Employee Benefits Obtained Through The Workplace
As an employee or an owner of a closely held business many benefits can be provided through the workplace under more favorable terms than can be purchased as an individual. The terms are more favorable when procured as an employee benefit because of:
- Economies of Scale;
- Reduced Commissions;
- Pooling of Underwriting Risks;
- Less Adverse Selection; and
- Tax Advantages.
Employee benefits can purchase insurance coverage at lower costs with reduced or guaranteed issue underwriting. Some qualified employee benefits can be received as non-taxable compensation. A cafeteria program allows for certain personal expenditures to be paid with before-tax dollars. Qualified Defined Benefit and Defined Contribution retirement plans are offered by most employers. Qualified Defined Contribution retirement plans are available with flexible contribution amounts, employer matches and vesting schedules designed to increase employee retention, such as a 401(k) retirement plan. Employee benefits can require continued employment as a pre-condition or may be portable after employee retires or is terminated.
A True North Financial Advisor can evaluate employee benefits available through the workplace to take advantage of the more favorable terms from these insurance and financial products. Employee benefits that can be obtained through the workplace include:
- Group term life insurance;
- Payroll deduction universal life insurance;
- Short-term and long-term disability insurance;
- Long term care insurance;
- Group auto insurance; and
- Qualified retirement plans.
Factors to consider are an employee’s insurability, product portability and expected tenure with company. A True North Financial Advisor can weigh the pros and cons of employee benefit programs to determine their use with your overall financial plan.
