Dealing with Redundancy and the Role that Personal Insurance plays

Leaving your current employer could mean that you cease to be eligible for certain forms of insurance directly related to your employment. Examples of this can include:

• Life, Total and Permanent Disability (TPD) and income protection cover linked to a super fund into which your employer was making payments.
• Sick leave or insurance provided by your employer that was not part of any super fund.

After determining whether you would be losing any insurance benefits you should proceed to do a broader analysis of your insurance position to determine whether you are adequately covered. The meaning of adequate in your case will most likely be influenced by your answers to the following questions:

• Do you have family or other dependants?
• Do you have significant amounts of debt?
• How much backup finance do you have available to draw upon in case of illness or serious injury?

Designing a new insurance portfolio in response to your assessment of your current situation can be quite complex and you would be well advised to get some professional advice in doing so. There are however a few basic considerations that you should take into account. Chief among these are:

• It is often possible to purchase insurance cover within a super fund. The main benefit of doing this is the fact that you can make significant tax savings and that premiums can under certain conditions be deducted from your super account balance. This means that you can remain adequately insured even when faced with a severely reduced cash flow.
• It might be possible to simply continue with the insurance arrangements that were in place when you were employed. Your super fund manager will be able to inform you whether a continuation option is available in your case.

It should be clear from all of the above that with redundancy comes some serious financial decisions. The way in which you make those decisions can make a definite impact on your financial future. Do your best therefore to make them in an informed and well thought out way and make sure that you get the best possible advice as you consider the alternatives open to you. Doing so could make your transition to a new position just that little bit easier as it will allow you to concentrate on taking the next step in your career rather than having to worry constantly about your long term financial future.