Redundancy insurance sales soar

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A new redundancy and life insurance product called Stop-Gap has exceeded launch expectations as unemployment during the recession highlights the need to be covered.

Wednesday, March 10th 2010, 2:58PM

Dorchester Life chief executive Henry Lynch says the vast majority of workers in New Zealand no longer have redundancy provisions in their employment contracts, yet most income protection products do not cover redundancy unless you have a mortgage.

"With Stop-Gap we have simplified the benefits, criteria and premiums so you know exactly what you are covered for and what you would receive should you lose your job."

He says the last Consumer Credit Expectations Survey from Dun and Bradstreet showed that almost half of working New Zealanders could only survive for a month without their income before they would be in deep trouble.

Stop-Gap provides a set monthly benefit (from $500 to $2,000) for up to 120 days for redundancy, and the additional benefit of a lump sum payment for death of $10,000, $30,000 or $50,000.

It also provides a lump sum payment of three times the monthly benefit in the event of bankruptcy.

Lynch says Stop-Gap has sold in the hundreds during some weeks since its launch at the end of September with most of the sales being made by independent financial advisers.

He thinks the reason for Stop-Gap's success is that it is a simple product which is easy to explain with no medicals or questionnaires needed as there is guaranteed acceptance. Advisers also receive 30% commission and renewal commission.

"The simple product means advisers also have the opportunity to talk to customers about other needs and products."

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