Redundancies are unfortunately a part of the working world and those who go through it can face substantial economic and non-economic costs. It can lead to long periods of unemployment whilst looking for a new job and can sometimes lead to displaced workers taking on roles which pay less and have fewer benefits than their previous job1. And whilst 16% of Australians report being happy about their position becoming redundant, 74% felt negative about the experience with reasons for this being they enjoyed their job, were stressed about losing it and their income, finding a new job is stressful and the broader emotional impact taking a toll2.
It’s reported that more than half of the Australian population either know someone who has been through redundancy or have unfortunately been through it themselves3 and in recent financial reports, one in every two Australians feel as though it would be difficult to find a new job, which is the highest number recorded since late 20164.
So, what do you do when redundancy looms?
Previous generations once enjoyed a “job for life” working world, but unfortunately, this isn’t the case anymore5. The reality is that due to economic reasons such as downsizing or closure, redundancy can happen to employees of all tenures and experience.
Losing your job and your income can be a stressful time and although it sounds like doom and gloom, there are options available to have peace of mind, so that if something like redundancy occurred, you could have a plan in place to fall back on.
The vulnerability test
Particularly for those with a mortgage or large debt to repay, it’s important to check in with yourself and your financial situation and assess how vulnerable you are, if you were to lose your income or face involuntary unemployment.
Could you rely on a redundancy package to see you and your family through to finding new employment? If your tenure was only one year, you might only be entitled to receive four weeks’ worth of pay6. For some households and families, this might not be enough to cover the mortgage, bills and any other expenses, especially in light of recent reports, where more than half of all Australian households spend their entire monthly income, and one in five do not feel confident they could raise $3000 in an emergency7.
Could you rely on savings, or would you need the help of family and friends to see you through?
Protect your financial future
At ALI Group, in the last five years 50% of our claims have been for involuntary unemployment8 and our loan protection insurance has helped thousands of Australians and their families through extremely challenging life events.
If you are a first home buyer, a property investor or perhaps you’re taking out a loan to carry out some renovations – then it could be prudent to discuss loan protection with your broker.
You see, ALI’s Loan Protection Plan provides a lump sum benefit if you are diagnosed with a terminal illness, pass away or suffer one of eleven serious medical conditions (including cancer, heart attack or stroke).
With a Loan Protection Plan, you will also receive up to three monthly benefits if you involuntarily lose your job (with only a 30-day waiting period)9 within the first five years of your policy. And you don’t pay any extra for this cover.
You may also consider adding the optional accidental injury cover which provides up to three months benefits, if you suffer a disabling injury (also with a 30-day waiting period).
If you are ready to learn more and take control of your financial future, reach out to your friendly mortgage broker today for more information on an ALI Loan Protection Plan.
For more information about the different types of life cover available, you can visit https://www.moneysmart.gov.au/insurance/life-insurance
your mortgage broker today about loan and mortgage protection. It’s how your mortgage broker prepares you for life’s unexpected events.
About Emma Flanagan
Emma is the Marketing and Communications executive at ALI Group. After completing a Bachelor of Communication with a Major in Journalism, Emma spent a couple of years living, travelling and working abroad before making her way home to Australia. Now, with firm roots back in her home town of the Central Coast in NSW, you will usually find her somewhere laughing with her family and friends, wining and dining with her Fiancé or by the ocean with her beloved, miniature dachshund, Lulu.
1. OECD (2016), Back to Work: Australia: Improving the Re-employment Prospects of Displaced Workers, Back to Work, OECD Publishing, Paris. [https://www.oecd-ilibrary.org/employment/back-to-work-australia_9789264253476-en]
2. Seek, Career Advice [accessed at: https://www.seek.com.au/career-advice/honest-truth-about-redundancy]
3. Seek, Career Advice [accessed at: https://www.seek.com.au/career-advice/honest-truth-about-redundancy]
4. MSN.com article, personal finance [accessed at:https://www.msn.com/en-au/money/personalfinance/almost-half-of-aussie-households-spend-entire-monthly-income/ar-AAFGlkV]
5. Seek, When Redundancy looms [accessed at: https://www.seek.com.au/career-advice/when-redundancy-looms]
6. Fairwork Ombudsman, [accessed at: https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/notice-of-termination-and-redundancy-pay]
7. MSN.com article, personal finance [accessed at:https://www.msn.com/en-au/money/personalfinance/almost-half-of-aussie-households-spend-entire-monthly-income/ar-AAFGlkV]
8. ALI Group last five financial years claims data, as at 30 June 2019
9. ALI Group, https://www.aligroup.com.au/existing-customers/policy-documents (refer to PDS)
Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSL 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement
(available at www.aligroup.com.au) when deciding if this product is appropriate for you. © ALI Group 2019.