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It doesn't matter if layoffs are at an all time high or your job seems secure, everyone knows how fast things can change. Loss of income occurs from layoffs and other circumstances changing. There are both expected and unexpected changes in finances that should be planned for to assure financial security.
Some changes in finances can be expected and planned for. Circumstances that can be planned for include the birth of a child, caring for elderly parents, college planning, medical procedures, and even divorce.
Some changes in finances are unexpected and there is no time to plan for them. Maybe you have experienced some circumstances that cannot be planned for like a sudden layoff, reduced work hours, illness, injury, death, car repairs, or large applicance repairs,
Some people are great with money and have enough in savings and investments to cover an extended period of time with no income or reduced income. They are confident that with their resume if their company started to layoff employees, their resume is strong and they will find a job quickly. Things don't always go as planned. Savings and investments can be drained by the time a new job is found. Unemployment mortgage insurance is needed to avoid that from happening. Most unemployed people will find a job before their unemployment mortgage insurance is depleted. For the few that don't or must accept a job temporarily that pays less than their previous job, unemployment mortgage insurance allows for them to still have savings and investments to fall back on if needed.
Using savings and investments during a layoff makes a person financially vulnerable if it becomes depleted. There is no guarantee that a layoff will be the only financial trouble that a person must face. Sadly some people who are laid off may also face illness, injury, and car repairs. If the savings and investments have been being used during a layoff, there may be no funds available for other financial circumstances that may arise. Financial security during a layoff will depend on the balanced use of both unemployment mortgage insurance and savings.
Unemployment insurance doesn't mean that you can stop saving. Savings should continue. A general rule of thumb is to be able to save the equivalent of 3-6 months' expenses in a savings account that is easily accessed. Once that has been accomplished, the savings account can be added to for a "cushion" and then the money that was budgeted to savings can be used to invest.
Even with unemployment mortgage insurance, there may be a need to take a temporary lower paying job if the unemployment lasts longer than 4-6 months to protect savings and investments from being completely depleted. During a layoff, volunteering can be an opportunity to gain new experience that may be helpful if a change in the field that you normally work in is being considered.
Solid financial security will depend on the combination of several sources being available when there is a change in income.
Layoff Mortgage Protection pays you cash in case of unemployment so you can keep your bills current. You need Layoff Protection so you can keep your bills current in case of a job loss.
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