If you're still on the job, chances are your company has offered you what is known as a "voluntary benefit," some insurance or other financial services product that you pay for by payroll deduction.
Voluntary benefits are a huge business. Companies like them because they are often popular with employees, but they don't cost the employer anything. Insurance and financial services companies love them because once you sign up, they know that they'll be paid because your employer will deduct payment from your paycheck. You might like them because they are generally cheaper than what you'd pay on the open market.
Fall is sign-up time. Brad Ridnour, senior vice president and national sales director for Transamerica Employee Benefits, thinks his company and its competitors have lots to offer people who are nearing retirement or doing retirement planning, but he urges people to understand what they are buying before they buy it.
There are some voluntary benefits that are widely available. Transamerica sells them, but so do lots of other financial services companies. If your employer offers these benefits, Ridnour says they are especially suitable for older workers.
Short-term disability. If you're injured or too sick to work and you exhaust whatever sick leave your company offers, this insurance will pay 60 percent of your salary up to a preset limit -- from two months to as long as two years. If you buy this kind of insurance with pretax dollars, you'll have to pay income taxes on the benefit. If you buy it with money on which you've already paid taxes, the benefit will be paid to you tax-free -- a big advantage when you are too sick to work.
Hospital indemnity and critical care insurance. These policies pay when you are sick and hospitalized -- usually. The best-known of these policies are offered by Aflac -- you know, the talking duck. Read the offerings carefully and ask tough questions. You may want to reject a plan that only pays for the days that you are actually in the hospital. With the proliferation of out-patient procedures and specialized care facilities, actual time in hospitals is increasingly short. That may make it unlikely that you'll be able to collect much, even if you are very ill. Also, read the list of ailments that qualify you to collect on the critical care policy. If it is very narrow, it may not be worth your money. Even cancer and heart disease are rare ailments among people in their 50s.
Life insurance with a long-term care rider. Buying a small universal or whole life insurance policy is a good idea, even if no one else depends on you for support. When you die, the policy will provide quick cash so loved ones can bury you. A long-term care rider will give you a percentage of the face value of the policy while you're still alive if you need help with two of the six activities of daily living. Transamerica offers a maximum permanent life policy of $40,000 with a long-term care rider worth 6 percent. It's not a whole lot of cash, but it could cover essentials when you need help the most.