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5 Insurance Options That Can Help You Manage Job Loss


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When you lose your job, one of the first things you’ll likely think about is how you’ll continue to support yourself financially until you find a new position or determine a new career path. There’s no doubt that weathering this kind of life change can be overwhelming, but it’s helpful to know that you have options. There are several different types of insurance that can help you manage financially and provide peace of mind about handling various expenses while you search for a new job.

There’s no one-size-fits-all “job loss insurance” policy you can purchase, of course, but you can utilize a few types of health insurance, credit insurance and even unemployment insurance to ensure you’re covered if you lose your job. Take a look at the following options to learn how they can help you manage a period of unemployment and keep your finances on track.

Short-term disability insurance is a type of insurance that offers income replacement or compensation if you become unable to work due to a non-job-related illness or injury. The insurance covers you for a predetermined period of time that usually lasts between three and 12 months. Benefits from short-term disability insurance typically start paying out immediately, but you may need to wait for a qualifying period of time to elapse before you begin receiving these benefits. The specific details will be outlined in your policy’s terms and conditions.

Depending on the insurance plan you purchase, you may be able to use the benefits to pay your rent, mortgage or car loan, and you might also be able to cover things like maternity leave, credit cards, groceries and even entertainment costs. Short-term disability insurance only covers non-job-related injuries and illnesses, and it’s something you’ll need to purchase before you experience the injury or illness. Injuries you incur while you’re on the job are covered by worker’s compensation

Some employers offer this type of insurance as an employee benefit. However, if it’s not part of your job benefits, you can purchase it privately from a certified disability insurance agent. The premium rates for this coverage depend on your age and the benefits package you choose.

Job Loss Insurance

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Job loss insurance is a type of financial protection that provides you temporary income after losing your job. This type of coverage can be ideal to purchase if you’re concerned about job security. These policies are typically only available to people with full-time jobs who are laid off involuntarily.

This job loss could be a result of a layoff, dismissal, unresolved labor dispute, lockout or strike. If you quit your job for personal or health reasons or are dismissed with cause, you may not be able to receive benefits from this coverage; it may be against the terms and conditions of the policy agreement.

The benefits you obtain from this type of policy are typically meant to cover certain types of payments while you’re unable to. They can pay for credit card bills, mortgage loans, car loans and personal loans for the stated period of your policy, and they’ll come into effect after a qualifying period, usually of 60 days. The amount of the monthly premiums you pay towards the benefit depends on your age and the coverage you sign up for.

Credit Protection Insurance

Credit protection insurance is a type of insurance that covers or pays out a monthly sum that you use to help pay or postpone your debts if you find yourself unable to pay them due to job loss. You can obtain this type of plan to cover debt obligations like mortgages, personal loans and credit card balances. The insurance pays the debts up to a maximum amount as stated in the certificate of insurance.

You’ll usually pay credit protection insurance premiums monthly for the period specified in your certificate of insurance. The premium fees for this coverage depend on your age, debt balances and monthly payment amounts. You can apply for credit protection insurance directly from the institution where you applied for your credit card, mortgage or personal loan.

COBRA Health Insurance

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows employees to keep their former employers’ health insurance plan for a limited period of time after they experience an involuntary job loss. After losing your job, your employer and insurance administrator should inform you about your eligibility to join COBRA. After this, you have 60 days to decide whether you want to continue coverage — keeping in mind that you’ll need to pay for it yourself. If the terms and conditions of the policy or the process aren’t clear, ask your insurance administrator for help.

You’ll pay your first COBRA premium within 45 days after signing up. Keep in mind that, while COBRA offers you the opportunity to retain your former employer’s insurance plan, the insurance cost will be higher because you’ll be paying for the whole premium instead of a portion of it. The part your former employer covered when you were working will become your responsibility.

While COBRA can be helpful in certain situations, you might find the cost prohibitive if you’re not working. It’s a wise idea to research and consider other insurance options before joining COBRA. Some factors to consider include the cost of premiums and your dependents’ eligibility. You can stay on COBRA coverage for up to 18 months following a job loss as long as you pay your premiums on time.

Supplemental/Private Unemployment Insurance

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Private unemployment insurance, also called supplemental unemployment insurance, is something you can purchase to supplement government unemployment insurance benefits after a job loss. The insurance isn’t meant to replace what you’d get from government unemployment compensation. It covers circumstances that make you ineligible for state compensation.

Getting benefits from government compensation and private unemployment insurance may allow you to cover your bills as though you’re still employed. The benefits can pay for car loans, mortgage payments and utility bills. Keep in mind that you’re eligible for the benefits only if your job loss occurred for reasons covered under the terms and conditions of your private unemployment insurance policy.

The premium rates you pay for private unemployment insurance may be affordable, but the amount ultimately depends on the benefits package you select. As with many other types of insurance, you can purchase private unemployment insurance policies from certified insurance agents. Take time to compare different rates and packages and carry out due diligence in selecting an agent. Before you experience a job loss, building a solid private insurance unemployment plan is a helpful financial solution.

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