Have you ever felt like you were alone on an island when making decisions on your benefits?
I have heard from many in the higher ed community that wish they had more guidance when making benefits elections. Do you remember the packet of information you received when you got hired? Did you feel confident in the elections you were making on those benefits? Many don’t. This article can help you remove the guesswork from your benefits elections.
Making Benefit Elections
The following are some of the elections you will need to make and a few questions that need to be answered…
403(b) Retirement Plan
One of the biggest perks of working in higher ed are the generous employer retirement plan contributions. Many institutions will contribute 7-12% into their employee’s 403(b). This can help you to amass significant wealth in a short period of time. With that, comes some important decisions on your part.
- What percentage of my salary should I be deferring?
- Should I make traditional or Roth contributions?
- What investments should I select?
- How should I name my beneficiaries?
Most institutions have both a basic life insurance benefit as well as supplemental (or voluntary) life insurance. The basic life insurance is typically 100% paid for by the employer. The death benefit on the policy is typically between 1 and 2 times your annual pay. The supplemental life insurance is paid for by the employee and can be in various amounts of death benefit. This insurance is nice because you normally don’t need to go through underwriting. It’s cheap when you are young but does get more expensive as you age.
- What do I want my life insurance to accomplish?
- Do I have the right amount of insurance to reach my goals?
- Do I have the right type of life insurance?
- Are my current policies cost-effective?
Health insurance decisions should be analyzed closely. These decisions become more impactful when you start adding in a spouse and children. Many employers are now using HSA (health savings account) high-deductible health plans. This puts more of an onus on the employee than it has in the past. Make sure that you understand what you are choosing and how you are utilizing the savings component of the plan.
- Am I choosing the right deductible for my family?
- Am I saving money to take advantage of the tax deductibility of the savings component of my HSA?
- Does my spouse have an employer sponsored health plan? How should we navigate the two?
- Am I investing my savings component?
Many universities are including disability insurance into their benefits package. Most include long-term disability or short-term disability. Some are generous enough to offer both. If something happens to you and you become unable to work for a period of time, this benefit can help keep you afloat until you’re well. If your employer doesn’t offer it, you may want to look into private policies.
- What is the elimination period on my policies? The elimination period is the time that must pass before the policy pays out benefits. This is normally in 30 day increments.
- What is the definition of disability on my policy? This can affect how likely you are to receive benefits.
- How long will my benefits pay out if I become disabled?
- Does my university have a 457 plan as well?
- Do I have dental and vision insurance?
- Does my school offer a tuition benefit? How does this impact my college funding goals?
- Does my university offer any benefit towards the use of legal consultation?
Conclusion: How to Remove the Guesswork From Your Benefits Elections
Making big financial decisions isn’t easy, especially when you’re overwhelmed with many of them all at once. I totally understand. Don’t make the mistake of “just picking something” because you get fed up. Work with a professional to make sound decisions. This way, you can remove the guesswork and be on your way to your best financial life.