Money Talks Monday (3/19/18)

As college graduation approaches many of us will be entering the workforce full-time for the first time in our lives. With that responsibility, we are faced with choices regarding the enrollment in insurance benefits. Though laws vary from state to state, typically, most employers with four or more full-time associates must offer some type of benefits, particularly health insurance, once an employee has completed 60 days full-time with the company. Considering 92% of recent college graduates begin their careers with major companies versus small businesses, most will have the opportunity to enroll in a number of benefit options.

When the time comes for you to enroll, here are some important tips to help you make the right the decisions considering your salary and the opportunity costs of not enrolling. First and foremost, when interviewing for a job, make sure to ask questions about benefit offerings. When interviewing for any job you should come prepared to ask the interviewer(s) at least three questions not related to salary. This is a good time to ask about benefits offered and how the interviewer rates the benefits he or she receives from working with the company. In most cases, the interviewer is well-versed in offerings and will speak candidly with you about his or her experiences with the company's benefits. When time comes for enrollment, of course, most know the importance and value of enrolling in health coverage. However, it is always wise to present the health care plan, dental plan, and vision plan to your respective physicians' business office for feedback regarding the coverage and how it will relate to your coverage with your preferred provider. Most importantly, and what is most often overlooked by recent graduates entering the professional workforce for the first time, is the opt in for short and/or long term disability coverage. When not offered by the primary employer, these are often supplemental policies offered by a third party. Most young people see the costs of disability insurance, be it short or long term, and think, "I am healthy. Why would I subtract that much out of every paycheck for coverage I won't use?" Here is the very simple answer. Opportunity cost. Defined as, "the loss of potential gain from other alternatives when one alternative is chosen," opportunity costs justify the importance of purchasing disability insurance. While one may be young, healthy, and cautious, one never knows what the future may hold. The per pay period cost of disability insurance is typically about that of buying one meal at a causal dining restaurant or three coffees from an upscale coffee shop. However, if you forego those luxuries for the price of disability, and heaven forbid you should fall down the stairs, have an automobile accident, injure yourself while playing a recreational sport, etc., you will be very grateful you opted in for disability insurance. These types of insurance, while they often do not pay out an employee's full salary, provide life sustaining income in the unfortunate event you are temporarily or permanently disabled.

It is imperative you weigh the opportunity costs of not enrolling in disability benefits before making the choice. Who will pay your rent, mortgage, car payment, grocery and power bill if for some reason you are unable to work for two months. When first establishing yourself as a financially independent adult, it is common that missing two moths worth of pay will start you on a downward spiral that could affect your financial health for the rest of your life. Think about the number of accidents you hear of everyday. Start keeping a tally. When the time comes for enrollment with your new company, see if the opportunity cost does not justify your enrollment in disability benefits. Join me here next week for Monet Talks Monday!