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Supplemental unemployment insurance is a type of insurance policy that can be purchased by individuals to protect them in the event that they should become unexpectedly unemployed. Such policies are used to supplement traditional unemployment insurance, which is generally provided by a government program on a local or national level. By purchasing supplemental unemployment insurance, an individual may be better equipped to pay bills and cover daily living costs should something occur which would cause termination from his or her current job. These policies must be purchased when the person is employed and they are only payable if the person in question also qualifies for government unemployment benefits.
The possibility of losing a job is a threatening one for all workers, especially in a modern business climate filled with upheaval. Losing a job generally means that the person is losing his or her main source of income, which can be especially troublesome if there are significant obligations which must be met. While regular unemployment benefits are helpful, they usually represent only a small portion of actual wages. For that reason, supplemental unemployment insurance is usually a good choice for those people concerned over the possibility of losing a job.
A supplemental unemployment insurance policy works much the same as other types of insurance. Anyone who is interested in such a policy must seek out an insurance company offering these benefits. A premium is paid, usually in regular installments, as compensation to the insurance company that assumes the risk of the policy. If the person becomes unemployed, the insurance company begins paying off benefits.
What makes a supplemental unemployment insurance policy so useful is that it can provide much greater benefits to the policy-holder than regular, government-provided unemployment insurance. The government benefits generally pay a person only a small percentage of his or her former salary. Supplemental insurance is added to those benefits to give a person a much greater payout. In some cases, the supplemental insurance, when added to normal unemployment benefits, can provide as much as half of a person's original salary.
There are some stipulations that must be met for a person to qualify for supplemental unemployment insurance. A person must be employed at the time the policy is purchased. In addition, he or she must qualify for governmental unemployment insurance. This means that a person who is fired with cause that denies him normal unemployment benefits cannot hope to fall back on supplemental insurance instead.