Retrenchment insurance is no reason start mocking your manager on Facebook, mostly because it doesn’t cover getting fired. Retrenchment cover is a type of salary protection for the event of retrenchment. That is, if you lose your job as a result of being retrenched, then your retrenchment insurance policy can be claimed on to cover a portion of your salary for a limited time.
Retrenchment cover is a great insurance policy to have back you up, as losing your job can happen at any time. Before you take out an insurance policy though, it is good to consider some exclusions to retrenchment insurance to make sure it’s the kind of salary protection you’re looking for.
Retrenchment cover is only for retrenchment
Retrenchment cover is not a comprehensive salary protection insurance policy. As mentioned, it does not cover you if you get dismissed from your job or if you electively leave (or quit). It also does not cover you in the event that you become disabled and are unable to work. A disability insurance policy will cover this, even if the disability is temporary. The same is true of a dread disease. If a dread disease leaves you unable to perform your daily work functions, a retrenchment insurance policy will not cover your salary. A dread disease insurance policy will.
Retrenchment cover is for a limited time only
Retrenchment insurance bides you time to get a new job. It does not cover you indefinitely. If you lose your job and your retrenchment insurance kicks in, it will most likely only cover your salary for six months. This, though, ranges from insurance company to insurance company.
Retrenchment cover is only a portion of your salary
Most retrenchment insurance policies don’t cover your whole salary. Sorry. No trips to club med allowed. It covers a percentage of your salary allowing you to stay afloat, by giving you enough money to make home and car loan payments, buy food etc.
Also, many other insurance policies come with a retrenchment benefit. This benefit only covers that insurance policy’s premiums and not your salary. Do not think that having a retrenchment benefit on a life insurance policy will cover your whole salary.
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