What Is Unemployment Insurance?

What Is Unemployment Insurance?

If you have been working and your employer decides to let you go, you are likely eligible for unemployment insurance. Unemployment insurance is a joint program funded through both the federal government and the States.  The amount you can claim as well as the amount of time you can claim for may vary according to the state you live in. However, Unemployment insurance or compensation is designed to help workers who become unemployed meet their financial obligations until they find another position.

There are several advantages to having unemployment insurance. The first is slightly obvious; to help unemployed workers meet their financial obligations. The second is to help sustain local communities. Small towns and communities can also suffer if a large portion of their workforce is laid off or fired. Regular wages pay bills and mortgages but also purchase goods and services.  If the wages paid to the workforce suddenly disappears then the local economy can suffer greatly. If you receive unemployment insurance, you are allowed to spend the money on what you choose. There are no restrictions forcing you to pay your essentials first. This way some of the money can reach the local economy.

Unemployment insurance or compensation is not bases on need. It is calculated by your previous earnings. Different states apply different formulas, but your unemployment insurance will be in line with your previous income.

There are some small disadvantages to unemployment insurance. Sometimes it is a judgment call on taking a new position. A person may receive a job offer but for less money. As soon as you re-enter the workforce your unemployment benefit stops. However, not taking a new position could be a risk as well. You can only claim unemployment for a limited period of time. Depending on where you live it could be 6 months to a year. By not taking a position, you could be risking a future income.

If you have been laid off or fired from your job, you are likely entitled to unemployment insurance compensation. With the help of state and federal funding. Unemployed workers can receive payment until they find another position. This helps both the unemployed workers and the local community. If you have been let go from you position, check into the unemployment compensation laws of your area. You may be entitled to a large amount of economic relief.