Assuring Half Your Income When Unemployment Knocks


In 1932, Wisconsin enacted the first state unemployment insurance plan in response to the Great Depression. Three years later, President Franklin Roosevelt established a program on a national level as part of Social Security legislation. Today, unemployment insurance available in all states, providing money for out-of-work adults and is funded by both federal and state taxes. Yet for most people who have lost their jobs, those unemployment checks are hardly enough to cover all the family bills.

This month, a private company, Assura, unveiled IncomeAssure, supplemental unemployment insurance designed to partially fill the gap between what workers receive from state unemployment and what they need. The policies add to what the state provides, bringing a worker a total of 50% of their lost income for up to 24 weeks.

"In reality, most people do not have adequate savings" says Leslie Nylund, CEO of Assura Group. "This is really a product to be part of financial planning. It's a way to weather the storm."

Unlike other existing insurance programs related to loss of a job, which cover specific things like credit card payments or mortgage, the insurance provides direct cash to be used in any way the policyholder needs, such as tuition, auto expenses, bills or rent.

How Does It Work

Take, for example, an information worker in New York who earns a $100,000 salary. If he were to lose his job and qualified for unemployment, he'd be eligible to receive New York's maximum monthly state benefits of $405 a week in unemployment insurance. With the supplemental income insurance, he would receive an additional $2,411.66 each month, for a maximum of 24 weeks, for a total of $4,166.66 for the month. The premium for this coverage plan costs about $150 a month. A transportation worker in Michigan earning $60,000 would pay a $61.44 monthly premium to receive coverage that would net him insurance benefits of $931 monthly if he lost his job, according to the IncomeAssure calculator.

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Coverage and premiums vary by occupation, state and salary level, and there's a six-month waiting period before a policy becomes active, which means policies that are purchased on Sept. 1 are not eligible to pay out until March 1, 2012. If a policyholder loses his job during the waiting period, IncomeAssure returns all premium payments to him. Only full-time workers and those who work in companies of more than 50 employees qualify.

Nylund says she expects the primary buyers of the policies to be in the $50,000 to $150,000 a year income range, who can afford the premium and also have substantial monthly overhead to cover. Right now, the insurance is available in 34 states and Washington, D.C., but Nylund expects it to be available in every state by the end of the year.

Should You Get It?

Run the numbers on your household budget and figure out how the loss of an income would affect current obligations. Given the six-month waiting period, where do you see your industry headed by next March? How substantial are the unemployment benefits that you are eligible for?

"Every day, you hear about consolidations and layoffs," Nylund says. "This is the environment we will be in for a very long time."