Protecting yourself and your family from a job loss is one of the most important steps you can take to providing security within your family unit. But how can you do that, exactly?

Stop and ask yourself: If you got fired tomorrow, how would you cope?

Could you cope? 

The more likely scenario in the current economic climate is rather than being fired, your department may be ‘downsized’ – resulting potentially in your redundancy – or business functions being outsourced or centralised in a location far from where you live.

Preparedness for such events can make the difference between weathering the storm, or drowning in it.

Back in 2009 I wrote about my plan for redundancy when I was deep in debt, and this 2-part post is effectively an update to that. Part 2 will look at the things you need to get rolling after you lose your job.

 

Before You Lose Your Job

There are some actions you can take before you lose your job that can help lighten the burden later on. Providing your financial house is in order, it will be relatively simple to do. If you’re just starting out after years of financial ‘head in the sand’ syndrome, it’d be best to set aside a day to go through everything.

 

1. Know Your Redundancy Rights

As an employee you have rights when it comes to being made redundant. You have a right to be consulted during the redundancy process. If your employer is getting rid of 20 or more staff, it must consult with the union or staff representative before even giving notice and should take place at least 30 days prior to notices being issued. If it is shedding 100 or more, it must take place at least 90 days before.

You should also be consulted individually and not just via your union. If this does not happen you may have a case for unfair dismissal (see next heading).

Further help and guidance can be obtained via Direct.gov:

• Your Redundancy Rights
• Entitlement to Redundancy Pay
• Calculate Your Redundancy Pay
• Redundancy Selection & Notice Periods

 

2. Know What is Unfair Dismissal

Unfair dismissal is exactly as it sounds – you lost your job for unfair reasons. There are endless potential examples, but a ‘for instance’ would be dismissing you for becoming pregnant, or refusing to work when it would be against the working time directive to do so, even when so ordered by your employer.

See Direct.gov for further guidance on unfair dismissal.

 

3. Fix Your Mortgage

Within the next 12 months myself and others are predicting a large-ish rise in mortgage rates. We are already seeing a slow rise in the cost of standard variable rates over the last 6 months, and with the Bank of England widely reckoned to be upping the base rate from 0.5%, a steady rise in mortgage rates is inevitable.

Protect yourself from untimely increases by re-fixing at a competitive rate now. Even if the rate is slightly higher than it is now resulting in a slightly higher cost than normal, when the rates begin to creep higher and higher you’ll be sitting relatively pretty than if you’d just remained on the Standard Variable Rate.

 

4. Fix Your Utilities

Similar to your mortgage, utility prices are on the up as well. If you can, shop around and find a good price-fixed deal. This will save you from untimely price rises at just the wrong moment when you can least afford to absorb them.

Dual-fuel deals are usually more cost effective, but don’t automatically assume that to be the case. See my 6 tips to reduce your electricity costs and 12 Tips to Save Water while you’re at it.

 

5. Pay Off Your Debts

Central to any plan to weather a job loss is to make sure you are debt free, or as near to debt free as possible in your circumstances. If your income is drastically reduced and you are concentrating on trying to find new work the incessant worry about how you will make the minimum credit card, loan and car payments will strangle you.

If you have debt such that you cannot hope to even meet the minimums in such a scenario, the non-stop telephone harassment and postal assault will surely drive you over the edge and severely damage your credit score in the process, potentially making finding a new job even harder.

For tips and advice to paying off your debts, head on over to my Get Out of Debt! series to get started.

 

6. Consider Your Next Job

Do you enjoy your current job, or is it time for a career change? Take the initiative and turn the current situation around into something more positive. Even if you are still gainfully employed now, begin looking around for ideas for your next move. You can write your C.V. to specifically target that market to help you get into it and have it ready to go for when the worst happens.

If you have talked yourself into wanting a change that badly, you could do worse than consider sending it in even while still in the employment of your previous employer.

Remember to balance the situation of your current employment against the potential gains of moving employer voluntarily. If you have been with your current employer for more than 2 years you have redundancy rights. If you move jobs, you would give up those rights for the first 2 years.

 

7. Spruce Up Your C.V.

If you have been in the same job for 10 years, it is quite likely that was the last time you looked at your C.V. Think of all the skills you’ve obtained since then. All the extra challenges you have faced in your work and home life that could add value to you as an employee. Dig it out, add your latest and greatest to it and sell yourself!

See the Top 10 HR secrets that will help get you hired.

 

8. Consider Your Health Insurance

If your employer currently provides you and/or your family with private medical insurance, now might be a good time to take the whole family for a check-up, a dentist’s visit and so on. Coverage will likely cease soon after your employment, so it makes sense to check nothing major needs doing before you lose your coverage.

Along a similar vain, if you are provided with a company car or insurance, consider how your transport may be affected by a job loss. You will need to factor in public transport or private insurance costs. If you own your own car there are still ways you can reduce your fuel costs and generally make your motoring life cheaper.

 

9. Review Your Household Budget

While you’re not panicking and running around like a headless chicken, take stock of your finances. What is your current cashflow situation? Do you know where every penny goes? If not then you need to start working out what you spend and when, to have some idea of how you’ll stand with a reduced income.

1. Complete an Online Statement of Affairs to calculate your monthly expenditure.
2. See what can be adjusted, reduced or disposed of entirely
3. Stick to the new budget and save what you free up

 

10. Look for Side Incomes

Any income is better than none at all, and if you can establish a side income stream while times are good, it can help carry you along when times are not so good. Why not start with my 5 tips for upping your income and then branch out from there. It need not be a huge commitment, perhaps taking a few hours a week at most. The point is to start it while you are not panicking about having no income at all.

Would you add to this list? Come share your experience and tips in the comments!

Once upon a time I was a small boy, and life was simple.

I got up, I went to school, I learned cool stuff, and I came home again. Then I ate my prepared-for-me dinner, I played with friends, and then I went to bed to prepare myself to do it all over again.

Then overnight somehow, I became an adult. Now I have bills bills bills, little time to play, and even do all the cooking! (It’s ok though. I enjoy cooking. Honest!). But every service and policy renews at different times and it’s made even harder when some places ‘helpfully’ rely on you not remembering and just automatically renewing policies and stinging you in the wallet.

My Home Insurance Quote

My current home insurance provider did, thankfully, send a letter reminding me they will helpfully automatically renew my cover in 28 days and that I “need do nothing”. They also helpfully put up the price by £103.29 despite not having claimed on it once, or even having spoken to them throughout the entire duration of the policy!

So step one, I rang to let them know that I have no intention of renewing. I knew I’d made the right decision as that phone call alone took nearly 20 minutes, and if you’re wanting to make a claim then being on hold for 20 minutes is not a great way to calm your nerves.

Find a Better Home Insurance Quote

Rule Number 1 is shop around. The Internet takes virtually all effort out of what used to take hours. Before comparison websites came into their own, I’d spend around 2-3 hours comparing policies, cover options, company reviews and all sorts.

This is wasted time. Why? Because you will never manage to check out, compare, remember or even find to begin with, the majority of home insurance companies out there. And this is where comparison websites have saved us not only a fortune in money, but a fortune in time.

Pop your details into a form, hit the magic button, and sit back and wait for the results to come in. Choose the cheapest one, check the cover, and sign on up! I performed my ‘winning’ check on Money Supermarket but there are plenty out there to choose from. The cover was slightly better than what I had previously (including accidental damage as standard rather than at an additional premium) and was less than what I paid last year.

Get A New Home Insurance Quote Every Year

The second most important piece of advice I can give is, much with every other service and insurance quote you get: shop around, and shop around very time it comes up to renew. Never settle for “it will do”, or “I don’t have time to change” because what it doesn’t cost you time, will cost you in your wallet. As I’ve demonstrated it took 10 minutes to fill in the comparison form, about 60 seconds for all the results to come in, and then another 10 minutes to sign up and purchase my new policy to start the moment my old one finishes.

That 21 minutes of effort saved me £111.70. If you paid yourself at that rate, that’s nearly £320 an hour. Worth finding the time to do, wouldn’t you agree?

Wait. Did I say the second most important piece of advice up there?

Yes. I did. And here’s the most important one:

Don’t pay your home insurance premium monthly, if it is anything other than 0%. You’re just throwing money down the drain otherwise, particularly if your credit is not brilliant. 24% APR is not unheard of and on a £150 premium that will add an extra £36 on to the top of your policy!

Coming up for renewal? Get your home insurance quote today and start saving too.

This is a 3-part article on Payment Protection Insurance (PPI), with the first instalment today. This post covers exactly what PPI is, how it applies to products, and how and why the PPI Refund industry has taken off recently. It also exposes the 13 most common reasons you may be due to a PPI refund. 

Part 2 will be an interview with someone who took on Lloyds TSB on their own, and savvy tips, tricks and outcome.

Part 3 covers exactly how to go about reclaiming on your own, for free.

You can’t watch TV for longer than 15 minutes these days, or read a newspaper without hearing about how YOU are due a PPI (Payment Protection Insurance) Refund. “If you call one of our claim handling specialists right now we can secure you thousands!” It’s the same on the radio. I even get them spammed to my mobile phone by text message and email. I’ve even had them appear on my blog as spam comments (thankfully caught).

The problem is not so much that you may (or may not) be due a refund of your PPI premium and associated interest payments, but more about how the service is offered. The vast majority of the commercial refund companies thrusting their services at you by any means possible is that they will charge not only an upfront fee, but potentially a percentage of any claim you receive. They also have no particular vested interest in seeing a positive outcome for you as they in the main rely on the under-informed applying in droves, paying a ‘small fee’ and potentially receiving thousands in return.

A Brief History of PPI

What is PPI?

PPI stands for Payment Protection Insurance and it is an insurance policy specifically created to help a creditor keep up with a loan or credit card in cases where they find themselves unable to work due to accident, sickness or unemployment.

When Did PPI Appear?

Payment Protection Insurance has been around for decades in one form or another. It was only in 1998 however that the payment protection insurance sector was first uncovered as being widely mis-sold as potentially useless, yet adding significant additional revenue to banks and other institutions. Between 1998 and 2011, a number of court cases and appeals took place between both consumers and banks, and the Financial Services Authority and the Financial Ombudsmen Service.

Finally, 13 years after first coming to light on the 20th April 2011, the UK High Court ruled in favour of consumers, paving the way for potentially tens of billions of pounds of refunds to be claimed.

Is PPI A Bad Thing?

Payment Protection Insurance isn’t necessarily a bad product. Like all insurance it is designed to cover you in times of hardship, much like home insurance, car insurance and gadget insurance. It’s a peace of mind product. The issue surrounding the PPI Debate is the way the insurance was sold, and not necessarily about the insurance product itself or the credit facility it backed.

It isn’t a panacea though as, particularly in the case of credit cards, PPI will only satisfy your Minimum Payment and usually only for a 12-month period. If you are off sick or unemployed for longer than that, most policies will end their cover and you’ve merely delayed the catastrophe rather than averted it.

For a more solid approach – or in addition to – check out my SCRAM Plan approach and the importance of redundancy planning.

So Why The Refund Epidemic Now?

The whole PPI problem centres around mis-selling. In the worst cases, PPI was included in loans without the consumer even knowing about it. The worst example of which was the Single Premium Policy style of loan, where instead of paying monthly for the cover, or as an up-front fee separate to the loan product, the entire cost of the policy was added to the borrowing at the start of the term. This meant consumers were borrowing (sometimes much) more than contractually agreed and paying interest on the policy and the loan every month, costing hundreds or even thousands of pounds.

There has been low-level refund claims taking place for at least 10 years now, but it has massively taken off since the ruling in the High Court last year.

Was PPI Limited to Just Loans?

Unfortunately not. The mis-selling also applied equally to credit cards, where consumers were bullied into taking the insurance worded such that it appeared the application would not be approved if they did not (or doing so would increase their chance of acceptance), were signed up regardless or without being asked, or had the insurance started even though it was not appropriate or applicable to their individual circumstances.

Reasons for PPI Refunds

The first question on most people’s minds is “am I due a PPI refund?“. The answer to that question if you have had a loan or credit card taken out within the last 10 years or so is “maybe”. There is no hard and fast rule as to who is and who is not eligible to a refund without first knowing a little bit about the product, your circumstances at the time, and the circumstances surrounding the PPI sale.

It certainly isn’t as simple as the claims companies make out. I have put together a list of the 13 most popular reasons for initiating a claim and if your circumstances at the time of the insurance being taken out matches then you probably have a good cause to begin refund proceedings.

1. You were under 18, or over 65 at the time of the sale

PPI policies have age restrictions and depending on your particular product, you may find you have paid (or are paying) for insurance that is already invalid to you because you are outside of its age limits. Now the under 18 part shouldn’t affect more than a handful of people, but the ‘over 65′ part may catch out more folks. This is a classic as the sales agent would have your date of birth as a standard part of the loan application process.

2. You worked part time

PPI policies in the main don’t cover people who work less than 16 hours a week. The person selling you the insurance product would have known this, and should have had sufficient information within your application to be able to deduce this fact for themselves. If you were still sold  payment protection insurance despite the sales person being aware (or negligently unaware) you didn’t work full time, you have a claim for mis-selling.

3. You were on a temporary contract

Temporary staff or contract workers (and even some agency staff under some policies) are ineligible for PPI cover. Much like the ‘part time’ scenario above, the person selling was either entirely aware the product was unsuitable for you but sold it anyway, or was negligent in their selling of it by deliberately not enquiring if it suited your circumstances.

4. You were self-employed

PPI policies with unemployment protection are usually not applicable to those who are self-employed. As with all of these you would need to read the policy terms to find out exactly what it covered, but on the whole being self-employed negated some or all of the cover.

5. You were a student

This ties in with (2) and (3) but may make students re-evaluate if they skipped over them. The chances are if you are a student then you are not working full time, or you are employed on a seasonal or temporary contract basis. Being a student in itself is not a reason, but you need to examine the circumstances surrounding you being a student to see if elements of your study would render your policy mis-sold.

6. You were already ill

Pre-existing conditions are likely to void any PPI policy if your illness should worsen, leading to a loss of income. In these cases, you should not have been offered the insurance in the first place. Think about how quickly travel insurance companies drop you should a pre-existing undisclosed medical condition crop up during a claim – it is much the same with PPI.

7. You were mis-informed about the extent of cover

Mental health issues such as stress or depression, and common muscular problems, such as backache, are often not covered by PPI policies. This should have been explained to you when you were offered the policy and potentially may also tie in with (6). If you already had a condition, or you were not informed of the exclusions, you may have a case for claim.

8. You were aware you may become unemployed

If you had reason to believe that you were facing an imminent loss of income, then you would have been ineligible for insurance covering this event and should not have been sold the PPI (or been applying for the credit in the first place – but that’s an entirely different discussion!). Most policies have conditions that would render your situation uncovered in such circumstances, and indeed have a period of time immediately after the cover begins that you are not able to claim in, further increasing the mis-selling aspect.

9. You were not told about the insurance

Or the cost of the insurance. Your lender should have clearly gone through the policy with you, checking you were eligible for cover, explaining with you what was covered and what was not, and how much it cost to purchase the cover. If you were not informed of the cost of the cover overall (see the ‘Single Premium Policy’ scam above), or you were unaware until some time later that you’d even been sold the cover, then you likely have reason to claim.

10. You already had similar insurance

Some standalone insurance policies provide income protection, or you may have been covered by a scheme from your employer to cover your liabilities for a set period in times of sickness or redundancy. The lender is obliged to look into whether you are already covered and if they did not, again you likely have reason to claim.

11. You were told it was mandatory

This, despite being number 11 in my list, is my biggest pet-peeve with this whole sorry saga. PPI is an optional purchase of an insurance product, and does not affect your eligibility for a loan or the interest rates payable. Lending institutions were not supposed to offer a discount if you take out an insurance policy, or make it sound like you are more likely to be accepted if you do, or less likely if you do not.

12. You were not told other options existed

Many of the PPI cover options provided by credit facilities are more expensive than if purchased as a standalone product from elsewhere. You are not obliged to take out PPI at all (as 11), but if you choose to do so, you are not obliged to take it out from the same company providing your loan or credit card. If you were not told that you have the opportunity to shop around for your PPI, you once again may have been mis-sold.

13. The PPI box was already ticked

Prior to July 2007, many online loan and credit card application forms had a tick-box to indicate whether you wanted to purchase Payment Protection Insurance or not. In a large number of cases, the page loaded with the box pre-ticked, so that customers had to opt out of buying the insurance, rather than opting in. This was changed after concerns raised by the Financial Services Authority and can indicate you were mis-sold as the PPI may not have been adequately explained to you, or you did not understand the relevance of it.

This list isn’t exhaustive, but does give a good start to discovering if you may be eligible for a refund of your PPI.

Conclusion

As you can see the PPI arena is a minefield, but it should be fairly clear at this point whether you have grounds to claim a refund. There is no magic or voodoo involved in working out whether you are due a claim or not, and there is certainly no need to either stump up your hard-earned cash to pay a company to claim for you, or indeed lose some of your compensation to them on a ‘no win, no fee’ basis. It’s something you can do yourself sometimes completely free, or minimally at the cost of a couple of postage stamps.

Be sure to check back tomorrow when I will be interviewing Bryony about her claim journey against Lloyds TSB and she will share her hints and tips with you for your own journey that I will explain in detail in Part 3 on Thursday!