Act Sooner Rather Than Later If You Want PPI to Pay Out Says Burgess

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People dithering over whether to buy redundancy protection must act sooner rather than later or they may end up with cover that won't pay out should they lose their job, warns Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Sara-Ann Burgess, MD Burgesses

PPI rewards prudent consumers who are proactive in recession-proofing their finances, rather than making payments to people who decide to take out a policy once they hear their job might be on the line. This is why I'm urging employees to act now, redundancy is a threat to all and the earlier PPI cover is taken out, the more likely the claim will be paid.

People dithering over whether to buy redundancy protection must act sooner rather than later or they may end up with cover that won't pay out should they lose their job, warns Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

She explains, "Although PPI, or redundancy cover as it's often referred to, is freely available to anyone who wants to buy it, claims will be rejected from people whose employer announces redundancies before the policy is taken out or up to four months after purchase. Even if specific job cuts aren't identified, insurers will rule that the employee was 'at risk' of redundancy and therefore ineligible to claim."

Sara-Ann's call for workers to act quickly and take out cover before further redundancy notices are given, comes in the week that recruitment firm Randstad released survey findings showing 46% of 350 public and private organisations are planning to cut staff levels in the next few months.

Its survey reveals an increasing number of employers intend to cut at least one in 10 of their workforce, indicating job losses will be higher and more widespread than anticipated.

The Federation of Small Businesses also says its members will make further redundancies having witnessed a 214% rise in calls from firms seeking employment advice in Q4 2008. During this period it received 4,905 calls, up from 1,562 logged in the same quarter in 2007.

In the first quarter this year, the Federation expects 85 businesses to go into administration every day and predicts this will increase to 120 daily in Q2. Sara-Ann continues, "This equates to 18,570 businesses going bust in the first six months of 2009 and given the average small business employs four people, 74,280 people are at risk of redundancy.

"This is an horrendous figure and underlines the importance of everyone having PPI or some other form of financial support to meet monthly commitments should a salary be lost. Smaller job cuts don't make the headlines these days, just the ones where hundreds and thousands of redundancies are announced in one go, such as Woolworths, Corus, Barclays, M&S, Jaguar Land Rover, Adams and South Eastern trains.

"However, whatever the profession, business-size and sector, people must consider ways to protect themselves against spiraling debts and ensure they can recoup a percentage of their salary to pay bills should they lose their job."

Payment Protection Insurance pays a pre-agreed sum every month for up to a year to meet varying financial commitments such as loans, credit cards and wider household bills, if redundancy occurs. But, it will only pay out if the policy is taken out well before any job losses are notified.

Claims are excluded from policyholders who are aware of any impending unemployment due to job loss announcements or mergers/restructures before the start date of the policy or within 4 months of it being taken out. This approach may be considered unfair, but insurers state this is 'standard industry practice' and avoids a knee-jerk reaction from workers looking for instant policy payouts.
Sara-Ann concludes, "PPI rewards prudent consumers who are proactive in recession-proofing their finances, rather than making payments to people who decide to take out a policy once they hear their job might be on the line. This is why I'm urging employees to act now, redundancy is a threat to all and the earlier PPI cover is taken out, the more likely the claim will be paid."

"However, be wary, there are unscrupulous providers who do not go through the exclusions and will not bother to check a customer's claims eligibility. Buy cover from independent PPI providers who will not mis-sell cover and are likely to offer more competitive premiums and broader support services."

PPI premiums are calculated per £100 of benefit and standalone firm, British Insurance, charges £3.40 per £100 for unemployment cover. A person looking for a monthly replacement income of £500 would pay £17 a month.

British Insurance has a 100% customer retention rate, has never received a product or service complaint, has policies for homeowners, those renting and people in shared ownership schemes and offers a back to work assistance programme.

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