The fine print on job-loss protection

Leave it to American marketing ingenuity to find a way to sell goods during a recession. Job-loss protection plans promise to make payments on your car, home, cell phone, and more if you become unemployed.

Of course, if you think your job is threatened, you probably shouldn't buy anything you don't really need even if it comes with layoff protection. And such programs sometimes promise more than they deliver. Here's what to look for:

Strict terms could disqualify you

The Jet Blue Promise will refund the cost of new air tickets purchased until the end of this year in the event of a job loss. But the person requesting the refund has to be the same person who booked and paid for the travel. So a two-income couple could be out of luck if the wife used her credit card to book the flight but the husband is the one who gets the pink slip. Also, the request for a refund must be faxed no less than 14 days before the outbound flight; for vacation packages during the Thanksgiving and Christmas holidays, it must be not less than 60 days before the trip.

Definition of 'unemployed' varies

Small print in the GM Total Confidence program, which ran from April 1 through June 1 of this year and provides coverage for qualified buyers through June 2011, shows how complicated some of the definitions can be. The program promised to make your car payments up to $500 per month for nine months if you lose your job. But you get no benefits if you're laid off and receiving termination or severance pay. Only full-time wage earners with at least 30 hours per week of W-2 income are eligible; the self-employed are not. Once the plan's benefits kick in, you risk losing those payments if you do part-time self-employment work to make ends meet while looking for a full-time job.

'Free' protection might cost you

Norwegian Cruise Line offers job-loss protection under its BookSafe Travel Protection Plan. If you (or your traveling companion) lose your job, it'll pay the steep cancellation fees (up to 100 percent of your ticket price) that are common in the cruise industry. The company says there's no additional cost for that benefit. But you have to buy the BookSafe insurance, which protects you if you're unable to travel because of sickness, accident, and other calamities, to get the new add-on. The cost for a couple on a typical low-end cruise: $118 to $278.

You might have to wait to collect

If you're a first-time buyer who closes on a house in California by Dec. 31, 2009, the California Association of Realtors' Mortgage Protection Program will pay up to $1,500 of your mortgage every month for up to six months if you lose your job during the first 12 months of the mortgage.

But you're not eligible during the first four months. If you're laid off after that, benefits are held up during a one-month waiting period. If you lose your job in, say, month two and find another one a month later, you'll have to wait for another six-month "actively at work" period before you're again eligible to collect if you lose the new job. Add in that one-month waiting period and you wouldn't be eligible until the 11th month, though you'd still be able to collect for six months.

Your benefit may be taxable

Because most of those benefits are not insurance payouts, payments above $600 in a year are reported to the IRS as taxable income.