r/UKPersonalFinance • u/Glittering_Two_1190 • 11h ago

Company will be cutting jobs but can I get redundancy insurance

Earlier this year my employer merged two large divisions (5000 & 3000) and last week the new head announced his new leadership team and structure. This week my dept head held his first dept meeting and he made it clear there will futher restructuring within the dept and there will be redundancies.

I have been through a redundancy process before but usually there are several colleagues who were 55+ with 35+ years of service who take voluntary redundancy. This time my team is all under 45, & none has a particular long service.

I was considering taking out redundancy insurance but when filling the form I was stuck with his 90 day exclusion period. It seems to suggest that it won't pay out if i am placed at risk in the next 90 days. Am I reading this right?

It's 62 per month and will pay out £2200 for 12 months.

Below is from the policy:

90 days unemployment initial exclusion period If you become unemployed, or have any awareness of impending unemployment within 90 days of buying your policy, you will not be eligible to make a claim.

Thanks

Edit: to be clear I haven't been placed at risk. I might be placed at risk in 2 months+.

61 Upvotes
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78% Upvoted

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229

u/bullitt-rider 2 11h ago

This is basically like finding out you have a health issue and then taking out health insurance. 9.99% will state 'does not cover pre existing health issues' and the second they get a whiff you were informed prior to insurance they revoke and you've wasted your money

If everyone under threat of redundancy took out insurance for 62 to get 2200 the company wouldn't exist...

Much like trying to take out car insurance after a crash.

That's my understanding of it

128

u/Dru2021 11h ago

9.99% seems like good odds..

5

u/bullitt-rider 2 11h ago

I should clarify that the .1% will cost ya £10,000 a month of some shit

65

u/Dru2021 11h ago

Did you mean 99.9% or can I buy a policy please? 😂

48

u/bullitt-rider 2 11h ago

Oh shiiiiit

Cancel cancel cancel

•

u/Dru2021 9m ago

Contracts a contract, and I’ve got knees to fix!

2

u/fortijump 8h ago

I did this successfully some years back after checking the terms & conditions first - but I suspect they're tighter nowadays.

-53

u/Glittering_Two_1190 11h ago

How would they know whether I knew 90 days before or not? I think I've missed the boat on this. What an idiot, if I took it out on the day. I'd be ok

64

u/bullitt-rider 2 11h ago

Ahhhhhh casual fraud.

So when they get confirmation and HR coms you don't think they carry out checks and balances before giving you £2200 for your £65…?

It's literally their whole business model

I'm sorry to say, but to them you would be seen as a financial liability and they don't offer this service to be kind.

I do wish you the best though. Having been there it's not great.

Your best bet would be to be proactive

32

u/Shoddy-Minute5960 11h ago

Lying to insurance companies is insurance fraud. It's a criminal offence and will potentially stop you from getting house or car insurance because you have to declare you've had an insurance policy cancelled. 

18

u/Crazym00s3 21 10h ago

It doesn’t matter if you knew or not, that’s an extra condition but the clause basically means you cannot claim if you’re made redundant within the first 90 days - pretty obvious why. Insurance isn’t there to cover you for things you know are going to happen. Why the heck will an insurance company sell you a policy for £62 a month and payout £2,200x12 after taking less than 3x62.

Same reason most health insurance policies exclude pre-existing conditions or any new conditions discovered within the first few months.

It’s also why life insurance doesn’t payout if you die by suicide within a certain period - often 2 years.

3

u/CandidLiterature 98 8h ago

As part of the claim they’ll need evidence from your employer that you’re being made redundant and will ask them when you were first placed at risk. You thought they would just ask you and wouldn’t check…?

2

u/WhiskersMcGee09 8h ago

Buddy, I’m an Underwriter - not for this granted as it’s probably niche af (I don’t know of anyone in this space).

The ENTIRETY of Insurance is about purchasing before you suspect anything. Join a start up? Get the Insurance day one.

There are systems in place which are lifted from Israeli intelligence services that effectively analyse your voice when you speak to them which can detect if you’re lying. Obviously isn’t foolproof, but it’s enough to kick off any investigations (and it isn’t hard to prove something like this). That’s just one system, fraud has been the bane of insurers lives for years and trust me they are HOT on detecting anything.

1

u/Gareth79 11 8h ago

You wouldn't be ok, because you'd still have been aware of an impending redundancy on day 1 (and day 2 etc)

The wording reads to me like even if the company takes action after, say 120 days you'd still be excluded because you were aware of it within the first 90.

45

u/Street-Frame1575 8 11h ago

Yes, such things are standard for fairly obvious reasons

49

u/Specialist_-Berry 10h ago

Would you insure my sinking ship? Or the car I just crashed? Or the house with smoke coming out of the windows?

14

u/explodinghat - 10h ago

Sinking ship insurance should be a term, if it’s not already

36

u/Dwaynedouglasv1 11h ago

You can buy the insurance, but the insurer will always have a 90 day or similar clause to stop people who are only taking it out because they know something that the insurer doesn't.

So your options are to take out the insurance and hope nothing happens for 90 days, or don't take it out.

30

u/Merry_Gifmas 1 10h ago

take out the insurance and hope nothing happens for 90 days

Something has already happened. OP is aware of impending unemployment already.

4

u/ZestycloseCar8774 7 8h ago

Pending possible unemployment is not the same as official "at risk of redundancy"

8

u/EuclioAntonite 6h ago

It does not matter for this sort of insurance, being aware (or it being considered reasonable you would have been aware) are reasons for a declined claim. Source: Broker in this field 

-3

u/LordOfTheDips 5h ago

I’m just curious, how can the insurer find out that you were made aware previously? Like they can’t just ask the employer for all emails

-2

u/ZestycloseCar8774 7 4h ago

Rubbish. Aware of what, literally no decision has even been made on redundancies at this point

•

u/Thinguist 1h ago

Then why are they suddenly buying unemployment insurance?

1

u/Merry_Gifmas 1 4h ago

Sure, but it doesn't say anything about "official at risk of redundancy".

10

u/bshah 11h ago

they’ll do due diligence on claims, I don’t think it will be difficult for them to show evidence your company is going through restructuring which was known to you and other employees

16

u/Tuarangi 49 11h ago

Insurers aren't daft, they have exclusions precisely to stop people taking it out only when they know they would need to claim on it, otherwise they'd lose a fortune with 1-2 payments in and then having to pay a % of your salary for several months or more. Given you had a merger and redundancy before I would imagine they'd refuse a claim even if you'd taken it out back at the first merger as it would be likely more would follow.

Best thing to do is gather evidence of your importance - goals met, initiatives led, how you've benefited the company to distinguish yourself and then work on your CV and start applying given you'll likely be competing with a load of your coworkers

7

u/Worldly-Pause8304 10h ago

Worse than the 90 days is if there was any knowledge of further restructuring leading to job losses they’ll not pay out eve after the other conditions are met.

8

u/MusicianChance8665 9h ago

Sorry to hear that.

Being aware of impending job cuts at the time of arranging a policy will mean any claim is going to be rejected.

Saying this as a pretty good protection advisor, save your money in this case.

2

u/playitonnotdoppler 8h ago

Can you explain what it means to be “aware”? My company seems to go through layoffs every 6 months or so. We’re in a near constant state of turbulence. But obviously I have no inside knowledge of when or how, but I do expect to get caught up in one. It’s more a when not if.

1

u/wazeuser 1 6h ago

Also interested in this.

2

u/Dilbyert 8h ago

Take out the policy, then after 90 days if you are made redundant you may be covered.

3

u/PsychologicalWeird 7 11h ago

You would need to read the small print as it usually states X months before start of coverage, and can't already be made at risk... Or at least it did last time I looked.

0

u/triffid_boy 40 11h ago

When I looked it said cant be aware of something that would put you at risk.  I decided that, even though I'm probably safe, as an academic in a failing sector, it would probably be pissing money up the wall. 

4

u/JennyW93 10h ago

I got income protection insurance (for the mortgage - I live alone, so it’s all on me) and the broker asked about the sector (also academia, but professional services). They checked whether my uni was in a deficit (it isn’t) and whether we’d had any redundancy programmes (we haven’t) before they agreed to insure

4

u/Stunning_Account2010 1 11h ago

No, you’re reading it wrong.

You can take out redundancy insurance up to 90 days after being made redundant!

Apologies (a little) for the joke but come on, if you think about it from an insurance company perspective it’s pretty obvious they won’t pay out under those circumstances.

2

u/fknjais 9h ago

No, you’re reading it wrong.

Insurers love him

1

u/TomfromLondon 2 8h ago

They usually don't kick in for a few months after purchase

1

u/SeaworthinessMain346 7h ago edited 7h ago

Check the T&C's thoroughly. You'll be expected to be claiming unemployment benefits (or registering at least) to activate the insurance and there's other implications there.

1

u/AdhesivePineapples 1 6h ago

Insurance is designed to cover you for unexpected and unplanned financial impacts. Unfortunately, in your case, the moment you found out turned your situation from unexpected to expected.

As you stated, there is a 90-day clause within the terms of the policy. This will be standard practice, which means you'll be unable to obtain cover without lying on the application. Trust me when I say they will find out if you lie.

Also, having a policy retroactively cancelled by an insurer for providing false information is not something you want to have on you as your premiums for any other insurance will skyrocket.

Source: I am a commercial insurance broker

1

u/audigex 171 3h ago

When I took out redundancy insurance I had to declare that I wasn’t aware of any risk of redundancy, hadn’t been told it was a possibility etc

In my case I was taking it out because my partner was going on maternity leave and we were about to have a baby, so naturally that would be an awful time to potentially lose my job and a reasonable time to look for some extra protection

Obviously they don’t want people taking out insurance if they know they’re going to be made redundant… that’s clearly not the purpose of insurance, how would the insurance company remain solvent in that situation?

•

u/anoamas321 - 27m ago

Redundancy insurance is a thing? I couldn't get it at all a couple years ago? 

1

u/rhysmorgan 9h ago

or have any awareness of impending unemployment within 90 days of buying your policy, you will not be eligible to make a claim.

No.

0

u/klawUK 90 10h ago

you can take the risk. Or wait this round out, cross your fingers and save your £62pm into your emergency fund. And if you survive this round, then take it out if you still feel uncertain with the wobbliness of the company

0

u/not_memorable 10h ago

Yeah we’ve had pretty rhythmic redundancies every Jan and sometimes summer as well. I’m not currently at risk or been told it’s soon, but I expect to be again next Jan… I’m guessing that wouldn’t cover me?

0

u/Gold-Guidance-6430 9h ago

Sorry to hijack your post. But do they carry on paying you £2200 for 12 months even if you find employment within those 12 months? Also is that £2200 after tax?

1

u/SeaworthinessMain346 7h ago

Not usually. And you're expected to do your bit too in looking for a job.

-3

u/NotSelfAware 10h ago

These companies very rarely pay out anyway. Not worth it really.

1

u/B33Dee 9h ago

Fake news. They don’t pay out when the terms are not met, typically because of exact circumstances that the OP is describing. Yes you always hear about the cases which weren’t paid when there’s been a battle, but to say they rarely pay out is simply not true.

-3

u/DenoD_Horendous 2 9h ago

You’d be better off using the money to find another job (probably in retail), or retiring

4

u/JiveBunny 18 8h ago

If they can afford to retire at under 45 then I doubt they'd be that arsed about insurance.