What are Employee Benefits?
Some companies (particularly bigger companies) will provide additional benefits to their staff as part of their compensation package.
Typically, these benefits could include some life insurance (death in service), health insurance, income protection and pension contributions.
If you work for one of the big US Tech companies they might give you free food, massages, life coaching, yoga and table tennis along with an expectation that you’ll work 70 hours a week!!!
Getting benefits at work is comforting (and we think more companies should offer them) but…… you need to be aware of how these benefits fit into your overall financial planning & be aware of the limitations associated with the benefits.
It’s extremely rare that your work benefits alone will fully protect you and your family – but they can play a part.
The first thing you need to do is to find out exactly what benefits you do or don’t have.
Do you have benefits at all and if you do, what’s included?
When it comes to pension contributions, death in service & income protection, keep an eye out for the ‘qualifying income’.
Some jobs have lots of overtime, commission, bonuses or shift allowances, but are they taken into account when your benefits are being calculated?
Is your ‘qualifying income’ based on your basic salary alone?
Then ask yourself, does the Death in Service provided through work provide enough Life Cover to look after your family financially in the event of your death?
Death In Service typically covers you for between two and four times your annual salary. On the rare occasion you may see more.
It might sound like a lot, but if you are relying on that alone, you will be underinsured.
Even if you are well covered through your benefits at work (and you plan to stay in the job until you retire), you’ll need to consider cover for your spouse / partner and your children.
In most cases, staff benefits won’t cover your spouse if anything happens to them which would leave the family exposed.
Pros & Cons
If we’re looking at pros & cons of work benefits, the main ‘pro’ is that the benefits come as part of your package.
You’ll get cover without having to pay for it. No complaints there.
The main ‘con’ is that the benefits are obviously tied to working in the firm.
Here’s the problem with that: What happens if your health changes in future years and you want to change jobs or retire early?
Will you be able to move jobs again or will you be locked into working there to keep your benefits?
If you had health problems, would you even be able to get cover elsewhere if you lost your benefits by moving job?
And what happens to your benefits at retirement?
Or if you were made redundant?
In most cases, they benefits will cease.
Work benefits can play a part if things go wrong.
They are a nice additional buffer to have (and as I said, more companies should offer them).
But it’s prudent to have independent cover that is tied to you, not your job or your employer.
Whether you have great Employer Benefits or none at all, I’d be happy to work out what you really need and build a financial plan that works for you and your family.
If you would like to have a chat, please contact me on the details below or Private Message me on Facebook. I look forward to helping in any way possible going forward.
Kind Regards,
Danny Coad QFA
Irish Insurance
Tel: 0862422441
Tel: 00353862422441 (If contacting from abroad)
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Sure Financial Ltd t/a Irish Insurance is regulated by the Central Bank of Ireland.
