Does Income Protection Pay If You Lose Your Job?
No, standard income protection does not pay if you lose your job through redundancy, dismissal, or resignation. It only covers illness or injury that prevents you from working. For redundancy cover, you need separate unemployment insurance or a policy with a specific redundancy add-on.
Key Points
Redundancy NOT covered
Standard income protection doesn't cover losing your job through redundancy
Illness/injury only
Income protection only pays if illness or injury prevents you working
Separate insurance needed
You need unemployment insurance or redundancy cover separately
Read your policy
Check your specific policy terms for exclusions and limitations
Frequently Asked Questions
Does income protection cover redundancy?
No. Standard income protection only covers illness or injury that prevents you from working. Losing your job through redundancy, dismissal, or resignation is not covered.
What insurance covers job loss?
You need separate unemployment insurance or income protection that specifically includes redundancy cover (rare and more expensive). Some mortgage payment protection policies include redundancy.
What if I'm made redundant while on a claim?
If you're already receiving income protection payments for illness, being made redundant doesn't stop your claim. You continue receiving payments while you're too ill to work.
Is unemployment insurance worth it?
It's less common than income protection because redundancy is harder to insure against (it can be influenced by your behaviour). Short-term policies exist but typically only pay for 12-24 months maximum.
Related Questions
This page provides general information only and does not constitute personal financial advice. Income protection insurance products and their terms vary between providers. Always read the policy documentation carefully before purchasing. Your Home Finance is authorised and regulated by the Financial Conduct Authority.