Job loss insurance: how to get compensation after being fired

How insurance works

Job loss insurance in Russia is offered as a standalone product or as a risk “wired” into a consumer loan or mortgage insurance policy .

A separate disability insurance appeared relatively recently, namely in the midst of the corona crisis. The economic situation forced employers to resort to cuts to minimize costs and keep the business, and support measures were not enough. Then the demand for such insurance increased.

An involuntary dismissal policy assumes an annual insurance premium (on average from 2,000 rubles ), and monthly payments can range from 20,000 rubles . within half a year . The amounts, of course, will depend on the specific terms of the contract.

If the cover was purchased with a mortgage , the reimbursement will most likely match the monthly payments on the loan. Under such agreements, the borrower can count on compensation for the cost of repaying the loan until the moment of employment, but for a period not exceeding 60-180 days.

In consumer lending, the terms of insurance protection against late payments are more modest. Thus, payments for this risk are usually within 0.5% of the loan amount for each unemployed day of the client. But, as in other cases, the amount of compensation and terms depend on the conditions of insurance coverage.

Under what conditions can you issue a policy

Not all employees can buy a policy against job loss without being tied to lending . Insurance companies usually set extremely stringent conditions for concluding such contracts. When calculating, many parameters are taken into account, such as the age of the employee, the total length of service and the length of service in the last place, the field of activity, the type of employment contract concluded, the reasons for dismissal (dismissal of one’s own free will is always excluded here), etc.

There is no universal list of conditions that all insurers in the market would apply . But the cumulative general conditions look like this:

  • Age threshold. The client in most cases must be at least 18 years old, but not older than 64 for men and 59 for women.
  • General work experience. From 1 year.
  • Experience at the last place of work. At least six months, including probationary period.
  • Field of activity. The client cannot be in the state or military service, be employed in the internal affairs bodies.
  • The type of the concluded employment contract. The policyholder must be permanently employed on the basis of an open-ended employment contract / service contract. Individual entrepreneurs will not be able to insure.
  • Legal status of a citizen. The applicant must not be under investigation or sentenced to imprisonment.
  • labor status. The client must not be temporarily disabled, be on maternity leave, leave without pay, be employed in temporary and seasonal jobs.

Grounds for payment

In order for the policy to work and the dismissal to be recognized as an insured event, several conditions must be met. Perhaps the most important thing is that the dismissal should take place not of one’s own free will, but at the initiative of the employer .

In total, there are several types of termination of employment relations: 

  • at the initiative of the employee;
  • based on the decision of the employer; 
  • with the consent of the parties;
  • in the order of transfer and other grounds provided for by law.

However, only two of these options fit the concept of involuntary dismissal: if the place of work was liquidated under paragraph 1 of Art. 81 of the Labor Code of the Russian Federation ; if the dismissal occurred due to a reduction in the staff of the organization under paragraph 2 of Art. 81 of the Labor Code of the Russian Federation .

That is why it is important for the insurer what record of dismissal his client will have in the work book. A mark of dismissal in connection with a violation of labor laws may serve as a reason for denial of payments.

After the occurrence of an insured event, the insured must receive the official status of unemployed (two weeks after losing his job), that is , register with the employment service at the place of residence. And don’t forget to get help. Usually, for the compensation period from the employer, that is, the payment of severance pay, according to article 178 of the Labor Code of the Russian Federation , two months are allotted. At this time, the so-called temporary franchise operates under the insurance policy – a period of unemployment. When it ends, the client will begin to receive payment under the policy.

An equally important condition that will be taken into account when recognizing an insured event for this type of insurance coverage is the presence of insider awareness . Such a policy is not suitable for an employee who has information about the proposed dismissal.

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