Sheehan Financial

Redundancy Insurance

Why Consider Redundancy Insurance

Job loss is a common concern in the current climate, especially with recent headlines of public sector layoffs and private sector cost cutting. While its unpleasant to think about, having a plan in place can ease stress and provide peace of mind.

Building a Financial Safety Net

Government support like job seeker allowance and cost of living allowance can help, but they may not cover all expenses, especially if you have a working partner. Financial advisors recommend having 3 to 6 months’ worth of savings to cover expenses, which can be challenging to accumulate with high living costs. In severe financial hardship, you might access your KiwiSaver funds, though this impacts long-term financial security.

What Redundancy Insurance is

Redundancy Insurance protect you from the immediate financial impact of involuntary job loss. It provides a monthly income for up to 6 months, covering bills like mortgage payments, groceries and utilities, giving you time to find new employment.

How it Works

Redundancy insurance is usually an optional add-on to income cover. If you lose your job involuntarily, you can claim on your redundancy insurance, regardless of any redundancy payout from your employer. You chose the percentage of pre-tax wages and the stand down period from 4, 8 or 13 weeks. Policies require proof of redundancy and you must be employed for 6 months before claiming.

What it Doesn’t Cover

Redundancy insurance doesn’t cover involuntary redundancy, retirement or non-performance-related job loss. If you are fired or chose redundancy you cannot claim.

Key Points to Keep in Mind

  • Not available for seasonal, part-time, contract or self-employed workers.
  • Not all occupations and industries are available.
  • Public downsizing rumours or prior job security communications can void the policy.
  • Typically, you can make 2 claims in your career.
  • Maximum age for coverage is usually 55.

Want to hear more?

Come in a speak to one of our experts on how Redundancy Insurance could be right for your needs.