How Career Insurance will help battle the job hunting during the crisis and after graduation
The major concern of every professional is Job security. When we think the trend line of the post COVID job market, we are always living in the fear of losing our precious job. How Career Insurance will help you to battle the job hunting after graduation/resignation/termination or during crisis like this pandemic.
Before going into the topic, there are more than one reason, for losing our job, such as company takeover, closure of a department/division, company shut down due to monetary loss, poor client network or even bankruptcy. When in doubt of losing our job, we should not forget to cover us Career Insurance will help us to battle the job hunting.
What is Career Insurance?
Career Insurance is also known as an unemployment insurance provides income in the case of a layoff or during jobless. It may also cover a business closure, job termination, and separation from employment.
Almost of the policies don’t provide coverage if you resign, retire, or you are fired from a job (legally); Unemployment cover acts as an insurance for unemployed periods, so if you lose your job, your insurer would pay you a monthly income.
How Career Insurance will help you to battle the job hunting?
When your company is undergoing into the financial crisis and they are forced to do lay off or terminate any resourse(may be you or me), interms to protect their survival. If you resign, retire, or are fired, you won’t qualify for this Career Insurance.
Most of the job resignation / loss policies have a waiting period of minimum 45-60 days to six months before eligibility to receive benefits. The waiting period begins after you have enrolled in the plan. If you lose your job sooner than that, you can't collect.
Some policies pay monthly amounts, and others provide a lump-sum payment. There may be a cap on the period under which you can collect benefits and on the amount you will be paid.
Take the time to research private unemployment plans before you sign up, so you fully understand the costs, eligibility requirements, and benefits.
Should you cover yourself by Career Insurance?
Before you make that decision to purchase private unemployment insurance, evaluate your employment circumstances. Also, review your personal finances to determine if the risk is worth the expense of paying an insurance premium.
If so, the time it will take you to find a new job will be shorter and you may not need coverage. In a strong job market, qualified candidates get hired quickly.
If you have a job or career that is in high demand, it may be at least somewhat recession-resistant.
Your financial situation and the type of job you have will determine if buying private or supplemental unemployment insurance is worth the cost of the monthly premium. If you’re living paycheck to paycheck without savings to carry you through a period of unemployment, the extra funds can help to pay your bills.
If you’ve got an employer or union-provided job loss benefit plan or a mortgage or personal loan protection plan, your expenses may be partially covered. An emergency fund combined with state unemployment benefits may be enough to tide you over, especially in times of low unemployment.
Consider what expenses you could cut back on if you unexpectedly lose your job. You may be able to make up some of the loss of pay, especially if there is another wage earner in the family.
As with any insurance product, carefully weigh the pros and cons before you purchase a plan. Decide whether you need it and whether it provides enough coverage to ensure that your expenses are provided for.
Features and Benefits of Career Insurance:
An insight of some useful features and benefits are,
Insurance Provider's Benefit
It's a sad reality that this Career Insurance also benefits the Insurance Service Providers. An unaccepted reason for this is that the insurance provider does not check whether or not a job insurance is required by the applicant. vice-versa every applicant also should aware that he/she really need a Career Insurance before purchase.
Job Loss or Security Purpose
This Career Insurance Cover is based on the major reason for job loss of the insured. In fact, it is one of the main deciding factors for getting a cover on job insurance.
Premium Plans
You have the choice of selecting a Career Insurance Cover based on the probability of job loss and the premium amount affordability. Typically, the premium towards job insurance is the range of 3% to 5% of the total coverage, on top of the master policy’s premium.
Cover Period or Validity
In case this Career 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.
In case, job/income is lost due to an unfortunate accident that results in death, partial or permanent disability, or disablement, the insured can get weekly/monthly salary benefits for up to 2 years.
In a scenario where the your job is lost due to termination/layoffs or retrenchment, the plan may help by paying off loans for up to 3 months.
There are short-term income protection policies also available that last 12 or 24 months, which are usually cheaper.
What will be covered under Career Insurance?
These are the three main inclusions offered by the Career Insurance Providers:
Critical illness Protection:
When a policy holder suffering from any critical illness and in case it is covered under any policy. If the illness is diagnosed during the policy term, the insurance company will compensate for the loss of income during the period of hospitalization/job seeking or other criteria if agreed;
Disabilities:
It's better this Career Insurance also providing rider benefits like personal accidental cover disabilities and death; Additionally, it includes scenarios like permanent disability resulting from an accident during this policy term period. Provided this claim is permissible and payable under the policy; Perhaps, it may have some limitations in continuation.
Loans:
An added feature this Career Insurance can pay you for your Loan EMIs for a specific or disclosed tenures; It's mandatory that the policyholder should also seek for a new job during that tenures;
Eligibility and Exclusions to be noted in Career Insurance:
Despite being a reassurance, Career Insurance provides very limited cover. Most companies offer 50% of the net income. The job insurance does not cover job loss in cases when the employee has been asked to leave due to poor performance, or during the probation period. The following are the cases when job insurance does not provide any coverage:
- Self-employed or unemployed individual
- Unemployment during probation period
- Unemployment in case of early retirement or voluntary resignation
- Job loss in case of an already existing illness
- Job losses such as suspension, retrenchment, termination for underperforming or fraud
Guidelines (Claim Procedure, Documentation):
There are clear guidelines provided by the Insurance Companies for the claim procedure and the documentations; To avail the claim benefits, termination letter is mandatory in every Insurance service;
The insurance provider mostly will ask for the written letter of retrenchment from the claimant. The main factor to notice here is the termination of the job should not be voluntary.
The claimant mostly has to furnish and submit below mentioned documents duly in case of filing a claim for Career Insurance:
- Duly filled and signed claim form
- Proof of Job loss / Income loss (Bank Statement)
- Termination letter
- Claimant's ID proof
- Pay Slips
- Form 16 (of the last or running FY)
- Claimant's Age Proof
- Company details (Name and Address)
- Copy of Policy documents
- Misc. documents required (Differ for Insurer)
List Of Plans Providing Job Insurance:
Stand-alone Career Insurance is not available in the insurance industry in India. Don't worry, as add-on or rider along with personal accident policies or critical illness plans, the Career Insurance is available. Some of the plans that are coupled with Career Insurance in India are:
- Home Suraksha Plan by HDFC Ergo
- Safe Loan Shield by Royal Sundaram
- Secure Mind by ICICI Lombard
After analyzing the trend of the career market in most of the countries I have come to know that the Job Security is being so fragile and volatile, Career Insurance could be a sensible option, If you can afford and keep it as a Back Up for your career battle. Although every Career Insurance serves as a temporary relief, it saves us from the mental trauma of job loss.
Be Aware about these hidden cheats
Always read the conditions before signing any Career Insurance. Because they don't have same conditions like other Insurance policy. Query well about the following before you buy the cover:
- Am I eligible for the claim if the employer offers me severance pay?
- Will I get the claim if the employer gives me a notice before termination as per my contract?
- What happens if I have been fired, but do not have a written document to prove it?
Conclusion
Unable to afford this? Can we have any better option comparatively? Yes, the affordable option what I can suggest is to create and maintain a contingency fund which covers four-to-six months of your expenses. Besides these FD, RD mostly can be opted as short-term investments with flexible liquidity would be acting as a shield to battle and win in your career crisis. Your investment and the Savings are the best Insurance against a Career Crisis, if it can be easily liquidated.
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