By Joni Lindquist

A new trend is evolving due to massive company layoffs and downsizing in recent years. Potential employees are requesting and receiving severance packages to help cover issues such as continuing health and life insurance coverage.

While many companies offer comprehensive severance packages to their key executives, they typically have a different plan for other workers. In most cases, these plans are usually less involved—with terminated employees receiving severance pay of, perhaps, one week’s salary for every year of service. However, there are a growing number of middle-level employees requesting up-front severance packages.

The question of the appropriateness of a severance package needs to be addressed on an individual basis, but there are a few basic questions you may want to ask a prospective employer:

Is a Severance Agreement Right for You? Most key executives have severance agreements because of their potentially precarious job security; however, employees on the very next rung of the management ladder should also consider whether asking for a written severance agreement makes sense for the very same reason.

Another factor that may influence your decision is your industry’s track record. If you work in a cyclical industry that has a history of consolidations followed by mass firings, your job security may be negligible. Likewise, if you move from a secure position to a start-up venture, you may want to consider asking for some form of protection.

How Much Is Enough? While severance packages vary from one employer to another, they typically take the form of a written contract in which you will either receive a lump sum or have your salary continued for some length of time after your departure.

Severance agreements providing for lump sum payments are atypical. Under most severance packages, your salary will continue for a specified length of time, generally from one month to six months, depending on the nature of the agreement. Once the length of the agreement is determined, you should discuss how bonuses and stock options would be handled.

What about Life and Medical Insurance? Most employees have the right to continued health insurance under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for a period of up to 18 months. Since you most likely will have to pay your own health expenses when you elect COBRA coverage, it makes good sense to cover this subject when discussing severance.  While most employers generally are not required to continue life insurance coverage, you may want to leave this option open for negotiation.

Is There a Downside to Discussing Severance?  Be careful about how and when you raise the severance issue. Negotiating for a new job should be a positive process. The severance issue could potentially sour it. Therefore, choose the time and circumstances wisely.  You may want to discuss a game plan with a trusted financial planner and/or career coach.

For help with your career transition, schedule a meeting by clicking below, contact Joni Lindquist –, or call (913) 345-1881.