New Years Resolution: Voluntary Benefits Housekeeping
I'm usually not big on New Year's resolutions; mine seem to get derailed in ways both totally predictable and totally unexpected. Like how I didn't realize that 2019's "learn to make a great pizza dough" resolution conflicted with the "lose a few pounds" resolution that same year. Or how 2020's "go see a proper heavy metal show" resolution got interrupted by a global pandemic.
Even if you're not planning any sweeping changes in your life going in to 2021, it's still a good time to do some basic housekeeping. When was the last time you made sure your voluntary benefits are protecting you in the ways you need them to?
I like to think of VB plans in broad categories based on how they protect you:
Protect Your Income
The first thing your voluntary benefits should be doing is protecting your most basic asset -- your ability to work and earn a living. If you're hurt or sick you may not be able to do that, so I always consider disability plans to be the foundation of voluntary benefits offerings.
Maybe your employer pays for a short and/or long term disability plan for you. Great, count yourself lucky. If not, do a quick thought experiment; imagine paying your bills with no paycheck. Ok, next imagine paying your bills with 60% of your paycheck. Which is easier to pull off?
First housekeeping item: If you don't own a short term disability plan, make this the first item on your 2021 benefits housekeeping list.
Protect Family Income
This is one of those items we put off all too often: make sure you have enough life insurance. The people that depend on you and your income need help if you're suddenly gone. And the things that you wanted to accomplish while you were alive can still happen if you're not: pay off the house, send the kids to college, make sure your spouse has enough money to retire.
The good news is that a voluntary benefits program at work can provide you multiple options for purchasing life insurance. On top of that, because of the preferred underwriting that can come we these plans, you may be able to get life insurance without having to answer health history questions to qualify. And payroll deduction makes paying the premiums effortless.
Second housekeeping item: Check your current life insurance, make sure you have enough and check on what's available to you at work.
Protect Cash Flow
Unexpected health events like accidents and serious illnesses can create immediate financial stress. The years-long trend toward higher deductibles leaves more of the upfront cost of health care on the consumer. Disability plans only cover a percentage of income. And as of this writing, you still can't buy groceries with your medical insurance card.
So plan for your immediate needs with voluntary plans that pay cash benefits directly to you. An accident plan plus a critical illness plan can provide much needed funds as soon as you see a doctor for an injury or are diagnosed with a serious illness. If you want to go even broader a hospital indemnity plan will pay benefits for anything bad enough that it puts you in the hospital, with some offering benefits for ER visits and outpatient surgeries too.
Third housekeeping item: Take another look at lump-sum and indemnity style benefits that provide cash payments for injury and illness.
Protect Your Iguana (Protect Cash Flow Pt. 2)
The previous three categories are by far the most important, but the variety of voluntary benefits available in the workplace is expanding all the time. Go ahead and take a moment to review what's available to you and decide what you think is important. Even if this year's housekeeping doesn't include adding pet insurance knowing what's available, how it works and what it costs will help you make better decisions in the future.
And remember, in most cases what you're doing is trading a small premium payment from each pay for a larger payment and often professional help when you get hit with something unexpected. Maybe your dog broke both front legs running through the woods at night (true story at my house). Or maybe a bunch of mystery charges from an Atlantic City casino showed up on your debit card statement (also a true story from my house). There are voluntary benefits for that.
Last housekeeping item: Make sure your voluntary benefits are protecting you in all the ways you need and don't let it slide like your other New Year's resolutions.