Cincinnati-based Great American Insurance is offering a policy that's among the first of its kind: Making sure workers can receive at least 50 percent of their incomes if they lose their jobs, potentially benefiting hundreds of thousands of middle- to higher-income people.
Currently, jobless workers make do by collecting state unemployment checks that amount, at best, to a few hundred dollars a week. For workers who once earned $60,000 or more a year, the jobless benefit is much less than half their previous wage. Many of these workers make ends meet by taking multiple part-time jobs or positions below their qualifications.
Now, Great American and Assura Group of New York are partnering to offer coverage that ensures customers will receive 50 percent of their previous incomes when combined with unemployment benefits - even if they used to earn up to $250,000 a year.
"Everyone knows a friend who's lost their job," says Leslie Nylund, Assura's chief executive. "This fills the gap in unemployment benefits. It takes the pressure off people and allows them to look for the right job."
IncomeAssure, which launched a month ago, is available in 34 states and is being marketed to professionals making anywhere from $60,000 to $250,000 per year.
Workers who lose their jobs can collect up to $387 weekly in unemployment benefits in Ohio, and $415 in Kentucky. That translates into 50 percent coverage for workers who once made $40,000 in Ohio and $43,000 in Kentucky.
But workers used to earning higher wages find the maximum jobless benefits fall short. Unemployment benefits provide just a quarter of the income once earned by workers who made $80,000 a year in Ohio or Kentucky. With IncomeAssure, that worker would receive $382 a week in Ohio and $354 a week in Kentucky in addition to their unemployment benefits.
The typical premium is about $66 per month, or about $800 a year. The greater the coverage, the higher the premium. Coverage lasts only for the first six months of unemployment.
"With unemployment hovering at 9.1 percent, you have a higher likelihood of becoming unemployed than becoming disabled or dying," Nylund says. She estimates the national market for the new coverage to be worth $25 billion to $30 billion a year for 30 million people.
Great American Insurance, a subsidiary of American Financial Group, says IncomeAssure dovetails well with its portfolio of specialty insurance products that cover everything from semi-trucks to executive liability. The company also is the No. 1 insurer of casinos, armored cars and the show horse and racing industry.
"Our partnership with Assura Group gives us the unique opportunity to fill an unmet need in the insurance marketplace with a truly innovative option," says Mike Sullivan, senior vice president of Great American Insurance.
More than a third of Americans are worried they could lose their job in the next 12 months, and 75 percent say they are not financially prepared for a potential job loss, according to a survey by research firm Caravan OCR International. The same survey showed 62 percent of respondents said they'd use long-term savings to cover expenses, while 28 percent would be forced to use retirement funds or seek financial help from family and friends.
There is a six-month waiting period before benefits can be received, which prevents payouts to someone who might know that he or she is getting laid off in a month. If a customer is laid off during the waiting period, he receives a full refund.
Matthew Rohrmann, an analyst with Keefe Bruyette & Woods in New York, says other types of insurance will pay the mortgage, car payments or credit card debt if a person loses his job. But Rohrmann says he's unaware of any other insurance that provides the comprehensive coverage of IncomeAssure. He says Great American has a track record of identifying highly specialized and potentially very lucrative niche insurance products.
"It's too early to say if this will move the needle for them, but they have always had a reputation for being on the cutting edge when new opportunities arise," Rohrmann says.
