Definition of Unemployment Insurance
Author: Leonard Garrett
Unemployment insurance is a joint program funded through both the federal government and the states. If you have ever been fired from a job you are likely eligible for unemployment insurance. The amount you can claim and the amount of time you can claim varies depending on the state you live in. Unemployment insurance or compensation is designed to help workers who become employed continue to meet their financial obligations until they find another job.
The advantages to having unemployment insurance is to help unemployed workers meet their financial obligations and to help sustain local communities. If a larger portion of a workforce is laid off or fired small towns and communities suffer also. Not only does regular wages pay bills and mortgages they also purchase goods and services. When wages paid to the workforce suddenly stop the local economy can suffer. You are allowed to spend the money from unemployment insurance on what you choose. There are no rules forcing you to pay your essentials first. This helps some of the money to reach the local economy.
Unemployment insurance or compensation is calculated by your previous earnings. It is not based on your needs. Different states apply different formulas but your unemployment insurance will be in line with your previous income.
There are some disadvantages to unemployment insurance. Sometimes you have to make a judgment decision on accepting a new job. You can accept a new job for less money. As soon as you accept the new job your unemployment benefits stop. However, if you do not accept the new job you will be putting yourself at risk. Unemployment can only be claimed for a limited period of time. Depending on where you live it could be 6 months to a year. So as you can see you could be risking a future income.
With the help of state and federal funding you are likely entitled to unemployment insurance compensation if you have been laid off or fired from a job. Unemployed workers can receive payment until they find another job. This not only helps the unemployed but also the local community. Check into the unemployment compensation laws in your area if you have been let go from a job. You may be entitled to a large amount of economic relief.