The need to protect ourselves and our belongings from unfortunate events that lead to loss, injury or damage is essential. Bad things happen, and when they arrive, they are usually unseen and so there is no way to either avoid or prepare for them. Even in seemingly good situations, unfortunate events can find their way into our daily lives. This can significantly upset the balance of things.
One of such events is unemployment. Just like any other unfortunate thing to happen, even unemployment can be insured against. In this article, we look at unemployment insurance, what it means, and how it works.
What is unemployment insurance?
Unemployment, in simple terms, refers to a state of not having a paying occupation. There may be many other technical definitions of unemployment, but the most central definition is when an individual does not have a legally recognized paying job. Several reasons can cause unemployment, as people lose their jobs daily due to injury, disability, lack of qualifications, economic recessions, downsizing or even pregnancy. Whatever the reason, an unemployed individual has his or her source of income cut short.
Unemployment insurance, therefore, is a type of insurance that protects you from the after-effects of losing your job. Unemployment can cause some losses, and so unemployment insurance protects from those losses or damages.
How does unemployment insurance work?
Unemployment insurance is a type of social insurance. Employers and employees pay a sum every month to the Unemployment Insurance Fund, which is a state fund that offers financial relief to eligible unemployed persons. The amount is 1 percent of the monthly salary. Contract jobs are not required to pay for the Insurance Fund.
Unemployment is paid to ease any struggles that arise from job loss, and in the event of death, the relief is given to the deceased’s family. However, not everyone is eligible for unemployment insurance. Quitting your job, or being fired for bad reasons, means you cannot claim the insurance.
Why do I need unemployment insurance?
While you hope it never happens, losing your job is a genuine possibility. It could be from a prolonged illness, preventing you from work for a long time, or due to a pandemic which sees companies start to lay off workers. Pregnant mothers could lose their jobs during their maternity leave, due to difficulties from their absence at work, and if you are a seasonal worker (that is, your job is not full time), you could be unemployed if there is a change in the industry. All of these reasons could very well be the reason you lose your job and have your source of income cut short. Unemployment insurance is a backup plan that protects you from the effects of losing your job, so you are not found wanting or caught unawares.
Unemployment, like any lousy event, can cause losses to anyone affected by it. Everyone needs help now and then, and with unemployment insurance, even when you have lost your job, you can rest a bit before you find a way to get back on your feet.