Wednesday, February 4, 2009

Rising Unemployment Insurance Claims

Posted by Yi-Xin Jin (Lily)

The financial crisis and recession has caused unemployment rate to rise significantly over the past year. Many companies are laying off workers, filing for bankruptcy, or going out of business, which made an already very tight job market even more competitive. With unemployment reaching a new peak every month, insurers are raising the premiums on unemployment insurance and tightening the eligibility requirement. The rise in insurance premium is mainly cause by the significant increase in claims. Many insurance companies are tightening its eligibility criteria by increasing its initial unemployment exclusion period to protect themselves from clients that are at risk of redundancy. For individuals whose employment sector is experiencing a large amount of job losses, because there’s too much risk involved these individuals are not accepted by some insurers. This past Thursday, the U.S. Labor Department announced that the continuing unemployment claims rise to a record 4.78 million Americans, which is the highest continuing claims level since record keeping for the statistic began in 1967. Insurance advisers suggest that when individuals are facing a rising premium, they should think carefully before deciding on cancelling their cover. Especially for individuals whose health has deteriorated since they took out their insurance, they will have a higher chance of being declined to a new cover in the future.

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