Unemployment
Unemployment insurance is designed to replace part of an employee's income for eligible workers who are unemployed through no fault of their own. To be eligible for unemployment compensation, the individual must have previous employment in a covered occupation and continued attachment to the labor force. Characteristics of unemployment insurance include:

  • Unemployment insurance payments (benefits) are intended to provide temporary financial assistance to unemployed workers who meet the requirements of State law.
  • Each State administers a separate unemployment insurance program within guidelines established by Federal law.
  • Eligibility for unemployment insurance, benefit amounts and the length of time benefits are available are determined by the State law under which unemployment insurance claims are established.
  • In the majority of States, benefit funding is based solely on a tax imposed on employers. (Three (3) States require minimal employee contributions.)

Practice Question:
Which of the following are TRUE statements concerning unemployment insurance/compensation?

I. Unemployment benefits are excluded from federal income tax
II. Unemployed workers are not required to be available for gainful employment
III. Compensation is typically equal to 50% of the worker's normal wages
IV. Requirements will differ from state to state

A. I and IV only
B. I, III, and IV
C. III and IV only
D. I, II, III, and IV

Answer: C
Unemployment benefits are included as gross income for federal income tax purposes and those receiving benefits must be gainfully seeking other employment opportunities in order to continue to receive benefits.

Superannuation
Superannuation typically refers to the ability to maintain your lifestyle on your current income and accumulated assets in retirement. When referenced in the context of retirement plans many people link it to the monthly payment that you receive during retirement; however, when referenced as a risk factor it refers to "outliving your income and accumulated assets".


Property Risk and Insurance

Related Articles
  1. Insights

    The Cost Of Unemployment To The Economy

    Unemployment carries many costs, both obvious and hidden, for an economy.
  2. Financial Advisor

    No Paycheck Doesn't Necessarily Mean No Income

    If you lose your job, be sure to apply for unemployment benefits. It's not welfare, but an insurance program that you and your employer have already paid into.
  3. Personal Finance

    Understanding Natural Unemployment

    Natural unemployment is often defined as the lowest rate of unemployment an economy will reach.
  4. Insurance

    How To Apply For Unemployment Insurance

    Unemployment compensation is a federal program administered by each state. Here's how to connect to your state's unemployment office and what to expect.
  5. Personal Finance

    Where Unemployment Hits Hardest

    A look at the demographics of unemployment, and what that means for workers around the nation.
  6. Personal Finance

    Understanding Frictional Unemployment

    Frictional unemployment is one aspect of natural unemployment, which is unemployment caused by things other than an underperforming economy.
  7. Insights

    Is U.S. Employment Really Surging?

    Last Friday, the U.S. Bureau of Labor Statistics (BLS) released the October unemployment data that showed the headline unemployment figure dropping to 5%, better than the expected 5.1%. Great ...
  8. Personal Finance

    U.S. Labor Participation Rate at Record Lows

    In absolute terms, labor participation hit an all-time low.
  9. Investing

    Did Your State Cut Unemployment Benefits?

    Many of the states now cutting back on unemployment benefits significantly under-funded their coffers prior to the Great Recession.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center