Employee Insurance Programs
Today it is impossible to imagine a well-developed organization without a decent care or compensation package. Most people are trying to find a company with a compensation package being as full as possible. Sometimes, even the salary is on the second place, while the compensation package holds a leading position. The insurance program can be defined as coverage that provides some benefits or cash payments in case of illness, death or trauma. The overall risk of health care is estimated at first, along with health expenses in the specific target group. Therefore, the company can develop a strict finance structure of payments such as the monthly premium tax among others. The aim of this is made to ensure the money availability for health care needs (Claxton, 2002). All these benefits are controlled by three basic central structures:
- Private business
- Non-profit organizations
There are different types of insurance programs such as term life insurance, universal life insurance, whole life insurance, accidental death insurance as well as short and long term disability insurance. The first type in the list is term life insurance. Talking about this type of insurance, it provides financial coverage for a limited period of time and at the fixed payments rate. Term life insurance is opposite to permanent life insurance with fixed lifetime payments for insured individuals. Term life insurance is actually death benefit, and it is primarily used to cover responsibilities for insured individuals. In comparison to permanent life insurance, term life insurance is less expensive (still depending on the term length). It is also simple to understand and to conduct (Vohwinkle, n.d.). One can choose different terms (e.g. 5, 10 or 20 years) and different coverage sums (from $100000 to few million dollars). The next advantage is that one can actually invest their money by themselves instead of having the insurance conducted by the insurance company. It is also important to outline that term life insurance is more suitable for short terms rather than long ones.
The next type of insurance is universal life insurance, which is the type of permanent life insurance. Moreover, it has an added financial component so that instead of choosing a specific term and putting a premium towards the policy, some part of the premium will be transferred to a cash account, which earns and accumulates interest. Universal life insurance is prevailing primarily in the United States. Such type of insurance provides some additional flexibility so that a person can actually stop premium payments for some time as long as cash can go over the cost of insurance (Vohwinkle, n.d.). One more benefit is that one can decrease or increase death benefit over some time, along with borrowing in the loan form against the policy. What is more, universal life insurance offers protection for a person’s family and strategies of leaving a legacy.
The next insurance type is whole life insurance. It provides a face amount (minimum death benefit) without taking into account the life length. However, premium payments are a must. It is actually an upside because it secures a person from temptation of payments skip, which may result in further problems with funding. Another advantage is that fixed premiums actually allow one to carefully project cash outlays, taking everything into consideration (Vohwinkle, n.d.).
Accidental death and dismemberment is another type of insurance. According to this insurance type, cash is paid to the beneficiary if an accident was the actual cause of death, losing of eyesight, speech, hearing or limb (Delly, 2008). The important thing is that if one loses only one limb or eyesight in only one eye, they will get only half of the benefit or so-called “partial dismemberment”. Moreover, a person has to prove the consequences of the accident if they want to get the benefit, namely show the document or extract. If the person’s death is caused by mental or physical illness, suicide, intentional injuring, war (declared/undeclared, with all weapons), taking drugs and driving a car while being intoxicated, financial compensation will not be paid. It is also important to outline that sometimes accidental death and dismemberment insurance are included into the health plans, making it an extra option (Delly, 2008).
Long term disability insurance (or simply LTD) is the type of insurance when a person is protected from income loss in case of an event which led to their inability to work because of an injury, accident, disease among others for a long period of time. LTD provides from 50 to 70 % of pre-accident salary, which is paid from 2 to 10 years or until the age of 65 (it is the most common practice). It is vital to outline that this type of insurance does not secure a worker from money loss due to work-related injuries as they are covered with workers’ compensation package (FindLaw, n.d.). LTD is a part of employee package and is offered by a company. In the case when it is not offered by an employer, it can be bought by the worker; though purchasing it by an individual is quite costly. However, the big advantage of individual LTD is that its payments are non-taxable. Another benefit of individual plan is that LTD provided by the employer is often inadequate to meet disabled workers’ needs. Additionally, LTD usually provides more options such as supplemental insurance for getting more monthly payments.
Finally, the last type of insurance is short term disability insurance. In fact, this is almost the same as LTD, but still it has some minor differences. First of all, it has different time period, which is usually from three to six months (from 10 to 25 weeks). Short term disability insurance typically offers 64% of pre-accident salary (FindLaw, n.d.). However, this number may vary because such information as employee’s position and the amount of time worked in the company is taken into consideration. After the expiration of short time insurance package the majority of employers suggest moving to LTD package. One more benefit of short term insurance is its affordability, mainly due to the time length.
In summary, there are diverse types of insurance, and one should analyze their upsides as well as drawbacks prior to choosing the most desired and suitable one.