Your annual benefits enrollment at work can seem like a daunting task, but it doesn't have to be. Read on for a quick explanation of some of the benefits your employer may offer and why they may be worth a look this year.
Medical and dental insurance get most of the attention during annual enrollment, but most employers offer several other kinds of insurance coverage as benefits available to you. We’ve outlined a few of the most common types here for you to consider.
Group life insurance
Life insurance pays a death benefit to the beneficiaries you designate if you pass away while you’re covered. The main reason people buy life insurance is to provide a financial benefit to your loved ones if you die, which can help maintain their quality of life if they no longer have your income to rely upon.
The coverage you get through your employer is typically group insurance, which is priced based on the health and demographics of a group of people, rather than individually. That means premiums are typically lower than what you would pay if purchasing an equivalent policy from an insurance company on your own.
Employer-provided life insurance coverage
Many employers provide some level of coverage to employees automatically, without requiring you to contribute toward the premium. This employer-provided coverage is typically guaranteed and does not require you to complete a medical exam or health questionnaire.
Purchasing additional life insurance coverage
The amount provided automatically by your employer may not be enough to cover your family’s needs, however most employers also offer you the option to apply for additional coverage and pay the additional premium via payroll deduction. This calculator can help you estimate your life insurance needs.
If you find you need more coverage, getting it through your employer’s plan may be a good deal for you. The coverage you get through your employer is typically group insurance, which is priced based on the health and demographics of a group of people, rather than individually. That means premiums are typically lower than what you would pay if purchasing an equivalent policy on your own.
Accidental death and dismemberment (AD&D) insurance
Accidental death and dismemberment insurance provides a lump sum payout in the event of a fatal accident or a nonfatal accident that results in the loss of limb(s), finger(s), eyesight, hearing or other key functions.1
Qualifying accidents are covered regardless of where they happen — at work or elsewhere.
There may be a huge upside when you consider nearly 170,000 people die from unintentional injuries annually, making it the third-highest cause of death in the United States.2 These types of accidents may be covered by AD&D insurance.
An AD&D insurance benefit can be a great advantage when faced with significant medical bills and an unexpected loss resulting from the accident.
Critical illness insurance
Critical illness insurance provides a lump sum cash payment to you if you are diagnosed with a critical illness or covered condition under the policy — typically cancer, a heart attack, stroke or major organ failure.3
Critical illness benefits are paid in addition to any benefits you might receive under any other insurance coverage in force and regardless of your income or the expenses you incurred. You can use the money any way you want.
While you can’t prevent critical illness from affecting your family, critical illness insurance may be a relatively painless way to help protect your family’s finances. Learn more about critical illness insurance.
Provides a lump sum cash payment to you if you suffer injury from an accident covered under the policy.
Accident benefits are paid in addition to any benefits you might receive under any other insurance coverage in force and regardless of your income or expenses incurred. You can use the money any way you want.
In 2018, 13.7 percent of Americans had a visit to the emergency room — at an average cost of more than $1,500.4 Accident insurance can provide an extra cushion of cash at a time when you may be faced with many unexpected costs but are less able to absorb them.
Hospital indemnity insurance
Hospital indemnity insurance provides a cash payment for each day spent in the hospital, as long as it is resulting from an injury or illness as defined by your policy.
The benefit payment can be used in any way you wish, giving you the flexibility to use the money on things such as deductibles and co-pays, or unforeseen expenses like childcare or help with home maintenance.
In 2017, hospital expenditures accounted for nearly 39 percent of Americans’ health care costs,5 and the average length of an inpatient hospital stay in the U.S. is 4.6 days, at a total cost of $12,183.6
While medical insurance may pay much of the cost, it rarely pays for everything. Hospital indemnity insurance may be an affordable way to help cover those extra costs that your health insurance plan might not cover.
Other annual enrollment to-dos
Beyond enrolling for coverage, annual enrollment is a good time to check on your existing benefits.
Review and update your beneficiaries
Most benefits offered by your employer — such as life insurance, retirement accounts and more — allow you to designate beneficiaries to receive the benefits if you die.
Annual enrollment is a good time to make sure you’ve completed this important step, and if you have beneficiaries already on file, to make sure they’re still accurate.
A lot can happen in one year —birth or adoption of a child, marriage, divorce or loss of a spouse — so reviewing your beneficiaries annually is a good idea.
Check your retirement contribution rate
When was the last time you reviewed your contribution rate to your 401(k), 403(b), 457 or other employer-sponsored retirement plan? If it wasn’t in the past year, annual enrollment is a good time to do that.
Many experts recommend contributing between 10-15 percent of your salary to your retirement account? Are you there already, or can you increase your 401(k) contribution rate by even one percent this year? Take the time to think about it and make a change if you can.