Providing for the financial well-being of your spouse and children in the event of your untimely death is something that most people plan for by purchasing life insurance.  It’s important to assess, however, what exactly your policy covers, and if it is enough to meet your needs.

Life insurance can be used for many purposes –wage replacement, your mortgage, children’s college educations, and estate planning. 

To briefly review, group insurance is typically provided by your employer.  It could be a multiple of your salary – whatever multiple your employer deems appropriate.  If you purchase additional insurance on your own in the form of whole life, you keep making premium payments and have coverage for life (usually defined as age 95).  The proceeds, upon your death, pass to your beneficiary and can be used for any purpose.  Term insurance is generally less expensive than whole life and provides coverage over a certain time period.   In the event of your death, a death benefit is paid, but once the contract period expires, the policy must be renewed (if still needed), usually with a new, higher premium.

If You Lose Your Job, You May Lose Valuable Insurance Benefits

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This past summer, one of my colleagues, Ellen Clawans, blogged about the various medical savings accounts that are available through many employers.  This week, I am going to discuss one type in particular in greater detail – Health Savings Accounts (HSAs). 

You may have been given the opportunity to establish and contribute to an HSA each year when you enroll for your medical, dental, and other employer benefit programs.  HSA plans are only available to individuals covered by high-deductible health insurance plans.  Although HSA plans are required to have a $1,200 individual deductible ($2,400 for families) and can increase from these required minimums, many HSA plans offer 100% coverage and often don’t require co-insurance payments.  So, if you fall within this category and have out-of-pocket medical expenses greater than your deductible, your costs will actually be less than if you had a more conventional 80/20 co-share plan.  Unlike Flexible Spending Accounts, HSAs are not a “use-it-or-lose-it” plan.  You don’t have to use the money by a certain deadline.  Read More→