Literally, severance insurance would mean a guarantee to the beneficiary that s/he would receive severance. But when you really think about it, it's a whole lot more than that. It benefits the displaced worker (possibly in a variety of ways); it benefits the employer (possibly in a variety of ways); it benefits the state unemployment insurance trusts (possibly in a variety of ways); it even benefits the insurance industry (while not harming any other party). In my opinion the only possible downside to severance insurance is to the insurance company that poorly underwrites the risk (if, in fact, there really is a method out there that allows an insurer to underwrite the risk).
This is pretty interesting. I'll take a look at them one by one.