PHILADELPHIA — Yes, the government provides unemployment insurance, but is there a market for private unemployment insurance?
Given the economy’s torpid state, a seasoned insurance executive and a University of Pennsylvania mathematics whiz are betting the answer is yes.
Marketing it under the name Income Assure, the Assura Group of NY Ltd. has been providing the product since August, as state insurance commissions have given approval.
“We’ve been doing a lot of research about this,” Assura Group Chief Executive Leslie Nylund said. “You are 200 times more likely to lose your job in your bread winning years” than to be disabled.
“We’re the only private unemployment insurance product available,” she said. It’s a startup business, Nylund said, declining to say how many people the company is insuring so far.
Like a Medigap plan, Income Assure supplements the state’s benefit to equal 50 percent of wages for a maximum of 24 weeks.
The insurance isn’t for everyone - it best suits high salary types who would face a huge gap between the top state benefit level and their wages. People who work for small companies, who have good reason to believe they’d be laid off, or who don’t earn more than about $60,000 won’t qualify.
Urijah Kaplan, a math whiz who graduated from the University of Pennsylvania,devised underwriting based on state, income, and sector.
For example, an executive in New Jersey earning $90,000 in the relatively stable field of health care would pay a $42.75 monthly premium, while an executive in the construction sector would pay $186.80 a month.
Four in 10 unemployed workers don’t qualify for state and federal unemployment benefits at all.
Usually they are new to the labor force, like recent college graduates, or haven’t worked steadily enough or earned enough to be eligible. Under most circumstances, people who quit or were fired don’t qualify.
“The state does all the gate keeping and screening,” Nylund said. If the state approves benefits, it’s likely that Income Assure will as well,she said.
Also, because Income Assure promises to bring the unemployed up to half of their past wages, it disqualifies many who live in states such as New Jersey and Pennsylvania that have relatively high benefits.
In these states, people who earned up to about $60,000 can already count on government benefits bringing them up to 50 percent of their former wages - thus, they wouldn’t qualify for Income Assure’s product.
Some of Income Assure’s executives are in need of unemployment benefits themselves.
Business, Pages 30 on 10/26/2011