Loss of Job Insurance in India

A job insurance policy is a type of insurance coverage that provides financial aid to the policyholder and his family. The policy is useful in case the main source of family income happens to lose the job. To cover the uncertainty of losing a job, this insurance is one of the best solutions.

In this policy, the insured is eligible to get compensation upon losing the job during the policy term. Provided the loss of the job is due to the pre-determined reasons as mentioned in the policy wordings.

What is a Job Insurance Cover?

In India, job-loss insurance cover can be availed as a rider benefit. The insured can enhance the coverage benefits with a loss of job cover due to a critical illness or an accident. Some insurance products such as personal accident cover, critical illness cover, etc., have an income loss add-on provision linked to them.

Sometimes, the coverage is also provided for big-ticket personal loans. It means that these insurance plans protect from specific liabilities like home loan EMI cover for a few months. For anyone worried about getting laid off by the company, a job insurance plan can help in dealing with the situation.

Features and Benefits of Loss of Job Insurance or Income Insurance

Loss of Job Insurance or Income Insurance offers the following key benefits: to the policyholder:

• Financial security in the event of loss of job or income as a result of an illness, accident, or disability
• In most of the plans, a pre-medical screening is not necessary
• It provides financial cover to pay off EMI’s for home loans or other liabilities up to a specified period. This time enables the insured to look for another source of income or employment

Eligibility Criteria to Get Loss of Job Cover

Job insurance policies have certain eligibility criteria and some of them are given below:

• The applicant’s employer should be a registered company

Inclusions of Loss of Job Insurance

As mentioned earlier loss of Job is an optional insurance coverage that can be availed by salaried / Self Employed individuals. The insured can avail of coverage benefits in case of employment termination/lay off/ retrenchment/dismissal. The inclusions under the job loss insurance policy for which the insured can file a claim are given below:

Critical Illness Diagnosis: The policy offers financial cover in case the insured is diagnosed with a specified critical illness. It is provided if the illness is covered under the policy. If it’s diagnosed during the policy term, the insurance company will offer compensation for loss of income during that period.

Disabilities: Income cover is provided for personal accident death and disabilities. It also includes permanent total disabilities resulting from an accident during the policy term. Provided the claim is permissible and payable under the policy.

Loans- The insurer can pay for your Loan EMIs for a specific tenure. And during that time the policyholder should also search for a new job. 

Exclusions under Loss of Job Insurance  

A job insurance policy does not offer coverage under the following situations. These are the exclusions. for which most of the insurers do not accept a claim:

• If the nature of the insured’s job is contractual, temporary, seasonal, and casual
• Loss of income during the waiting period as mentioned in the policy wordings
• If the insured happens to lose the job due to a fraudulent act, poor performance, cheating, etc.
• Loss of job/income while the insured is on the employer’s probation period
• If the insured seeks compensation for a voluntary retirement

Claim Procedure for Loss of Job Insurance or Income Insurance

In case the policyholder loses his/her job due to an admissible reason, he/she intimates the insurer about the same. The insurer inspects the claim and upon satisfaction, the insured amount is paid to the policyholder. And the procedure to lodge a loss of job insurance claim is given below:

• In case of job or income loss, a written intimation is provided to the insurance company along with proof of unemployment
• After this, the policyholder submits all the supporting documents
• Once the claim is approved, the insurer compensates with the claim amount

Documents Required for Claim

To avail the claim benefits, proof of termination is a must. The insurance company will require written proof of retrenchment from the claimant. The job-loss insurance is provided only if the termination is not voluntary. And has taken place due to the conditions mentioned in the policy.

Therefore, documentation mentioning the circumstances and reasons for termination is a pre-requisite. The policyholder would need to furnish the following documents when filing a claim for loss of Job Insurance:

• Duly filled and signed claim form
• Proof of job/income loss
• Termination letter
• Claimant’s ID Proof
• Salary Slips and Form 16
• Claimant’s Age Proof
• Company’s Details
• Copy of policy documents
• Other documents as required by the Insurer

Loss of Job Insurance Renewal Process

There is no separate process to renew the policy. However, you can get it recovered once you renew the main policy in force. And if you do not have a loss of job cover, then you can opt for it at the time of policy renewal.