The Real Value of Optional Benefits
Your employee benefit plan is a significant source of support for employees, their families and your business – both financially and emotionally. It’s good to know that your employer cares about you and has invested in your health and wellbeing. It’s good to know that if the unexpected happens, you and your family will be supported.
Your employee benefit plan may be a good foundation of support for you, but what if you would like to build on that foundation? What if you need more? What options are available?
An Additional Layer of Protection
Optional benefits are additional insurance that can be added to your existing plan. They enhance the coverage that you receive through your employer. It’s your choice whether you purchase optional benefits; the right choice for you may be different than the right choice for your colleagues. It really is up to the individual.
Some of the most common optional benefits available are:
- Optional Life Insurance
- Optional Accident and Serious Illness (ASI)
- Optional Critical Illness
There are two situations where you may choose to purchase optional benefits.
- Add on to existing coverage – In this scenario, you may have some coverage, but you would like more. For example, your employee benefits plan may provide life insurance equal to two times your annual salary. You’ve given it some thought and don’t think this would be enough money for your family; in this scenario, you would be purchasing additional life insurance above and beyond the amount your family would receive through the group benefits plan.
- Purchase coverage not part of your plan – In this scenario, your employee benefits plan may not include the coverage you would like. For example, your employee benefits plan may cover health and dental, but not life insurance. In this scenario, you would be purchasing life insurance because your employee benefits plan does not include it.
Why Purchase Optional Benefits
Unfortunately, life can throw us some unexpected curve balls. For most of us, it’s reassuring to know that we would have financial support to help us get through a difficult time.
Optional Life Insurance
Loss of income due to an untimely death can have a devastating compounding impact on your family. This is especially true if you have children or other families that depend on your income to support them. Research shows that a family typically needs 4 to 6 times their household income after an untimely death to make provisions for the replacement of the lost income. It’s hard to think about such a scenario, but by purchasing additional life insurance you can have some peace of mind that your family would have a financial cushion.
Optional Critical Illness
Unfortunately, critical illness occurs far too often to people of all ages and backgrounds. Research indicates that 40% of Canadians will develop cancer in their lifetime. In addition, there are 70,000 heart attacks in Canada each year. You never know who will be affected, and for those who survive, it is often a long road to recovery. A critical illness can mean a loss of income, which can threaten your family’s lifestyle and assets. Having financial stress added on to the stress of a very ill family member can be too much. Optional critical illness can help preserve your family’s quality of life and protect your assets.
Optional ASI (Accident and Serious Illness)
Accidents do happen and their effect on your family’s financial situation can be serious. Accidents are the leading cause of death in people under 39, and the fourth leading cause of death for people of all other ages. Despite great advances in medical research, serious illness is something that also happens far too frequently.
ASI is the more sophisticated cousin to traditional AD&D (Accidental Death and Dismemberment) coverage. It includes coverage for accidental death and dismemberment but also includes coverage for serious illness. This is significant because serious illness often necessitates extensive rehabilitation, which can have a significant impact on your income. Optional ASI coverage provides much needed financial support for you and your family when the unthinkable happens.
Purchasing Optional Benefits
Whether or not purchasing optional benefits is the right choice for you depends on many factors: your age, family situation, stage of life, job, industry and salary all play into the equation. Often, younger people have more debt and more dependents so they would have a harder time dealing with the financial consequences of death, illness or accident.
If you do make the decision to purchase optional benefits, there are a few advantages to purchasing them through your existing employee benefit plan.
- Premiums are collected through payroll deductions
- Coverages are often available with no requirement to provide a medical history, up to a maximum amount
- Better rates, due to group buying power
Your rates will depend on factors such as your age, gender and smoking status. You may need to apply within 30 days of becoming eligible in order to take advantage of receiving coverage without a requirement to provide a medical history.
Good Advice is Key
The Plan Administrator at your company is a great resource for more information about optional benefits and how you can apply. If you’re looking for some financial peace of mind, optional benefits may be the way to get it.