State Unemployment Insurance

Published: | Updated: January 21, 2017

Definition - What does State Unemployment Insurance mean?

State unemployment insurance is a temporary source of income for those who become unemployed due to external factors. Workers who quit or are fired are usually not eligible for unemployment benefits. Moreover, self-employed workers cannot receive benefits either and therefore must rely on their own funds to support them when work is not available. How much an unemployed worker receives depends on their previous incomes and time spent in the workforce.

Insuranceopedia explains State Unemployment Insurance

For example, a company may let X number of employees go because it is downsizing. These newly unemployed workers would be eligible to receive unemployment benefits. The amount they receive is often about half of their original income, and this is meant to encourage active job seeking. In addition, those who receive benefits typically have to prove they are indeed looking for work. The funding for state unemployment insurance comes from unemployment taxes that employers pay.

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