Worried over job loss? Know how to insure

Next to health, COVID-19 pandemic is playing havoc on the economy. As many companies are in a layoff spree, job and income security has become a major worry for many. Against this backdrop, opting for ‘job loss insurance’ can be explored.

Hyderabad: The Covid-19 pandemic is wreaking havoc not just in our day-to-day lives but also on our job and career. Due to the lockdown most of the companies have been incurring losses.

As a result, companies are cutting salaries and issuing pink slips to the employees. So how are you going to protect yourself and your family with this?

Well, there is something called job loss insurance that might help you to tackle the worst situation. Here is everything you must know about job loss insurance.

What is a job loss insurance cover?

A job loss insurance policy offers financial aid to the policyholder and the family in case the policyholder, losses his/her job. The policyholder, will be eligible to get compensation for a certain duration if the job loss takes place due to the pre-determined reasons mentioned in the policy.

Who can claim job loss insurance?

No insurance company offers a stand-alone job loss insurance policy. It is available only as an add-on with other policies that cover larger risks such as critical illness, personal accident cover, home insurance and so on. Remember a health cover would typically provide insurance against job-loss only in case the policyholder is unable to continue working due to ill-health.

What it covers?

It provides you the instant cover relief from the financial crisis. The insurer pays three biggest EMIs that you have running and it is capped at 50 percent of your income.

Companies who give insurance cover?

1. ICICI Lombard’s secure mind critical illness plan
2. HDFC Ergo’s Home Suraksha Plus (Home loan protector plan)
3. Royal Sundaram Safe Loan Shield (Critical illness plan)

While offering an insurance cover, insurance companies calculate the possibility of risk. If somebody is taking job loss insurance cover, the premium would be extremely high.

Important things to cover while taking job loss insurance

Written proof of retrenchment is one of the crucial document that is required to assess the cause of job loss. The most common exclusions which might make a policyholder ineligible for a claim are unemployment/job loss due to early retirement, job loss due to pre-existing diseases and health conditions, fraud, dishonesty, loss of the job during the waiting period of the policy etc.

Given the situation right now, the most advisable option is to take job loss insurance cover and maintain a contingency fund which covers at least 6 months of your basic salary.

(Written by Indu Choudhary. Author is a personal finance expert.)

Disclaimer: The above Article is based on the author's own research and ETV Bharat does not assume any responsibility or liability for the same.

If you have any queries related to your personal finances, we will get those answered from an expert. Reach out to us at businessdesk@etvbharat.com with complete details.