Time to review your employer benefits

Ask NJMoneyHelp

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Q. It’s time to sign up for benefits at my job. I’m not sure about two benefits. One is disability insurance for $25 per month, and it covers 50 percent of my pay. The other is accidental death and dismemberment insurance for $15 per month for $100,000 of coverage. Are they worth it?
— Insured

A. These are two very different kinds of insurances.

The answer to whether they’re worth it would depend on whether you become eligible for a claim or you value the protection more than the premium.

Let’s look at each separately.

Disability insurance protects a portion of your income in the event of a disability, said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.

“Paying $25 per month or $300 annually to protect 50 percent of your income certainly sounds `worth it,’” Gaelick said.

Still, he suggests you dig a bit deeper.

“You should read the benefit summary to know the policy’s definition of disability and whether the premium is paid for only by you or is there a portion paid for by your company,” he said. “Only the percentage of the total premium paid for by you would qualify for income tax-free benefits.”

As for the accidental death and dismemberment policy, benefits are only paid for an accident, Gaelick said. There would be no coverage for an illness.

“So if you have a hazardous occupation, participate in dangerous activities, drive a lot or just think you’d feel better having the protection for $180 for the year, then yes, it’s worth it,” he said. “No one has a crystal ball so the best you can do is weigh the cost against the peace of mind having the benefits.”

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NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.