PSA: Currently Not a Single Insurer in Australia Will Cover Involuntary Redundancy (Layoffs)

If you have this benefit from a former or grandfathered-in policy, well done. But the last policy I saw this on was removed in 2020 at the start of the pandemic.

As of 2022, not a single insurer will cover redundancies.

Comments

  • +2

    What about income protection insurance offers through mortgage provider? Let me find a relevant PDS in next 6 hours

    • 1.25 hours to go! God speed!

      • I replied below that i couldn’t find and you were right.

  • +1

    If they do cover it is usually very limited in terms of payout and how long. If you were an insurer would you cover redundancies?
    It would get abused and ppl would be redundant forever.

  • iSelect would like a word..

    • +1

      I had a few browses over last two hours, and i think OP is spot on! The first lockdown in 2020 made this event less insurable.

  • +1

    I think its very rare to non-existent for there to be an income protection policy that covers loss of job. If it did exist, it would be very expensive. Its like zero excess on a motor insurance policy, they factor in you are likely to make a claim.

    It is simply too prone to abuse.

    There should not be a need for such insurance at the moment.

    a) Unemployment rate is low, some places have a labour shortage.
    b) You normally get a redundancy package, unless you are a contractor / casual.
    c) One should have monies set aside for life's curveball anyway.

  • +1

    I had a look into this a few years ago when there were at least a few policies that covered involuntary redundancy as part of income protection.
    It was costly, had waiting periods before cover kicked in, and was for a limited time.

    My conclusion at the time was the circumstances where it paid out would be limited, so it wasn’t a material benefit. And that was when I was working in telco that had seen an 80% reduction in workforce over 15 years, so redundancies were routine and regular.
    Better to save the premiums so you have a cushion that you can use even if you are never made redundant.

    • +3

      And a bit more of my thinking - at the time, I was the sole bread winner and my partner was a full time student, and child carer for school age children.
      We didn’t have much scope for saving 6 months of expenses, we needed to pay the bills.
      This made me nervous about job security, hence the investigation.
      What ended up being acceptable to me was the conclusion that if I did lose my job, I could get another. Maybe at a significant pay cut, but certainly something, even if it was unappealing contract work or similar.

      Once I realised I was likely to be able to pay the bills, albeit with a lot of belt tightening, it became a question of whether I could endure this for a while, at least until my partner could contribute more. I figured I could do an unpleasant job for a year or two, knowing there was a date when my partner would graduate. And if things were tight, it wasn’t out of the question to pick up a Saturday job for one or both of us.

      I’m not trying to say you should do the same, but I kind of realised I was looking for insurance against having a crappy time for a year or two, not insurance against a real catastrophe.
      When I came to look at it that way, it was easier to sleep at night, because I had a plan if things went wrong, and it didn’t require monthly payments to get there!

    • Look at that we found one!

      Unfortunately it’s for a max payout of $15k ($5k/mo for maximum 3 months) for anyone who earns $140k AFTER tax. It’s $27/mo or $324/yr.

      They won’t let you get it if you earn more than $140 after tax.

      They won’t let you get it if you need more than 3 months of cover which at that rate is technically 40% of your income?

      So I think this technically meets the requirement of “involuntary redundancy insurance” but it’s super limited and you’re not paid your regular salary, nor does cover last very long.

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