No matter how long and hard you have worked for a particular organisation, the unfortunate truth is that today, no job will guarantee you lifelong employment security; sadly, cutbacks and redundancies are becoming an unavoidable risk. If you are made redundant, your employer may offer you a reasonable redundancy pay package, but this is rarely enough to maintain your current standard of living until you find another job. Losing your regular income could leave you struggling to afford to pay your household bills, make mortgage payments on your house, and even buy groceries. In order to avoid financial difficulties, you may wish to consider taking out unemployment insurance.
Unemployment insurance protects your regular income by making monthly payouts to you if you suddenly become redundant, or lose your job for reasons outside of your control. Fortunately, Australia has traditionally enjoyed relatively low unemployment rates, but an increasing trend towards outsourcing of labour and more short-term flexible working contracts has meant that unemployment insurance is becoming more relevant. The need for unemployment insurance also increases in periods of economic instability, as the need for employers to make savings adversely impacts on job security.
Unemployment insurance commonly goes by the broader name of Accident, Sickness and Unemployment Insurance (ASU) or Income Protection Insurance. These are seen to be the main insurable reasons why you would not be able to work, and could therefore lose a significant amount of income. Some insurance companies split ASU insurance into two elements; accident and sickness insurance also covers any disabilities which keep you out of work for a certain period of time, and unemployment or income protection insurance covers periods without work (sometimes referred to as 'redundancy or involuntary unemployment insurance').
Some insurance companies further refine their policies, offering specific cover for mortgage payments, other loan payments, or simply a regular level of income. It may be the case that choosing less extensive cover will save you money, since some companies 'package' all these types of cover into one comprehensive policy, which may not suit your needs. Ensure that you read the terms and conditions of your policy carefully, to check that you are not paying for unnecessary cover.
As much as this type of insurance is becoming popular in uncertain times it is still important that you fully understand all exclusions and restrictions that may impact on your ability to claim if necessary.
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