If you’re like most employees, open enrollment season for employee benefits has either just passed, or is upon you right now. Here’s a quick post about 2 “benefits” that are commonly offered by employers but that really aren’t worth the expense or trouble in most cases.
1. Life Insurance.
Many employers offer life insurance up to one year’s salary for the employee. This is far from adequate for most people. The ball park recommendation for life insurance coverage is 7-8 times your annual salary. And just 1 year’s worth doesn’t even begin to start your coverage because you can’t take it with you when you leave! Whether you quit or get laid off, that insurance coverage ends.
Because of this, you’re much better off getting insurance on your own, outside of your employer. You’ll get a much better deal AND it will stay with you regardless of where your career takes you. The one exception to this might be some one who’s single and only needs life insurance to cover their own funeral costs. In that case, one year’s salary is probably adequate.
2. Disability Insurance.
Employers typically provide some degree of disability insurance to employees. The problem is that the coverage is usually no more than 60% of your salary, and is capped at $5,000 – $10,000 per month. That may be fine for you, but if your benefit plan is on the low side, you may be better off getting disability insurance on your own. The benefit to that is twofold – 1. You get to take your coverage with you when you leave your job, 2. if you pay the premium yourself you don’t get taxed on the benefit.
Just some food for thought for this year or next.
If you need more information to help you make smart insurance decisions go to the nonprofit LIFE Foundation’s Web site at http://www.lifehappens.org.
Could not agree more with the advice on work offered life insurance. Most people don’t realize that it is not a good value once you get above and beyond the employer paid amount. With the advancements in mortality tables and such, our industry is making the decision an easy one.
TM