Avoid Costly Mistakes During Open Enrollment
As the open enrollment season approaches, it’s essential to pay attention to the finer details of your insurance coverage. While it’s easy to focus on the big decisions like premiums, deductibles, and coverage styles, overlooking smaller details can lead to costly consequences.
Don’t Overlook Workplace Life Insurance
One critical aspect to consider is workplace life insurance policies. These policies are often available during open enrollment and can be opted into with a simple checkbox. According to Carolyn McClanahan, a physician and certified financial planner, failing to properly designate beneficiaries is a significant mistake.
Designate Beneficiaries Wisely
In the event of your death, the payout from your policy will go to the designated beneficiary. If you don’t name someone, your loved ones may face a lengthy and expensive legal battle. McClanahan recommends listing a primary beneficiary, such as your spouse, and secondary beneficiaries in case something happens to both of you. Importantly, minors should not be listed as direct beneficiaries, as they cannot legally take possession of the money.
Parents, Take Note
For parents of small children, McClanahan advises naming your spouse as the primary beneficiary and setting up a trust for your children as the secondary beneficiary. This approach avoids the costly and complicated process of court-appointed guardianship.
Be Cautious of Additional Policies
While a no-premium life insurance policy from your employer may be a good deal, additional policies should be viewed with skepticism. These policies often come with limited underwriting, and healthy individuals may find cheaper options elsewhere. Before buying additional insurance, compare the premiums and payouts with term life insurance policies available outside of your workplace.
Term Life Insurance: A Cost-Effective Alternative
Term life insurance pays out if you die during a specified period, making it an attractive option for parents who want coverage until their children are grown and independent. By shopping around, you may find that you can insure yourself for cheaper elsewhere, or discover that a workplace policy is your best bet due to health concerns.
Take Control of Your Insurance Coverage
This open enrollment season, don’t make the mistake of overlooking the finer details of your insurance coverage. Take the time to review your options, designate beneficiaries wisely, and explore cost-effective alternatives. Your loved ones will thank you.
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