Insurance helps with being out of work

October 30, 2011 at 12:00a.m.

The Philadelphia Inquirer

PHILADELPHIA

Yes, the government provides unemployment insurance, but is there a market for private unemployment insurance?

Given the economy’s dismal prospects, a seasoned insurance executive and a University of Pennsylvania mathematics whiz are betting the answer is yes.

Marketing it under the name IncomeAssure, the Assura Group of NY Ltd. has been rolling out 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, IncomeAssure 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 Penn, 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 hammered construction sector would pay $186.80 a month.

The company’s target customer is someone like Alayne Green of Elverson, Pa., an executive in pharmaceutical publishing who was earning considerably more than $100,000 when she was laid off in June 2009.

“I’d grab it in a heartbeat,” said Green, who is now working. “Things are way too unstable now. Peace of mind is so important.”

For a $113.37 monthly premium, Green could buy enough coverage to bring in a monthly income equal to 50 percent of her wages, assuming a $100,000 salary.

IncomeAssure calculates her state benefits at $2,483, then provides an additional $1,684 a month.

“Six months of income would give me some breathing room,” said Green, who lost all retirement and college savings but who managed to save her family’s home. She now has a temporary contract job.

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 gatekeeping and screening,” Nylund said. If the state approves benefits, it’s likely that Income- Assure will as well, she said.

Leery of hiring, more employers are going the temporary contract route, meaning many with new post-layoff contract jobs — those scared enough to buy the insurance — won’t qualify for it because, like Green, they know they will be out of work when their contracts end.

Also, because IncomeAssure 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 already can count on government benefits bringing them up to 50 percent of their former wages — thus, they wouldn’t qualify for IncomeAssure’s product.

Some of Income- Assure’s executives are in need of unemployment benefits themselves.

The six-employee company, which uses one firm to finance the risk and another to handle the back-end administrative processing, laid off everyone but Nylund and Kaplan last week.