Following the new General Conditions for Debt Repayment Insurance (click here for news on this) effective February 2008, a number of banks are adding unemployment cover to the insurance they offer for mortgages or consumer credit.
Halkbank was the first to launch a product, available only to employees (therefore excluding the self-employed). This pays your monthly loan repayment for up to twelve months in the case of unemployment.
Fortis has just announced their product. Employees can be covered for unemployment, self-employed covered for temporary disability.
Companies offering this benefit as a stand alone product, or as a rider to accidental death and/or disability products can launch quickly, as such a product is free-tariff. However premium tax of 5% (called BSMV) is payable with this product structure.
However, a number of companies are currently working on products that offer unemployment protection as a rider to life products. This will provide a more comprehensive cover, e.g. in the case of a mortgage protecting the policyholder against loss of their home resulting from death, inability to work due to disability, or unemployment. Also life products have the advantage that they are exempt from BSMV. But the product design and roll-out periods are longer as Treasury approval is required.
Expected product design:
- Payment of the remaining loan balance on death or total permanent disability
- Payment of the monthly instalments for a maximum term if the insured is unemployed (suitable for employees)
- Payment of the monthly instalments for a maximum term if the insured is temporarily unable to work due to disablement (suitable for self-employed)
- Waiting periods for unemployment and disability benefits
- Limiting unemployment cover to involuntary unemployment: cases where the life insured is made redundant through no fault of their own
- Single premium in the case of consumer credit or mortgage protection
- Monthly premium in the case of credit card protection