Ten Questions Employees Should Ask About Employer-Sponsored Insurance Benefits During Open Enrollment Season

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Benefits enrollment can present employees with an increasingly complex set of financial decisions each year. Many employees tend to focus on long-term retirement savings by enrolling in or adjusting their 401(k) plan allocations. Others may concentrate on selecting the health insurance plan that will best meet their immediate health care needs. Throw in flexible spending accounts and other employer-sponsored benefits such as transportation subsidies or health club memberships, and employees are faced with many important choices.

    As a result, many employees do not sufficiently evaluate the available employer-sponsored insurance coverage along with their individual coverage to help ensure appropriate levels of protection in critical areas - disability income and life insurance.

Here are 10 key questions about employer-provided disability income and life insurance coverage options to ask yourself and your employer during benefits open enrollment:

Disability Income Insurance:

1. Would you lose your employer-sponsored disability income insurance coverage if you switched jobs or became unemployed? Employer-sponsored coverage may not be portable. Individual disability income insurance provides coverage during a job change or unemployment, thereby helping to protect one's financial future during uncertain times.

2. Would your income from an employer-sponsored policy during a disability be less than anticipated because it's integrated with Social Security or other benefits? Employer-sponsored disability income insurance benefits are usually reduced by Workers' Compensation or Social Security benefits. The qualifications for Social Security disability income are typically stringent, and the payments tend to be modest. In contrast, individual disability income insurance typically pays benefits in addition to any benefits payable under Social Security.

3. Does your employer-sponsored disability income insurance only cover your base income or salary or does it also include commissions and/or bonuses? Group coverage typically replaces 60 percent or less of base salary, which can leave a large amount of income from bonuses and commissions unprotected. Individual policies give the option to cover these other sources of income so that you can protect more of your actual earnings.

4. Does your employer-sponsored disability income insurance have strict definitions of what qualifies as a disability? It is important to determine how a policy defines disability. Some will pay benefits if you are unable to perform the duties of your regular occupation, while others pay only if you are unable to engage in any gainful employment. Typically workers compensation covers only work-related disabilities, while a majority of disabling accidents and illnesses aren't work related.

5. Does your employer-sponsored disability income insurance provide the adequate stability and protection that can be suited to your needs? Individual disability income policies will typically offer longer maximum benefit periods, include noncancelable features, cost-of-living adjustment riders, and the option to purchase additional coverage. These add-ons are usually not available from employer-sponsored disability income plans.

Life Insurance:

1. Does your employer-sponsored life insurance provide adequate protection? The level of life insurance coverage available through an employer-sponsored plan is typically one times your annual salary before a medical evaluation is required. In a majority of cases, this is inadequate protection without an additional individual policy. Like employer-sponsored disability income insurance, this coverage doesn't usually include bonuses or commission income above the base salary amount.

2. What costs are associated with increasing your coverage through your employer-sponsored policy? Increasing coverage through an employer-sponsored plan to an adequate level of protection is often more expensive than through an individual policy. In group plans employees pay premiums based on the risk profile of the entire employee base. Depending on your individual situation, that's not necessarily the best value.

3. Would you lose your employer-sponsored life insurance if you switched jobs or became unemployed? As with disability insurance, an individual life insurance policy protects you during a job transition. Employer-sponsored life insurance coverage may not be portable or convertible, and may not be available from your next employer.

4. Can your employer-sponsored life insurance coverage be customized? Group life insurance coverage doesn't generally provide the product types, features or riders that are suited to individual needs. Group coverage is a one-size-fits-all approach.

5. Does your employer-sponsored life insurance provide income replacement for a non-working spouse? Income replacement for nonworking spouses is an important and often overlooked life insurance need that an employer-sponsored policy doesn't cover. An individual policy on a nonworking spouse can provide for such things as day care costs, housekeeping, or nursing care in the event of their tragic death.

Often people don't realize that their employer-sponsored coverage alone is not enough. While everyone should take advantage of the low-cost, basic coverage often available through an employer, most should also combine it with individual insurance protection. A financial advisor can help you understand what combination of protection will meet your individual financial goals and needs.

For more information, visit riversource.com

About RiverSource Insurance

Insurance and annuity products are issued by RiverSource Life Insurance Company and in New York, by RiverSource Life Insurance Co. of New York, Albany, New York. These companies are affiliated with Ameriprise Financial Services, Inc. Only RiverSource Life Insurance Co. of New York is authorized to sell insurance and annuities in New York.

About Ameriprise Financial

Ameriprise Financial, Inc. is a leading financial planning and services company that provides solutions for clients' asset accumulation, income management and insurance protection needs. Through a nationwide network of more than 10,000 financial advisors, Ameriprise Financial delivers tailored solutions to clients through a comprehensive and personalized financial planning approach built on a long-term relationship with a knowledgeable advisor. The company specializes in helping to meet the retirement-related financial needs of the mass affluent and affluent. For more information about our services and providers, visit ameriprise.com.

RiverSource Insurance products are sold through the personal advisors of Ameriprise Financial (NYSE:AMP).

This is not an offer for insurance; proof of insurability must be made before coverage will be issued.

Investments and financial advisory services available through Ameriprise Financial Services, Inc., Member FINRA and SIPC, an Ameriprise Financial company.

(C) 2007 RiverSource Life Insurance Company. All rights reserved.

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Todd Wold
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