Open enrollment is the time of year when you can enroll in or change your employee benefits, such as health insurance, life insurance, and other voluntary benefits. It can be overwhelming to decide which benefits to choose, but this guide will help you understand some of the options your employer may offer and why they are worth considering.
Types of insurance benefits
Insurance benefits are designed to protect you and your family from unexpected events that can affect your health, income, or quality of life. Some of the most common types of insurance benefits are medical and dental insurance, but there are also other types of coverage that can provide valuable protection. Here are some of the insurance benefits you may want to look into during open enrollment.
Group life insurance
Life insurance is a benefit that pays a lump sum to the people you choose as beneficiaries if you die while covered by the policy. The main purpose of life insurance is to help your loved ones maintain their standard of living if they lose your income due to your death.
Group life insurance is a type of life insurance that is offered by your employer as part of your benefits package. It is usually based on the average health and age of a group of employees, rather than your individual situation. That means you may pay lower premiums than if you bought a similar policy on your own.
How much life insurance do you need?
Many employers provide some level of life insurance coverage to employees for free, without requiring you to contribute anything. This is called employer-provided life insurance, and it is usually a fixed amount or a multiple of your salary. You do not need to take a medical exam or answer health questions to get this coverage.
How to get more life insurance coverage
The amount of life insurance that your employer provides may not be enough to cover your family’s needs, especially if you have dependents, debts, or other financial obligations. Most employers also offer you the option to buy additional life insurance coverage and pay the extra premium through payroll deduction. This is called voluntary life insurance, and it may require you to complete a medical exam or health questionnaire.
To estimate how much life insurance you need, you can use this calculator. You can also learn more about the pros and cons of buying life insurance through your employer.
Accidental death and dismemberment (AD&D) insurance
Accidental death and dismemberment insurance is a benefit that pays a lump sum to you or your beneficiaries if you suffer a fatal or serious injury from an accident covered by the policy. For example, you may receive a benefit if you lose a limb, your sight, your hearing, or other vital functions due to an accident.1
AD&D insurance covers accidents that happen anywhere, not just at work. It can be a useful benefit to have, considering that more than 227,000 people die from unintentional injuries every year in the United States, making it the third-leading cause of death.2 These types of accidents may be covered by AD&D insurance.
An AD&D insurance benefit can help you and your family cope with the financial impact of a severe or fatal accident, such as paying for medical bills, funeral costs, or living expenses.
Critical illness insurance
Critical illness insurance is a benefit that pays a lump sum to you if you are diagnosed with a critical illness or condition covered by the policy, such as cancer, heart attack, stroke, or organ failure.3
Critical illness insurance benefits are paid on top of any other insurance benefits you may receive, and you can use the money for any purpose you want. For example, you can use it to cover deductibles, co-pays, or other out-of-pocket expenses, or to pay for extra care, travel, or household needs.
Critical illness insurance can help you avoid financial stress if you face a serious health issue, as critical illnesses can be costly and disruptive to your life.
Accident insurance
Accident insurance is a benefit that pays a lump sum to you if you suffer an injury from an accident covered by the policy, such as a fracture, a burn, or a concussion.
Accident insurance benefits are paid on top of any other insurance benefits you may receive, and you can use the money for any purpose you want. For example, you can use it to cover deductibles, co-pays, or other out-of-pocket expenses, or to pay for extra care, travel, or household needs.
Accident insurance can help you cope with the unexpected costs of an accident, as accidents can happen to anyone, anytime, and anywhere. In 2021, 18 percent of Americans had a visit to the emergency room4, at an average cost of more than $2,715.5 Accident insurance can provide some extra cash when you may need it most.
Hospital indemnity insurance
Hospital indemnity insurance is a benefit that pays a cash amount for each day you spend in the hospital, as long as it is due to an injury or illness covered by the policy.
The cash payment can be used for any purpose you want, giving you the flexibility to use the money on things such as deductibles, co-pays, or unforeseen expenses like childcare or help with home maintenance.
Hospital indemnity insurance can help you cover the extra costs that your health insurance plan may not cover, as hospital stays can be expensive and lengthy. The average length of an inpatient hospital stay in the U.S. is 4.5 days.6
Other open enrollment tips
Besides choosing your benefits, open enrollment is also a good time to check on your existing benefits and make sure they are up to date.
Review and update your beneficiaries
Most benefits offered by your employer, such as life insurance, retirement accounts, and more, allow you to name beneficiaries who will receive the benefits if you die.
Open enrollment is a good time to make sure you have completed this important step, and if you have beneficiaries already on file, to make sure they are still accurate.
A lot can happen in one year, such as the birth or adoption of a child, marriage, divorce, or loss of a spouse, so reviewing your beneficiaries annually is a good idea.
Check your retirement contribution rate
When was the last time you reviewed how much you are contributing to your 401(k), 403(b), 457, or other employer-sponsored retirement plan? If it wasn’t in the past year, open enrollment is a good time to do that.
Many experts recommend saving between 10-15 percent of your salary for retirement. Are you meeting that goal, or can you increase your contribution rate by even one percent this year? Take the time to think about it and make a change if you can.
