Insurance

4 Things Life Insurance Is Not | CA Employee Benefits Agency

Are you confused about life insurance? I don’t blame you. When I first started writing about finances more than a decade ago, my understanding of life insurance was limited.

I knew about life insurance because it was offered through my employer, and I thought a $50,000 policy was a lot of money. I also recognized insurance company names from late-night TV commercials and the occasional bit of junk mail.

I understood “insurance” to be that stuff that you had to have for your car, your home, and your health. The “life” part was a big, blurry blob of “other.” If that’s how you’re feeling, here are a few tips that might help bring things into focus—by understanding the “nots.”

1. Life insurance through work is generally NOT enough. Since learning this myself some years back, I’ve noticed that many people never explore life insurance past what is offered through their work. Policies through work are a great benefit to have, but are usually limited to one- or two-times your salary or a fixed amount like $50,000. Plus the coverage typically ends when your employment there does.

How far will an amount like that go when you consider what’s left behind for your loved ones: the loss of your income and mostly likely debts and bills. What about things like rent or mortgage, child-care and education costs?

An easy way to get a working idea of how much life insurance you need is with a Life Insurance Needs Calculator from a neutral source like www.lifehappens.org/howmuch.

2. Life insurance is NOT a luxury item. Many people have not even considered buying life insurance because they’re convinced it’s a luxury. In a recent study by Life Happens and LIMRA, consumers thought the cost of a 20-year, $250,000 level term life insurance policy for a healthy 30-year-old was three times higher than it generally is. Younger people, in particular, overestimate the cost of a term policy by a factor of five.

If you took a guess at what that policy above would cost, what would you say? It comes out to about $13 or so a month for that policy. Definitely not a luxury—most of us spend more than that on a meal out.

3. Life insurance is NOT just about covering funeral expenses. While covering funeral expenses is very important, and a major reason people purchase it, life insurance does so much more. If something happens to you, life insurance benefits can help replace lost income, or pay off a mortgage, or help ensure a college fund or safeguard a retirement nest egg.

The proceeds of a life insurance policy are generally tax free and can be used for anything your loved ones may need now and well into the future. Amazing, right?

4. Life insurance is NOT just for really healthy people. Granted, life insurance is less expensive the younger and healthier you are, but don’t discount it just because you’re not in triathlete shape!

Many people don’t considering buying life insurance because they think they won’t qualify. But when certain health conditions, such as diabetes or high blood pressure, are under control with a doctor’s guidance or medication, it’s often possible to qualify. You may even be able to get coverage after a heart attack. Just know that it is probably best to work with an experienced insurance agent if you are concerned about a health issue and qualifying for coverage.

Now, if you’re a bit overwhelmed with this information and perhaps don’t know where to start, just know that a life insurance agent will sit down with you at no cost to go over your needs and help you get life insurance coverage to fit your budget. If you don’t have an agent or advisor, go here for suggestions on how to find one. You can also tap the Agent Locator there to find someone in your area.

Remember, the right agent or advisor can help you make sense of the confusion and get you on track for the financial future you want—with the protection your loved ones need.

by Helen Mosher
Originally posted on LifeHappens.org

PCORI Fee Increase for Health Plans | California Benefits Consultants

On November 5, 2018, the Internal Revenue Service (IRS) released Notice 2018-85 to announce that the health plan Patient-Centered Outcomes Research Institute (PCORI) fee for plan years ending between October 1, 2018 and September 30, 2019 will be $2.45 per plan participant. This is an increase from the prior year’s fee of $2.39 due to an inflation adjustment.

Background

The Affordable Care Act created the PCORI to study clinical effectiveness and health outcomes. To finance the nonprofit institute’s work, a small annual fee — commonly called the PCORI fee — is charged on group health plans.

The fee is an annual amount multiplied by the number of plan participants. The dollar amount of the fee is based on the ending date of the plan year. For instance:

  • For plan year ending between October 1, 2017 and September 30, 2018: $2.39.

  • For plan year ending between October 1, 2018 and September 30, 2019: $2.45.

Insurers are responsible for calculating and paying the fee for insured plans. For self-funded health plans, however, the employer sponsor is responsible for calculating and paying the fee. Payment is due by filing Form 720 by July 31 following the end of the calendar year in which the health plan year ends. For example, if the group health plan year ends December 31, 2018, Form 720 must be filed along with payment no later than July 31, 2019.

Certain types of health plans are exempt from the fee, such as:

  • Stand-alone dental and/or vision plans;

  • Employee assistance, disease management, and wellness programs that do not provide significant medical care benefits;

  • Stop-loss insurance policies; and

  • Health savings accounts (HSAs).

HRAs and QSEHRAs

A traditional health reimbursement arrangement (HRA) is exempt from the PCORI fee, provided that it is integrated with another self-funded health plan sponsored by the same employer. In that case, the employer pays the PCORI fee with respect to its self-funded plan, but does not pay again just for the HRA component. If, however, the HRA is integrated with a group insurance health plan, the insurer will pay the PCORI fee with respect to the insured coverage and the employer pays the fee for the HRA component.

A qualified small employer health reimbursement arrangement (QSEHRA) works a little differently. A QSEHRA is a special type of tax-preferred arrangement that can only be offered by small employers (generally those with fewer than 50 employees) that do not offer any other health plan to their workers. Since the QSEHRA is not integrated with another plan, the PCORI fee applies to the QSEHRA. Small employers that sponsor a QSEHRA are responsible for reporting and paying the PCORI fee.

PCORI Nears its End

The PCORI program will sunset in 2019. The last payment will apply to plan years that end by September 30, 2019 and that payment will be due in July 2020. There will not be any PCORI fee for plan years that end on October 1, 2019 or later.

Resources

The IRS provides the following guidance to help plan sponsors calculate, report, and pay the PCORI fee:

Originally posted on thinkhr.com

Choosing the Right Flexible Benefit for Employees | Cupertino Benefits Agency

Trying to decide which of the many employer-sponsored benefits out there to offer employees can leave an employer feeling lost in a confusing bowl of alphabet soup—HSA? FSA? DCAP? HRA? What does it mean if a benefit is “limited” or “post-deductible”? Which one is use-it-or-lose-it? Which one has a rollover? What are the limits on each benefit?—and so on.

While there are many details to cover for each of these benefit options, perhaps the first and most important question to answer is: which of these benefits is going to best suit the needs of both my business and my employees? In this article, we will cover the basic pros and cons of Flexible Spending Arrangements (FSA), Health Savings Accounts (HSA), and Health Reimbursement Arrangements (HRA) to help you better answer that question.

Flexible Spending Arrangements (FSA)

An FSA is an employer-sponsored and employer-owned benefit that allows employee participants to be reimbursed for certain expenses with amounts deducted from their salaries pre-tax. An FSA can include both the Health FSA that reimburses uncovered medical expenses and the Dependent Care FSA that reimburses for dependent expenses like day care and child care.

Pros:

  • Benefits can be funded entirely from employee salary reductions (ER contributions are an option)

  • Participants have access to full annual elections on day 1 of the benefit (Health FSA only)

  • Participants save on taxes by reducing their taxable income; employers save also by paying less in payroll taxes like FICA and FUTA

  • An FSA allows participants to “give themselves a raise” by reducing the taxes on healthcare expenses they would have had anyway

Cons:

  • Employers risk losing money should an employee quit or leave the program prior to fully funding their FSA election

  • Employees risk losing money should their healthcare expenses total less than their election (the infamous use-it-or-lose-it—though there are ways to mitigate this problem, such as the $500 rollover option)

  • FSA elections are irrevocable after open enrollment; only a qualifying change of status event permits a change of election mid-year

  • Only so much can be elected for an FSA. For 2018, Health FSAs are capped at $2,650, and Dependent Care Accounts are generally capped at $5,000

  • FSA plans are almost always offered under a cafeteria plan; as such, they are subject to several non-discrimination rules and tests

Health Savings Accounts (HSA)

An HSA is an employee-owned account that allows participants to set aside funds to pay for the same expenses that are eligible under a Health FSA. Also like an FSA, these accounts can be offered under a cafeteria plan so that participants may fund their accounts through pre-tax salary reductions.

Pros:

  • HSAs are “triple-tax advantaged”—the contributions are tax free, the funds are not taxed if paid for eligible expenses, and any gains on the funds (interest, dividends) are also tax-free

  • HSAs are portable, employee-owned, interest-bearing bank accounts; the account remains with the employees even if they leave the company

  • Certain HSAs allow participants to invest a portion of the balance into mutual funds; any earnings on these investments are non-taxable

  • Upon reaching retirement, participants can use any remaining HSA funds to pay for any expense without a tax penalty (though normal taxes are required for non-qualified expenses); also, retirees can use the funds tax-free to pay premiums on any supplemental Medicare coverage. This feature allows HSAs to operate as a secondary retirement fund

  • There is no use-it-or-lose-it with HSAs; all funds employees contribute stay in their accounts and remain theirs in perpetuity. Also, participants may alter their deduction amounts at any time

  • Like FSAs, employers can either allow the HSA to be entirely employee-funded, or they may choose to also make contributions to their employees’ HSA accounts

  • Even though they are often offered under a cafeteria plan, HSAs do not carry the same non-discrimination requirements as an FSA. Moreover, there is less administrative burden for the employer as the employees carry the liability for their own accounts

Cons:

  • To open and contribute to an HSA, an employee must be covered by a qualifying high deductible health plan; moreover, they cannot be covered by any other health coverage (a spouse’s health insurance, an FSA (unless limited), or otherwise)

  • Participants are limited to reimburse only what they have contributed—there is no “front-loading” like with an FSA

  • Participant contributions to an HSA also have an annual limit. For 2018, that limit is $3,450 for an employee with single coverage and $6,900 for an employee with family coverage (participants over 55 can add an additional $1,000; also, remember there is no total account limit)

  • Participation in an HSA precludes participation in any other benefit that provides health coverage. This means employees with an HSA cannot participate in either an FSA or an HRA. Employers can work around this by offering a special limited FSA or HRA that only reimburses dental and vision benefits, meets certain deductible requirements, or both

  • HSAs are treated as bank accounts for legal purposes, so they are subject to many of the same laws that govern bank accounts, like the Patriot Act. Participants are often required to verify their identity to open an HSA, an administrative burden that does not apply to either an FSA or an HRA

Health Reimbursement Arrangements (HRA)

An HRA is an employer-owned and employer-sponsored account that, unlike FSAs and HSAs, is completely funded with employer monies. Employers can think of these accounts as their own supplemental health plans that they create for their employees

Pros:

  • HRAs are extremely flexible in terms of design and function; employers can essentially create the benefit to reimburse the specific expenses at the specific time and under the specific conditions that the employers want

  • HRAs can be an excellent way to “soften the blow” of an increase in major medical insurance costs—employers can use an HRA to mitigate an increase in premiums, deductibles, or other out-of-pocket expenses

  • HRAs can be simpler to administer than an FSA or even an HSA, provided that the plan design is simple and efficient: there are no payroll deductions to track, usually less reimbursements to process, and no individual participant elections to manage

  • Small employers may qualify for a special type of HRA, a Qualified Small Employer HRA (or QSEHRA), that even allows participants to be reimbursed for their insurance premiums (special regulations apply)

  • Funds can remain with the employer if someone terminates employment and have not submitted for reimbursement

Cons:

  • HRAs are entirely employer funded. No employee funds or salary reductions may be used to help pay for the benefit. Some employers may not have the funding to operate such a benefit

  • HRAs are subject to the Affordable Care Act. As such, they must be “integrated” with major medical coverage if they provide any sort of health expense reimbursement and are also subject to several regulations

  • HRAs are also subject to many of the same non-discrimination requirements as the Health FSA

  • HRAs often go under-utilized; employers may pay an amount of administrative costs that is disproportionate to how much employees actually use the benefit

  • Employers can often get “stuck in the weeds” with an overly complicated HRA plan design. Such designs create frustration on the part of the participants, the benefits administrator, and the employer

For help in determining which flexible benefit is right for your business, contact us!

by Blake London
Originally posted on ubabenefits.com

Look Backward to Plan Forward | CA Benefits Agents

We have entered Open Enrollment season and that means you and everyone in your office are probably reading through enrollment guides and trying to decipher it all. As you begin your research into which plan to choose or even how much to contribute to your Health Savings Account (HSA), consider evaluating how you used your health plan last year. Looking backward can actually help you plan forward and make the most of your health care dollars for the coming year.

Forbes magazine gives the advice, “Think of Open Enrollment as your time to revisit your benefits to make sure you are taking full advantage of them.” First, look at how often you used health care services this year. Did you go to the doctor a lot? Did you begin a new prescription drug regimen? What procedures did you have done and what are their likelihood of needing to be done again this year? As you evaluate how you used your dollars last year, you can predict how your dollars may be spent next year and choose a plan that accommodates your spending.

Second, don’t assume your insurance coverage will be the same year after year. Your company may change providers or even what services they will cover with the same provider. You may also have better coverage on services and procedures that were previously not eligible for you. If you have choices on which plan to enroll in, make sure you are comparing each plan’s costs for premiums, deductibles, copays, and coinsurance for next year. Don’t make the mistake of choosing a plan based on how it was written in years prior.

Third, make sure you are taking full advantage of your company’s services. For instance, their preventative health benefits. Do they offer discounted gym memberships? What about weight-loss counseling services or surgery? How frequently can you visit the dentist for cleanings or the optometrist? Make sure you know what is covered and that you are using the services provided for you. Check to see if your company gives discounts on health insurance premiums for completing health surveys or wellness programs—even for wearing fitness trackers! Don’t leave money on the table by not being educated on what is offered.

Finally, look at your company’s policy choices for life insurance. Taking out a personal life insurance policy can be very costly but ones offered through your office are much more reasonable. Why? You reap the cost benefit of being a part of a group life policy. Again, look at how your family is expected to change this year—are you getting married or having a baby, or even going through a divorce? Consider changing your life insurance coverage to account for these life changes. Forbes says that “people entering or exiting your life is typically a good indicator that you may want to revisit your existing benefits.”

As you make choices for yourself and/or your family this Open Enrollment season, be sure to look at ALL the options available to you. Do your research. Take the time to understand your options—your HR department may even have a tool available to help you estimate the best health care plan for you and your dependents. And remember, looking backward on your past habits and expenses can be an important tool to help you plan forward for next year.

Do You Have Mixed Emotions about Open Enrollment? | CA Benefits Agency

It’s typical to have mixed feelings about the annual benefits open enrollment period. Dread for the additional administrative workload and potential benefits cost increases… Anticipation of newer, more attractive, and easier to administer plans… It makes for a fall season that causes many HR professionals and benefits brokers to drown their misery in pumpkin spice lattes.

Better Benefits Attract and Retain Talent

A high-quality employee benefits package is one of the best tools in your arsenal to attract the right talent, enhance employee engagement, and retain your most valuable employees. According to a May 2018 Harris Poll/Glassdoor survey, nearly half (48 percent) of U.S. workers cited attractive company benefits and perks as key factors in their likelihood to apply for a job, and other surveys have found that excellent benefits play a role in retaining employees.

Employees today expect their employers to be creative, consider employee needs, make benefits easy to use, and offer them choices to help manage their lifestyles. Besides health insurance, benefits protecting their incomes, such as disability insurance, financial planning, and retirement plans are important. In addition, consider that employees are tech savvy and expect to have online tools and calculators, along with complete communications, to assist them in making decisions regarding their benefit options.

5 Steps for Success

To prepare for this year’s open enrollment, focus your efforts on designing the best benefits and communications program. Make the most of marketing your benefits programs to your employees by:

  1. Reviewing workforce demographics and benefits usage to get a better understanding of employees’ stages in the lifecycle. Knowing your audience and targeting benefits communications to meet those lifecycle needs makes the benefits more personal and relevant. Employees with young families, older workers preparing for retirement, empty nesters, and young singles all have distinctly different benefits needs and interests.

  2. Packaging benefits by target group with messaging that speaks to each group’s needs while consistently reinforcing the overall benefits strategy and company branding in the messaging. Different communications delivery systems may also be important to different employee groups.

  3. Starting the messaging with why the benefits are structured as they are and what the company’s overall benefits strategy is designed to accomplish. Don’t sugarcoat any bad news about changes in the benefits program. Employees will see through it and resent attempts to hide changes that may be perceived as negative. This is a good time to highlight the important value of their benefits programs, promote wellness, encourage retirement savings, and encourage cost-effective usage of benefits programs.

  4. Keeping the messaging straightforward. Provide clear information, checklists, and decision support tools that are easy to follow. Have the details available but keep the key messages and “what you need to do for enrollment” information central to the enrollment materials.

  5. Bringing company managers and supervisors into the discussions prior to launch. Give them a heads up regarding the upcoming benefits changes and enlist their help in the process.

4 More Things to Consider

The next step is to tackle the “how” of the benefits communications and enrollment program, including:

  1. Communications delivery methods. Electronic communications? Mobile apps? Webinars? In-person company meetings? Text messages? Packages mailed to home addresses to involve the family? Use of social media? Intranet messaging? Gaming techniques? Frequent emails or instant messaging? Live hotline for questions and concerns? Combination of all methods?

  2. Enrollment methods. Online? Manual? Mobile? Make it as administratively simple as possible for both employees and the benefits administration staff. Use electronic tools if the budget allows.

  3. Timing. Establish a timeline working backwards from the date that the information must be completed with the carriers and other benefits providers. Then work forward to deliver the communications program.

  4. Frequency. Employees need time to consider their options and allow the information to soak in. Consider sending employee prompts and reminders so that the enrollment process is completed in a timely manner.

The annual open enrollment communications opportunity is precious — you can influence how employees see benefits or cost changes, motivate employees to change their health or savings habits, and let employees know that management is listening, considering their feedback valuable, and responding to their needs.

by Laura Kerekes
Originally posted on thinkhr.com

Wealthy vs Financial Fit. Here’s the Difference and Why It Matters | California Benefit Consultants

 

People can be wealthy without being financially fit, meaning they can have a lot of assets or money tied up in assets, but those assets aren’t “liquid.” Let me explain. Say you have a house that has escalated in value in the real estate market. You may have this large asset, but that doesn’t necessarily mean you’re financially comfortable from an income standpoint. You aren’t able to tap into that “wealth” to pay for your day-to-day expenses.

Considering Risk
The overall goal when I sit down with someone, or perhaps a couple, is to determine their wants and needs, and then give them a plan that helps them grow their assets, while achieving their income goals.

But one thing many people fail to look at is the risk during this growth period. Let’s say you’re married, and again your major asset is your home, perhaps even with a large mortgage. What if something were to happen to either one of you? Would you still be able to pay the mortgage and retain the house? Or would you need to sell your largest asset just to pay day-to-day living expenses?

That’s where life insurance comes in as a foundational piece to financial fitness. It addresses the issue of someone dying too soon—that’s a risk factor you don’t want to leave chance. And the truth is, it’s an affordable solution for almost everyone. A healthy 30-year-old can get a 20-year $250,000 level term life insurance policy for about $13 a month. Most of us can afford to find that kind of money in our budget.

What Do Romantic Partners Want?
Life Happens did the survey, “What Do Romantic Partners Want?” and we discovered some great news for most of us—people prefer a partner who is financially fit (64%) over someone who is wealthy (16%). And we explored a whole host of factors, from looks to money to relationships. And I think it’s only natural that when people are dating, all the factors that we explored in the survey come into play.

It’s when things become serious and you’re looking to settle down that you have to start asking some of the tougher questions, questions that may make you feel uncomfortable. For example, does the other person have a lot of debt or other financial obligations?

Remember, if you marry and sign on the dotted line, you become responsible for each other’s debt. I’ve seen divorces happen where one partner was racking up a huge amount of credit card debt without the other one knowing, and then in the divorce proceedings the other partner finds out that they are responsible for half that debt.

In the end, it comes down to being financially aware, asking the appropriate questions, even if they are uncomfortable ones. You need to go into a long-term relationship with your eyes and ears wide open.

 

by Marvin H. Feldman

Originally posted on lifehappens.org

Final Rule on Short-Term Limited-Duration Insurance | California Benefits Firm

On August 1, 2018, the Internal Revenue Service, the Department of Health and Human Services (HHS), and the Department of Labor (collectively, the Departments) released a final rule that amends the definition of short-term, limited-duration insurance. HHS also released a fact sheet on the final rule.

According to the Departments, the final rule will provide consumers with more affordable options for health coverage because they may buy short-term, limited-duration insurance policies that are less than 12 months in length and may be renewed for up to 36 months.

The final rule will apply to insurance policies sold on or after October 2, 2018.

For more information, contact us!


by Karen Hsu
Originally posted on ubabenefits.com

Do Single People REALLY Need Life Insurance? | California Benefits Advisors

Many people make the assumption that life insurance is for married couples and those with kids. While it is true that not all single people need life insurance, there are a number of reasons when it can make (really) good sense.

 

1. You have student loan debt. Many people assume that your debt dies with you, but that’s not always the case. While the loans through the federal government are discharged (aka forgiven) if you were to die, personal loans that have a cosigner are generally not. That means if your parents, for example, co-signed your student loan through a bank, they would be responsible for paying the rest of the loan if something happened to you. There are instances when the bank has called for the loan to be paid in full immediately following a death. You don’t want to leave your parents dealing with grief and loan payments.

2. You’re living with your significant other. When you’re living together, a lot becomes shared financial responsibility. Consider this example: You need both your incomes to meet the mortgage or rent where you’re living. Have you thought about what happens if one of you dies prematurely? Would the other partner have to sell up? Find a new place to live immediately? And this is just one example of many shared financial responsibilities couple have. Adequate life insurance is an easy answer to those questions.

If your parents co-signed your student loan through a bank, they’d be responsible for paying the rest of the loan if something happened to you.

3. You plan on having kids … someday. It may not be now, but when kids do come, so do the expenses and bills. According the USDA, it costs $245,340 to raise a child to age 18, and that’s without factoring in the cost of college. Getting life insurance in place now means you have coverage in place for when you do have a child. Plus, you protect your insurability for the future. … and that leads us to the next reason.

4. You’re young and healthy. Age and health are two major drivers of how much you’ll be paying for life insurance. Why not lock in a low price if you have both of those working for you? Did you know that a healthy 30-year-old can get a 20-year $250,000 term life insurance policy for about $13 a month? Doable, right? Don’t wait until a health issue or age puts life insurance out of your reach.

5. You know you’ll be taking care of family members in the future. This may mean aging parents or perhaps you have a special-needs sibling that you help care for and support financially. What would happen to them if something happened to you and your support disappeared? Life insurance can ensure that there is money in place to fund those needs into the future. This is where it might be wise to consider a permanent life insurance policy (one that’s there for your lifetime, as long as you pay your premiums).

6. It will pay for your funeral. No one likes to think about such things, but the truth is if you die, someone will have to pay for your funeral. You wouldn’t want to leave your parents, partner or other family members struggling with grief as well as paying for a funeral and burial, which can cost an average of $7,100.

If any of this sounds daunting, just know that it does’t have to be. You can start by doing a quick calculation on your own to see if you need life insurance with this Life Insurance Needs Calculator. And just know that you can also talk things through with an insurance agent—at no cost. They will help you figure out how much you may need, and also find a policy that fits into your budget.

 

Originally posted on lifehappens.org

 

Affordable Care Act Update | California Benefit Partners

Health Insurance key words wheel.jpg

Recently, the President signed a bill repealing the Affordable Care Act’s Individual Mandate (the tax penalty imposed on individuals who are not enrolled in health insurance). While some are praising this action, there are others who are concerned with its aftermath. So how does this affect you and why should you pay attention to this change?

First, as an individual, if you do not carry health insurance, you are currently paying a penalty of $695/adult not covered and $347.50/uninsured child with penalties going even as high as $2085/household. These penalties have been the deciding factor for most uninsured Americans—go broke buying insurance but they have insurance, or go broke paying a fine and still be uninsured. With the repeal signed in December 2017, these penalties are zeroed out starting January 1, 2019.  While it seems that the repeal of the tax penalty should be good news all around, it does have some ramifications. Without reform in the healthcare arena for balanced pricing, when individuals make a mass exodus in 2019, we can expect higher premiums to account for the loss of insured customers.

As a business, you are still under the Employer Mandate of the ACA. There have been no changes to the coverage guidelines and reporting requirements of this Act. However, with healthy people opt-ing out of health insurance coverage, the employer premiums can expect to be raised to cover the increased expenses of the sick. Some do predict the possibility of the repeal of some parts of the Employer Mandate —specifically PCORI fees and employment reporting. The Individual and Employer Mandates were created to compliment each other and so changes to one tend to mean changes to the other. 

So, why should you pay attention to this change? Because the balance the ACA Individual Mandate was designed to help make in the health insurance marketplace is now unbalanced. Taking one item from the scale results in instability. Both employers and employees will be affected by this tax repeal in one way or another.

 

Getting Married? Two Questions You Need to Ask Your Partner (but Probably Haven’t) | California Employee Benefits

Getting married is a big leap. And you may be in the midst of a whole lot of planning—from when and where to have the wedding to whom to invite. But planning the wedding and honeymoon is just the start of your life together. As you start planning your future, don’t forget to put a solid financial base in place.

While you may have already talked about joint or separate bank accounts and what gets paid by whom and when, there is probably a piece you haven’t talked about: insurance. While it isn’t top of mind for most people, talking through your insurance coverages is actually an important step. As you combine households and finances, you want to make sure that you have protection in place. Here are two questions to think about and to talk through with your partner.

Do you have any life insurance? People may get a certain amount of life insurance coverage through work, often one or two times their salary. And while that sounds like a lot, you have to consider how long that money would need to last. For example, are you buying a home together? If so, would just one of you be able to continue with the mortgage if the other died unexpectedly, or would you be forced to sell it just so you could meet day-to-day living expenses?

Plus, you also have to consider that life insurance coverage through work typically ends when your job does. So if you change jobs, you may find yourself without coverage, and you new job may or may not offer life insurance as a benefit.

The easy solution is to get your own individual life insurance policy. And for most people, it can be quite affordable. Remember, the younger and healthier you are, the less expensive coverage is. For example, a healthy 30-year-old can get a 20-year, $250,000 term life insurance policy for about $13 a month. Most people can find that in their budgets.

Do you have disability insurance? If you are working and rely on your paycheck (and how many of us can say we don’t!), this is a key piece of coverage. Disability insurance pays you a portion of your salary if you were to become sick or disabled and unable to go to work and earn your paycheck.

An individual disability insurance policy has this key benefit: It will be with you as you move from job to job.

Many people think Workers’ Comp would take care of them if something happened, but you only get this coverage if the accident is work-related. Most disability claims—more than 90%—are due to illnesses, like cancer, for example. That means if you couldn’t work, you’d have no income. What is your plan to pay your monthly costs if something like this happened? That’s where disability insurance comes in. It would replace a portion of your salary so you could continue to pay your mortgage or rent and your monthly bills until you are able to return to work.

Your employer may offer this coverage through work, so be sure to talk to your HR rep or benefits administrator to see if you have disability insurance (short-term, long-term or both) and what it covers and for how long. You can also get an individual disability insurance policy, which has this key benefit: It will be with you as you move from job to job. In a tight economy, employers are always looking for ways to trim costs and unfortunately, insurance coverage is often first on the chopping block. When you have your own policy, you never have to worry about if your next job will have coverage.

Once you have talked with your partner, if you find either of you has gaps in coverage you’d like to fill, then it makes sense to sit down with an insurance agent. Remember, they will talk through your options at no cost to you—and no pressure to buy.

 

By Maggie Leyes
Originally posted on lifehappens.org