Private insurance can supplement unemployment checks

When Melville resident Barry Winter lost his job last summer as a managing director at a Manhattan financial-services firm, like any unemployed worker in New York State he could collect no more than $420 a week in state unemployment benefits, despite having earned more than $250,000 a year.

But an insurance policy he had purchased the year before from a little-known private wage-replacement program helped to cushion the income blow. Between his state unemployment benefit and the funds the private policy paid him, he collected 50 percent of his weekly wages. So in addition to the $420 a week from the state, he qualified for $1,999 from his private policy for 24 of the 26 weeks his state unemployment benefits were in effect.

“It was certainly helpful in making the transition from full employment to unemployment,” Winter, 61, said.

That insurance program is IncomeAssure, and it’s offered by just one insurance company in the country, Cincinnati-based Great American Insurance Co., which underwrites it. And the program’s sole administrator and claims manager is SterlingRisk, a Woodbury insurance company.

New talk about income-replacement benefits surfaced recently after President Barack Obama, during his State of the Union address, proposed a similar program to help laid-off workers whose new jobs pay substantially less than the ones they lost. Some political pundits believe that plan has little chance of becoming reality.

IncomeAssure has been around for about four years, said David A. Sterling, chief executive of SterlingRisk, whose primary business provides insurance to midsize and large companies. The wage insurance policy is aimed at mid- to upper-income workers and insures salaries up to $250,000 a year.

IncomeAssure, which has a two-week waiting period before collecting benefits, dovetails with state unemployment insurance programs, many of which provide up to 26 weeks of benefits, including New York’s.

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“If you are eligible for state unemployment, you are eligible for this product,” Sterling said.

To buy a policy you must be employed. To receive benefits, you must have purchased the insurance at least six months before a layoff, Sterling said. If you lose your job before the six-month waiting period is up, your policy will be canceled and your premium refunded, Sterling said.

Premiums average about $900 a year, or about $75 a month, he said. But as with any insurance program the cost can vary widely based on such things as a state’s maximum unemployment benefit, its unemployment rate, the policyholder’s industry and his or her salary. Winter’s premium was $315 a month, clearly reflecting factors such as his salary and industry.

The program is small. It has about 1,000 customers nationwide, including 100 on Long Island, and is available in every state except Alaska and Hawaii, Sterling said.

The program, he said, has primarily relied on word-of-mouth and Web advertising to spread the word.

“We really did a soft launch, because it had never been done,” he said.

The Insurance Information Institute in Manhattan said it knows of no other company that offers similar coverage.

Joan H. Cleveland, president and chief executive of SWBC Life Insurance Co. in San Antonio, an IncomeAssure broker who began selling the product early last year, said she knew of no other private programs that pay benefits directly to laid-off individuals.

Winter, who is still unemployed, said he happened upon information about the program while driving one day and listening to the radio.

“I was lucky enough to catch the name,” he said. “I had no idea this existed.”

He said he accessed his benefits without a hitch.

“I collected for 24 consecutive weeks without any issues at all,” he said.