What % of your salary would you pay to guarantee 1 years income security

dimbodoyle

I ask the question above because I am curious on two counts:
1) If you could pay some sort of insurance premium each year which would guarantee 1 years worth of income at your current salary in the event of losing your job, Whats % of income would you pay?
(This would protect your income for 1 year)

2) I guess I am trying to find out what value as % of their salary people place on job security.

I am going to open with 10% (which is about €3k)

alexlyons

my take on this would be, at 10%, in ten years time you've paid close to one full years salary, taking into account pay increases, when they come back that is. and statiscally speaking the average person would hopefully not need such a service within the first ten years of there working life (assuming they took out such a policy at the start) so after ten years you've thrown a years salary away. Granted you could look at any form of insurance like that, but what I'm saying is I think 10% is to high, I'd go with more around the 5% mark, that'd be 20 years to pay one years salary, which would seem better value IMO

rumour

dimbodoyle wrote: »

I ask the question above because I am curious on two counts:
1) If you could pay some sort of insurance premium each year which would guarantee 1 years worth of income at your current salary in the event of losing your job, Whats % of income would you pay?
(This would protect your income for 1 year)

2) I guess I am trying to find out what value as % of their salary people place on job security.

I am going to open with 10% (which is about €3k)

Very good idea...that is creative.

dimbodoyle

Yeah Just thinking about it as a protection scheme for future recessions. In this one a lot of people have had siginificant salary drops either through wage cuts or going on to social welfare. I suspect that most peoples core costs such as mortgages / rent and personal debt are not adjustable in the short term.

One problem might be its treatment for social welfare i.e. you can have one or the other but not both at the same.

amacca

dimbodoyle wrote: »

I ask the question above because I am curious on two counts:
1) If you could pay some sort of insurance premium each year which would guarantee 1 years worth of income at your current salary in the event of losing your job, Whats % of income would you pay?
(This would protect your income for 1 year)

2) I guess I am trying to find out what value as % of their salary people place on job security.

I am going to open with 10% (which is about €3k)

Think a number of insurance companies may already have done the research and answered your question for you.

Im fairly sure there are salary protection/income protection schemes out there. Although they may run for longer or possibly even less than a year.

of course these schemes do operate on the basis of you losing your job through sickness or injury.......not sure how it would alter the premium if you lose a job through redundancy/company folding up etc.......might give you a base to work off though.

dan_d

Not quite the same but right now, I'm paying a mortgage protection insurance ie, it should pay my mortgage payments for a year in the event of redundancy.Reason being that our jobs are not secure (well, I don't have on anymore), and we figured we should have this.

2496eur this year (Christ that's a lot of money!!)

Nijmegen

There are insurance companies that do this, like Allianz, but I doubt if they'd be operating here and now in this market.

I would think that in a slightly more stable economy than this, 10 - 15% would be reasonable. Depends, if it's tax deductable or not and we're talking gross or net. I'm talking gross.

But in a better economy there's a lot less reason to have it, and in this economy it'd be a lot more expensive because it's required!

titular

My OH has a policy that will pay €3000 per month net for up to two years if made redundant of if unable to work due to illness or injury. She is not entitled to tax relief on the premium but gets the benefit paid net.

It is costing €360 per month and if there is no claim after 12 years all premiums are returned. She can only protect a certain % of salary and €3000 per month is the maximum benefit possible. The company is based in Ireland but I'll not mention the name in case it contravenes charter. Feel free to PM me if you like.

(no, I do not work for them, nor am I any way associated with them - just answering the OP's question)

Regards

T



EDIT: I have just checked the site and they have now pulled the redundancy cover option and are now only offering a 25% cash back option.

Apologies

T

Head The Wall

dan_d wrote: »

Not quite the same but right now, I'm paying a mortgage protection insurance ie, it should pay my mortgage payments for a year in the event of redundancy.Reason being that our jobs are not secure (well, I don't have on anymore), and we figured we should have this.

2496eur this year (Christ that's a lot of money!!)

I have read about those mortgage protection products not covering if there was any inclination of financial trouble in the company previous to you getting the product e.g redundancies, short time weeks etc

As with all insurance companies they are only looking out for themselves so check the small print

dimbodoyle

Thanks for the comments folks

I guess I had a ulterior motive for asking the question but I didn't frame it properly.

A lot of the argument about the wage reductions is that the public sector will find it hard to attract talent in the future. Thus they want pay parity, however that prices job security at 0. which would suggest that they dont place any value on it.

My asking what would you pay to have income security (as a proxy for job security) looked to see how much of a discount one might accept to there wages to guarantee their tenure.

titular

dimbodoyle wrote: »

Thanks for the comments folks

I guess I had a ulterior motive for asking the question but I didn't frame it properly.

A lot of the argument about the wage reductions is that the public sector will find it hard to attract talent in the future. Thus they want pay parity, however that prices job security at 0. which would suggest that they dont place any value on it.

My asking what would you pay to have income security (as a proxy for job security) looked to see how much of a discount one might accept to there wages to guarantee their tenure.

The one year part of your initial question will prevent this from being assessed adequately. The best way of finding this out is for an atuarial study to be conducted across the economy as a whole. Looking at the risk inherent in redundancy, the wage to be covered and the length of time to retirement and to price the risk accordingly.

This would give a median price of the benefit.

Gumbo

rumour wrote: »

Very good idea...that is creative.

Payment Protection?
its readily available from most insurance companies. think i was quoted just under 200e per month 4 years ago based on 40k approx salary.

ive changed jobs since and had a pay cut to mid 30's now so would probably be a bit cheaper to insure now.

bondjames

Head The Wall wrote: »

I have read about those mortgage protection products not covering if there was any inclination of financial trouble in the company previous to you getting the product e.g redundancies, short time weeks etc

As with all insurance companies they are only looking out for themselves so check the small print

Think I see some research on this and it showed that just 6% of people were successful in getting a claim
Read the fine print and then read the very small fine print

Idbatterim

What % of your salary would you pay to guarantee 1 years income security?None if I were a public servant, thats for sure!

Padraig Mor

I currently pay approx. 7% of my net salary in premia to an income protection scheme which will give me approx 65% of my salary for 12 months post redundancy. And I'm public sector....

zielarz

That's the worst idea I've heard in a long time. Instead of thinking how to compete on the job market and increase your salary you're thinking about securing what you have... I'm shocked.

Sleepy

I've never gone in for this type of insurance tbh. I know I can find work within a month or two of something going south where I'm currently working. Granted, it'd probably be in the UK but I'm not overly worried that I don't have a 'job for life'. It's those that can't get used to the fact that these types of positions don't really exist any more that need to be worried.

Padraig Mor

zielarz wrote: »

That's the worst idea I've heard in a long time. Instead of thinking how to compete on the job market and increase your salary you're thinking about securing what you have... I'm shocked.

That aimed at me?

zielarz

Padraig Mor wrote: »

That aimed at me?

No, it was about the idea of buying insurance in general.