Insurers to pay EMIs in case of retrenchment

KOLKATA: At a time when the fate of some 53,000 Satyam employees is in limbo and job cuts in various sectors loom large in a slowing economy, wouldn���t it be nice if job losers were armed with an insurance cover that guarantees payment of some EMIs on loans availed.

Well, that���s exactly the kind of lifeline that ICICI Lombard has thrown up and companies such as Bajaj Allianz General Insurance are also experimenting on these lines. While the concept is new in India, it has been in vogue in international markets that have experienced recessionary trends and liquidity crunch.

For instance, Hyundai Assurance in the US is offering to cover up to $7,500 of debt on a new Hyundai car in case of a job loss as well as personal bankruptcy if self-employed.

ICICI Lombard���s cover comes bundled with a mediclaim policy that promises to pay the EMIs for three months after someone has lost his job on account of retrenchment or layoffs. The job loss may be due to a closure of a division or a department on account of poor financial health or action of any public authority resulting in the closure of the employer���s firm.

The job loss may also be termination from employment due to illness. The premium for such a job loss cover is a factor of loan amount, policy duration, loan tenure, and age, Sanjay Datta, head, (health & personal accident insurance) at ICICI Lombard, told ET. ���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,��� said an insurance analyst.

Bajaj Allianz has been experimenting with a job-loss cover for sometime now and had launched a similar product in partnership with financial institutions. ���We have a product that offers a cover of up to three EMIs in case of job loss,��� said a senior official from Bajaj Allianz General Insurance. Strangely, however, they did not find many takers for the policy when it was launched.

Incidentally, there are no standalone products that offer only the job-loss cover. 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 offers loans to consumers,��� Optima Insurance Broking director Rahul Agarwal said.

Interestingly, UKairlines Flybe is offering a cover to its customers, allowing them to claim a full refund on their travel costs if they lose their jobs. The insurance is being offered to passengers who book flights, hire cars and book hotels in January. It is available to anyone who has been in continuous work with the same employer for at least two years.
debjoy.sengupta@timesgroup.com