While it may not be as dramatic as the “other” election we just experienced, open enrollment will provide you with some choices that can have a big impact on your life. Depending on how your organization administers its benefits program, you may be able to make changes to several important areas during open enrollment. Here are three of them:
• Life insurance. If your employer offers free or inexpensive life insurance, you should almost certainly accept it. But if your situation has changed since you first received life insurance as an employee benefit — that is, if you’ve gotten married or had children or bought a house — you may well need to supplement your employer’s policy with outside insurance. Also, make sure the beneficiary designations on your employer’s policy are still correct.
• Disability insurance. Almost everyone recognizes the need for life insurance. But that’s not necessarily the case with disability insurance — which is unfortunate, because a worker’s chance of becoming disabled is two to 3.5 times greater than dying, according to A.M. Best, the credit-rating company. If your employer offers disability coverage, you should probably take it — but, as is the case with life insurance, you may need to supplement your employer-sponsored plan with a policy of your own. To determine how much protection you need, add up your monthly living expenses and then compare the total to your current disability insurance coverage. You may well discover a “gap” that should be filled.
• 401(k)plan. If you can make changes to your 401(k) or other employer-sponsored plan, you’ll want to consider two key areas: your contribution amount and your investment mix. As a general rule, it’s a good idea to contribute as much as you can afford to your retirement plan because your money can grow on a tax-deferred basis. So, if you can afford it, or if you’re anticipating a salary increase for next year, consider bumping up your retirement plan contribution. You should have several weeks in which to study your benefit plan options, so take the time you need to make the right choices. You may also want to consult with a professional financial advisor — someone who can help you determine your life insurance and disability protection needs as well as review your retirement plan’s investment mix to ensure it’s still appropriate.Information provided by Matt Kneifl, financial advisor, Edward Jones, 1100 73rd, Windsor Heights, 279-2219.