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Unemployment insurance in India

Ever worry about that dreadful letter stating that your employer doesn’t require your services anymore? Does the thought of losing your job keep you up at night? There is a solution that could make you sleep much better at night. It’s called unemployment insurance. There are 2 major aspects of unemployment insurance in India:-

  • Unemployment insurance addon riders
  • Unemployment allowance provided under ESIC (Rajeev Gandhi Shramik Kalyan Yojana)

Let us discuss both of these options in detail below.

Unemployment insurance addon riders

An unemployment insurance rider is an add-on that you can purchase with your existing life insurance policy. The motive of this additional rider is to cover you against any unforeseen unemployment caused due to:-

  • Mergers and takeovers
  • Bankruptcy announced by your company
  • Department shutdown (due to internal decision of management)

Importance of unemployment insurance

  • It provides a steady flow of income even during the tumultuous period of job loss
  • Helps maintain the standard of living for yourself and your family
  • Provides peace of mind even when you are employed

Exclusions

There are certain things that job insurance does not cover. They are:-

  • Job loss due to resignation
  • Job loss occurring during probation or trial period
  • Job loss due to the poor performance of the employee
  • Unemployment due to a pre-existing illness or sickness

Further, self-employed people cannot opt for unemployment insurance.

Unemployment insurance addon riders in India

  • Secure Mind policy by ICICI Lombard
  • Home Suraksha Policy by HDFC Ergo
  • Safe Loan Shield Policy by Royal Sundaram


Unemployment allowance provided under ESIC (Rajeev Gandhi Shramik Kalyan Yojana)

All employees enrolled under the Employee State Insurance Act can avail of the Rajeev Gandhi Shramik Kalyan Yojana. This Yojna states that an employee can claim unemployment benefits if he/she is unemployed due to no fault of theirs, business winding-ups, or workplace injury

Salient features of Rajeev Gandhi Shramik Kalyan Yojana

  • Unemployed employees will only be provided an allowance for a maximum period of 1 year.
  • The claimant has to ensure that he claims within 6 months of job loss.
  • The claimant cannot claim benefits once he is re-employed.
  • The claimant has to be a member of ESIC for at least 3 years before making claim under RGSKY.

In light of the above information, the prudent employee should know about these unemployment insurance options in India and act upon them. It may save them a lot of unease in the future.

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