount you earned before being made redundant.

The ins and outs of unemployment cover from a general insurance company

While this type of unemployment insurance policy seems like a sure buy there are often criteria that have to be met before a benefit will be paid. So for example:

With this in mind it is worth asking yourself whether such a policy would be worthwhile. After all, you will need to rely on savings or other forms of finance until you can make a claim. You’ll also be prohibited from taking even a part time job while looking for more permanent full time work.



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