O’Connor: Funny, but here’s that rainy day ...

Unemployment was on my mind last week, for no particular reason at all, of course, when I ran across a bit of economic “good news.”

According to the Dept. of Labor, the number of initial claims for unemployment benefits for the week ending Nov. 12 was a scant 235,000, a decrease of 19,000 from the previous week.

This is good news, the department noted, because it was the lowest level for initial claims since Nov. 24, 1973.

Unless you’re one of those 235,000 suddenly jobless men and women.

The standard personal finance advice is that everyone should maintain an emergency fund that can cover three to eight months’ of their expenses. If you earn the median household income of about $50,000 a year, you need to sock away $7,500 in your rainy day fund. But just this past May, the Federal Reserve reported that 46 percent of U.S. households would struggle to meet emergency expenses of just $400.

Which means that 108,100 of those folks filing new unemployment claims are in big trouble. Beyond their unemployment checks they have nearly no money to fall back on. In Michigan, they’ll collect a maximum of $365 — IF they have dependents — for no more than 20 weeks. In Florida, it’s $275 for 12 weeks. In North Carolina, the maximum is $350 for as little as five weeks.

Although my interest in all of this is purely academic, of course.

Keep calm and buy Lotto tickets

This bring us to David Sterling, CEO of Sterling Risk Insurance, which has introduced something called IncomeAssure — private unemployment insurance you can buy for yourself.

The policy works like this: You pay a premium for one year of coverage, choosing a benefit amount that matches your salary, and IncomeAssure promises to pay the difference between your state unemployment benefit and 50 percent of your salary for up to 26 weeks (minus a two-week deductible), regardless of how long your state benefits run.

Let’s say you earn $75,000 a year in Michigan working in, oh, let’s just randomly say the “information” industry, for no particular reason at all, of course. That means you take home about $4,000 a month. A policy would cost $91 a month, for total premiums of $1,096.

Then, in the highly, highly unbelievably unlikely event that you’re suddenly and unceremoniously canned, IncomeAssure would pay out $10,792, over and above the $7,240 you’d collect in state benefits. Those total benefits of $18,032 would cover about four months of your lost take-home pay.

IncomeAssure also offers a cheaper alternative for people with incomes of less than $50,000 that pays out a lump-sum payment if you lose your job.

Not that anyone around here needs to prepare for that kind of occupational travesty, of course.

About that river in Egypt ...

This being insurance, there are several caveats. For your claim to qualify you have to first be eligible for state unemployment benefits, which may not happen if your employer fights your claim or the state denies it. You also have to vest in the policy for six months before filing a claim, meaning you can’t get a layoff notice one day and hop online to buy coverage the next day. If you do get laid off during the initial six months, IncomeAssure returns your premium.

“That’s our protection against fraud — if the state pays you, we’ll pay you,” Sterling says. “Unless we find out you’ve lied about a pending layoff on your application.”

Yvette Owens, a Macomb Township IT manager for an automaker, bought a policy after depleting her own savings to help out a relative.

“You’re supposed to have at least six months’ worth of savings in case something happens,” Owens said. “I know I can’t pay my mortgage on unemployment insurance.”

Owens, 36, says she pays about $108 a month for $120,000 in coverage while she works on rebuilding her cash cushion. “I’m not there yet,” she says. “I’m relying on this policy if anything happens.”

Not that anything like that ever would, of course.

boconnor@detroitnews.com

(313) 222-2145

Twitter: @BrianOCTweet

Brian O’Connor is author of “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”