Optional Policies

Are they worth it?

By Kimberly Lankford, Contributing Editor

From Kiplinger's Personal Finance magazine, November 2009

Health insurance is the big-ticket item during open enrollment. But you may be given the option to sign up for other types of policies.

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Life insurance. Many employers automatically provide life insurance at no charge that equals your annual salary. But that's way too little coverage for most families (a rule of thumb is to have eight to ten times your annual income in coverage), and you lose the insurance when you leave your job.

If you have health issues that make it tough to qualify for a policy on your own, buying extra employer-provided group life could be a good deal. But if you're healthy, you may be able to get a better policy on your own. Check rates at www.accuquote.com.

Disability insurance. Employers generally provide some disability insurance as an employee benefit. But coverage is usually limited to 60% of your base income, and your pretax monthly benefit may be capped at $5,000 to $10,000.

If that isn't enough to cover your bills, look into buying extra coverage through your employer. You may be able to buy a policy that provides more-specific coverage, and you can take the policy with you if you leave your job. Plus, if you pay the premiums yourself, you won't have to pay taxes on the benefits.

Long-term-care insurance. The first generation of group LTC policies did not offer preferred rates and spousal discounts. But many newer group policies offer flexible terms, plus you may even get a group discount of 5% to 10%.

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