At a time when job loss and instability are a way of life, you may think of opting for job loss insurance. However, is it worth it? Unlike the CEOs and the CXOs, for whom there are golden parachutes, most common people are in a financial mess, post a job loss. Even though one can always try hard to save their jobs, it’s always important to stay prepared for such an eventuality.
“Job loss is a distressing experience, leading to both financial and mental stress. Recently, many people across the globe have encountered job loss due to various reasons such as layoffs, business shutdowns, etc. Sometimes, an individual also loses his job due to major ailments such as cancer, kidney failure, etc. Even though such situations are beyond one's control, it is always advised to buy a job loss insurance cover to mitigate the impact,” says Parthanil Ghosh, director & Chief Business Officer, HDFC ERGO General Insurance Company.
There are insurance policies available to cover job loss. However, should you go for it?
According to experts, the scope of job insurance policy in India is quite limited. There are job loss add-ons available in the market but most of the time they are not useful as they do not adequately cover the loss. There are no comprehensive job loss insurance covers available. They mostly come as add-ons with a home protection plan, accident insurance cover, or critical illness cover. While some employers offer job loss coverage to their employees, some take it independently on their own. It is important to carefully review the terms of the policy to understand the coverage, exclusions, and any waiting periods or restrictions that may apply.
At HDFC Ergo General Insurance, loss of income is covered under the Sarv Suraksha Plus insurance plan. This plan addresses employment termination and covers loss of income due to major medical illness. “Under Sarv Suraksha, we pay the weekly/monthly benefit up to a maximum of the sum insured as defined in the policy document. Please note, one can file the claim only once during the lifetime of the coverage under loss of income cover,” says Ghosh.
However, Ghosh said that there are certain conditions and exclusions that one should be aware of. This coverage is available only for salaried people in India. The benefit will be payable after the termination of the insured from employment till the reinstatement of employment with the same employer or new employer or expiry of the policy period, whichever is earlier, subject to a maximum of the sum insured. The claim will be accepted only if the period of termination or resignation is more than 30 consecutive days. No claim will be paid if the termination or resignation is due to fraud, dishonesty, poor performance, etc. Unemployment at the time of inception of the policy period or arising within the first 90 days of the policy purchase is not covered. Any unemployment due to resignation, or retirement whether voluntary or otherwise is excluded. Any unemployment arising from a casual, temporary, seasonal, or contractual job, etc.; is not covered,” adds Ghosh.
Kanishka Gadi, head- liability and banking business, Anand Rathi Insurance Brokers said that in India, job loss insurance policies are available for loan customers. “Involuntary loss of job means a termination or permanent dismissal of the insured person from employment by the employer,” adds Gadi.
The reasons are here as below:
Illness contracted which first occurs or manifests itself during the cover period
Injury sustained during the cover period resulting in Permanent Partial Disability (P.P.D)
The EMI amount payable on the occurrence of Involuntary Job Loss is subject to the following conditions:
Minimum three/six/nine/12 equated monthly installment (EMI) of the loan account corresponding to the insured’s contribution in the EMI Amount(s) falling due in respect of the loan subject to:
Submission of sanctioned letter & repayment track record or bank account statement reflecting EMI or loan account statement
Insured should be a salaried employee only
Insured is a permanent employee of the organization working on a full-time basis and such employment has been in force for a continuous period of 12 months.
Insured is paying EMI regularly.
According to experts, rather than job loss insurance, it would be wiser to create a contingency fund of at least three months of EMI.
