Customers should start protecting themselves against the impending redundancy aftershock of the credit crunch, according to MoneySupermarket.com.
The price comparison site says with jobs becoming a more common casualty of the credit crunch, many Britons may be looking for ways to insure their salary should they face redundancy or be unable to work through illness or accident.
It is encouraging consumers to consider payment protection insurance (PPI), the only protection product that pays out a monthly sum if people lose their jobs.
However, despite this potential lifeline, moneysupermarket says research it has carried out suggests only one in seven Britons have a PPI policy.
Almost a quarter of people do not know what PPI is, it adds, but points out that 7% admit the economic uncertainties have made them consider buying it.
Emma Walker, head of protection at moneysupermarket.com, says whether it’s mortgage or loan repayments, or credit card commitments, Britons looking to insure their income should consider a PPI policy.
“It's worrying that a quarter of us don't know what it is," she says. "More concerning is a tenth of people would only buy a PPI policy if they felt their job was under threat.”
Walker says the best time to buy a policy is when you least expect to need it, as the small print will usually reveal insurance is void if the policy maker is aware of impending unemployment.
“Even if the sector you are employed in has seen mass redundancies, you could be tarnished 'high-risk'," she says.
"Be upfront with your adviser about your situation and get as much information on your policy as possible so you're not in for any shocks. Exclusions and caveats are commonplace in a policy."
UK employers are negative about employment looking forward for the fourth quarter of 2008, expecting an 8% decrease in hiring, according to the Manpower Employment Outlook survey.
MoneySupermarket.com found applications for PPI policies are dominated by those employed in the finance and business sector (39%) followed by those in the construction industry (16%), both of which are areas suffering from recent job losses.
Walker says: "Policies such as PPI can be complicated so customers should seek advice if necessary and ensure they've read the small print of the policy - the last thing you want is not be covered at a time when you need it most.
“It's important to consider what is appropriate for your circumstances and what levels of cover you need. Insuring against unforeseen circumstances in the current economic climate is wise and standalone policies can be well worth the initial outlay."IFAonline
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