What is Job Loss Insurance?
Job loss insurance is coverage that provides up to six months of mortgage payments in the event of involuntary unemployment. Job loss insurance has become very popular with the national unemployment rate at its highest rate in the last five years. However, there some key points to consider when purchasing this insurance:
Who is Eligible for Job Loss Insurance?
Job loss insurance is available to those who work for other companies; job loss insurance is typically not eligible to the self-employed or those in the military. Also, if you own more than 10% of the business that employs you, you are not eligible.
When Will Job Loss Insurance Pay Benefits?
You must be out of work for a least 30 to 60 days before this job loss insurance will pay anything. You receive no protection from job loss insurance when unemployment is due to mandatory retirement, resignations, or dismissals due to misconduct or criminal activities.
Who is Paid the Benefits of Job Loss Insurance?
Benefits are paid to the mortgage company not to the homeowner.
Do I Need Job Loss Insurance?
Generally speaking, it is unwise to purchase insurance to cover one particular event. It is often a better idea to save the the premium to self insure yourself for such a short-term emergency. Most of the time, insurance is best purchased against a major financial catastrophe such as death, the loss of home, or lawsuit following an automobile accident, and not for a temporary event such as losing a job.
How Much Should I Save?
Most financial advisors recommend having three to six months of savings for living expenses in case of emergency such as job loss. It can be as simple as putting away 10% of your paycheck into a savings account, or better yet, have a financial advisor tell you how to put together savings plan for you to easily stash away money in case of a job loss or other emergency. Another way to save money for an emergency such as a job loss, is to find out how much job loss insurance premiums will cost you, and instead of buying the insurance, put it away in a savings account.