A History of UK Unemployment Insurance
Unemployment Insurance has hit the headlines recently, mostly due to a rise in demand due to the recession, but also due to misselling of payment protection accident, sickess and unemployment insurance and the subsequent flood of claims.
As a concept the first type of Unemployment Insurance available in the UK was created by the Liberal Goverment of Lloyd George with the passing of the National Insurance Act in 1911.
The bill was introduced mainly to protect the two point five million workers in manual trades who along with their employers were required to pay into a central fund to cover the claims.
The payments were calculated on a sliding scale up to a maximum of seven shillings a week.
The cover period for which claims could be drawn was limited to one fifth of the period of contributions.
In other words you had to be in work and paying contributions or premiums for five years before you would be covered for unemployment that lasted a year.
The unemployed who did not qualify for cover or who had not been in work long enough had recourse to the Poor Law authorities which inevitably at this time still meant the workhouse for many unfortunates.
High premiums and poor cover, not a very good effort for the first Government led insurance scheme, but it did offer some protection to those in work, and coupled with the social change of the Edwardian period led to a new sense of Government social responsibility and a working class mentality that became the foundations of the Labour Party and eventually led to other social provisions such as the NHS.
This National Unemployment Insurance scheme proved to be inadequate to provide for the large numbers of unemployed and returning demobilised military, that followed the end of the First World War in 1918.
A temporary scheme of unemployment relief was designed to combat the suffering, which was known as the 'Out of Work Donation'.
This enabled a much larger payment of 29 shillings a week for men and 24 shillings for women to be made to claimants, with additional allowances for dependents, to most adults who registered as unemployed.
This was available for a strictly limited period, but the Government was forced to grant extensions as more and more servicemen were demobilised.
In 1920 the Unemployment Insurance Act was passed amid an mini economic recovery. The Act extended the provision of the 1911 Act to most workers earning less than £250 per year.
The period in which money could be claimed was shortened to one sixth of the period of payment contributions and for the first time a maximum cover period, during which benefits would be paid was set to 15 weeks.
The UK Economy changed radically for the worse early in 1921 and by the middle of the year unemployment exacerbated by the coal strike, was close to 20 per cent. Under these conditions, the contributory system and the one in six rule were untenable given the threat of political instability and civil unrest among the unemployed.
The Unemployment Insurance Act of March 1921 relaxed the 'one in six' rule by providing for the payment of 'uncovenanted' benefit without previous contributions. The intention was that benefits would be paid for a maximum of 32 weeks.
The 1921 Act also introduced for the first time what were effectively 'policy conditions' a 'seeking work' test for those claiming benefit.
Claimants had attend a labour exchange and show that they were genuinely seeking work and were obliged to accept any work paying a 'fair' wage - whatever that means!.
In February 1922 further conditions were introduced by way of a means test, aimed at restricting benefit payments. Some groups, such as single adults living with relatives, could be excluded unless it would cause serious hardship.
So what has gone wrong with the system of Nationalised Unemployment Insurance?
Jump forward sixty years to 1979 when Margaret Thatcher duped the nation into electing her with her infamous Labour isn't working campaign...
...only to return Britain to the largest number of Unemployed since the 1920's.
Under the Conservative Government of the 1980's the number of claimants for unemployment insurance far outweighed the resources being paid into the risk pool.
Civil unrest spread to every corner of the country in 1981 as the great unemployed sought vengeance on the Tory elite.
Unemployment Insurance now had to cover many millions who had never contributed to the system, not just those who had worked all their lives and paid their premiums. Fortunately for Mrs Thatcher she was able to pay for her mismanagement by squandering the proceeds of North Sea oil and keeping most of the nation at subsistence level.
So little had changed in sixty years. Out of this mess in the late 1980's was born a new private market for mortgage protection insurance for unemployment, aimed at the new home owing working classes and middle classes; and initiated by the banks and building societies, primarily to ensure that their mortgages got paid should the home owner lose their job.
Most of these policies were flawed in their design and have been subject to recent criticism leading to the mis-selling findings by the Competition Commission and large fines by the FSA.
To counter this the insurance industry came up with an income protection policy designed to protect the insured against unemployment for a fixed period and a fixed amount commensurate with the level of premium.
National Unemployment Insurance still exists in the form of job seekers allowance or income support whatever they wish to call it, today pays out very little, is still means tested although everyone has to still pay 'national insurance' contributions and has an excess period of 13 weeks before you can claim.
One thing that hasn't changed in nearly 100 years is that, if you are unfortunate enough to become unemployed - you can't rely on the Government to cover you!
In the current recession it is wise to protect yourself against unemployment with
income protection or
lifestyle insurance.
Very reasonably rated polices are available from independent suppliers such as Personal Accident.
Labels: income insurance, income payment protection insurance, income protection, income protection insurance, redundancy insurance, UK government, unemployment insurance
iProtect assure Income Protection Insurance clients are covered for Swine Flu
Specialist provider of lifestyle insurance and income payment protection insurance products,
iProtectinsurance.com have today not only assured their existing customers that they are covered for swine flu and it's after effects, but have also issued a rallying cry to those worried about whether they are covered or not, to switch any ASU policy today at no cost and with no exclusion penalties - you might even save a lot of money!
Spokesman for the company Dennis Haggerty said
"At
iprotect we have always refused to sell Unemployment insurance without it being combined with Accident and Sickness cover as well. This is because our statistics show some of the most expensive and long running claims are for sickness. It is really the only way to be fair to customers to ensure they are covered in of work for any form of involuntary unemployment, not just redundancy.
Despite the recession and the huge increase in unemployment, still some 40% of the claims we receive are for Accident and Sickness related absence from work. Some of our past claimants have been so unwell they could not work for close to a year. The Swine Flue outbreak is a reminder to us all why it is important to have
Accident Sickness and Unemployment cover, Further, if people become infected and potentially seriously debilitated by damage to their lungs and internal organs, quite possibly they could be many months off of work.
Modern medical science may avoid deaths in the UK, but if the strain mutates and prevents its victims returning to work, it is some comfort to know that at least the bills will be paid and benefits paid under their iprotect policy prevent their family finances spiraling out of control."
InsuranceBlogger has had a good look at the iProtect website. It's very easy to use particularly if you are looking to switch or combine covers or policies. The ratres are some of the most competitive on the market and their lifestyle insurance offers exceptional cover at very cheap rates.
Labels: accident insurance, ASU, income insurance, income protection, income protection insurance, lifestyle insurance, mortgage protection, swine flu, unemployment insurance
Income Protection Insurance - Claim Exclusion & Excess Periods - confused?
If you like me are one of the many millions of people who've recently rushed out and bought some unemployment insurance in the form of Income Protection Insurance, you may be confused about the all important claiming part of the policy.
This centres around the Claim Exclusion Period and the Claim Excess Period.
So here's an explanation of the difference:
Claim Exclusion Period.Nearly all policies have a wording which excludes claims for unemployment for 120 days or four months from the inception date when you took out the policy. This period is to prevent fraudulent claims from people who knew they were going to be made unemployed. The exclusion period means the period of time that you will need to be unemployed or disabled before you qualify for claim payments. The qualification period options vary by policy are always detailed on the income protection insurance policy documentation.
Claim Excess Period
Not to be confused with the exclusion period, the excess period is a period
of time from the day you make your claim until the claim is eligible to be paid
out. It varys considerably by income protection policy and longer excess periods
generally mean cheaper premiums. This may not always be in your best interests,
so many of the independent income protection insurance suppliers now offer polcies
which have 'back-to-day-one cover'.
But what exactly is 'back-to-day-one cover'? It means that claims are paid back
to the very first day of your claim for benefit.
For example,if you take out cover and then made a claim on the 1st of May you
would wait until the 31st of May before receiving any benefit but the payment
would be for the entire period you are unemployed or disabled from the 1st of
May. So effectively you get benefit as soon as you are eligible for a claim
and there is no 'excess period' in which you can't claim benefit.
Shop around
Income Protection Insurance is one type of insurance where it really does pay to follow the maxim 'shop around'.
With so many offerings and variances in benefits and premium
rates, on the market it can get confusing, however the better Internet sites
now make the process quick and easy and should not deter you from purchasing
this modern essential
More information on UK Income Protection Insurance can be found here.
Labels: income insurance, income protection insurance
UK Finance Giants withdraw Unemployment Mortgage Protection Insurance for own employees
Insurers may withdraw Mortgage Protection Insurance cover to their own employees
In the wake of the credit crunch, collapse of Lehman Bros. , the inevitable threat hanging over the future of Amercian insurance giant AIG, and the unprecedented collapse of UK Insurance giant HBOS shares by 40% in one day, you could argue that MPPI unemployment Insurers are right to worry and already some capital lenders are refusing to offer payment protection insurance to homeowners and employees who work for banks and building societies.
Some Underwriters have gone further becoming more risk averse and have included all financial services sector workers including insurance company employees, IFAS and insurance broker staff.
This adds to the growing list of trades and professions who are now finding it increasingly difficult to puchase unemployment insurance to protect their mortgages, income level or loans.
Construction workers, estate agents, conveyancing solicitors and services and more recently removal firm staff can no longer easily purchase mortgage payment protection insurance or the other products that could ease the pain of being unemployed.
The move could be indicative that the UK Insurance market is heading for recession. Insurance Staff have been made unemployed gradually over the the last six months, with a recent 6000 redundancies at Norwich Union flying under the general radar, with other insurance company giants creating redundancy hitlists.
A spokesperson for
Personal Accident - one of the UK's largest online independent mortgage protection insurance providers, who compare policies on price and cover - said, "It's true that we have received notices from some of our underwriters withdrawing certain particular income related unemployment cover for a list of trades within the financial services sector.
However we can still offer age-related policies for
income protection insurance and
mortgage protection insurance to all bank and building society staff, which generally offer better cover at lower prices as they are not lifestyle rated and available to anyone. As these are monthly policies they are simple to change midstream - you could save yourself a fortune in premiums if you switch your policy from a bank or building society and a lot of worry if you are unfortunate and join the ranks of the mass unemployed, or your building society or bank collapses leaving your policy worthless.
Could you meet your mortgage repayments or pay bills without a job? These are very worrying times...."
Simon Burgess head of independent provider
Burgesses agreed. "Age-related unemploment insurance offers the best solution to financial services workers who may be threatened with unemployment. We offer policies to cover your mortgage, wages or debts whilst you are unemployed. I would however advise anyone thinking of protecting themselves from financial harm if they lose their job, to act fast as there is a ninety day exclusion no claims period from the start of the policy." He added, "Although our mortgage protection insurance has seen a downturn with the number of new mortgages being taken out virtually non-existant due to the credit crunch, we have recently seen a sharp rise in the number of
unemployment insurance applications, particularly from workers in financial services."
So it appears that if you want to be able to pay your mortgage in three months time or still have an income you should take out
payment protection insurance cover today. This is particularly prudent for financial services sector workers whose jobs appear to be most at risk.
Labels: income, income insurance, Insurance, mortgage payment protection, mortgage payment protection insurance, mortgage protection insurance, mppi, unemployment, unemployment insurance
