With the job market in many sectors seeing the impact of COVID-19 and the subsequent lockdown, it is prudent to be prepared for any financial crisis arising from job loss. Many companies have already started pay cuts and layoffs. In such an unprecedented situation, some people may think insurance is one of the best ways of protecting oneself.
There are many insurance providers that offer job-loss covers too which aim to provide income replacement.
"Job insurance cover is the latest in the insurance industry in India. However, it is not yet available independently and can be purchased only as an add-on with a critical illness cover or a home loan protection plan,” according to Bankbazaar.
The job insurance cover is based on the reason for job loss of the insured. Policy holders have the choice of selecting a job insurance cover based on the probability of job loss and the premium amount.
"Typically, the premium towards job insurance is the range of 3 percent to 5 percent of the total coverage, on top of the master policy’s premium. If the job insurance is a part of the home loan protection plan, the policy tenure is just five years. The insurance does not cover the entire period of the home loan tenure," BankBazaar said.
Customers opting for this cover should, however, understand all the terms and conditions of these plans since job-loss policy triggers only if the loss is due to the conditions included in the policy.
Seeing the high premium and temporary relief, some experts also warn against opting job loss insurance cover.
"These policies provide very limited cover. Also, job insurance does not cover job loss in cases when the employee has been asked to leave due to poor performance, or in the probation period. The are many more conditions under which job insurance does not provide any coverage," BankBazaar said.
