Should I take out job loss insurance?

While the figures seem to show for several quarters a drop in unemployment, France is far from achieving full employment. And the period of economic uncertainty that has opened up, between the consequences of the health crisis and those of the war in Ukraine, is not reassuring for job seekers or even for employees. Because, especially in certain metropolises which offer favorable ground for the crisis, company bankruptcies can lead to job protection plans and collective dismissals for economic reasons. However, there is a way to protect yourself against the drop in income that a dismissal would cause: job loss insurance.

Who is Job Loss Insurance for?

We talk about job loss insurance most of the time in the context of a mortgage. Remember that the law does not require you to take out a borrower insurance when a bank loan makes it possible to acquire real estate, but few lenders accept clients who would not use it. This borrower insurance will, depending on the guarantees taken out, cover the capital remaining due in the event of total and irreversible loss of autonomy, or even death. It can supplement borrowers in the repayment of installments in the event of work stoppage due to incapacity. And generally, the insurance taken out when borrowing is limited to these scenarios. However, losing your job can also make it difficult, if not impossible, to repay monthly payments. Without adequate coverage and without a quick return to employment, it may then be necessary to sell your property. To avoid this situation, organizations therefore offer job loss insurance. However, not all assets can access it.

Job loss insurance: for whom, for what?

This insurance is intended for employees likely to benefit from a replacement income if they lose their job. Also, the population concerned is ultimately limited to employees on permanent contracts (CDI). Artisans, merchants and other non-salaried workers will not be able to subscribe to it, as well as employees on a trial period or on a fixed-term contract (CDD). Insurers often impose other access conditions, such as an age limit. After 55, many workers are excluded. It is sometimes even necessary to attest to a certain seniority to be offered this guarantee against job loss.

It should be noted that this insurance will only give rise to the right to compensation within a very specific framework. Resigning, being fired for misconduct, negotiating a conventional termination of the employment contract, undergoing a period of partial unemployment… Most insurers do not cover these job losses. Dismissal for economic reasons is almost exclusively the only job loss that can give rise to compensation.

In terms of compensation, job loss insurance covers credit maturities during the period of inactivity of the insured. Concretely, when an employee sees his employment contract terminated by his employer, he no longer has to pay his monthly payments. The insurance is then activated to supplement the holder of the insurance during his period of unemployment, even if he receives unemployment benefits. But here again, the duration of the compensation in particular may vary depending on the organization and the contract taken out.

What are the points of vigilance to choose the right job loss insurance?

Before committing to job loss insurance, it is better to check certain elements, at the risk of seeing your compensation reduced to a trickle. Indeed, the amount of the support varies according to the contracts, because the deadlines are only rarely supported in full. The contract may provide for a compensation rate or a guarantee ceiling. You should also know that even if you were able to subscribe, your age, advancing, can become problematic for hoping to be compensated.

Also pay attention to waiting periods and deductibles. The organization can prevent compensation if the dismissal occurs a few weeks after the signing of the contract. The insurer can also impose a deductible period at the end of which only it will cover the monthly payments. Clearly, depending on the contracts and the insurance companies, you cannot be compensated during the first months of your contract, or even during the first months of your period of unemployment. In terms of deadlines, it is also necessary to inquire about a potential maximum duration of compensation and the possibility of exercising this guarantee several times during the duration of the contract.

The amount of the contribution is of course an important factor of choice. This will be calculated according to age, profession, salary and guarantees taken out. Asking for several quotes with equal guarantees is the best way to determine which will be the best job loss insurance contract.

(By the editorial staff of the hREF agency)

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