A recession may make it impossible to allocate additional company dollars to benefits, but an employer can give employees time and convenience instead, through various strategies.

- Set up a direct deposit program for employee paychecks. Depending on the financial institution used, the direct deposit program may be a bridge to discounted financial services, such as free checking, waived ATM fees, and the like.

- If business needs permit, give employees more control in balancing their work and personal demands through some form of flexible scheduling. This could include flexible hours, summer hours, compressed workweeks and telecommuting. Some employers find that employees on flexible schedules are better performers on the job, because they can more readily attend to personal issues and thus be more focused when at work.

- Investigate adding voluntary benefits. These no-cost-to-the-employer benefits can add a dimension to your benefits programs that can be difficult to achieve through a traditional benefits package. Employees are able to buy benefits at prices more affordable than what is available in the individual market; they have the convenience of payroll deduction; they also have the convenience of benefits being marketed to them, rather than having to seek them out on their own.

- Investigate discount programs. In these programs vendors offer their products and services at a discount to a company’s employees. The vendor’s motivation is access to the employer’s workforce, with the hope that the discount will steer buyers in their direction rather than to their competitors.

- Although many workplaces have gone more casual, others maintain specified dress codes. Employees appreciate when certain days are designated as casual-blue jeans okay-and the atmosphere that can accompany a casual dress day can give the workplace a lift.

Examine existing benefits programs to see what works and what doesn’t, and ask whether dollars should be reallocated to better meet employee needs. For example, are there medical plan options in which few employees participate? A streamlining of the available options can reduce administrative and program costs alike.

Some benefits have multiple uses but may have been promoted narrowly, so that employees may not understand their true value. Employee assistance programs (EAPs), for example, may be perceived as a source of help for substance abuse problems, but EAPs also typically offer a wide range of services many employees could avail themselves of, such as childcare and eldercare referral and assistance with financial issues and debt counseling.

Employees often underestimate the value of their benefits and compensation package, but there’s a good reason for this-many companies neglect to inform employees of what the company spends to make the benefits offerings available. Employees see their own contributions for medical, dental, etc., on their paycheck stubs, but other than during open enrollment-if even then-many companies simply never let employees know what the company pays for employee benefits. Consider distributing “total compensation statements,” which show employees the actual amount the employer is compensating them, through salary, mandated benefits (e.g., Social Security, Medicare), and the company’s employee benefits program.

As the economy improves and benefits budgets become less constricted, these measures can remain in place, continuing to enhance the value of your benefits package in employees’ eyes.

A January 2007 survey conducted by International Communications Research on behalf of the National Association of Insurance Commissioners (NAIC) revealed that 56 percent of U.S. adults say they would be unable to pay their bills if they became disabled and could not work for a year or longer.

Despite this sentiment, only 44 percent of respondents indicated they had long-term disability coverage. Of these, 71 percent said their employer provided long-term disability insurance, which would leave them vulnerable to the financial effects of a long-term illness if they become unemployed.

Not only are Americans unprepared to deal with the financial devastation of a long-term disability, they are also unaware of the chances of becoming disabled. Only 13 percent of those polled responded that it was somewhat or very likely they would become disabled and unable to work. However, the Social Security Administration reports that 20 percent of the nation’s population will become disabled for a year or more before reaching age 65.

The NAIC noted that the majority of people fail to consider the impact of a disability on their ability to remain financially independent. They believe that understanding the role of disability insurance is essential to one’s total financial security.

To help consumers who are considering purchasing disability insurance, the NAIC offers the following guidelines:

• Determine how much money you’ll need to cover your critical expenses such as mortgage payments/rent, food, utilities and transportation should you become disabled. Unless your investments and savings can maintain your current lifestyle for several years, you should consider purchasing long-term disability insurance.

• Understand that having a pre-existing health condition, such as a back problem or heart ailment, could affect your ability to qualify for long-term disability insurance.

• Obtain disability insurance at a young age and find a “non-cancelable” policy. With these policies, your coverage can never be cancelled nor can premiums increase once your policy has been issued, so long as you pay your premiums on time.  A “guaranteed renewable” policy cannot be cancelled, but premiums could increase as stated in the policy.

• Know how long a waiting period your policy stipulates before benefits are paid. The longer the waiting period you select, the lower the premium.

• Keep in mind that many insurance companies will require supporting documentation from physicians to verify whether, and to what extent, you are disabled, before paying a claim.

Using life insurance to replace the primary breadwinner’s income during their working years is a practical necessity, especially when you have children. Unfortunately, there are still many people who fail to protect their loved ones in this way. If you don’t carry enough insurance to replace your income should you die, you could be placing a tremendous burden on your family. This is even more important for single parent households.

A simple rule of thumb to determine if you have enough insurance is to divide your annual salary by .05. For example, if you earn $50,000 per year you should own approximately $1,000,000 in life insurance.

Once you retire you may no longer need this insurance. If you’ve accumulated enough assets to provide comfortably for your lifetime, then life insurance is no longer needed for income replacement purposes. Don’t cancel that policy yet, however, because you may need it for other reasons.

For 2007, an individual can pass $2 million ($4 million for couples) to their heirs free of federal estate tax. If you’ve successfully accumulated more than this amount of assets then you may need life insurance to pay for future estate taxes. Unfortunately, few married couples have the proper plans in place and end up forfeiting one exemption that results in reducing that amount to $2 million.

Life insurance is an excellent way to pay estate taxes without being forced to liquidate assets. This is particularly true when a large percentage of an estate is tied up in illiquid assets, such as a business interest or real estate. In those cases, illiquid assets would have to be sold swiftly at probably less than their true market value to pay the tax bill.

With the proper use of this insurance you can avoid these situations entirely, and plan in such a way that you pay your taxes for pennies on the dollar. If your estate is smaller, you may not need life insurance to help cover future estate taxes.

The third use of life insurance is for special planning strategies. There are unique strategies you can employ to significantly increase the financial support you can provide your favorite charitable causes or to offer a financial safety-net for your loved ones for generations.

Even those of modest means can provide literally millions of dollars to worthy causes, while passing on a legacy of giving to future generations. Very few are aware of these strategies.

If you don’t fit one of these situations you may no longer need life insurance. Don’t take this decision lightly, though, especially if your health has diminished. Depending on your age and health, you may realize more by selling your policy instead of canceling it. Always consult a qualified, unbiased professional prior to canceling your policies to explore your options.

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http://www.usatoday.com/money/perfi/columnist/block/story/2011-09-05/Some-403b-retirement-plan-advice-for-teachers/50266580/1