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3 Things About Employer-Sponsored Life Insurance

What's up Internet? My name is Ian Bloom. Welcome to Nerd Finance! I'm your resident financial life planner and huge nerd! In today's episode, I am going to be talking with you about life insurance. Which is not thrilling so if you are trying to understand the three core types of life insurance please go-ahead and watch another video that I put on this channel that compares the type of life insurance to different starter Pokemon. I think that's a pretty interesting take and foundational knowledge of life insurance would be helpful if you're going to watch this video.

Let's start talking about employer-sponsored life insurance. Most employers include some amount of life insurance benefit regardless of whether you pay for it. So, you may have one or two times your salary in life insurance benefits. Hypothetically, let's say your salary is $50,000, well you may have a $50,000 or $100,000 life insurance benefit that the employer pays for. It's important to know what this is, but it's also important to recognize that 50 or $100,000 isn't going to go very far if the household is used to your income. If you're married, and especially if you're married with children, this maybe time to consider some more.

For instance, if my wife were to pass away I would want way more than $50,000 to continue my Magic: The Gathering habits. All jokes aside, when somebody passes away, the last thing you want to be worried about is finances. Just recognize that employer-sponsored life insurance is usually not all that you need.

The second thing to know about employer-sponsored life insurance is that it doesn't come with you. It's more like an obelisk than it is portable. So, that means that when you leave your employer, if you have additional life insurance especially beyond the base that they give you, it is not necessarily going to come with you. You may want to consider if you're going to purchase additional life insurance to purchase it outside your employer, because having it at your employer may seem inexpensive at first, but if you're in pretty decent health and you apply outside you can usually get some policies that are cheaper - with more flexible benefits - and that have a guaranteed period of time that they will be active for. Whereas your employer sponsored policies are good simply for as long as you work at that employer.

Finally, and wrapping this all up, almost all though not all of employer-sponsored life insurance benefits are term insurance benefits. This means that they are temporary in nature. So, if you're out there looking for a permanent life insurance policy (though I don't usually implement those with my clients) permanent life insurance policies can usually be found out in the private market, but not within your employer-sponsored plans.

If you have questions about how much life insurance you should have, or if all this stuff just seems like a lot to you, don't hesitate to reach out. I'd be happy to have a conversation around your life insurance benefits. In any case, I hope that this video wasn't too terribly boring for you and I hope you have a wonderful day!

What Are Ancillary Benefits?

Transcript:

What's up Internet? My name's Ian Bloom. Welcome to Nerd Finance! I'm your resident financial life planner and huge nerd!

In today's episode, we are going to be doing our final open enrollment video of this month. The reason I think that's important is that if you are watching this video, but you haven't watched the previous three just know that you'll get a lot more out of anything if you watch the prequels. This video is going to be addressing a couple of ancillary benefits, or extra benefits, that I see available for purchase at employers.

The first benefit that I'm going to address is critical care, or medical benefit, insurance that is not health insurance. These ancillary policies are usually an indemnity policy, which means that they pay out if the policy is ever triggered, regardless whether you need the money or not. They usually come associated with a duck.

So, the reason I'm not a huge fan of these policies is that I kinda view them as "dragon-burning-down-your-house" insurance. They are super, super-specific and they are really good for that specific group of people. If you live in Helgen and you have already had a dragon burn down your house once I could totally see why you would want "dragon-burning-down-your-house" insurance, right? But, if you are not one fo those people, who lives in the mythical town of Helgen, then I'm not really sure why you would want this policy because we really don't have dragons burning down our house in America...yet. Given that, I'm not really a huge fan of critical care policies. They don't trigger as often as you would want, so for a lot of people they are just extra dollars tacked onto their paycheck expenses.

The second benefit that I'm going to address on this video is legal insurance. Legal insurance I'm a little bit bigger of a fan of. Usually, this is a benefit where you can pay $10 or $20 a month for access to a network of attorneys that will do certain actions for you (included in that fee.) They will do some other actions at a discounted rate.

What I mean by this is, if you get a speeding ticket or you need to get your wills done, those sorts of things are usually covered by this legal insurance. On the flip side, if you get sued in a very complicated lawsuit involving a "dragon-burning-down-your-house", well suing a dragon is usually not covered.

The reason that I'm a fan of these benefits is typically you can utilize them to your advantage with a little bit of careful planning. Do you need to get your estate planning done or updated? Well, this is a really good purchase for that year because that package of representation usually costs $1,000 or $2,000. So why not have this sort of insurance?

Finally, the last benefit that I'm going to address as an ancillary benefit (though you usually cannot make any changes to it) is the parental leave policy. The reason I thought taking a moment to talk about this would be worthwhile is that the landscape of parental leave is changing drastically. A lot of the modern tech companies are super interested in looking good an providing great leave to parents. And thankfully, that is changing in our communities.

Evaluating this before or after you join the company is important because if you're going to go through having a child any time soon you want to know what the financial landscape of that looks like. How much time can you spend with the child? So keep in mind that being aware of this policy, even though you may not be able to make any changes to it during open enrollment, is super important.

I hope this video was helpful to you. It was just discussing a couple of the benefits that I see as worth discussing, since they come up pretty often. If you have any questions, feel free to reach out. Have a wonderful day!

Disability Insurance and Bear Wrestling

Transcript:

What's up Internet? My name is Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd!

In today's episode, we are going to be covering disability insurance. To start off, let me paint you a picture here. You are a champion bear wrestler. In fact, you're probably the only bear wrestler...but, you are a part of the bear Wrestling Federation and you get injured in a tragic bear wrestling accident. Who's surprised? I'm not sure, but the two types of disability insurance start to play in here. Where do they cover you?

Short term disability covers you while you're basically getting better from your injuries. So, it starts seven days in and usually lasts about 90 days. It's gonna cover you for one hundred percent of that huge bear wrestling salary that you get, which is awesome! Now, after that 90-day period, long term disability is going to kick in.

So you're healing from your wounds, but maybe you shouldn't step back into the ring with another bear just yet. Who would ask you to do that when you don't have full range of motion in your leg? Well, long term disability is going to cover you for about 60% of your salary and it's going to cover you until you're healed. Now that being said, it will cap out at your retirement age, but for the most part you shouldn't expect to not get back in the ring and wrestle bears. Because if you could, why wouldn't you?

Those are the basics of long and short term disability, but these come into play in a couple of different ways. First off, you should know that if your employer is paying the tax on that disability benefit. If they are, you will have to pay tax on the income when you receive it from the benefit. So, should something happen to you and you be receiving some money from your disability insurance, that is fully taxable income. On the offhand that you either own your own disability insurance or have the ability at your employer to pay tax on your disability benefit, you will then receive the benefits tax-free. So, if this is an option at your employer I often caution clients to please make sure to do it. Even though it represents a slightly greater expense today, it may represent a much bigger benefit should something happen to you. And let's be real if you got injured wrestling bears, you're going to want all the money that you can get, because you have to support that bear wrestler lifestyle.

In any case, I hope this video was at least somewhat silly and helpful for you. Thanks for watching! Have a wonderful day!

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