People who have been laid off from work probably have one question running through their minds. What do I do now? Bills, credit cards, the mortgage, all of them have to be paid.
Many of the nation's new jobless are turning to a new kind of safety net. News on Six reporter Steve Berg has some of the pros and cons of what's known as Involuntary Unemployment Insurance.
Ask anyone who's been unemployed, and they'll tell you the government's benefits don't go very far. Some companies now offer job loss insurance, or involuntary unemployment insurance, but it doesn't come cheap. Margo Mitchell with Consumer Credit Counseling, "It is expensive, but of course if you lose your job today, it's a wonderful cushion."
There are lots of different kinds of jobless insurance. You've probably seen offers from your credit card, where for a fee, your payments are covered if you lose your job. A couple of different companies are offering mortgage insurance that will cover your house payment for up to 6 months if you lose your job. There are even policies that insure other bills, like your utilities or college tuition. A good idea? It depends on the individual. But Margo Mitchell with Consumer Credit Counseling says they all have one thing in common. Margo Mitchell, "The catch is you have to be a participant now, you can't sign up for it today if you've lost your job."
Some other tips: Credit card insurance varies widely. Some plans pay your whole balance while others only make your minimum payment. Read the deal closely. Not everyone is eligible for mortgage insurance. Layoff-prone jobs like airline workers are sometimes not covered. Neither are self-employed people.
And job loss cannot be due to firings, resignations, retirement, or criminal activity. But credit counselors say sometimes, all you need to do is make a simple phone call. They say many creditors are willing to work with people to delay payments in case of a layoff. "But you need to talk to the creditors and let them know, don't wait till you're 30 or 60 days and you start getting calls from them.â€
Financial advisors say unless you have a job where you face frequent layoffs it's probably cheaper to just save your own money, enough to cover 3 to 6 months of your expenses.