Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 19, 2021

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Unemployment insurance originated as a safety net to those who lost their jobs.

But an individual doesn’t have to purchase an unemployment insurance policy in the manner most other types of insurance work.

Rather, federal and state organizations provide benefits to those who qualify. Leading the Fed’s portion of the program is the United States Department of Labor.

How long does unemployment insurance last?

The benefits are designed as a short term “bridge” until an individual can find work similar to what they were doing prior to becoming unemployed.

Typically, you can expect to receive up to 26 weeks of unemployment insurance before your benefits “run out.”

However, you should not expect to receive the same amount of money you were paid while you were employed.

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Do I qualify for unemployment insurance?

Not everyone who has a job in the U.S. qualifies for unemployment benefits. You must have been employed full time for a certain period of time before you will qualify.

This means those of us who work a part-time job, are self-employed, or work on a temporary basis may not qualify for benefits.

Not only do you need to have been employed full time, you must also have lost your job through no fault of your own.

For example, if you are fired for gross misconduct or insubordination, you probably won’t qualify for benefits.

Being laid off or fired because for reasons other than gross misconduct generally qualifies you.

If you were fired from your job and disagree with your employer over the reason, you may have to “argue” your case with the state in order to receive benefits.

Note that your employer will get a chance to have their say in the matter as well.

It’s worth pointing out that if you were a full time employee who lost your job and started a business, you may be eligible for benefits if you meet certain criteria (depending on the state you reside in).

For example, Texas will provide benefits to those who start a business and do not make a profit.

Where does the money come from?

Businesses in the United States are required to pay tax, based on their payroll, to both the state and federal government.

In times when the economy is doing well and the employment rate is high, the funds are built up because the payroll tax is higher.

If and when the economy takes a nose dive, the “pool” will ideally be well-funded and benefits will be paid out to those in need.

How much money will I get?

The answer to this question depends on which state you live in. As discussed above, you can expect to receive much less than you were earning while employed full time.

States determine the amount of the benefits, but they average 36 percent of the average weekly wage, according to the National Employment Law Center.

For example, if you were salaried at $40,000 per year with your previous employer, you can expect to receive $14,000 per year (assuming you were able to collect for an entire year).

Your state’s unemployment website may also provide a benefits calculator available to help you determine what you can expect to earn while unemployed.

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How do I receive unemployment benefits?

You must register with your state unemployment department and apply for benefits when you become unemployed.

Expect at least a two week delay between losing employment and receiving benefits…assuming everything runs smoothly.

Similar to a deductible with property insurance, there is a one week time deductible before you can qualify.

If you meet the requirements, the state will notify you and begin to process your benefits. In order to continue to receive benefits, you must be able and available to work full time for each period you request a payment.

Additionally, you must continue to seek full time employment and will likely have to maintain some sort of work search log.

Remember, the goal is to get you back into the workforce as soon as possible.

What if my unemployment benefits run out?

In normal economic conditions, the 26-week period of benefits is expected to be more than enough time for you to find gainful employment similar to what you had prior to collecting benefits.

In tougher economic times, the federal and state governments can extend the unemployment benefit period indefinitely.

If your benefits run out and you haven’t found work, you may be able to get an extension.

But assuming the governing body that pays your benefits doesn’t vote or approve an extension, you simply cease to receive money.

However, if a vote to extend benefits is approved, you will likely receive retroactive back pay for the time period you were unable to collect.