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Job loss insurance policies never managed to gain much popularity in the UAE despite some heavy marketing efforts in recent years. But those who took these or as add-ons in their primary policies are better off post-pandemic. Image Credit: Shutterstock

Dubai: Insurers, especially those offering life cover, and credit card issuers in the UAE are slowly dropping the ‘job loss protection’ add-ons from their new polices. This change comes after they were hit with sudden rise in claims from job losses in 2020, and which impacted their revenue and profitability.

Job loss protection – which is also there on some mortgage contracts - used to be a key add-on in life insurance policies, and this is where insurers took the biggest hit, according to industry sources. “Such claims have obviously mounted, although it is not clear what percentage of life insurance policyholders had job-loss built into their policies,” said Leena Parwani, CEO of LPH Financial Services.

“There are standalone job-loss insurance policies that were being sold in the UAE as well – although these had very few takers.”

In basic policies, job loss insurance offers a temporary income for the insured.

Less popular, lower claims

Insurers would be thankful that there weren’t many who thought of buying one. If that had been the case, local insurers would have been worse off, sources add. In fact, through the last five years, multiple attempts were made by leading local and international insurance firms to market job loss schemes in the UAE marketplace.

“This is a market where selling life insurance policies are difficult, because most residents see it as an additional payment burden,” said the claims manager at a local insurer.

Priority insurance

It meant that residents would be willing to pay for a medical insurance cover, but anything over and beyond that was a cost they didn’t want to shell out on. But those who bought job-loss cover say their experience has made them wiser.

These clauses were part of their mortgage contracts, and provided a good deal of relief when their financial circumstances turned sour last year. “I lost my job in August and I still had to pay off a few instalments on the apartment,” said a former executive who owns property at Business Bay. “The job loss cover did come to the rescue.”

Standalone job loss cover did exist earlier - but is no more available to my knowledge. Job-loss coverage now comes mostly as an add-on or as a rider such as the credit-shield coverage with credit cards.

- Leena Parwani of LPH Financial Services

Pay more

Burnt by their 2020 experiences, insurers are either dropping the job loss provision… or raising the premiums steeply.

“The problem is, most do not realise the need for insurance when things are normal,’ said Parwani. “Why would a consumer buy job loss coverage when he/she is earning a comfortable living?

“They realise the need during uncertainty or after they lost jobs – like during this pandemic. Those who covered themselves against such a situation are better off during crises and pandemics. A job loss or even a drop in income makes it difficult for consumers to stick with their mortgage installments.”