Job Insurance Cover

A Must In Today’s Times

The pandemic has been a big disruption across the world and one of the negative fallouts has been the loss of employment for many, thus leading to tremendous financial pressure. In such a scenario, job insurance needs to be given topmost priority

For more than a year now, ever since the pandemic gripped the world, it has been a challenge to simply survive in more ways than one. And while lives have been lost aplenty, there has also been the case of jobs getting wiped off across the world. All this has led to millions of cases of financial and mental turmoil. New norms have come into being, especially the work from home culture. As a result, those involved in labour work have lost their livelihood, and not just the daily wage-earners but the salaried employees too. Downsizing in the corporate sector has turned into a grim reality. The following graph depicts the unemployment rate in urban areas across all age groups as per the current weekly activity status. The figures are in terms of percentage.

So, in order to protect ourselves from any financial breakdown due to loss of job, it is advisable to buy a job insurance cover. This insurance cover provides financial aid to an individual and his family in case the sole bread-earner of the family loses his job. In order to avoid a financial crisis, such kind of insurance is the best solution.



Meaning of Job Insurance

Job insurance cover is a novel concept in the Indian insurance industry. A secured job is everyone’s requirement and necessity. The Indian industry as of now may be labour-intensive but robots are certainly going to take over the production floor in the future. As such, these are the workers who need job insurance the most. Employees also lose jobs when companies are merged and the surplus staffers are weeded out.

Retrenchment is nothing new and so is the inability of a company to pay salaries due to decrease in production and sales. In India, job insurance cover is not an independent insurance cover but is provided by insurance companies as a rider benefit.

A policyholder can enhance his or her policy by adding this rider benefit and can get indemnified in case of loss of job. The features and benefits of job insurance cover include:

• It provides financial security to the policyholder and his family in the event of job loss.
• It also provides protection to policyholders to pay off loans or other liabilities they are burdened with up to a specified period.
• No pre-medical tests are required.

Policy Inclusions

Given that job insurance cover is a rider benefit, a policyholder has the option to opt for this insurance cover or not take it into consideration. A policyholder can avail the benefits of the insurance cover if he or she loses the job due to retrenchment, termination or dismissal. The inclusions under the cover for which a policyholder can file a claim are given below:

• Critical Illness Diagnosis : The policy offers a policyholder financial aid if he is diagnosed with any critical illness during the policy term which is covered under the policy. The insurance company will offer compensation for loss of income during that period.
• Loans : By taking job insurance cover an insurer will pay your EMIs or liabilities in case of loss of job. And during that time the policyholder should search for a new job which can bring him income.
• Disabilities : Insurance cover is also provided for personal accident death and disability. Disability also includes permanent disabilities resulting due to any accident during the policy term.

Policy Exclusions

The following are the exclusions for which a majority of insurers do not accept any claim:
• Job loss in cases when the employee has been asked to leave due to poor performance or due to fraudulent activities.
• Loss of job during the probation period.
• Job loss in case of early retirement or voluntary resignation.
• Loss of job during the waiting period as mentioned in the policy wordings.
•If the nature of the policyholder’s job is contractual, temporary or seasonal.

Case Study

Let us consider the case of Ramesh Sinha who has lost his job due to the pandemic. He is burdened with a home loan but has no income to pay his EMIs. And he also possesses life insurance cover. Let us look at both the scenarios i.e. where he has purchased a job insurance rider and where he hasn’t purchased the same.

Scenario 1: 
In this case he has taken the rider benefit of job insurance cover and will therefore not have to worry about the EMI payments as his life insurance company will pay the same for him for a specific period of time during which he will have to find another job and start generating income once again. Here he will not get suppressed under financial pressure and he can manage his other expenses by using some of his investments. Besides, he will get compensated in case he is diagnosed with any critical illness or he gets disabled due to an accident.

Scenario 2:
In this case he has not opted for the rider benefit of job insurance cover. Therefore, he will face tremendous financial pressure on account of the loan-related EMIs. He will have to go through mental as well as financial breakdown which might affect him adversely and could impact his performance while applying for another job. In order to afford all these expenses and EMIs he will have to use up his investments and might also have to sell some of his assets if he has more liabilities. And he won’t be able to finance treatment if he is diagnosed with any critical illness or faces any disability due to an accident.

Conclusion

We are now living in a phase of uncertainty and it is quite likely that there may be multiple waves of the pandemic hitting the country. All this has led to job insecurity too. The most important thing for an individual is to keep the income flowing in so as to avoid financial disruption and mental trauma. In such a case, a job insurance cover can act as a saviour for a common man and his or her family.