With employees facing job layoffs, some insurers in the country have come up with a product that covers payment of some EMIs of the loan availed by a person who loses his job.
ICICI Lombard and Bajaj Allianz General Insurance are companies that are offering such cover to their customers. While ICICI Lombard offers this cover along with its medi-claim policy, Bajaj Allianz has launched the product in association with some financial institutions.
Under the cover extended by ICICI, customers will get their three EMIs paid in case of a job loss due to retrenchment or layoffs. Moreover the job loss due to the closure of a division because of poor financial condition or action taken by any public authority resulting in the closure will also be covered by the insurer.
ICICI Lombard's head, (health & personal accident insurance), Sanjay Datta further informed that the job loss could also be termination from employment due to illness. The premium amount in such a case would be a factor of loan amount, policy duration, loan tenure and age.
An insurance analyst said, "The cover offers a shield against job losses for a limited period, but at least, a beginning has been made at a time when Satyam employees are facing uncertainty while the economy is in turbulent times."
The cover offered by Bajaj Allianz General Insurance was introduced recently and it is similar to the one offered by ICICI Lombard. A senior official with Bajaj Allianz General Insurance said, "We have a product that offers a cover of up to three EMIs in case of job loss."
Presently there are no individual products that cover only job loss. Optima Insurance Broking director Rahul Agarwal said, "This is largely because the premiums are low and the product needs to be played on a volume basis. Such insurance products suit the requirements of banks and institutions that offer loans to consumers."
This concept has been basically followed in the international markets that faced liquidity crunch and recession trends. For instance, Hyundai Assurance in the US is offering to cover up to $7,500 of loan on a new Hyundai car in case of both job loss and personal bankruptcy if self-employed.
Besides UKairlines Flybe is currently offering its passengers to claim for a full refund on their travel costs if they lose their jobs. The cover is provided to passengers who book flights, hire cars and book hotels in month of January and it is only made available to people who are employed with the same employer from the past two years.