Do you know that the UAE has made it mandatory for all workers in the country to sign up for a job loss insurance scheme? What is involuntary job loss insurance, and how might it benefit you? Scroll down and find out everything you need about the latest unemployment insurance scheme in UAE and find the options that best suit your personal needs.
Losing a job is a life-altering experience that brings uncertainty, stress, and financial challenges. Whether due to economic fluctuations, corporate restructuring, or unforeseen circumstances, job loss can disrupt the stability we rely on.
In UAE, where countless expatriates and residents call home, the impact of job loss can be particularly profound. This is where job loss insurance comes into play as a lifeline, providing much-needed security during these trying times.
In this article, we’ll explore the significance of job loss insurance in the UAE, shedding light on how it can serve as a reliable safety net to navigate the stormy waters of unemployment and secure a more stable future.
You might also like to read: 6 Best Banks in UAE for Expats in 2023
What is a Job Loss Insurance?
Before we get into the details of the Job Loss Insurance Scheme in UAE, it is pertinent to understand the concept of job loss insurance cover. An in-depth insight into the concept will help you get a hold of the scheme in a much better way.
Job loss insurance, also known as involuntary unemployment insurance or redundancy insurance, provides financial protection to individuals who unexpectedly lose their jobs. It is designed to offer a safety net during periods of unemployment, helping policyholders maintain financial stability when they no longer have a regular source of income.
Who is Eligible for the Job Loss Insurance Scheme in UAE?
An involuntary loss of a job, often referred to as involuntary unemployment, is a situation where an individual loses their job through no fault of their own and without their own choice.
It typically occurs due to circumstances beyond the employee’s control, not the result of their performance or actions. Some common scenarios that are considered involuntary loss of a job include:
Layoffs: When an employer reduces its workforce due to financial constraints, restructuring, or changes in business operations, and employees are let go.
Company Closure: If the company or business where someone is employed shuts down, ceases operations, or goes out of business entirely.
Position Elimination: When an organization eliminates a specific job or position, the employee holding that position becomes redundant.
Economic Downturn: Economic factors, such as a recession or economic downturn, can lead to widespread job cuts and layoffs in various industries.
Contract Expiration: If an employment contract or project-based work arrangement ends, the job is lost.
Health Issues: Sometimes, individuals may lose their jobs due to health problems that make them unable to perform their duties.
Termination without Cause: In some cases, employers may terminate employees without cause whose reasons are unrelated to the employee’s job performance or misconduct.
It’s important to note that voluntary resignations or terminations for cause (e.g., misconduct, poor performance) are not considered involuntary job loss.
The Job Loss Insurance Scheme in UAE is only available to individuals who experience involuntary job loss to help them financially during their job search and transition to a new position.
Benefits of the Unemployment Insurance Scheme in UAE:
Job loss insurance in the UAE typically covers a portion of the policyholder’s income for a specified period after they become unemployed. The coverage may include benefits like a monthly payment or a lump sum, and it usually lasts for a predefined period, such as 3 to 12 months, depending on the policy terms.
This insurance is meant to assist individuals in meeting their essential expenses, such as rent or mortgage payments, utility bills, and groceries, until they secure a new job. One thing to be noted here is that voluntarily quitting a job does not come under the umbrella of job loss insurance coverage in the UAE.
The perks and benefits of job loss insurance coverage usually depend on the type of policy bought and the insurance coverage provider. However, the primary benefits offered by most of the insurance provider companies include:
- A set compensation amount is provided to the insured person after a specific period has passed since losing the job.
- Waive-off on credit card payments or easy installment plans without interest
- Relaxation on APR (Annual Percentage Rate)
- Pre-decided accidental death benefits in case the policyholder dies an unexpected sudden death resulting in a loss of income for the household.
Some Job loss insurance policies in UAE often come with certain conditions, such as a waiting period before benefits kick in and eligibility criteria based on the cause of unemployment. It’s important for policyholders to carefully review the terms and conditions of their job loss insurance to understand what is covered and under what circumstances they can make a claim.
Exclusions in Job Loss Insurance Cover in UAE
The following conditions or situations are generally considered exclusions, and the unemployment insurance scheme cover in UAE may not offer benefits in such scenarios:
- If the job you lost was temporary, you might not be able to reap the benefits of the job loss insurance scheme. These include all types of contractual, freelance, part-time, and temporary jobs.
- If the job loss occurs before or during the pre-specified waiting time. This period is usually decided when signing up for the insurance policy.
- If the job is terminated for lousy performance, misconduct, and fraud.
- Suppose the job is lost during the probation period. In that case, People working on probation are generally not considered full-time employees in UAE. Thus, they might need help to reap the benefits of the involuntary job loss policy.
Many banks and financial institutions in the UAE provide job loss insurance coverage alongside other provisions such as personal loans, credit cards, life insurance, or personal accident insurance policies.
This means you can get job loss insurance coverage as an added benefit only when you sign up for a credit card or take loans from banks.
However, only some banks and insurance provider companies offer this cover without requiring the applicant to sign up for a credit card or financial loan.
Latest News and Update on Job Loss Insurance Scheme in UAE
Starting January 1st, 2023, All UAE citizens and expats working in private and federal government sectors must sign up for the mandatory Unemployment Insurance Scheme.
All employees with a salary of AED 16,000 or less will have to pay a subscription fee of AED 5 per month (AED 60 per annum). Compensation for such employees will be a maximum of AED 10,000 per month.
Employees with more than AED 16,000 will have to pay a subscription fee of AED 10 per month (AED 120 per annum). Compensation for such employees will be a maximum of AED 20,000 per month.
Subscriptions can be paid monthly, quarterly, or annually at the workers’ convenience. Policyholders may negotiate with the insurance provider and obtain other benefits as well. All costs are subject to 5% VAT.
How to Sign Up for the Unemployment Scheme?
Private Sector and Federal Government Employees in the UAE may sign up for the scheme via multiple channels, including
- Dubai Insurance www.iloe.ae
- ATM Machines and Bank Kiosks
- Business Service Centres
- Currency Exchange Providers
- Etisalat Offices
- Du Offices
- Through SMS (Etisalat users can send SMS on 2120 )
To find more details, you may log on to the official portal of the UAE Unemployment Scheme.
6 Best Job Loss Insurance Providers in UAE
Job Loss Insurance coverage in UAE is usually provided by banks, financial institutions, and insurance provider companies. Here is a list of the best job loss insurance policy providers in the UAE:
Abu Dhabi Islamic Bank (ADIB)
Exclusively accessible to ADIB cardholders, the Islamic Covered Card Takaful Job Loss Insurance Cover is offered in collaboration with Dubai Islamic Insurance and Reinsurance Company.
The insurance cover compensates with 10% of the cardholder’s current balance in the event of job loss, with a maximum cap of AED 4000. The involuntary loss of employment coverage lasts for six months following the event.
Dubai Islamic Bank
The job-loss Takaful plan by Dubai Islamic Bank is accessible to anyone holding a permanent job in the UAE, provided they can provide the necessary documentation.
The policy cover comes in two variants: one tailored for individuals earning less than AED 3,000 per month, and the other for those earning between AED 3,000 and AED 5,000 monthly.
The first variant offers a monthly coverage of AED 1,000, with a monthly premium of AED 8, while the second variant extends a monthly coverage of AED 4,000, with a premium of AED 10.
Abu Dhabi Commercial Bank (ADCB)
Income Protection Plan is included as a complimentary benefit of the Secure Life Insurance package offered by ADCB.
The cover is available to all eligible applicants. The bank is offering an assured sum protection of up to AED 350,000 as compensation. After an involuntary job loss in the UAE, the coverage offers AED 6,000 per month for a duration of six months, with a monthly premium charge of AED 20.
Emirates NBD (ENBD)
Credit Shield, a job-loss protection insurance policy by Emirates NBD, is automatically activated when you sign up for your credit card.
The policy offers a 10% reduction on credit card outstanding balances, with a maximum cap of AED 4000 in case of job loss in the UAE. Furthermore, the annual percentage rate (APR) for outstanding dues on the credit card is reduced to a mere 0.99% when job loss occurs. The first two months under this insurance cover are complimentary, meaning no premium is required during this period.
Provided in collaboration with Oman Insurance Company, the Lifestyle Protect Insurance Cover is available to all salaried individuals with a minimum salary of AED 3,500 per month. It offers protection for job loss and loss of income for three months following the event, along with additional life protection benefits in the case of unforeseen accidents or events.
First Abu Dhabi Bank (FAB)
Lifestyle Protect Plus Job Loss Insurance Cover by FAB extends up to three months of financial security following job loss in the UAE.The coverage amount may vary between AED 1,000 and AED 4,500, depending on the chosen plan and premium.
In the UAE’s dynamic and ever-evolving job market, the significance of a job loss insurance scheme cannot be overstated. As explored in this article, these schemes serve as a vital safety net, providing individuals with financial security during uncertain times. The diverse range of job loss insurance options available in the UAE caters to various needs, salary brackets, and preferences, demonstrating the commitment to safeguarding the workforce’s well-being.
In conclusion, involuntary job loss insurance schemes offer a sense of reassurance to individuals facing the unexpected. It underscores the UAE’s dedication to supporting its citizens and expatriate workforce, even in the face of job loss. It must be noted here that signing up for an unemployment scheme is mandatory for all nationals and expats residing in the UAE.
Whether you’re a private sector employee or belong to a federal government entity, knowing about and signing up for job loss insurance coverage is a proactive step towards mitigating the financial impact of unforeseen career disruptions and ensuring a more stable and secure future.