Tuesday, November 17, 2009

Group Term Life Insurance - Open Enrollment

For some, open enrollment is going on as employees scramble to make elections for the coming year. I consulted with a client today on their options.

The family has been covered under a family major medical plan but his wife has recently returned to work and has been offered a benefit package. The health plan is good and very inexpensive for her after factoring in the employer contribution.

Like most employer plans, the heavy cost is shifted to the employee that has a family looking for coverage. After reviewing the benefits of their current plan vs. the one through the employer and weighing the cost of both plans the husband decided to keep what he has now.

The husband and children will remain on the current plan, the wife will choose the employer plan.

We then looked at other benefits such as life insurance, dental and vision. The dental and vision plans both have nominal premiums (due to heavy employer subsidy) and were essentially a no-brainer.

He dismissed the life insurance but I encouraged him to look at it further. Like many plans, the employee will receive life insurance at no charge that is a multiple of salary.

Free is good.

They also have a dependent life insurance plan that allows the wife to buy $50,000 of life insurance on her husband. Since this is open enrollment he can pick up the insurance without evidence of insurability.

This last item is a key in the decision process.

My client has cancer.

He has been battling cancer for 2 years. He applied for SSDI (Social Security Disability Insurance) in January and was approved in three weeks.

No one is approved that quickly.

If he were to apply for life insurance in the open market he would be denied. I strongly encouraged him to pick up as much life insurance as he can get under the employer plan.

After I explained the way the plan will work, that he will not be required to answer health questions or submit to a physical exam, he agreed that purchasing life insurance through the employer was a good idea.

So did I.
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