Opt For A Job Loss Insurance Cover To Make Layoff Less Painful

Mr.Ravi, 30, was working in an MNC company as a sales incharge from past 4 years. He was very much satisfied with his job and was having a good salary package which was enough to meet all his requirements. But two days back, due to a huge loss, the company decided for cost cutting through a layoff, which increased the risk of losing job for many of the employees including Mr. Ravi. This also increased the risk of not being able to repay loans and other mortgage taken by the employees. But Mr.Ravi wasn’t worried about such issues as he knew about these types of risks related to jobs and that’s why he bought a job loss insurance cover to protect himself from such lay offs.

With the increasing number of layoffs in India, job security is becoming a big issue and that’s why many people like Mr. Ravi are opting for a job loss insurance cover which provides cover for the policyholder in case he faces involuntary termination due to the closure of the company as whole or its divisional office, provided the firm employees at least 20 employees. The reason for closure of could be financial loss, merger and acquisition or violation of law.

Cover under Job Insurance

The Job Insurance cover comes into action when you have a pending loan and no job to repay it. In such cases, the insurer pays 3 biggest EMIs where the loan eligibility is 50% of the monthly income. The loss of income is covered up to a certain limit in this plan which is decided in advance.

 Features and Benefits of Job insurance

  • Premium

You can choose the job insurance cover on the basis of your chances of losing jobs and the premium amount. The premium amount in job insurance ranges from 3-5% of the total insurance cover, on top of the master policy’s premium.

  • Waiting Period

There is also an initial waiting period of 30-90 days before you can make any claim. Although the policy term ranges from 1-5 years, but still you can make a claim only once during the term.

  • Reason for Job Loss

The cover of Job insurance is based on the reason for job loss of the insured. It acts as one of the main deciding factor for getting a cover on job insurance.

Exclusions

The Job insurance doesn’t provide cover for the insured person in the following cases:-

  • Unemployed or Self-employed individual
  • Unemployment during the probation period
  • Unemployment due to voluntary resignation and early retirement
  • Unemployment in case of already existing illness
  • Job loss due to suspension, retrenchment, termination for under performance or fraud

Companies offering Job Insurance in India

Till now, stand-alone Job insurance is not available in the insurance sector in India, but it is available with personal accident plans and critical illness plans. For claiming benefit under loss of job, you need to submit some specific documents like copy of last three months salary slip, appointment letter, form 16 etc. Some of the plans which offer job insurance as a rider in India are:-

  • Secure Mind by ICICI Lombard
  • Home Suraksha Plus by HDFC ERGO

With the increasing number of layoffs, especially in the IT sector, opting for a Job insurance could prove to be a wise decision. But you should also understand that a job insurance comes with various limitations and provides relief for only a certain period of time.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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