Enrolling for Life Insurance
When you are first enrolling in the Manitoba Public School Employees Group Life Insurance Plan, you are faced with many decisions
- How much insurance do I need?
- What coverage do I need?
- What’s the cost?
- What if my needs change?
While you will ultimately have to decide these questions yourself, this document will help to identify some of the important issues surrounding each of these questions.
How Much Insurance Do I Need?
The answer is different for everyone. Are you married or single? Do you have large debts or a big mortgage? How many children do you have and what are their ages? Do you have health problems that make you a higher insurance risk? How you answer these questions will determine whether you need a lot of life insurance or very little.
What Coverage Do I Need?
In addition to Group Life Insurance, the plan also offers Family Life Insurance and Accidental Death and Dismemberment (AD&D) Insurance. The Family Life Insurance covers your spouse ($20,000) and each child ($10,000). If you have no other insurance for your family this may be an important addition. The AD&D coverage pays an additional benefit if you die accidentally or are involved in a serious accident where you may lose a limb, or sight or are paralyzed. You can also cover your family for this benefit. This is a valuable benefit if the prospect of accidental death or injury could create additional burdens for you or your family.
What’s the Cost?
Decisions on coverage are best made on need. But clearly you will want to know what the various options may cost you, over and above what your employer pays. The best way to see what various optional coverages will cost you is to log on to this website. In addition to describing the coverages available, you can access the Insurance Rate Calculator (your monthly payment does not include the 8% Manitoba RST). This will allow you to complete a number of “what if” calculations to determine the total monthly cost of a variety of options or option variations you may be considering.
What if My Needs Change?
How much insurance and which coverages you elect will depend on your current needs. However, needs rarely remain constant and you may want to change your insurance in the future. Here are the rules:
- You can reduce your coverage at any time, subject to certain minimum requirements
- Should you experience:
- the death of your spouse
- birth or adoption of your first child
you can increase or add coverages, provided you apply within 90 days before or after the event.
- You can increase or add coverage at any other time – but only if you provide medical evidence of insurability satisfactory to the insurer.
- There is an open enrolment period for AD&D only, every September.
Make sure you understand all the rules before you make your choices.
Should I Convert My Group Life Insurance?
Things You Should Know
When the group life insurance available through your employer either terminates or reduces, you will usually be able to convert this coverage into an individual policy of insurance. For those eligible, this conversion privilege is guaranteed regardless of your state of heath, provided you make application within 31 days of the termination of your group coverage. This is a very valuable option for some, particularly if you are uninsurable for reasons of ill health. But for others it may be too expensive or unnecessary. Here are some things to consider.
All conversion policies are special individual policies of insurance which are much more expensive than the group policy available through your employer. Premium rates vary and will depend on the type of policy you choose and such things as your age, sex and smoking status. Further, when you apply for an insurance policy under the Conversion Privilege, the insurer may limit the types of policies available to the more costly varieties because they assume you to be uninsurable.
How much life insurance do you really need or want? For many, the answer is little or none. For example, if you are retiring you may have concluded that your financial affairs are in order, you have no major obligations and therefore little need for life insurance. You may have other policies that you deem adequate under the circumstances. Some may conclude the opposite. A desire to leave an estate or outstanding debt may precipitate a need for life insurance after your group coverage terminates.
How should You Decide
First, remember you only have 31 days following the termination of your group insurance coverage, to make application for the guaranteed issue policies that are available under the Conversion Privilege. You can always make an application and then decide not to proceed if the coverage is too costly or if you later decide you have no need for life insurance. But if you are in good health, it may cost you less to buy a regular individual life insurance policy (as opposed to the limited offerings of the Conversion Privilege). Many of you however, may not know if you are in good enough health to be accepted for a regular policy. In these circumstances, the best way to proceed is to apply for both: a regular policy where you must provide evidence of good health and a conversion policy where you are guaranteed coverage regardless of your state of health. If you are accepted for the regular policy, this likely will be the less expensive way to proceed, but if you are declined, you will not have missed the application deadline for the conversion policy. You might even decide, after you have all the information, that neither approach is right for you. It is also a good idea, that when you search for a regular individual policy, you see what might be available from several different insurers.
How Should I Proceed?
If you would like to explore the issues and cost of converting your group life insurance into an individual policy, contact the Payroll Department of your school division. They will have information brochures and contact points with the insurer to assist you through the process. You may have your own insurance agent who can also give you quotes on alternative regular individual policies. Many of you will also want to talk to a financial advisor to seek their advice on what might be necessary to compliment your personal financial plan. But remember, the responsibility to make application for a conversion policy is yours, and you must do so within 31 days of the termination of your group insurance coverage.
Have Your Needs Changed?
There are several milestones in our lives where our life insurance needs may change (e.g. marriage, death of a spouse or birth of a child). Your plan can accommodate these changes. This is a good time to re-assess all the aspects of your insurance coverage. Do you have the right amount of insurance coverage, too much or too little? To understand the rules regarding increased coverage, please contact the Payroll Professional in your school division or review this website.
Is Your Beneficiary Current?
When was the last time you reviewed your beneficiary? Now might be the time to make certain insurance proceeds will be distributed the way you want them to be. If you are not sure, your Payroll Professional can tell you who you have currently nominated as your beneficiary.
How Much Insurance Do I Really Need?
The Manitoba Public School Employees Group Life Insurance Plan provides employees with a wide range of insurance coverages, as well as optional amounts of insurance for some of those coverages. Faced with a variety of choices many employees often ask “How much insurance do I really need?”
Well not surprisingly, the answer to that question is not a simple one, and it will also change over time. Each individual should determine what their own needs are, based on an assessment of financial commitments, family needs, lifestyle expectations, estate planning, and consideration of future changes to any of these items. Most people will need larger amounts of insurance when their responsibilities are greatest. A family to raise, mortgages and future schooling costs are all good reasons to protect yourself with appropriate life insurance coverage. On the other hand, as these commitments fade or disappear, insurance needs will also dissipate. Focus should then move to estate planning. How important is it that you leave an estate behind and how large do you want it to be? Each of us will likely have a different answer.
To assess how much insurance you need, it is best to have a serious look at what would happen should your untimely death leave a spouse and family, or any other person who may be dependent upon you for support, without the regular source of income you provide. What would be the impact on them and how long would it last. Answering this question will help you determine minimum insurance amounts.
When you have completed your assessment, the next step is to review the coverages that are available to you through the Manitoba Public School Employees plan. Your booklet describing coverage will help you through this process. For most employees, coverage from this plan will be sufficient to meet their needs. For others, who have substantial commitments and young families, supplementary coverage may be required at least temporarily.
You may decide that you want to augment your coverage by purchasing individual insurance. The important thing is to regularly assess your needs. Your insurance coverage should be maximized when your responsibilities are greatest. As they diminish, you may decide you need less insurance. Remember though, if you have health problems or are uninsurable, do not cancel coverage that you may ultimately need. It may not be available later, and it will be your family that suffers.