Ten Costly Myths About Unemployment Insurance

If your job is in jeopardy, learning about unemployment benefits should be at the top of your list. When and if you are laid off, knowing whether you can collect unemployment, for how long, and how much you will receive can mean the difference between going broke and staying afloat. In this particular instance, ignorance is NOT bliss!

Be sure you don't fall prey to the 10 myths people hold about unemployment benefits and insurance:

Myth #1: I'm going to get something out of unemployment insurance because I paid into it.Truth: Unemployment insurance is paid for primarily through employers' contributions. You, as an employee, do not pay into any unemployment compensation fund directly.

Myth #2: Unemployment insurance will stay in place until I get a job.Truth: Unemployment insurance is just that -- insurance. It works just like life insurance, auto insurance, and medical insurance, in that there is a maximum payout and you must meet certain conditions to file a claim. In other words, once you have used up your unemployment benefit, you will not receive more money unless you return to work for a period of time and then are laid off again. This is similar to auto insurance -- when you are in an accident, your insurance company pays for the eligible amount (the cost of the damage to your car or your medical bills) and nothing more. If your accident costs more than your insured amount, you pay the remainder.

Myth #3: Unemployment benefits will be similar to what I earned when I had a job. Truth: Maximum amounts vary from state to state, but in many cases, the amount you receive in unemployment will be far less than your actual paycheck. Unemployment insurance is not designed to fully replace your paycheck, but to tide you over, temporarily, until you find another job.