What is Job loss Insurance? Should you Avail this during COVID-19 Crisis? Offers by Insurance Companies and other Details!

Following the global pandemic caused by the novel coronavirus, various public and private sectors are under financial crisis. This has costed the jobs of many, especially in India. Various organisations, including Tech giants have been laying off their employees. At the same time, some of the insurance companies in India have started selling ‘Job Loss Insurance.’

The Job loss insurance is generally given with a home loan protection plan or a critical illness plan. Hence, when an individual loses their job but possesses the insurance, he/she gets immediate financial relief. A premium which ranges between 3-5% of the coverage is also provided as an add on. However, it is calculated based on the age of the individual, EMI amount, credit card rating, policy tenure, and so on.

ICICI Lombard's secure mind critical illness plan, HDFC Ergo’s Home Suraksha Plus (Home loan protection plan), and Royal Sundaram Safe Loan Shield (Critical Illness Plan) are some of the companies which are offering the Job Loss Insurance.

Sanjay Datta-Chief, Underwritings, Claims and Reinsurance, ICICI Lombard GIC told India TV news, “Due to the growing uncertainty of job security, and growth in unfortunate events such as mergers and Acquisitions, Cost reduction exercises by companies or contracting critical illness/Surgery one may lose his/her ability to work and thereby may not be able to meet his/her financial liabilities. Loss of Job insurance protects an individual’s financial liabilities as per the covers opted in the policy.”

Hence individuals who have lost their jobs due to poor performance or for being under a probation period, can’t expect the insurance to cover. Further, people who are self-employed or unemployed, opting for early or voluntary retirement, losing their job due to an illness, fraud, retrenchment, and suspension can’t avail the insurance cover.

“The cover is not a standalone cover and is bundled with another policy like a health insurance or insurance cover provided on the home loan. The terms and conditions to make a claim are very specific and hence the job insurance cover may not be useful. Given the restrictions, I would suggest, individuals, do not rely on the cover but look at building an emergency fund with at least 6-12 months of their expenses,” says Mrin Agarwal, Founder Finsafe India Private Ltd and Co-founder Womantra.