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Involuntary Unemployment Insurance

Unemployment InsuranceInvoluntary Unemployment Insurance (IUI) is a type of supplemental homeowners insurance that protects borrowers who are not self-employed against the risk of unemployment.  Specifically, it preserves their ability to pay their loan installments or debts while they are unemployed.  Often involuntary unemployment insurance is packaged with a loan, or offered as an extra rider on an insurance policy.

There are many causes of involuntary unemployment, but to be classified as “involuntary,” the loss of employment cannot be due to employee misconduct or due to seasonality of the employer’s business (such as a school teacher during Summer recess, or a ski instructor in the off-season).  Some of the more common causes include: unemployment due to an individual or mass layoff, a general strike, termination by your employer without cause, a unionized labor dispute, or a lockout.  Whatever the cause is, involuntary unemployment can create a severe hardship for you and your family when faced with paying bills without your normal income, or while waiting for unemployment benefits to start, if you qualify.

Involuntary unemployment insurance is not an insurance that is required by law, and most homeowner policies do not include this type of coverage. But, people do find that it is advantageous to have because it helps them cover their mortgage payment or other bills if they lose their job.  Unemployment can devastate the finances of any family, and unfortunately once somebody with few financial options is forced to take out a loan to cover living costs, they can then be trapped in debt for years to come.

When tied to a loan, the involuntary unemployment insurance coverage amount itself typically does not exceed the borrower’s loan payment.  And, coverage will only pay benefits while the borrower is involuntarily unemployed, for up to the number of months or benefit period selected at the time of purchase.

Assurant Specialty Property is an example of a company that provides this type of insurance through its First Protector product.  First Protector offers an involuntary unemployment benefit with the flexibility to cover your entire monthly mortgage payment, or a portion thereof.  And, if you depend on two incomes for your mortgage payment, you can select joint coverage that provides benefits if you or your co-borrower become involuntarily unemployed.  First Protector also includes other valuable benefits, such as paying the mortgage loan payment if the home cannot be inhabited due to a disaster such as a flood, fire, hurricane, or windstorm.

For more information, please visit www.First Protector.com.