What do you think of my insurance coverage?

[Broken Arrow]

Since the topic of insurance has been brought up, and since my employer has recently switched to a new insurance company, I thought I'd post my new coverage and get some feedback on whether you guys think it's efficient or not.

Medical
It's a high deductible for both my kids and I. It's $39/week, but that's the lowest it can get.

Basic Life with Accidental Death & Dismemberment
10k benefit. Provided for by the employer. No choice there.

Short term disability & Long term disability insurance
I declined coverage. In fact, I don't understand why it's on here because there's something else that is similar but is cheaper later on.

Dental
11.05/week for the kids and I.

Vision
2.99/week for the kids and I.

Accidental Death & Dismemberment
I'm a little surprised that I took 200k! Oh wait, I see. The coverage is dirt cheap (in my book) at $1.38 per week, but in return, I would get a decent coverage in case of an accident and I get dismembered.

Let me also add that dismemberment only qualifies me for half of that coverage, which for a guy in his 30s with 3 kids, isn't much in the end. Loss of hearing or speech nets only a quarter of that policy. Only when I die do I qualify for the entire amount. Yay.

Voluntary term life insurance
I declined it. Hmm. I guess it's because I already had accidental death and dismemberment. That and it's also more expensive than AD&D.

Flexible Spending Account
Declined it. It's a FSA, and it doesn't seem that great to me, even though my employer promoted it like it's the best thing since sliced bread.

So, what do you guys think of it? Should I change it, and if so, how?

[vsjhoc]

BA - Like most of us, you're worth more dead than alive.

I'm a big fan of disability insurance. I've read (so it must be true) that the chances of a person becoming disabled are a lot higher than death. Wait a minute, that came out wrong. I meant, you are much more likely to suffer a disability that impacts your ability to work than to die during your younger and mid-work life years.

I'm not a fan of AD&D. The chances of your becoming dismembered according to their definition are so remote -- that's why the policy is so cheap. You can't just lose all function in your arm, you have to lose the entire arm itself.

I'd check the life insurance coverages against each other -- what are the exclusions that differ?

You're right, employers push the FSAs like crazy. What's in it for them, I wonder? Hmmm, maybe less taxes for them to pay out because you lower your taxable income. I tried it one year and found the paperwork was such a pain it wasn't worth it.

Glad to see you're well covered. When's the end of the open season?

[pearlieq]

I would reconsider declining disability and term life. The AD&D plan wouldn't cover if you were to develop cancer, heart disease, or some other kind of chronic health condition that either limited your ability to work or cut your life short. Nor would it cover a less serious but still work-limiting injury or illness like a major broken bone, shingles, etc.

I know you're young and healthy, but but there are lots of medical risks. If you've got access to disability and term life, I can't see a downside to taking them!

[Daylily]

I always passed on the dismemberment policy because it was too specific. Loss of sight in one eye, two eyes, loss of a foot, and arm?????

However, I wholly promote Flexible Spending plans especially now that they allow over the counter medications to be included. Last year I did $2100. If I'm in the 25% bracket, I'm saving $525 on my medical costs. Reconsider this one for next year. It really does lower your taxes.

[humandraydel]

Well BA, to be honest, I don't think you gave us enough info. Your medical is a high deductible - does it include a Health Savings Account? If so, does the company contribute anything to it? What exactly is the deductible? How often do you use medical services in a year?

The same basic questions apply for dental/vision too.

[zetta]

I agree with the above poster. Unless you work in a machine shop or similar career where getting limbs chopped off is a real possibility, I would ditch the Accidental Death & Dismemberment in favor of disability and term life insurance. (Even if you do work in a machine shop, I would check to see if workers comp would cover you anyway.)

A friend of mine was in a very bad car accident at age 30. Due to a brain injury, her short term memory is shot and she can't work even at a job like McDonalds. Because she had good disability insurance, she gets 66% of her salary at the time of the accident for the rest of her life. If she didn't have it, she would be forced to live on social security and welfare, which would pay a lot less.

Since you are divorced and have children, I assume you are paying child support. In my view, you have a moral obligation to provide for your children even in the event of your death. Regardless of how you feel about your ex, what happens to their situation if you die and they have that much less money coming in? I would recommend enough term insurance to at least cover your child support payments until the youngest turns 18. You might look to see if you can get a better deal from an insurance firm directly instead of through your employer.

[Gruntina]

I actually used my FSA and glad that I did. Only because I had to purchase new hearing aids devices to the tune of $6,000!!!!!! Expensive but only because I am at my maximum level where I need the most powerful hearing aids. Almost profound deaf hear!

Insurance will only cover a total of $1000 and that includes the molds, tubing’s, batteries and service charge so it was not much.

I put in full max of $5000 in my FSA account. It is taken out pretax from my paycheck each month so it makes my income looks like $5,000 less so that alone already saved me some taxes.

The best part is that I do not have to wait to pay for my hearing aids and can pay it all the first month of the year even though I am taking it out of my pay each month. It is assigned with a card like a credit card and takes away all the paperwork. It’s easy.

This year I continued but with a lesser amount to pay for my health insurance co-payments, contacts, contact solutions, pharmacy drugs, hearing aid batteries(They are extremely expensive about $24 per month for me!) and the like. Its already budget for me for the year and I have the card on hand anytime when I need it.

But it can be much skewed for the company. I had a co-worker who also applied for the full amount in her FSA account. Halfway through the year she got laid off. She used up her FSA but does not have to pay it back only because the company has to pay in full up front at the beginning of the year. So it can be a bad thing for the company if they have many layoffs.

[saver25]

If you find the FSA concept attractive then you may be inclined in the future to take a look at HSA's (Health Savings Accounts) as well. HSA's have some very nice benefits and one advantage that they hold over an FSA is that the funds in the account roll over from year to year and continue to grow tax free as long as the funds in the account are used to pay for qualified medical expenses.

[Broken Arrow]

Thank you everyone, for you inputs so far.

Hmm. I see, so AD&D is very specific eh? Yes, that would explain why it's so cheap.

Very well. I will drop it in favor of term life instead.

As for FSA, my credit union offers HSA, and that's the route I would take instead.

[poundwise]

AD&D is cheap because it is not worth anything. I'd drop it too.

I also wouldn't bother with short-term disability. Long-term disability, yes, but not short-term.

Term life is important, especially if you have children. I don't agree with the blanket 10X your annual income figure that is often given, but certainly, with the cost of term being so low, it is a nice piece-of-mind instrument to have.

Also, as you probably seen in other posts of mine, I love my HSA. Of course I know it isn't the best route for everyone but a HDHP and HSA fits us very well.

[saver25]

Yes, the HSA concept is very attractive and is even more so with some of the recent changes in tax law under the Pension Protection Act of 2006. For instance, one change is that you can now deduct the full contributed amount on the 1040 regardless of how long the HDHP has been in force as long as you keep the plan in force for 12 months (in the past you could only deduct the pro rata portion of maximum allowable amount that the coverage was in force. Example: Total maximum deduction was say $5,000 and your coverage was in force for 3 months - you could contribute-deduct 3/12 of $5,000 where now you can contribute-deduct the full $5,000 [or whatever the amount may be]). Here is a good summary of the changes: http://www.complianceheadquarters.co.../12_14_06.html

[saver25]

This is a nice change because you can now use the HSA contribution kind of like the traditional IRA in that you can decide the day before you file your tax return to set up the HSA and contribute into the savings account much like establishing an IRA and receive the tax benefits immediately on the 1040.

[defcon]

Not only is ad&d restrictive in the ways mentioned but on the death part of it there is usually a limitation of between 60-365 dies that you must die before. In these days of ever advancing medical technology being alive on some sort of life support or through extreme measures past 90 or 180 days is not unusual. The policy would not pay. Also quite often people who die after surgery will pass from a bacteria infection not from the surgery itself per se. Teh AD&D policy does not pay. Also you get into an auto accident and have a massive coronary that kills you the AD&D policy does not pay because you did not die as a direct cause of the accident.

Keep in mind that there are two large ad&d companies that will cover you for 1,000,000 for 100/yr. Given that these are for profit companies you had better believe that they pay out on far less than 1 in 10,000 policies every year. If you want to stake your families future on those odds and those alone you are risking far too much.

You should drop the dental and get an association card usually about 29/yr because most dental insurance plans cap payout at 1500 for orthodontics and 2000/yr. Also Dentists hate insurance companies even more than medical doctors and I know for a fact that a Dentist will give preferential scheduling to an association member over an insured. Plus you can get some great negotiated rates and if you do have an HSA account you can use monet from it to pay for the dental costs.

[saver25]

Yes, the definition of "Qualified Medical Expenses" for the purposes of an HSA is quite broad. It has been used to include LASIK surgery, medical bandages, etc. Here is a good Health Savings Account article - also there were some very nice tax law changes in the Pension Protection Act of 2006 that allow for even more favorable tax treatment of HSA's.

[Broken Arrow]

I made swapped out the AD&D with term life last week. I was told by my company rep that the changes could be done as early as next week.

The tip on the dental association member is something I never knew before, but will certainly look into now.

Thanks again for all the inputs. Feel free to keep them coming.

[PRICEPLUS]

BA, Long term disability is a must. It is usually very reasonable and heaven forbid something happens to you and you cannot work. If you pay for LTD it is tax free if you need it. I hope you stay healthy to 110 and beyond but please rethink having it!

[Broken Arrow]

Thanks, Price. I'll definitely look into it.

[PRICEPLUS]

BA, I had a friend who was thinking of stopping his LTD. I talked him out of it. Two weeks later he was involvedin a major accident which left him unable to work. LTD and Soc. Sec. are all he has now. If he had dropped the LTD he would have been in some really deep poop!

Best of luck and I hope you never have to use it!

[zetta]

PricePlus,
Where have you found reasonable rates on LTD? We were looking at purchasing additional coverage through our IEEE membership (which reportedly has really good rates) and I was shocked by the quotes I got -- much much higher than term life. There are also a lot of variable factors that influence the policy price. Since the insurer didn't have an online calculator, I would have to spend a lot of time going back and forth with an agent to figure out the best deal. Are there any parameters you can recommend as a starting place?

[tinapbeana]

BA, just throwing my cents in, though it may no longer be timely.

when at the phone company i carried both STD and LTD. STD could go into effect after only missing 3 days of work and would last up to 6 months. it required a doctor's recommendation, but the coverage was such that physical and mental illness in addition to injuries were included. LTD would go into effect after 6 months and would last for 2 years. i chose both because even 60/70% of my wages (my coverages for STD/LTD respectively) would easily shore up our budget at the time, and the benefits would help 'tide us over' until such a time that an application for social security/disability could be approved. i also took into account my company's FMLA policy when signing up for coverage, because they had different regulations if you were out on short-term versus simply FMLA.

my cost with the plan my employer offered was approximately $5 per month for both coverages.

luckily, i never had to use either. with that said, when i had to travel abroad for a month due to work, i felt much better being able to leave my mother with a complete pack of information and a timeline of how many days to call in sick, then when to file for STD, etc if i were hospitalized or injured. as a side note, this company also offered international riders for their coverages at no charge if you were overseas on company business.

at any rate, my suggestion is to see a) what the STD covers (just injury, or illness too) b) what % of your wages are covered and c) would you rather carry the STD or use your EF...