What is Job Loss Insurance?

Job loss insurance: features

The purpose of job loss insurance is to guarantee the insured against the pecuniary consequences of the loss of his job for an economic reason (dismissal for the employee or compulsory liquidation for the self-employed).

If the death-disability-incapacity guarantees are always required by the banks as part of the insurance of a mortgage (or borrower insurance), the job loss guarantee is always optional. To be eligible, you must be on a permanent contract, generally have at least 6 months or 1 year of seniority in the company and be under 55 years old.

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Operation of the job loss guarantee

The application of the job loss guarantee is subject to various criteria.

economic dismissal

If the purpose of the job loss guarantee is to cover employees in the event of dismissal, only insured persons who have lost their job for an economic reason resulting in compensation by Pôle emploi can claim this cover. The reason for dismissal must be completely foreign to the insured. This is why job losses resulting from:

Also not covered are employees on partial or seasonal unemployment or those benefiting from early retirement.

Good to know : for contracts guaranteeing non-employees (self-employed workers), they will only be compensated if their cessation of activity is following the judicial liquidation of their company (whether in their own name or in a company).

The expiry of the waiting period

All contracts include a waiting period intended to moralize the risk. This period, which varies according to the contracts, between 3 and 12 months between the date of subscription of the contract and the taking of effective guarantee aims to avoid anti-selection by delaying the adhesion of people whose employment is threatened in the short term. term.

The application of a deductible

Rare are the contracts that do not include one. Generally between 30 and 120 days, the deductible is always deducted before the compensation for the period of unemployment. Thus, an insured dismissed on January 1 and whose contract includes a 60-day deductible will not see his compensation intervene until March 1 (provided that the waiting period provided for in the contract has elapsed).

The duration of the compensation provided for in the contract

Each contract sets its own compensation rules. Generally, the duration of this does not exceed 12 to 18 months per period of unemployment. On the other hand, sometimes the contract also includes a maximum compensation period during the life of the contract and sometimes also a monthly compensation amount, but also an overall compensation ceiling over the duration of the contract. Finally, the contract also sets two other variable criteria depending on the insurers:

  • The percentage of coverage of the amount of the indemnified loan maturity (20 to 100% depending on the contract).

To note : some insurers offer progressive compensation (eg 30% for the first 6 months, then 50% for 6 months and 80% for the last 6 months).

  • The end of guarantee age (generally between 60 and 65 years of age).

Calculation and cost of the contribution

The contribution varies according to the insured and depends essentially on 3 criteria:

  • the age of the insured (statistically, the risk of job loss increases with age);
  • the profession of the insured (in certain branches of activity, reclassification is easier, because the offer is greater);
  • the salary of the insured.

The contribution is expressed as a percentage of the capital borrowed. Currently, the applicable rate is comprised (depending on the cover, age and profession of the applicant) between 0.10 and 0.60%.

The other form of job loss insurance

If the optional job loss guarantee in borrower insurance is the most common, it should be noted that there are also job loss guarantees on the market offered by certain insurers as additional guarantees to the “Stop working” contract following a accident or illness and covering the insured in the event of total temporary work incapacity (ITT) or in the event of permanent work disability.

This compensation paid in the event of loss of employment following an accident or illness is chosen by the insured (between 150 and 1,500 euros per month) and is paid for a maximum period which generally does not exceed 12 months.

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