Outgoing Monetary Policy Committee member David Blanchflower issued a stark warning to all UK workers yesterday by suggesting Government spending and deepening recession could see unemployment hit four million.
The news comes only a week after The Office of National Statistics revealed unemployment has risen above 2m for the first time since 1997.
If you haven’t already, now seems like the right time to consider some form of protection for your client bank. Unemployment cover being the obvious choice.
However, to catch those consumers who are about to pile into the marketplace and panic buy, industry experts have flagged up a number of caveats to watch out for when purchasing unemployment cover.
AWD Chase de Vere’s head of protection and structured product research Julie Smith says there are lots of warnings you need to be aware of.
She says: “We ‘re getting more people asking about redundancy cover but that in itself has pitfalls, especially when most people who want redundancy cover fear they are at risk which means they won’t be covered.
“Also contracts can vary enormously and it is very difficult to compare like for like on any comparison site. As with most things you need to check the small print to make sure the policy meets your requirements.”
Smith says some things to consider before buying unemployment cover could be your eligibility for cover. She says generally you have to be working at least 16 hours per week and for at least six months prior to commencement of a policy.
It is also worth considering any age restrictions the policy may have, premium increases at time of renewal, maximum benefit entitlement and the policy’s exclusion period, says Smith.
Most polices have an initial exclusion period of three to six months from the start of the policy, which could pose a problem depending on your client’s circumstances. Also insurers have the right to refuse to renew a policy in the event of a change in circumstances, says Smith.
Providers meanwhile have aired a mixed bagged of views around unemployment cover.
Pru Protect director of protection Kevin Carr says there has been an increased demand for the product, while Axa has withdrawn its accident, sickness and unemployment offering to new customers as part of its Axa protection account from today.
Carr says: “The market has seen a notable increase in demand this year for unemployment cover, and as with other protection products the terms and conditions from one provider to the next can vary. Reviewing different product features, as well as understanding the terms and conditions, is potentially just as important for unemployment cover as it is with any other insurance.”
However, Axa’s decision to withdraw ASU from is protection portfolio is because demand for ASU cover is too low through this channel for the provider to continue offering it in this way.
An Axa spokeswoman says: “Existing customers are not affected as their cover will continue as normal. We remain fully committed to the ASU market and as such will continue to offer the cover through our corporate partners.”
It is also worth a mention that while some providers are withdrawing their unemployment offering, others are stipulating in their terms and conditions that all those working in the banking, financial and property sector are uninsurable.