Avoid Costly Errors During Open Enrollment

As the open enrollment period kicks off, employees often zero in on major choices regarding health, dental, and vision insurance plans—decisions involving premiums, deductibles, and types of coverage are front and center.

Overlooking the finer details can lead to significant time and financial strains for you and your family, warns Carolyn McClanahan, a physician and certified financial planner who founded Life Planning Partners.

Handling Workplace Life Insurance Carefully

Workplace life insurance is often available during open enrollment and is generally advantageous. However, failing to designate beneficiaries properly is a common oversight with these policies.

Neglecting to specify beneficiaries or naming minors can result in complications. Ensuring your beneficiaries are clearly designated is an issue you can address later, though it’s best done sooner to avoid future hassles.

McClanahan advises against listing minors as beneficiaries. If a child is designated, the legal system will appoint a guardian to manage the funds—a process that can be expensive and cumbersome.

Choosing Beneficiaries Wisely

When enlisting for life insurance at work, the decision to opt-in to an available no-cost policy is straightforward. But it’s crucial to list the right beneficiaries to circumvent potential legal strife after your passing.

Your spouse might be a logical primary beneficiary, yet it's smart to consider secondary ones as well, avoiding minor children as their direct beneficiaries. Consider establishing a trust for your children and consulting with an estate advisor.

Understanding Additional Insurance Policies

While free life insurance through work should be utilized, auxiliary insurance options should be considered carefully, says McClanahan. For healthy individuals, independently obtained insurance might offer better rates.

Evaluate the costs and benefits of any additional workplace insurance versus market options like term life insurance, which provides coverage over a set period.

For those with health challenges, workplace policies could be more accessible and financially viable than private insurance solutions.