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