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In recession-pressed UK, you can now insure yourself against having your salary cut.

August 21st, 2009 by tom | 0 Comments | Filed in Daily News, Debt, Employment, Money Management, UK employment

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To fire off one of the greatest clichés of all time, desperate times call for desperate measures, or at least innovative ones. And the latest insurance scheme to be offered from next month to UK employees certainly falls into that category. The new scheme will allow workers to insure themselves against the possibility of having their salary cut and, in the event that the insurer meets all the terms of the policy, should the unthinkable happen, the insurance policy will make up the shortfall for a pre-agreed period. The policy also covers a holder who has been made redundant and succeeds in finding a job, but at a lower salary.

Unlike redundancy insurance, the policy only swings into action once the holder has found new employment, when it will pay out the difference between what the holder was being paid at his previous job and what he is being paid now. A spokesman for the insurance company behind the scheme pointed out that primarily among the principal benefits of the policy was that it allowed employees who had been made redundant to take a job on a lower salary that might offer retraining and a key to a second profession.

Employees who decide to take up the option, pay a premium that is calculated to cover what can be just a minor percentage of the salary gap up to the full amount. Under the terms of the policy, the holder can only be paid out if he was dismissed from his job.

The Association of British Insurers praised the new insurance scheme, stating that its launch demonstrated that the UK insurance industry continued its efforts to meet the demands of consumers, in spite of the ongoing market conditions.