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.

Premium rate is determined in accordance with the rate of layoffs and the possible duration of unemployment for a person who is unemployed at a given time. The non-existence of reliable and coherent statistics on layoffs and duration of unemployment after layoffs makes the rating of job loss insurance very difficult.

Since the duration of the contract is usually one year renewable, provisions for reserve are proportional to the premium for the outstanding period. With the growing unemployment resulting from layoffs affecting people of all ages, job loss insurance certainly offers several opportunities to insurance companies.

Furthermore, international organisations such as the International Labour Organisation (ILO), International Labour Office and the International Social Security Association (ISSA) encourage their member countries to include unemployment benefits in their social welfare systems. In  light of the ever-increasing rate of unemployment, credit institutions, especially banks, are increasingly resorting to job loss insurance to minimise the financial consequences of the non-repayment of loans granted to clients who have lost their jobs. Indeed, current indications suggest that layoffs would remain an issue to contend with in the business world. Job loss insurance therefore presents significant business opportunity which insurers could exploit to boost their business portfolio.