Your group insurance may not provide the protection you expect

January 01, 2013 • Insurance Planning

Do you have life and health insurance through your employer’s group benefits plan? Whether it’s a traditional package of fixed benefits or a flexible plan that allows you to emphasize some benefits over others, it may not cover as much as you think it does.

Here’s a look at the most common gaps found in group life and health plans – and how to bridge them so you have complete protection.

Disability insurance

Disability insurance replaces a portion of your salary if you are unable to work and eand earn an income for an extended period of time. Check your group plan for the following:

  • Payment period. It’s common for a group plan to pay disability benefits only for a limited period, sometimes two years or even just 12 months. You can imagine what would happen to you financially if you suffered a disability lasting five or six years or longer.
  • Maximum benefit. Benefits are usually a percentage of your regular income, but there may be a monthly maximum – and it may not be sufficient for your needs.
  • Definition of “disability.” Find out how “disability” is defined in your plan. Some plans state that your benefits will not continue if you are able to work at any job at all. Others use a broader definition and will pay benefits if you’re unable to work at your regular job.

If there are gaps in your coverage, you may want to purchase personal disability insurance to complement your group plan.

Life insurance

Life insurance under a group plan typically covers you only while you are employed at the company. If you leave the company, you may have the option of continuing coverage with the same provider; however, the cost might be prohibitive or you might not qualify.

It might be to your advantage to purchase permanent life insurance instead. Not only will you have protection that lasts for your lifetime, your policy can also help you to:

  • Generate tax-sheltered investment returns.
  • Leave an inheritance for your children.
  • Preserve the value of your estate by covering the taxation that may arise at death.

Critical illness insurance

Most group plans do not include critical illness insurance. If yours doesn’t, you may want to add this important coverage, which provides a lump-sum benefit if you are diagnosed with cancer, heart disease, stroke and other illnesses and conditions.

If your plan does include coverage, check the range of covered conditions and amount of the payout. Either may be significantly different from the coverage available with an individual critical illness insurance.

Long-term care insurance

Group benefits rarely include long-term care insurance. If you’re interested in this coverage, you’ll need to purchase it on your own.

It can be a worthwhile investment. Long-term care insurance not only covers the costs of a health care facility, but also enables you to receive personal health care services while remaining at home.

Talk to us if you want to make sure your life and health coverage is complete. We’ll look objectively at your group benefit plan and see if individual coverage would help to fill any gaps.

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