Wage insurance is a term used to refer to the act of compensating wages. When an individual is laid off from work and is forced to find a new job where he is paid less than he was in his previous job, the wage loss is compensated by the law of wage loss insurance. The term insurance refers to the act of protecting something against losing money. If something wrong happens and someone incurs a specific loss through damage, death, or illness, the insured company will pay the insured amount of money as compensation. There are several types of insurances including:
- Life insurance
- Wage Loss Insurance
- Home Insurance
- Car Insurance
- Health Insurance
- Disability Insurance
- Long-Term Care Insurance
- Liability Insurance
Wage Loss Insurance
While the idea of wage-loss insurance has been in practice for a long time in certain parts of the world or specific companies, it was officially made into a policy in 2001 in the United States by Robert Litan and Lori Kletzer. It was presented in the paper A Prescription to Relieve Worker Anxiety.
As mentioned above, wage loss insurance compensates a displaced employee with the wage they lose compared to the previous wage due to the new lower-paid job.
Due to an increase in the unemployment rate due to technological advancement, i.e., computers and robots taking over human labor jobs, many people do not have a steady income source anymore. Or they do not earn the same amount of money they used to before their job displacement. In this situation, wage loss insurance comes as a life savior.
Furthermore, it is also widely believed wage insurance is also a response to the effects of globalization and also outsourcing. Also, because of the constant flux in the economy, many people will not be able to keep their job with their wages. A lot of these people might be fortunate enough to acquire better-paid jobs. However, some might not be able to do so, and they will need wage loss insurance.
Importance of Wage Loss Insurance
The policy of wage-loss insurance is mainly for middle-class and lower-class people as this insurance helps them through a difficult financial situation. Usually, these classes do not have more than one income source or financial savings. Hence, wage loss insurance is significant.
- Here are some reasons why wage loss insurance is essential:
- A person will still receive an income even when they cannot work for a while.
- A person can customize the insurance.
- If a person is sick or injured, wage loss insurance will help take care of the family.
- The insurance can be claimed directly.
- It will help a person to get an everyday life as soon as possible.
Wage Loss Benefits
When an employee gets injured via an unfortunate accident related to the job, they will not work. Due to this, they will face a certain amount of wage loss. However, these employees will also receive two-thirds of their salary as they will be considered temporarily disabled.
Usually, you will only be eligible for wage loss benefits if your recovery time is more than seven days. Only then will you receive the money you are liable to. If your recovery time takes more the fourteen days, you can also get paid for the initial seven days.
Here is a list of few factors related to wage loss benefits:
- The period the injured employee cannot work.
- The employee's health condition post-injury.
- Whether the salary is fixed or fluctuating.
- The number of years left before retirement.
Wage loss insurance is a fundamental employment right that every employee deserves, especially during the country's distressful economic situation. If you ever face an unfortunate injury or are unexpectedly laid off from your workplace, make sure you do your research on your company and country's policy on wage loss insurance. This insurance will help you through a difficult time and might help you get back on your feet.