NiveshKarBefikar With Sajja Praveen Chowdary: Job and Income Loss Insurance

India's workforce has been severely hit because of Covid-19. As many as 21 million salaried class lost their jobs between April and August, according to a report by the Centre for Monitoring Indian Economy (CMIE). This led Policybazaar to launch a new vertical wherein customers can buy job/income loss insurance products. If you are a salaried person and have a running loan, you can opt for a loss of job insurance. Let’s assume the customer's company terminates him/her, or the company shuts down, retrenchment, then, this plan will cover their EMI for the next three months. The loan should be from an authorized bank or a company. 

The second category is loss of income plans. If there is an accident and a person suffers a disability, the loss of income insurance pays income equivalent to your salary for the next two years or till the time your health gets better, whichever is earlier. The insurance company pays a weekly income that will cover your expenses in such scenarios. These plans cost as low as Rs 150-200 a year whereas, usually, accidental death benefit plans can cost around Rs 10,000 for the same coverage. 

((relatedarticle_1))

A major highlight of loss of income plans is that they cover not only salaried customers, but self-employed customers too. There are different plans available for both salaried and self-employed individuals, and benefits offered under both the categories vary from one plan to another. In continuation of its consumer awareness initiatives, Policybazaar organized Job/Income loss insurance Webinar under its Nivesh Kar Befikar series. The webinar was hosted by Vivek Law, Founder, and editor-in-chief of The MoneyMile, who spoke to Sajja Praveen Chowdary, Head, Motor Insurance, Policybazaar. Here are the edited excerpts from the Q&A session:

Q.How can I buy the insurance and what are the conditions attached to it? 
-Vinay Kumar Tripathi

We have the option on Policybazaar’s website. You can choose loss of job/income insurance. Once you put in your details with respect to your salary applied and the loan, you will get personalized quotes which are as per your income and so on so forth. You can modify the weekly income benefit as per the limits available. In case you are looking for a loss of income plan, the benefits and income will be shown. You only need to fill in details of your name, address, name of the bank and amount of loan etc. You can get an instant policy easily. 

Q.What is the premium frequency?
-Anil Patel

The premium frequency in these plans at this point of time are on an annual basis. Someone with an EMI of Rs 15,000-20,000, these plans would cost about Rs 1600 per year. Termination of job due to poor performance, fraud or dishonesty is not covered under the plan. There is also a three months waiting period for loss of job insurance. For loss of income insurance, let’s assume you have a salary of Rs 40,000 per month, then the insurer would pay Rs 10,000 weekly benefit. Then, the premium would be around Rs 500-600 per year. 

Q.Generally in companies, one is asked to resign rather than terminate. This happens in 90% cases. What happens in that case? Will the person not get coverage?
-Ram Naray
Let’s assume the layoffs happened because of a company’s shut down. In those scenarios, the person will be covered. In another kind of scenario, when the company asks a person to resign because of cost-cutting, the company pays as per labour laws. In such scenarios, the insurance is not applicable because the person is resigning. 

Q.In case of insured person’s death, any benefit for the family?
-Anil Patel

Loss of income plans give weekly benefits in case of a disability. It also has an accidental death benefit. In loss of job plans, there is a critical illness benefit which covers upto the loan amount in case of a critical illness. In case of loss of job, you are paid three months of EMI. If you suffer a critical illness and hospitalized, you are paid Rs 5 lacs. These benefits are within the same premium as mentioned in the beginning. 

Q.How to choose which job loss plan is better? What are the factors one should keep in mind? 
-Dinesh Kumar

Basically, four companies are offering loss of job insurance and five-six companies are offering loss of income insurance. The plans are similar within these 3-4 companies. People will look at the insurer offering the lowest premium. You can also check that what are the benefits insurers are giving within the same premium. Some plans might be covered for critical illness and loan amount. 

Q.What are the benefits attached to a job/income loss insurance?
-Anthony Mendis

In job loss insurance, the insurer will cover your EMI upto three months in case of loss of job. In case of income loss due to accident disability, the insurer will give a weekly benefit which you can choose upto your weekly salary amount. For example, if your salary is Rs 40,000 per month. You can choose a weekly benefit of Rs 10,000. In case of accidental disability, the insurer will pay Rs 1000 per week for the next two years or till the time the insured becomes healthy whichever is earlier. 

Q.What are the documents that one needs to submit to prove that the person lost his/her job?
-Ram Naray

You will have to submit a loan statement as to what was the loan disbursed amount, claim form, KYC documents. Apart from this, they would require either the termination letter or communication from the employer on a case to case basis and proof of your salary. There might be some scenarios where the insurer might want to investigate a bit further and might ask you to give a bank statement where the salary was getting credited. In some scenarios where the company suddenly shuts down and there’s no communication, the insurance companies will take a case to case call for the documents required. 

Q.Are there any chances of honest rejection?
-Manoj Kumar Singh

Yes, in the case of loss of income plans, if you are already physically disabled, then you can’t get these plans. There are some risk categories where insurance companies either have a differential pricing based on the category of job or some risk categories which aren’t covered under these plans. For example, if you're working in mines, underground mines, these won’t be covered under these plans. 

Q.Are there any specified professions which are not listed under this policy?
-Azam Ali

As I mentioned before, there are high-risk related jobs that aren’t covered. It depends on the insurer. 
 
Q.Is this available only online? What is the difference between buying it online vs offline?
-Nagaraj

It is not only available online. You can also buy this from the insurance companies offline. One of the reasons that these plans were not popular because the premium size is very small compared to life and health insurance products. Hence, options to purchase it offline have been lesser in nature. Buying online has many benefits. Everything is listed in black and white on the website. You can compare plans from different companies. 

Q.Is it possible if I buy this policy for my son who will turn 18 by Jan, 2021?
-Ashok Baabar

No, these plans are for customers who have a job or income and have an EMI. 

Q.Is there any income limit or any other condition?
-Anurag 

Loss of job insurance has three months waiting period. Secondly, the termination shouldn’t be due to fraud, dishonesty or poor performance. 

Q.Will it cover government employees also or are these for only customers working in private companies?
-Prajeesh

These are applicable for any kind of segments. Loss of income plans are both for salaried and self-employed customers. 

((newsletter))