Insurance for job loss (Meaning, Benefits and Workings)

Life is uncertain, one can never predict the future. Even specialized world-class analysts could not predict the black swan event of the global pandemic that is now known as the COVID-19 pandemic.
Millions of people during these times faced tremendous difficulties and millions of people all around the world lost their jobs.

In fact, according to a report of the National Statistical Office (NSO), India’s GDP was adversely affected due to the pandemic resulting in a sharp decline of 23.9% in the 1st quarter of 2020.

One must be cognizant of the harsh fact that anyone can lose their job and consider looking into insurance for job loss. A job loss insurance policy can provide the cushion that you require during difficult times.

Let us discuss the following:

• What is job insurance?
• Job insurance in India?
• How does job insurance cover work?
• Benefits of job insurance

What is job insurance?

Job insurance provides financial safety or security to the policyholder and his family for a specified period in case the policyholder loses their job.
The insurance company will pay the insured a sum assured if the policyholder loses his/her job due to reasons that are mentioned in the policy wordings.

Example

The policyholder may lose his job due to a certain critical illness or suffers from any kind of disability. The insurance company will compensate the policyholder for the same.

Job insurance in India

Insurance cover in India is not available as an independent policy yet. That being said, it can be taken as an additional rider on certain base policies.

Many insurance companies in India offer you job insurance cover along with a critical illness cover, personal accident cover, or even a home loan protection plan.

A job insurance cover is apt for you if you are the only earning member in your family, and want to mitigate any financial risks that you may have to face due to the loss of your job.

What risks are covered in a Job insurance cover?

Job insurance cover covers the following:

1) Removal from job

This cover provides financial cover in case the policyholder has lost his/her job.

2) Temporary suspension from employment

The cover will offer financial help to the policyholder in case the policyholder is suspended from his job due to specified reasons mentioned in the policy document.

3) Critical Illness

The insurance company will provide financial relief to the policyholder in case they have been diagnosed with a critical illness costing them their job (illness covered under the policy bond).

4) Loan EMI

The insurance company will pay the policyholder’s loan EMI up to a specified period providing the policyholder a breather while he looks for another job.

How does job insurance cover work?

1. In case the policyholder loses his/her due to a valid reason, he must inform the insurance company about the incident immediately.
2. The insurance company will appoint a claim assessor to inspect the case.
3. Upon proper inspection, the insurance company will release the compensation sum to the policyholder.

Benefits of a job insurance Cover?

1. Provides financial assistance to the policyholder in case of a job loss due to accident, chronic illness, any physical disability, etc.
2. Protects the policyholder in case of a job loss due to termination or temporary suspension.
3. Provides protection if the insured has a loan.
4. Pre-medical tests are not mandatory while opting for this cover.

Eligibility for job loss insurance

Following is the eligibility criteria for job loss insurance:

1. Individuals must have a fixed salaried income.
2. Candidate should be employed in a registered company.
3. This policy will not be provided to self-employed individuals.

What are the exclusions under job insurance cover?

The insurance company will not provide coverage under the following conditions:

1. Non-compulsory or voluntary retirement from a job.
2. Loss of job during the waiting period of the policy which is usually ranging from 30-90 days.
3. Loss of job or termination due to poor performance.
4. Termination due to any act of fraud or scam.
5. Loss of job during the probation period.
6. If the job is of contractual, casual, or temporary nature.

What are the steps to follow to claim Job insurance cover?

Step 1– In case of a job loss/ termination. The policyholder must immediately inform the insurance company about the same. The policyholder must write a formal letter providing the details about the incident attached along with proof of unemployment.

Step 2– The policyholder will be required to submit supporting documents to the insurance company to validate his claim.

Step 3– The insurance company will compensate the policyholder after a satisfactory inspection.

What are the documents that will be required in the claim process?

• Singed and duly filled claim form needs to be submitted by the claimant.
• Supporting documents as proof of unemployment.
• Termination letter from the company.
• Identification documents of the claimant.
• Salary slips of previous months.
• Form 16
• Details about the claimant’s company in which he/she was employed.
• Copy of policy documents.
• Any other document requested by the insurance company.

List of job insurance plans

As mentioned earlier, job insurance is not available as an independent policy, it is available as an add-on cover along with certain policies.

Let us have a look at some of the plans that come with the benefit of a job insurance cover:

1. Secure Mind by ICICI Lombard
2. Home Suraksha Plan by HDFC ERGO
3. Safe Loan Shield by Royal Sundaram