Job Insurance: Coverage, Claim & Renewal

Updated: 01-10-2019 11:47:25 AM

To attain stability in different spheres of life is one thing that everyone strives for. And the same applies to jobs as well. However, there is always a chance of losing your job due to reasons like accident or some illness. To manage such a frightening situation, there is job insurance.

What is Job Insurance?

A job insurance policy provides financial aid to the policyholder and the family for a certain duration in case the policyholder, also the breadwinner, loses his/her job. The person is eligible to get compensation if the job loss takes place due to reasons mentioned in the policy. In India, these reasons can be some critical illness or total or permanent disability because of an accident.   

In India, a job insurance is not provided as a stand-alone policy. It is offered as an add-on cover and generally comes as an added benefit with health insurance or home insurance policy. 

What all Job Insurance Covers? 

The policy provides financial coverage in any of the following scenarios:

• Termination from employment
• Temporary suspension

How Job Insurance Functions

• In the case of a job loss due to a valid reason, covered under the policy document, policyholder intimates the company about the same
• Insurance provider inspects the claim 
• On satisfaction, the amount reserved for such an event is paid

Eligibility Criteria

Following points must be checked with when applying for job insurance:

• Applicant should have salaried income
• Company in which the applicant is employed must be a registered one
• Not applicable for self-employed persons

Claim Process for Job Insurance 

• In case of job loss, the policyholder must intimate the insurance company in writing with the proof of unemployment 
• Policyholder needs to submit other supporting documents 
• If found satisfactory, insurance company then pays the claim amount

Documents Required for Claim Process 

Following documents should be submitted to make a claim process under Job Insurance:

• Claim Form (duly filled and signed)
• Documents providing reasons for job loss
• Employment termination letter from the employer
• Salary Slip of last 3 months
• Form 16
• Employer’s details (contact number, email ID, etc.)
• Copy of policy document
• ID Proof of claimant
• Age Proof of claimant
• Other documents asked by the insurance company

Exclusions under Job Insurance

Certain situations are not covered under a job insurance. They are called exclusions. Following cases are not covered under job insurance: 

• If the reason for job loss is poor performance, dishonesty, fraud, etc.
• Voluntary retirement from a job
• If the job was of casual, seasonal, temporary or contractual nature
• Job loss during the waiting period of the policy (ranging from 30 to 90 days) 
• If the job loss happened during the probation period

Renewal Process 

Since this is not a stand-alone policy but an add-on cover, renewal of the cover takes place along with the policy itself. 

Important Aspects 

• This add-on usually has a waiting period of 30 days from the start of the policy and claims can only be made thereafter
• It can be claimed only if there is an employment termination, dismissal, temporary suspension or job-loss due to illness or some kind of disability because of an accident.  

Advantages of Job Insurance 

Some of the benefits under job insurance are:

• • Provides security to individuals in case of job loss due to an accident, illness, or disability
  • Provides protection to policyholders to pay off their home loans or other liabilities up to a period of 3 months in which insured can look for another job
  • No pre-medical tests are required to get this insurance coverage

FAQs

Q1. Which insurance policies offer job insurance as an add-on cover?

In India, it is currently offered as a rider or a add-on coverage along with the main policy. It is offered under Critical Illness Policy, Accident Cover, Home Insurance Cover. etc.

Q2. Does the insurance policy pay regular compensation to the policyholder, if s/he loses a job?

In certain cases, it does give regular compensation to the policyholder on losing a job. This varies from policy to  policy. The most common situation is losing a job due to total or permanent disability because of an accident.

Q3. If an individual is asked to resign from a job due to poor performance, will s/he be compensated under this add-on policy?

No, job insurance does not cover performance issues, voluntary resignation, and pre-existing diseases due to which a loss of job may happen. 

Q4. Does job insurance rider option require a pre-medical check?

No, no insurance company in India asks for a pre-medical check for the job insurance rider. However, one must carefully check all terms and conditions before getting this rider.