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Unemployment figures highlights need for protection

16th February 2011 Print

John Pollock, Group Board Director for Legal & General's Risk business comments on the rise in unemployment figures released by the Office for National Statistics (ONS).

The unemployment figures will not surprise anybody. With government budget cuts hitting the public sector and businesses that support public departments seeing a drop in orders, job losses are likely to continue.

The planned changes in state benefits means that those unfortunate enough to be made redundant will not find it easy to replace their loss of income with unemployment benefits. More people are likely to struggle to meet their household bills and make their monthly mortgage payments, potentially putting their home and family at jeopardy of repossession.

Recent statistics from The British Population Survey on UnemploymentCitroen published in January showed that 35% of jobseekers had a family and that nearly 50% either had a mortgage or were in private rented accommodation.

Our own recent researchCitroenCitroen has shown that only 2% of those surveyed had considered taking out insurance since the financial crisis hit, to provide cover if they were made redundant. 73% believe that the Government should provide financial help for those that are unemployed but not really understanding the actual benefits this would mean.

One of the real social benefits of insurance is when redundancy happens. For example, Income Protection Insurance allows for an income to continue or more specifically Mortgage Payment Protection Insurance (MPPI) is able to offer homeowners and their families a vital financial safety net providing a monthly amount, typically for up to 12 months which helps to meet their mortgage payments while they find another job. It can also cover them if they have an accident or become sick and are off work. Anyone who has a mortagage or is in the process of arranging one should seriously consider putting mortgage payment protection insurance cover in place to provide for the future, given that the state is unlikely to help."