Definition of Layoff Insurance
Layoff insurance is designed to help workers make their mortgage payments in case they lose their job. Because Employment Insurance (EI) provides insufficient coverage for most individuals and families, many people choose to top up their EI coverage with a layoff insurance policy. This way, if they do end up losing their job, their insurance provider will take over the responsibility of making their mortgage payments. This helps policyholders keep their homes and avoid going into debt after an unintentional job loss. Layoff insurance payments are non-taxable, and policyholders don’t have to worry about losing their EI coverage because of their layoff insurance, as layoff insurance payments don’t count as income.
Mrs. McGillicuddy works 40 hours a week for a burgeoning technology company. As a single mother with two children, she designates the bulk of her $4,000 monthly salary to pay for her mortgage, which costs $2,700 per month. While she feels secure in her job, she is aware of the possibility that she could be unexpectedly laid off at any time.
One day, the company Mrs. McGillicuddy works for declares bankruptcy, and she loses her job. She claims EI, which pays her $1,750 per month after taxes (the maximum amount), which is not enough to pay her mortgage. Fortunately, she doesn’t have to worry about losing her house, as her insurance company takes over her mortgage payments. The insurance company makes the payments directly to her mortgage lender, so she can focus her efforts on finding a new job. She can also continue to use her EI payments to cover other expenses.
Layoff Insurance Tips from First Foundation
Bundle your policies for the best protection and the most savings. Being laid off isn’t the only situation that could cause you to lose your home. That’s why we offer a variety of mortgage protection insurance policies, including mortgage life insurance and a comprehensive mortgage protection plan. With the right insurance policies, you can make sure that your mortgage will be looked after, no matter what happens. Not sure which policy or policies are right for you? Talk to one of our insurance brokers about your needs, and they’ll help you identify the right insurance policy or package for your situation. Taking out multiple policies is also a great way to save money on your insurance coverage. By combining your layoff insurance with another type of insurance such as mortgage life insurance, you can maximize your coverage while saving on the overall cost of your insurance payments.
Have more questions? Contact Us for more details on Layoff Insurance.