This is the time of year to plan for what next year may look like and make your best guess as to what benefits you may need in terms of health, life, and disability insurance, pre-tax reimbursement plans and your retirement plan. This checklist will serve as a reminder for the things you should keep in mind while making these decisions.


  • Look over your last few years’ worth of health expenditures to determine how much of your policy you utilized and what benefits you found most valuable (i.e., a low co-pay, low deductible, free annual check-ups, free preventative services). Although a new health condition may arise at any time, your regular expenditures and health routines are fairly easy to track. 
  • Consider a high deductible health plan. If you didn’t utilize many of the low-cost options and are possibly paying a higher regular premium for these benefits, consider a high deductible health plan, if offered.
  • If you have adequate (three to six months’ worth of living expenses) you may choose higher deductibles on health, auto and homeowner’s insurance plans. This will reduce your premiums and increase your cash flow.

Life Insurance

It is generally not a good idea to have the majority of your life insurance coverage through your employer, as your employment and insurability may change and the underlying policy may not be portable (i.e., you may not be able to convert it to personal coverage). In addition, most employment related life insurance is term coverage (versus permanent or whole life) which may prove inadequate, and the premiums may increase substantially over time. For these reasons, it is preferable to have the majority of your coverage as personal coverage. Nevertheless, if life insurance is offered to you as an employee benefit (usually a multiple of salary), here are some basic guidelines for how much to obtain.

  • Add up the total amount of debt you have (mortgage, student loan(s), auto(s), credit card, boat etc.).
  • Subtract any loans that may be forgiven upon death (i.e. some student loans for those in the military have this provision).
  • Estimate income needs of survivors. If you have a significant other and/or children, estimate how much they need to live on if they no longer had your income. Then multiply this annual figure by the number of years they would be dependent on that income. (I.e. $30,000 x 8 years = $240,000).
  • Subtract any Social Security, pension or other income benefits your dependents may receive that may offset those living expenses. (You may check your benefits through Social Security at
  • Add any goal items that would require a financial sum, such as a college education.
  • Subtract any personal life insurance you already possess.
  • This process should yield a rough figure for your employment-related life insurance needs.
  • Update your beneficiary designations. This is an often overlooked document and is crucial to ensuring the proceeds end up in the right hands. If you have minor children, you may wish to ask your attorney for assistance in establishing a trust for their benefit and how to list this trust as the beneficiary of your life insurance proceeds.

Disability Insurance

Most employers offer some form of short- and/or long-term disability income protection. The employer may cover the full cost of this coverage (in which case the benefits are taxable as income) or you may be required to pay for a portion of this coverage (in which case a portion of the benefit is not taxable).

  • Obtain as much disability coverage as possible. The odds of you becoming disabled are much greater than the odds of you dying prematurely while working. And, if you become disabled, you are still a consumer; you still need to eat, have shelter and clothing and provide for any dependents. Disability coverage is not cheap, but it is necessary to protect against what could be a substantial financial risk.
  • Elect whatever elimination period you can afford. The elimination period is the length of time that you do not receive benefits when you are disabled; the longer the period, the smaller your premium. Like the health insurance, if you have adequate cash reserves, you may elect a longer elimination period/deductible than if you do not.

Pre-tax Reimbursement Plans

These plans such as cafeteria, Section 125, and health care savings accounts can be used to pay for out-of-pocket expenses for health care, child care and some other items. Some plans must be used completely in the calendar year or you lose the amount and others can be rolled into succeeding years’ benefit claims. Refer to your benefits package for the details on your plan.

  • Be organized, These plans are typically best suited for people who are organized and can easily keep track of their expenditures, receipts, contact information and dates. If you are organizationally challenged, contact a local chapter of an organizer’s association for tips and techniques.
  • Estimate your expenses. Try to ascertain what amount you are likely to spend, based on past history and looking into potential expenses for the next year, for health and child care, if this is what your plan offers.

Retirement Plans

  • Enroll in your company’s retirement plan as soon as you are eligible, but only after you have set aside a cash reserve.
  • Set aside at least 10-15 percent of your income in this plan. Some plans offer an employer matching contribution that will provide a nice boost to your account.
  • Meet with an account representative about investment options. Everyone has a different recommended asset allocation depending on their level of risk tolerance, age, and time horizon. Discuss your options with a representative and/or your personal financial planner.
  • List beneficiaries, update as needed. Just like the life insurance, your retirement plan beneficiary receives the proceeds from your account upon your death. However, the proceeds do not pass through your will or probate. There are rules that govern how these proceeds are paid out such as those that regulate Required Minimum Distributions and Mandatory Cash out.

Open enrollment can be stressful but keeping these things in mind will help you navigate the many decisions you face.

FPA member Amy Jo Lauber, CFP®, is President of Lauber Financial Planning in West Seneca, NY.

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