24 Main Pros and Cons of Unemployment Insurance

The concept of unemployment insurance can be defined as a particular type of state-provisional insurance that serves as a mode of payment when an individual loses his or her job and effectively meet certain eligibility requirements. This is also known as the unemployment benefits.

However, one does not receive such benefits if he or she is seen to quit their jobs or are self-employed. The unemployment insurance is also not provided in such scenarios wherein the employee has been fired for a particular cause.

Such benefits are essentially provided by the state governments and are funded by particular payroll taxes which are specifically collected for such a purpose.

Benefits Drawbacks
Help during periods of unplanned unemploymentClaim a large number of limits
Ensures to benefit the economy as a wholeSudden imposition of federal and state taxes
Ensures flow of money in the right directionDelays in payment cycle
Encourages job seekers to look for better opportunitiesConsiderable work gap
Provide longer durations of benefit recipients

Advantages of Unemployment Insurance:

Help during periods of unplanned unemployment:

The unemployment benefits definitely provide a complete sense of assurance for all such individuals and their respective families to tackle any kind of difficult situations which may arise due to the lack of a proper job. Such unemployment benefits can also help such unemployed individuals to stay afloat by providing a protective net for themselves and their family members.

Therefore, during the prolonged periods of unplanned unemployment, it is the unemployment insurances which come to the rescue and help such individuals to carry on with their lives.

Ensures to benefit the economy as a whole:

Apart from extending a good amount of support to the unemployed individuals and their families by providing all the basic requirements like food and housing while they are seen on a constant search for new employment opportunities, the unemployment benefits also help the economy to progress in a particular manner.

This can ultimately benefit the society who can definitely earn significant benefits from the same. 

Ensures flow of money in the right direction:

The unemployment insurance is extremely beneficial due to the reason that they allow all the specific benefits which are paid to the unemployed individuals to ensure a particular directional flow of the money towards the businesses, creditors as well as the retailers. Such significant cash flows are extremely crucial on a local as well as a global basis.

Encourages job seekers to look for better opportunities:

The unemployment insurance is based on a strict eligibility criteria which serves as a beneficiary aspect for a number of individuals who are seen on a lookout for better job opportunities after losing one previously. Such benefits are basically targeted towards the ones who have been voluntarily or terminally removed from collecting such particular kinds of benefits and have therefore resulted in creating a hollow area in the system.

Apart from this, the job seekers are therefore seen to be much more encouraged in looking for better opportunities because they are routinely seen to answer a wide range of questions which are found related to the respective job hunts of their own.

Provide longer durations of benefit recipients:

The unemployment benefits are seen to extend their support towards the unemployed individuals for a longer period of time which can result in benefit oriented recipients. If a recipient is seen to be collecting the unemployment benefits for a period of traditional period of six months, such an individual is most likely to reject the first job that might be offered to him or her during this time period because they might indulge in finding the right position which can definitely benefit them in the long run during this period.

Disadvantages of Unemployment Insurance:

Claim a large number of limits:

The unemployment benefits puts forward a number of government oriented limitations which are ultimately imposed upon the amount of such benefits which a particular claimant is supposed to receive. Such amounts are seen to vary because they are based on various changes that might occur on a timely basis.

Sudden imposition of federal and state taxes:

The unemployment benefits are often considered to be taxable oriented income strategies which are seen to occur at the particular federal level coupled at some state as well as local levels. The state might impose complete taxation of such unemployment benefits which might come on a sudden notice and during such situations where the individuals do not have any such sources of earning a proper amount of wage.

Delays in payment cycle:

A number of claimants are seen to receive the very first payment of their unemployment benefits at a period of nearly three to four weeks after applying for the same. However, such individuals should be well aware regarding the fact that such a payment cycle might not be maintained even after the claimant is seen to fulfill all the eligibility requirements and the process might take a longer duration of time.

• Considerable work gap:

The unemployed individuals might ignore the importance of maintaining a minimum amount of gaps in the entire employment cycle which can ultimately hamper the future employment possibilities. This can definitely create a negative impact upon the process of earning the unemployment benefits as well which can result in individuals missing out on a number of good opportunities.


It is during the 21st century that the concept of unemployment benefits have earned a significant amount of popularity and is one such concept that almost everyone is well acquainted with. It has definitely put forward a number of opportunities for many such individuals who have lost their jobs and can therefore provide a hand in support for their families and their basic requirements.

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