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.
What a bunch of Bankers! UK Banks challenge PPI ruling
Feelings are running high this morning in the Payment Protection Market and the consumer pressure groups with news that Barclays and Lloyds TSB are challenging the Competition Commission's ruling to ban the sale of Payment Protection Insurance at the time of sale of a loan mortgage or credit.
Insurance Blogger thinks this is outrageous after years of expenditure on the investigations by the FSA and Competition Commission and others, and the subsequent fines for misselling, that any institution, let alone a largely Government owned institution Lloyds Bank, should have the right to challenge any such decision!
Payment protection insurance lobbyist Sara-Ann Burgess from specialist payment protection insurance company, Burgesses confirms our viewpoint. She said "These institutions are without morals and intent on putting profit ahead of consumers' interests." "This latest move is a bid by the banks to continue making billions of pounds in profits in order to prop up other failing business areas. "We all know PPI mis-selling is rife amongst High Street lenders and their resultant profits are obscene. These delaying tactics, lodged to stop the ban going ahead in October 2010, only serve to prove just how shameless these firms are and the extent they will go to protect their 'cash cows'."
The UK Protection Insurance sector takes over £5 billion in premiums every year and around 90% of the premiums goes in profit to Banks and Building Societies.
In 2006, the Competition Commission reported the 12 largest distributors made profits of GBP1.4bn - before the recession kicked in and demand for unemployment insurance protection and income protection insurance policies grew.
After a lengthy investigation into anti-competitive practices, the Commission announced in January a series of measures to lower prices and widen choice in the PPI sector.
These included: axing single premium PPI and replacing with monthly payments. a seven day ban on selling cover alongside credit. a requirement to offer PPI separately to credit.
The Financial Ombudsman Service predicted some 30,000 payment protection insurance mis-selling complaints would be received by the end of March this year and confirmed the majority of them can be traced back to High Street lenders.
It upholds at least 90% of cases and in the case of one lender, 100%.
Sara-Ann Burgess concludes: "How can you on the one hand say banks are working to restore confidence and then on the other have two major players challenging decisions in order to maintain gigantic market shares and prevent freedom of choice? Actions are certainly speaking louder than words. These lenders are damaging the financial well-being of consumers and will continue to do so. What's equally insulting is the fact that Lloyds is paid for by taxpayers and our money is being used to ensure we continue to be ripped off."
Insurance Blogger couldn't agree more! The banks created the current recession by the misselling of mortgages and piggybacked missold mortgage payment protection insurance, and now they are trying to retain their ill gotten share of a market that wouldn't exist if they had done their job properly in the first place.
BancAssurance is a French joke - Keep your noses out of Insurance - Bankers!
For those of you still in a job, we wholeheartedly recommend Burgesses 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.
Doomsday UK – Swine fever pandemic ravages British Economy
Within days of the closure of the last schools, the final tube train stopped signalling the immediate closure of the UK’s public transport network for the foreseeable future. Snakes of lorry convoys with armed police motorcycle outriders have been seen moving around the country’s motorways, ensuring vital supplies are getting delivered. The halt of Petrol (Gasoline) sales has prevented the movement of most private individuals. What’s vital? If the newspaper shop on the corner doesn’t get any cigarettes in soon he’ll probably get burnt out! Most businesses have been shut for over a month now under local community orders. Around the country local authority disaster action plans are in full swing and restrictions of movement of goods and people, are in place. Rioting is reported in some urban centres up and down the country by the major British TV networks, although the coverage is poor with outside broadcasts rare. Rubbish piling up in the streets and rats are not helping the problem, as victims of swine fever as it is now known succumb to other diseases. Everyone calls it Swine Fever since the H1N1 swine influenza virus mutated into the deadly strain. Bodies are going uncollected and unburied as the number of fatalities rises. The most up to date information can be found on remote UK Internet TV stations such as YouTube or Ustream. It looks well bad in India………Even worse in Cornwall...
No seriously we really do think it just media hype! Although a major viral crisis would damge the UK economy. Uncertainty and fear have been jamming the enquiry lines of call centres of UK insurance companies and brokers, up and down the country this week, following the sporadic outbursts of Swine Flu, influenza variant strain H1N1, associated with travellers returning home after vacation in Mexico. Unlike the questions regarding travel insurance which have been covered extensively in the national press, it appears the UK public are more concerned about their individual personal covers, should Swine Flu become pandemic. We asked some of the UK’s leading Insurance Business characters for their thougfhts on how Swine flu in the UK, was going to affect their insurance products and claims.
Hayden Powers, Customer Services Manager at Burgesses Ltd the UK’s largest online supplier of independent income protection insurance and mortgage protection insurance for Sickness and ASU products http://www.burgesses.com explained, “The majority of sickness insurance protection products sold by online independent providers such as ourselves in the UK, cover Flu and it’s associated sickness, and we can assure all our clients and direct customers that they are covered ‘back to day one’ of a period of sickness caused by swine flu. It is important that a sickness insurance policy includes the back to day one cover, as most income insurance and mortgage payment protection policies for sickness have a thirty day excess period before you can claim. If your swine flu sickness period only lasts three weeks and you have a thirty day excess period with no back to day one of your sickness cover, then you will not be able to claim.”
Robin Rankin of UK Commercial Ltd http://www.uk-commercial-insurance.com the online UK Commercial Insurance broker network, confirms that many small business owners are very concerned about the effects of swine flu on their business. He said, “They are concerned about the interruption to their business that widespread Swine Flu might bring. We have had enquiries as diverse as from freight forwarder insurance customers that do business in Mexico with imported goods, through to clients who have Keyman insurance who are concerned about business continuity if these key players fall victim to the flu. However most enquiries have been from small businessmen concerned about additional pressures on their already struggling businesses that swine flu might bring, in particular business insurance coverage under the contingency sections of business interruption. A major problem will arise if companies are forced to close due to a swine flu pandemic, and the nature of the risk becomes fundamental. In this scenario the UK Government will have to step in to rescue falling businesses.”
Dave Healey underwriting expert at online specialist car insurance comparison site http://www.car-insurance.tv warns of the dangers of driving with swine flu. He said, “We are warning our clients against driving if they are suffering the effects of flu or on medication prescribed due to having contracted swine flu. Aside from any legal obligations, persons doing so are at a much higher risk of having an accident”
It’s apparent that the UK insurance industry is bracing itself against the Swine flu outbreak as the situation worsens, but it is as yet unclear whether they are in a proper position to deal with a full scale influenza pandemic, as seen in 1918 with Spanish flu.
Good news is that despite all the bad economic news and the credit crunch, productivity is up. There has been a hundred per cent drop in the number of employees calling in sick saying they have the flu!
reading the following article from ezines at looking at the housing repossession figures it appears that that the courts aren't necessarily taking the Governments advice to be lenient of debtors.
Debit Crunch - Credit Card and Loan Debts May Lead to Mortgage Foreclosures By Paul Magus
Once upon a time an unsecured loan was exactly that - these days it appears every loan is secured against your property, if not what when you take it out but at anytime in the future, should the creditor wish to pursue an action against you through the UK Courts.
Creditors are using tougher tactics to make debtors pay back their debts - with a recent surge in applications for charging orders. A charging order is a application made to a district judge in a county court. Initially an interim charging order will be granted as soon as the creditor applies to the court for a charge. This will make your property very difficult to sell, even if you were planning to, as a potential buyer will need to negotiate the charge being removed, and would certainly not assist in a quick sale.
You will then be dragged before a district judge a few weeks later to explain why a charge should not be put on your property against for example, your credit card debts. A full charging order will be given in 99.9% of cases and the charge will be registered against your property on the land registry documents.These court orders, enable lenders to secure bad debt on credit cards and on loans against borrowers' properties. This would result in a loss of equity were the borrower to sell.
Much more worrying for the Nation as a whole is that today some lenders are now unwilling to wait, and according to a recent UK BBC Panorama program are bypassing the initial stages of the debt recovery process and now applying for an immediate 'order for sale' from the courts, forcing the property-owner to sell up straight away and pay off their debt from the capital raised against the sale of their house.
The CPS (Crown Prosecution Service) who set the CPR rules for procedure in the county and small claims courts, appear, primae facia, to be assisting Creditors in obtaining these orders, which cannot surely be in the National interest.
Be extremely careful in defaulting on your credit card payments you could lose much more than you bargained for including your home. We may have had the credit crunch which has restricted the flow and liquidity of money but we've yet to see the full force of the 'Debit Crunch' when the Credit Card and Loan companies want their money back, when your home will become at risk of repossession, even though you've always kept up with the mortgage repayments, for the smallest of debts, aided and abetted by the machinery of state through the Civil courts.
If you are afraid of becoming unemployed or are thinking about purchasing Income Protection Insurance in the UK, then take notice of the five things they don't (or may neglect to) tell you about when selling you an income insurance policy.
1. 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 policy documentation. quite often you can save many pounds by agreeing to a longer period during which you cannot claim.
2. Monthly Premiums.
Income Protection policies are monthly cover with the premiums usually paid monthly in advance by direct debit.
Because they only cover you on a month by month basis as long as you pay the premium, it is now very easy to shop around and get better cover at a much fairer premium.
If you feel that you job is likely to be at risk due to the fallout from the credit crunch and the banking collapse, you should act immediately and purchase some income insurance
Remembering the exclusion period, and say it costs you £30 per month per £1000 worth of monthly income benefit (which is incidentally quite expensive compared to the independent suppliers) a £120 outlay would secure you income benefit each month of £1000 from the New Year this year to Christmas next year, by when you should hopefully be back on your feet.
3. Changing Policy.
If you have previously purchased Income Protection from a bank or building society you should consider changing to an independent supplier, whose premiums may only be half what you are currently paying and whose cover restrictions may be more favourable to your individual circumstances.
Because you pay you premiums monthly if you already have income protection insurance in place, you may need to cover two premiums for the exclusion period if you purchase a new policy, which could prove expensive during the exclusion period.
However many of the independent income protection providers may have in place a premium waiver for this period in order to win your new business.
4. 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 varies considerably by income protection insurance 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 policies 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.
5. Shop around.
Income Protection Insurance is one type of insurance where it really does pay to follow the principle or maxim 'shop around'.
With so many offerings and variances in benefits and premium rates, on the market it can get confusing. A recent report by the Credit Commission in the UK accused the major lenders of anti-competitive practices and mis-selling of PPI and one area for example, legislation was introduced in January this year disallowing loan protection insurance to be sold alongside the loan or within 14 days of having sold a credit service to a customer, allowing that customer to for example surf the net for alternative IPPI products.
However today the better Internet sites, which are generally independent product suppliers, now make the process quick and easy, and should not deter you from purchasing this modern insurance essential in this most turbulent of economic times.
Lifestyle Insurance: How to avoid the unemployment spectre
Yesterdays latest unemployment figures were rather depressing with the official count just bubbling under two milllion unemployed in the UK at 1.9m.
The January job losses have yet to be taken into account and with the closure of many high street shops and the recently decimated manufacturing, financial and motor industries, we could see the official job loss rate of 6.3 rise dramatically this time next month when the January figures are published.
Is your job on the line?
Very few jobs are 'safe' in the current economic climate and it is worth considering
How you would protect your current position should the worst happen and you face redundancy?
What contingencies do you currently have in place should you find yourself unemployed?
Do you really know the monthly amount of outgoings you will need to sustain your current lifestyle?
IProtect are offering a whole new take on unemployment protection and income protection for unemployment by offering a wholistic 'lifestyle insurance' policy thatis designed to maintain your existing lifestyle should you suddenly become incapacitated or unemployed through redundancy.
Visit Iprotect for lifestyle insurance information
New face for the High Street as Unemployment worsens
We hope you had a good Christmas and everyone at Insurance Blog hopes you fare better in the New Year! But looking at the news and the statistical analysis, it looks like 'Things can only get.....worse. Yesterday the Chartered Institute for Personnel and Development predicted that unemployment will rise by 600,000 over the next year and with a further 400,000 temporary workers unable to find employment, by this time next year more than 2.8 million people will be officially unemployed. The CIPD predicts that the majority of the job losses will be before Easter, with 1600 people per day losing their job.
The future looks particularly bleak for the high street shops and the fall of Woolworths and their 27,000 employees on the dole, may look very small by Easter if the High Street manages to disappear at the rate it is shrinking - faster than the Polar Ice Caps. There will be an inevitable knock on effect for some High Street Insurance Brokers and the numbers are likely to shrink at the same rate as the rest of the retail market is collapsing!
If you work in retail we strongly recommend that you act quickly to take out income protection insurance. You will have to wait three months in order to claim as a matter of course, so act now! you can't rely on state benefits to maintain your lifestyle through this economic crisis!
Lifestyle Insurance Cover - the new ASU and Income Protection
There seems to be some confusion all over the Interent as to the difference between redundancy insurance and income protection - which in our opinion are largely the same ASU cover with possibly varying out of work conditions.
However both are currently being outsold by a new all inclusive Lifestyle Insurance product not tied to any particular payment plan or debt.
The new safety first product offered by British Insurance http://www.britishinsurance.com is different as it covers your complete lifestyle should anything happen to you including redundancy or unemployment. Lifestyle being you can spend the benefit to cover either or all of your Income, Mortgage Payment protection insurance, Rent, Utility Bills, Loans, Credit cards, Household bills, Other lifestyle cover. Following their award winning Mortgage payment protection insurance products success, this new lifestyle cover from British Insurance appears to be likely to be just as popular given the economic gloom. The redundancy insurance and lifestyle insurance cover is available in the UK through various large internet outlets
Insurance Blog regular contributor and UK Insurance Guru, Paul Magus, has written a very interesting article for those thinking of purchasing Income Protection Insurance in the modern economic environment....
"If you are afraid of becoming unemployed or are thinking about purchasing Income Protection Insurance in the UK, then take notice of the five things they don't (or may neglect to) tell you about when selling you an income insurance policy."
We often get told 'we've got mortgage indemnity' or 'we don't need mortgage payment protection as we've got mortgage indemnity'. So we thought we had better put the record straight on the differences between the two.
If you are paying mortgage indemnity insurance (which you shouldn't be) you are paying for a lender to be protected should you fall foul of the credit agreement and not pay the loan or mortgage.
Mortgage indemnity is insurance that your lender may ask you to take out for its protection in case, at some future stage, you fall significantly behind with your mortgage payments and your lender has to repossess your property and sell it. If the property is sold for less than the amount of your outstanding mortgage, your lender can claim on the mortgage indemnity to recover some (or all) of its loss.
You should be aware that mortgage indemnity does not cover you. You must repay all the money owed under your mortgage, whether or not your lender makes an indemnity claim.
Mortgage payment protection insurance or MPPI protects your mortgage payments should you lose your job or get sick. Most mortgages can be covered for under £20 per month if you go to an independent supplier such as Personal Accident or British Insurance. MPPI, or mortgage payment protection insurance, is private insurance that borrowers may take out to insure against sudden loss of income due to unemployment or health-related difficulties. This type of insurance is also known as Accident, Sickness and Unemployment insurance or ‘ASU’.
It is a good idea to take out MPPI, or some other form of income protection insurance, because state benefits do not normally cover mortgage interest during the first nine months you are out of work. The above independent suppliers will offer insurance cover that is suitable for you and your circumstances - and can cover you if you are self-employed, on a fixed term contract, or have a pre-existing medical condition.
The financial turmoil and dramatic drop-off in business conditions over the past two months have darkened the economic outlook for 2009 even further, the Confederation of British Tndustry (CBI) warned today.
In its revised economic forecast, the CBI predicts that the recession which it says, started in the third quarter of 2008 will now run for most of 2009 and see unemployment peak close to 2.9m. Some unofficial figures already report unemployment to be in excess of 3 million. Officially Unemployment is expected to reach the two million mark by the end of 2008, with the jobless rate rising to 6.5%. The number out of work is currently expected to peak at around 2.9 million (9%) by mid 2010. With this in mind it would be prudent for those still in work to purchase income payment protection insurance.
The CBI has downgraded its growth predictions for 2008 and 2009, following the severe impact on confidence and business activity from the financial turmoil in October 2008. GDP growth for 2008 has been revised down from 1.1% to 0.8%, and in 2009 the CBI now expects the economy to contract by 1.7%, against its forecast in September of 0.3% growth. These figures are closely paralleled to those of the Treasury predictions The economy is expected to shrink quarter-on-quarter by 0.8% between October and December this year, and to contract again for a subsequent three quarters before beginning a slow recovery through 2010.
As the economy slows sharply over the coming year and commodity prices continue to ease, CPI inflation is expected to fall from 4.2% this quarter to 1.7% by the end of 2009, undershooting the Bank of England’s 2% target. Into 2010, inflation is likely to fall back further to a low of 1.1%, averaging just 1.2% over the year. The drop in inflationary pressure will give further room to the Bank to make a series of rate cuts over the coming six months to bring the Bank rate to possibly as low as 1.5%.
John Cridland, CBI Deputy Director-General, said: “Since the last forecast in September the banking system has come under immense strain, sending consumer and business confidence has plummeted in its wake. Given the speed and force at which the economic downturn has occurred, we have reassessed and downgraded our expectations for UK future economic growth. But the fast-moving and global nature of this crisis means it is impossible to look far ahead with any certainty. What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting. An unwelcome consequence of the downturn will be a significant loss of jobs, many of them in sectors that have been relatively insulated until now.”
Lack of confidence among consumers will dampen household spending and the CBI predicts that household consumption will contract by 1.8% in 2009.
Investment forecasts have also been downgraded on the back of the falls in business confidence. The CBI predicts fixed investment will shrink by 3.8% in 2008 and 10.5% in 2009.
The CBI estimates that public borrowing will increase sharply during the recession. Net borrowing for 2008/09 is expected to hit £69.9bn and £93.8bn in 2009/10, which represent 4.8% and 6.4% of GDP respectively.
Ian McCafferty, CBI Chief Economic Adviser, said. “This latest forecast shows that 2009 is going to be a very tough year for business, with the sharpest fall in GDP since 1991. Most worrying are the increasing signs that the credit crunch is now reaching the corporate sector. Since October's financial turmoil, companies have started to report that, for the first time, they are finding it increasingly difficult to access capital. If this were to be more than a temporary phenomenon, it would result in otherwise healthy companies going to the wall for lack of short term finance. This would have serious implications for both employment and investment."
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
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