In September another 31,800 people claimed jobless benefit, lengthening the dole queue to almost 1.8 million.
Redundancy insurance, which is also known as unemployment insurance or redundancy cover, is supposed to provide a payout if you lose your job. However, consumers need to be aware that these policies can be as misleading as Payment Protection Insurance (PPI). They are expensive for what they provide and they may not pay out when you need to claim.
Typically, redundancy insurance will only pay out if you lose your job because of compulsory redundancy. You cannot claim if you choose voluntary redundancy. Additionally, you must actively seek work while you are claiming on your redundancy insurance.
Other onerous conditions include a wait of between 30 and 60 days before you start to receive benefits, and a qualifying period of 120 days before the policy is valid. You must also be continuously employed for six months before you can make a claim.
David Kuo, Head of Personal Finance at money website Fool.co.uk, says: "It is understandable that we want to insure against losing our jobs as the economy slows. But it is vital to ensure that you are buying something that does what it says on the tin.
"Redundancy insurance is expensive when compared to Income Protection insurance, which protects against loss of income if you can't work. Another option is to self-insure by putting aside at least three months worth of expenses.
"Buying insurance will give you peace of mind. But be mindful of buying useless insurance. It is tantamount to drawing a cake in the ground - it's not much help if you are hungry."
