Unemployment insurance - keep or drop it?

[Freedom2016]

My husband has an 85k/yr job and some years ago (before we met) he purchased an unemployment insurance policy that we still carry. We pay $81/mo for it: if he loses his job, he would collect 60% of his paycheck. I am pretty sure he got talked into it by an Ameriprise guy. I probably need to look into more of the terms and conditions on it because I assume he would also be eligible for unemployment benefits if he lost his job, and I'm not sure if he would be eligible for both or if the former would make him ineligible for the latter.

Our financials are such that we currently still need both of our salaries to cover our expenses. (I KNOW.) I've never carried unemployment ins myself - seems like kind of a sham to me - but I've also never challenged this particular expenditure because we've had bigger fish to fry. I am self-employed and my income fluctuates a lot year-to-year; this year I am poised to have windfall earnings but last year I brought home 50% less than usual due to unpaid maternity leave.

I'd like to know the Mustachian community perspective on whether we should carry a policy like this. To do that, do I need to lay out our whole financial situation? If yes, what info would people need to say "yea" or "nay"? Or is this one of those things, like buying insurance from a car rental company, that is nearly *always* a dumb idea?

[MooreBonds]

As you point out, you would need to read the fine print of the Ameriprise contract. I personally have never heard of a private unemployment insurance contract (although I'm not extremely familiar with every category of insurance policies) - could it be some form of a disability policy instead?

Either way, because I'm assuming that your husband would have access to some federal/state unemployment insurance, I would look to ditch the $81/month (that's a whopping $972 a year after taxes!) policy and just save the cash.

[tooqk4u22]

Wow - I wonder what the terms and conditions are, and what qualifies, and how long it pays? 

Maybe its time to sign up and have a talk with the boss :)

[James]

I would guess the restrictions are quite extensive, and I would also guess that you are probably not getting much real value for the money.  Look into the policy and find out what the actual coverage is and the restrictions/exemptions to coverage.

Does your husband have a job that would be relatively easy to lose and very hard to get if lost?  That would be the only case I can see requiring such insurance, otherwise I would plan to rely on an emergency fund and cutting costs to cover a break in employment.

[Freedom2016]

Thanks for the input! I'm awaiting more info from the hubs about the T&C's. I'll report back what I learn.

[Freedom2016]

Minor update: we've figured out that it's disability insurance, not unemployment insurance, and that it would pay out $2250/mo in the event of a qualifying event. My husband hasn't yet been able to track down the details of the policy, though. He signed up for it so long ago that he doesn't remember & doesn't have paperwork handy.