Does your employer benefit package measure up?

Many Americans just went through their annual benefits enrollment period at their work. Precious time was spent reviewing the available offerings with spouses and determining which ones best meet their families’ needs, weighed against the cost. Yet a good number of Americans may not have taken the time to review their company’s benefit plans and may not be aware that what’s available and what they selected could fall short of meeting their needs.

Does your benefit package really measure up? Forty percent of employees don’t understand their benefits, according to a 2011 ADP Research Institute study, which means many may be underutilizing available resources for retirement planning, health care and insurance. And sometimes the benefits offered are a good start toward financial protection, but employees don’t realize that these benefits are intended to be just that – a start – and additional coverage may be needed to help fill in the gaps.

“When a household income earner is in good health and able to bring home the paycheck every week, families often forget about those other benefits available from the company,” says Melissa Millan, senior vice president, Massachusetts Mutual Life Insurance Company (MassMutual). “Everyone should carefully review their benefits, and determine if any additional insurance protection might be needed to keep the family finances on an even keel if something should happen to affect that weekly paycheck.”

Two benefit areas often misunderstood or left untouched are life insurance and disability insurance. If you have these benefits offered to you by your employer, consider how they can help you out financially.

* Life insurance – Many employers will offer group term life insurance as part of their benefit package, with the option for employees to purchase additional coverage on their own by having the additional premium payments deducted from their paycheck. One reason employees might want to consider purchasing additional coverage through their employer is because they may not need to provide any health information or be pre-approved medically like they would be if they were to purchase it outside the workplace.

Employees should be aware: they might not want to rely solely on group term life insurance. Because it’s offered as a benefit via their employer, the employer could decide to discontinue offering the benefit. And if the employee leaves the company for any reason, coverage could be lost, if there are no options to take the coverage with you. Instead, consider balancing the benefit offered through your employer with an individual life insurance policy. With individual life insurance, you are the owner of the policy, can purchase the amount of coverage you truly need and bring it with you if you leave the company. If you purchase additional insurance, either at work or outside of work, it’s always important to understand your ability to keep the coverage, regardless of your employment relationship.

* Disability insurance – Employers often will provide group long-term disability plans that replace a portion of the employees’ incomes, if they suffer an illness or injury that prevents them from working for an extended period of time. However, the gap between the amount of salary replaced by the group insurance and the employee’s pre-disability income may be larger than many people realize. Typically, many group plans replace only a portion of employees’ total salaries – 50 to 60 percent, on average. Additionally, many group disability plans don’t cover commissions or income from bonuses, a critical component of many individuals’ incomes.

An extended period of disability could cause financial consequences for an individual or family. To help reduce the income gap, having an individual disability income insurance policy can help you continue to pay your bills and avoid tapping into your savings.

Knowing what’s offered in your company’s benefit plan, and reviewing if those benefits are enough to keep your family financially stable in case something were to change your status quo is important. Taking this step today can help you enjoy some peace of mind about you and your family’s future.