Monday, July 30, 2007

Severance Insurance

It's been established (not yet quantified) that there are durational savings. Where else could there be savings? A number of blogs ago I asked the question, "If insurance companies can write disability insurance, why can't they write severance insurance?" Both illness/injury and getting fired result in the same thing...loss of income, and both happen involuntarily.

Well, that got me to researching long term disability insurance and better understanding what makes it tick. I now better understand how it is structured, but in doing the research I found that long term disability benefits are offset by any Social Security or Workmens Compensation benefits received. "Offset" ??? If that's the precedent, then why couldn't/shouldn't severance be offset by state unemployment benefits? Possibly more savings for an insurer? Any legal issues?

So how big a deal would that be. In looking up state unemployment insurance benefits, I found that the range of weekly benefits is from $133 in Puerto Rico to $575 in Massachusetts. And these amounts can grow considerably based on marital status, dependents, etc. So say someone is getting 10 weeks of severan ce. The potential savings with an offset would be $1,330 to $5,750 per person. That's real money.

Now I'm understanding why insurance companies are sniffing around this. The savings are really there, so it would seem.


No comments: