You walk into your office on a Monday morning, get settled
in with a fresh cup of Joe and in comes your supervisor with a pink slip. What
an unpleasant surprise, especially considering you’ve spent several years with
your employer and your last evaluation was excellent.
To make things worse, you won’t be receiving a severance
package: The only money coming in until you find a new job is what you hope you
will get after you apply for unemployment benefits through the state, plus what
you get from cashing out your vacation time, if that’s possible. Now what?
The only logical answer is to start searching for work
immediately. However, if you had known about it – and signed up in time – you
might have benefited from private supplemental unemployment insurance, a product
developed by IncomeAssure. And you may want to consider it in the future, so
you can protect yourself going forward.
Even President Obama is in favor of wage insurance. In
January’s State of the Union Address, Obama said: “Say a hardworking American
loses his job – we shouldn’t just make sure that he can get unemployment
insurance; we should make sure that program encourages him to retrain for a
business that’s ready to hire him. If that new job doesn’t pay as much, there
should be a system of wage insurance in place so that he can still pay his
bills. And even if he’s going from job to job, he should still be able to save
for retirement and take his savings with him.”
In the spirit of planning for emergencies, everyone should
think through what they'd do if they suddenly lost their job. Planning for
Unemployment will help you get started.
As you figure out how your finances might work out, ask
yourself whether supplementary unemployment insurance would be worth it for
you.
How the
Program Works
When you enroll in an IncomeAssure plan and then lose your
job, you become eligible to receive a monetary benefit that equals up to half
of your weekly pretax income at your previous employer. This amount is derived
from your weekly state unemployment benefit and your weekly IncomeAssure
supplemental benefit.
To demonstrate: If you live in Florida and your annual
salary is $65,000, your weekly earnings before taxes are $1,250. If you receive
$275 per week from the state – the maximum unemployment benefit Florida offers
– your check from IncomeAssure will be for $350 if you choose a salary
replacement rate of 50%. This amounts to $625, or half of what you were earning
each week prior to termination. (Benefits are taxable and can be received for
up to 24 weeks. If your state program has a benefit term that lasts less than
26 weeks, you may be able to obtain extended unemployment benefits.
A Few
Important Considerations
For starters, only salaries up to $250,000 are covered, and a
six-month waiting period applies from the date of initial enrollment. (If your
annual earnings exceed this amount, only $250,000 will be used in the
calculation to determine the weekly benefit.) Also, the program works in
conjunction with unemployment benefits, so you are automatically ineligible if
you aren’t approved to receive state benefits.
What's more, you cannot enroll in an IncomeAssure plan if
you are self-employed, or if you resigned from your previous position and are
currently pursuing a new career opportunity.
In the event your employer severs employment before the
waiting period lapses – or issues a layoff that was common knowledge among
employees – you are only eligible for a refund of your premium payments rather
than for benefit payments under the policy.
How Much
Does It Cost?
The amount of your monthly premium will depend on the
following factors:
- state where you are currently employed
- desired salary-replacement rate (choices are 25%, 30%,
35%, 40%, 45% or 50%).
- industry
- number of extended benefit periods
- gross annual salary and commission
According to the website, most premiums are less than 1% of
the member’s gross annual salary and commission in premiums, but you can use
the online calculator to obtain a more accurate quote. “For example, if you
make $75,000 per year, your policy could cost less than $50 per month,” the
website adds. You should also know that premiums are waived during the period
in which you are receiving benefits through IncomeAssure.