Sickness and unemployment insurance may refer to a number of different things. It commonly refers to accident and health policies that not only pay for medical expenses, but which also replace lost income when that illness or accident causes an individual to lose a job, either temporarily or permanently. Unemployment insurance may also refer to the insurance that companies typically must purchase through a state program that provides unemployment benefits to those who have been laid off through no fault of their own.
The most common use of the term sickness and unemployment insurance is generally related to what many may refer to as accidental health and disability insurance. In this case, however, benefits may not only be paid out in the case of an accident, but other types of illnesses as well. Therefore, the policy could actually cover a great deal more than a traditional accident and disability policy.
Generally, the unemployment portion of sickness and unemployment insurance helps to replace the income lost when an individual cannot work. This type of insurance is typically paid as a portion of the regular income that the individual received. In some cases, that benefit may be based on what the income was at the time the insurance was purchased. It could also be based on a percentage of the most recent income, defined by salary earned over a certain time frame, such as the last three months before the disability. Some policies may cap the number of months for which unemployment insurance may be paid.
Most sickness and unemployment insurance is offered by an employer, but it could also be purchased as an individual policy. These policies typically cost more than a typical health insurance policy because the benefits are so much greater. Further, some insurance companies may feel this type of insurance product is more likely to be fraudulently abused.
Certain illnesses or accidents may occasionally be exempt from sickness and unemployment insurance. For example, if a policy owner engages in certain types of risky activities, the policy could specify that injuries or illnesses resulting from those activities will not receive benefits. Alternatively, the policy may pay medical payments, but may not pay benefits due to lost income.
Unemployment insurance can also refer to the premiums that businesses pay for unemployment benefits. Those payments generally go into a fund administered by a governmental entity. The required premium is set by the government and could be different for different occupations. Generally, employees must meet certain conditions to be eligible for benefits, including working a certain amount of time and losing employment due to no fault of their own.