If you lose your job, don't lose your insurance coverage

Amy Higgins

Losing a job often calls for a tightening of the purse strings, especially when good job opportunities seem scarce. Nearly 14 million Americans know how scarce those opportunities can be; that's how many people were unemployed in October 2011.

Even if you're cutting back, it's ill-advised to say goodbye to insurance protection to save some dough while you're unemployed. Here's here to move forward and keep your coverage.

Help at home

The last thing you want to do when you lose your job is lose your home as well. But mortgage payments often are the most expensive monthly bill. Mortgage insurance can keep you current on payments while you search for employment.

For instance, Genworth Financial's HomeOpeners MonthlyPlus program includes mortgage insurance that covers you if you lose your job or suffer an injury or illness that prevents you from working. Its involuntary unemployment insurance coverage will pay its members' mortgage payments up to $2,000 per month for up to six months. Accidental death and dismemberment and accidental disability coverage is included in this program as well. It pays a benefit if the borrower or co-borrower is disabled, dismembered or dies in an accident after the first 60 days of insurance protection.

There may be some restrictions, however. Genworth Financial's coverage excludes seasonal workers as well as those who are self-employed, employed by family members or voluntarily unemployed. It also excludes those who are older than 66 and those who knew they were about to become unemployed before coverage took effect.

Hanging onto health coverage

The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, lets continue the same health insurance coverage you had through your previous employer for 18 months. You likely will pay more for COBRA coverage than you did while you were employed because COBRA participants generally are responsible for their entire premium. But this coverage often is less expensive than health coverage in the individual market, according to the U.S. Department of Labor. Employees who are voluntarily or involuntarily terminated qualify for COBRA coverage as long as they are not let go for gross misconduct.

Ideas for auto insurance

With rising gas prices and the need for continuous vehicle maintenance, your daily drive to work can be expensive. That commute is likely eliminated when you lose your job, so it's a good idea to inform your insurance provider about your employment status -- you might save some money on your auto insurance. Where, how long and how often you drive affects your insurance rate, according to the Insurance Information Network of California. If your daily commute is reduced significantly, you may be able to lower that rate.

Some insurers also offer what's called pay-as-you-drive insurance. This unique type of coverage allows you to tie your premium to how often you drive. Some insurers will monitor your mileage and adjust your premium accordingly. Others will let you get prepaid coverage for a certain number of miles -- and you won't have to pay your next premium until you drive those miles.

Life choices

Ridding yourself of life insurance premium payments might be tempting after you lose your job. But if you stop making payments, your coverage will lapse. Life insurance premiums are determined by factors like age and health status. So, if you buy it when you're young, you can often lock in lower premiums. Letting your coverage lapse ends that locked-in rate. If you try to buy another policy later in life, you may not get as good a deal -- or be denied coverage altogether if you have developed health problems.

If you have a permanent or whole) life insurance policy, as opposed to a term policy, you may have some more options if you have to end your coverage. Permanent life insurance policies come with a cash savings account that builds over time. If you cancel coverage, you can collect the cash savings -- although you may have to pay taxes on some of that cash if the sum exceeds what you've paid in premiums, the Insurance Information Institute warns.

Your permanent life insurance policy also may have a "reduced paid-up" option, which would allow you to stop premium payments in return for a reduced death benefit or reduced cash savings, according to the Insurance Information Institute. You also may be able to convert your permanent life policy to a term life policy and use the cash savings to pay your premiums.

Assess your situation

Review all your insurance documents to ensure they match your current lifestyle. You might be surprised about discounts that your insurance provider offers. For instance, if you have a home surveillance or alarm system, you may be eligible for a home security discount.

It's not easy making ends meet when you're unemployed. But by tapping your resources and reviewing your insurance coverage, you can save a few bucks until opportunity comes knocking once again.

See how much you could save today on your home insurance. Get your free home insurance quotes today!