Innovation in insurance is not only limited to the creation of new products but may also involve the rebranding of existing products to take care of the changing habits of consumers or emerging risks. Thus, job loss insurance has been developed as a response to the need to provide credit institutions some protection against default by their clients who may lose their jobs before the full repayment of loans granted to them. Indeed, job loss insurance has become an almost compulsory guarantee for loan transactions, particularly long term loans, given the growing unemployment resulting from job loss. It is expected that the expanding consumer credit market would support and sustain the growth of job loss insurance which provides benefits other than the death cover under the traditional life assurance policy.
In order to guard against the possibilities of fraud, the underwriting conditions of job loss insurance are strict and restrictive. As with other insurance contracts, job loss insurance also has exclusions and benefits would not be paid in the following circumstances, among others: retirement, early retirement, negotiated departure and bankruptcy of the employer of the insured; resignation or dismissal during probation period; dismissal following gross misconduct; partial unemployment, lay off following a civil war, war, strikes, unrest, a nuclear catastrophe; temporary or contract employment.