It's insurance, not welfare.

Even in these hard economic times, a lot of people seem confused about unemployment insurance. Some people go months without claiming benefits because they're too proud to take a "handout." This is not a handout. It's insurance. If you crashed your car, you would let the insurance company pay. If you had to be hospitalized, you would let the insurance company pay. When you lose your job, you should let the "insurance company" pay because you have been paying into "the policy."

ChannelClarity's post about health insurance for the unemployed got me thinking about insurance in general. We use the word all the time with little concept of what it really is.

The best way to think about insurance is as gambling in reverse. If you go into a casino and bet money, you're betting (foolishly since every game in there is rigged against you) that you will have good luck. When you buy insurance, you're hedging against bad luck. If you die before your life insurance policy expires, you win -- lucky you!

Insurance is a way of spreading risk. When 1,000 people buy an auto insurance policy for $1,000 a year, that gives the insurance company $1 million to play with to pay for damages in accidents caused by policy holders. If the total damage caused by those accidents is under a million bucks, the insurance company makes a profit, and the people who bought the policies don't lose their shirts. Everybody wins except the responsible drivers who buy the policies and never have accidents (That was me back when I had a car, and boy did I resent it! That's part of the reason I stopped driving). Fair, right?

Unemployment insurance is the same darn thing. Everyone pays into it when they have a job. Those people who lose their jobs and collect are like the people who die before their life insurance policy expires -- the "lucky" ones.

My advice to any proud person out there who may be hesitant to collect unemployment benefits is this: Take the money! There is nothing to be ashamed about in collecting your unemployment insurance benefit.

Unemployment offices in all 50 states.