Job Loss Insurance on Policybazaar: Detailed Review
- How does the policy help?
- What kind of job losses are covered?
- What is not covered under a Job Loss cover?
- Which are the insurance companies that are providing this cover right now?
- What is the process of buying the policy?
- How much does it cost?
- Who is this policy suitable for?
- Are there any options for the self-employed?
- Be careful - Points to note:
Nervous energy is kind of taking me over, as I write this article. In the last few months, as I was engrossed in building Beshak, I consciously avoided any negative news around the pandemic and its personal or economic impact. While I did hear about job losses and pay cuts, you must forgive my ignorance when I say that I did not understand the true extent of this impact.
Until today - when I did my research for this article. A CMIE report I read on Indiaspend showed some mind-boggling numbers - India has lost over 18.9 million jobs as a result of the pandemic and lockdown until August 2020 - of which 5 million were lost in July alone.
In a recent interview, Mahesh Vyas, the CMD of CMIE said - “companies are slowly shutting down, as they are slowly seeing the impact of the lockdown on their business is more severe than what they thought at the beginning of the lockdown. The hit on the corporate sector is playing out slowly. Smaller companies will be impacted way more than larger companies."
In a time when many would be worried about their future, Policybazaar recently launched a job loss insurance offering on its website in partnership with a few insurance companies like SBI General, Universal Sompo, and Shriram General. These plans are specifically designed to help individuals and families keep up their loan EMI installment payments, in the immediate time- periods after a job-loss.
Here’s a deeper insight into this job-loss insurance cover and how it could help you.
In case of a job loss, the policy will pay for 3 EMIs on your loan, up to the time you are employed again. You should note that Insurers might have a limit on the maximum EMIs they would cover. For instance, we found that Shriram General caps their maximum EMI at INR 1 Lakh, while Universal Sompo has no limits, and SBI General will only pay 50% for EMIs above INR 1 Lakh.
Further, some of these policies also provide a Critical Illness cover in addition to paying the EMIs. In case you are diagnosed with a critical illness listed in the policy, the policy will pay off the outstanding loan amount.
Jobs lost due to termination by the employer are covered, except when the termination is due to non-performance or fraud. For instance, mass layoffs or termination due to closure of the firm, merger, or acquisition, or even compulsory retirements are all covered.
The policy will not cover -
- People on contract jobs
- Termination within 90 days of employment
- Resignation by the employee
- Jobs lost due to fraud
- Jobs lost due to non-performance.
Note: Most policies do not cover loss of work by self-employed individuals.
Currently, this cover is available on Policybazaar. They have tied up with Universal Sompo, Shriram Life, and SBI General for these policies. I am sure, if this takes off, they will add more insurance companies in due course.
The process is currently not very clear. However, here’s what we could find:
- First, you provide details of your age, outstanding loan amount and EMIs along with your mobile number, to calculate the premium amount.
- Once the premium is calculated, and you’d like to go ahead with the payment - you will need to provide your date of birth and annual income details.
- You make the payment.
- Once the payment is completed, according to the website, you will immediately receive a call from the insurance company, so they can get your detailed information.
- Post this, the policy will be issued. The website says that the policy can be issued in 2 minutes.
At this moment, this process looks simplistic and possibly disjointed. There might be some back and forth between you and the insurance company. We are expecting the conversation to include questions about the employer, medical history, etc. to help them evaluate the risk better.
For a 33-year-old, with a loan of Rs. 1 Crore, and an EMI of Rs. 1 Lakh, the premium ranges from Rs. 10600 to Rs. 46600 per year.
People paying EMIs: The policy targets people who have large loans and EMIs. For people who do not have loans, this policy is not available at this moment.
Salaried Employees: The cover is currently only for salaried employees.
One of the insurers, Shriram General does provide a job loss cover for the self-employed, but that only covers damage/loss to the workplace due to fire, floods, earthquake, flooding, or a serious illness making you immobile - and not essentially a loss of work.
If you are self-employed, we would recommend that you look at a wider range of policies to cover the risk of such ‘act of god’ situations, before you make a decision.
Usually, a Critical Illness policy will cost anywhere between INR 300 to INR 400 per one lakh of coverage. So for a 1 Crore cover, the premium will be in the range of Rs. 30000 to Rs. 40000/- a year. On the other hand, this policy is providing the Job Loss cover along with Critical Illness cover at a much lesser rate. We suggest you look at this as an alternative to critical illness insurance, with a job loss cover add-on - instead of the other way around.
- The policy wordings or brochures were not available on the website. There could be certain further hidden conditions that we may have missed in our assessment above. Please ensure you ask for the policy document, read it carefully before you pay premiums, and sign up for the plan.
- Be careful when you go through the list of plans. A few plans listed might not cover job loss and EMI payments and cover only critical illness, accidental disability.
- Note, the website says that you will get a call after you make the payment, for certain details. Ensure you answer the insurer/policybazaar’s phone calls after payment.
- Ensure you go through the policy document after you have received and carefully compare with the terms and conditions you had agreed when buying the policy. Note, the plan does have a 15 day free look period. You can always return the policy and get your money refunded within 15 days of receiving the policy.
Mahavir is the Founder at Beshak.org. Since 2005, Mahavir has been building tech-based startups that compare and advise insurance products to individual buyers. In his last role, he was the Chief Business Officer at Coverfox. Mahavir is a recognized professional in the personal insurance field. He has contributed to leading business publications, including The Economic Times, Business Standard, Mint, DNA, and Moneycontrol