Employment Insurance

Employment insurance comes in many different forms. Once, there was little need for such a product, because when people joined an organization, they would typically work there until they eventually retired. Now, however, layoffs and switching jobs are commonplace, so the need for financial assistance during times of unemployment is often a reality.

Governmental Assistance

Unemployed workers translate into less eager consumers on the economy, so naturally, unemployment is a big issue among political leaders. The goal is to put unemployed workers back to work as soon as possible, while assisting them financially in the interim. When a person becomes unemployed they can go to their local unemployment office and file a claim for benefits. Although the benefits do not start immediately, people can receive unemployment benefits for several weeks, as long as they continue to search for a job.

Unemployment benefits recipients must periodically verify that they are actively searching for work; without the verification the benefits cease. The verification process is not necessarily difficult, and in theory, a person can simply call a few offices and inquire as to whether they are hiring in order to qualify as having been on an active job search. Although some people see the act of collecting unemployment benefits as undesirable and aggressively pursue new employment, others welcome the benefits as a sort of paid break from work.

Monthly Benefits

The amount of monthly benefits depends on several factors, including the amount of time a person worked at a particular company before being laid off, and also how much money they earned while working there. Benefits also vary from state to state, and in some instances, other factors are considered, such as:

• The number of dependent children
• The existence of a dependent spouse
• The number of hours worked per week while employed

The Economic Policy Institute webpage has a useful tool to calculate the amount of benefits a person may receive, according to their state of residence.

Purchased Employment Insurance

When a person is approved for a loan or credit card, they are usually offered some form of employment insurance in addition to disability and life insurance. The reasoning behind these insurance product is that in the event the borrower loses their job, in theory, the monthly payments will be made by the insurer until the borrower finds another job. There is usually a monthly charge for employment insurance, and the monthly charge generally fluctuates based on the balance owed.

If there is no balance, then there is no fee for the insurance, but as the balance climbs, so does the monthly fee. Although it is generally better to be safe than sorry, most financial experts agree that this type of insurance is more to the benefit of the credit card company than the borrower.

Many stipulations attached to employment insurance policies leave many unemployed borrowers ineligible to use the policy, even if they have paid the fee faithfully, month after month. It is also important to remember that employment insurance for a credit card or loan is only good for that particular account. Is it really worth spending $18 a month for insurance on a credit card if the minimum balance is only $50 a month to begin with?

Harsh Realities

No matter how secure a person feels in a job, there is always the possibility of an eventual layoff. While it is true that some jobs are more secure than others, it is always a good idea to have a backup plan in the event of an unexpected job termination.

The best thing workers can do is to pad their savings accounts with enough funds to pay six months worth of expenses. This gives them the leeway they need to find another job without needing to snatch up the first one that comes along.

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