Yes; take the premiums you would've paid for 6 months (effectively without coverage during that time regardless), save them, and reduce your living expenses to allow you to build up the cash cushion from there. If you're in that income bracket you really should be able to structure your expenses so you can save a decent amount, even in a high-cost city (there are minor exceptions to this, for instance child support obligations, but moving to a shittier apartment or not going out to eat for N months to build up savings is a valid alternative to incurring an extra recurring expense like this if you're living on the margin of insolvency anyway).
Unlike these benefits, depleting savings isn't taxable income, and again, in that bracket you might even be able to wrangle in tax-advantaged savings (eg saving in a Roth account that gives you extra option value, converting to a Roth at your now-lower income bracket & withdrawing the principal, withdrawing home equity, etc). Once you figure in the fact that it's paying out effectively 1/4 of your income, after taxes, for 6 months max, minus the state unemployment benefits, it really does look to be a minimal payoff.
> Yes; take the premiums you would've paid for 6 months (effectively without coverage during that time regardless), save them,
Well, that gets you about 5% of the way there.
> save them, and reduce your living expenses to allow you to build up the cash cushion from there. If you're in that income bracket you really should be able to structure your expenses so you can save a decent amount, even in a high-cost city (there are minor exceptions to this, for instance child support obligations, but moving to a shittier apartment or not going out to eat for N months to build up savings is a valid alternative to incurring an extra recurring expense like this if you're living on the margin of insolvency anyway).
Not so easy for many people.
> Unlike these benefits, depleting savings isn't taxable income, and again, in that bracket you might even be able to wrangle in tax-advantaged savings (eg saving in a Roth account that gives you extra option value, converting to a Roth at your now-lower income bracket & withdrawing the principal, withdrawing home equity, etc).
There can be tax benefits for this insurance product as well (See PLR-112680-11 for example). There can be penalties for withdrawing savings from tax-advantaged accounts.
> Once you figure in the fact that it's paying out effectively 1/4 of your income, after taxes, for 6 months max, minus the state unemployment benefits, it really does look to be a minimal payoff.
Your math is iffy. You double counted the State benefit.
It's
State benefits + Insured benefits = 50% of your former salary for up to 24 weeks.
In states (like Florida) where State benefits don't last 24 weeks, the insured benefit would be an initial supplemental benefit, and then a full 50% replacement.
So for say someone in NY previously making about $2,000/w, the state will pay ~$420/w and this insurance would pay around $580/w, for up to 24 weeks. Again, not a bonanza, but still very helpful for people who don't have (or don't have enough) significant savings they can easily access. If the benefits were much higher, the premiums would be much higher as well (TANSTAAFL). It's a trade-off to make an affordable product that is sufficiently useful.
There is a premium calculator on the site. For some people this policy is useful and necessary, for others, maybe not. You can lecture all you want about how people should have a significant emergency fund always available, but unfortunately, many people find that too difficult. So this is an alternative.
Unlike these benefits, depleting savings isn't taxable income, and again, in that bracket you might even be able to wrangle in tax-advantaged savings (eg saving in a Roth account that gives you extra option value, converting to a Roth at your now-lower income bracket & withdrawing the principal, withdrawing home equity, etc). Once you figure in the fact that it's paying out effectively 1/4 of your income, after taxes, for 6 months max, minus the state unemployment benefits, it really does look to be a minimal payoff.