Unemployment in the UK has been increasing over the last two years with the latest official figures published by the Office of National Statistics (ONS) showing there has been little change to this bleak picture.
According to the figures, the number of unemployed people has now risen to 2.47 million in the three month period to August, 2009. This is an increase of 88,000 on the previous quarter and up 677,000 from a year earlier.
The number of people claiming job seekers allowance from the state – otherwise known as the claimant count – in September 2009 was 1.63 million, up 20,800 on the previous month and up by 670,100 when compared with a year earlier.
Despite the rise, this is the lowest increase in the claimant count since May last year.
Further good news was also apparent from the number of redundancies that took place in the three months to August, with 233,000 people being made redundant, a decrease of 68,000 on the previous quarter.
And further signs that labour market could be stabilising was supported by the number of job vacancies, which instead of falling remained stable at 434,000 in the three months to September 2009.
How can insurance protect against unemployment?
According to Stephen Haddrill, director general at the Association of British Insurers (ABI), the rising unemployment levels and recession should teach the UK population lessons about protecting against all eventualities.
He said: “The recession has showed us that income cannot always be relied upon and neither can the state, so we need to become more self-reliant and less state-reliant. A lot of people have little protection to help cope with unemployment.”
David White, chief executive of the Children’s Mutual, added: “Around 69 per cent of households have less than £8,000 in savings, so you need to protect yourself. You need a resistance to shock.”
Why then do some people fail to invest in income protection insurance?
The managing director of life and health UK, at insurance company Swiss Re says there is not enough awareness about the need for people to cover themselves, and that financial planning can, for some, seem like a burden.
Craig Thornton, explained: “Often people take note of protection when it is too late. They think they’ll have enough to pay them if they become ill.”
“Some think, why spend money on things that are never going to happen but there is a protection gap which is in danger of getting wider during these financially challenging times.”
Paul Chohan, head of mortgages and life insurance at Confused.com, added: “It’s important to be able to choose the right cover for your circumstances.
“You can protect your income or your mortgage payments in the event of you suffering accident, sickness and most importantly unemployment. You can vary your excess period online – which is the time between the claim and when the product pays out - allowing you to choose the cover you feel is right for your circumstances.”
