In addition to employer-sponsored retirement plans and group health insurance, life insurance and long-term disability insurance (LTDI) are typically needed by most employees.
Life Insurance
As a general rule-of-thumb, an individual needs life insurance if another person is financially dependent on them. There are many different types of life insurance, but most employer plans offer term life insurance. Term insurance covers you for a term of life, typically 10, 15, 20, or 30 years. However, many group life insurance policies only cover the insured while employed with the group. One benefit of group life insurance is that the cost is typically very low. The downside is that the policy may not be able to go with an employee that separates from the employer. A coverage amount of approximately 10 times an employee’s salary is a good starting point for benefit needed, but this depends on the situation.
Long-term Disability Insurance (LTDI)
LTDI is another need for most employees. LTDI provides a benefit in the event that an individual is unable to work for an extended period of time due to injury or illness. Group plans offer LTDI for typically low premiums. Commonly, group LTDI plans will cover 60% of the employee’s salary. LTDI is a need for nearly everyone that works and is dependent on their income to live. Similar to life insurance, the downside to a group LTDI plan is that it may not be able to go with the employee should he or she separate from service.
While insurance isn’t fun to talk about, it is an important piece of a solid financial plan. Make sure to speak with your financial professionals about being properly ensured.
