Many employees know the value of taking part in their company-sponsored savings plan but unfortunately not enough. They know it’s a valuable tool to help them grow their retirement savings and prepare them for the day they will need to draw on those savings. Many company-sponsored plans are a good start for retirement savings but need to be supplemented with personal saving outside of the plan.

When we complete retirement calculators and projections we take all sources of savings into account. Employees are taking steps to ensure they have adequate retirement savings but what if something catastrophic occurs? Have they insured their ability to reach their savings goals?

Read: Financial wellness: The missing link in your employees’ financial plan

Part of a solid financial plan is placing adequate insurance in case an event happens preventing your employee from earning at the same rate they are currently. An accident, sickness or mental illness can take them off their chosen retirement path. Proper insurance plan structure and coverage can keep employees on track with their financial goals. These goals can include retirement, children’s education or saving for the cottage you always wanted. Many unforeseen events can be covered by some form of insurance.

Just as the company-sponsored retirement plan is a great tool for long-term savings, a group benefits plan is a great tool for ensuring employees’ financial goals are insured. Many companies offer life insurance, long-term disability and even critical illness insurance, which are a great base but often could stand to be supplemented. A typical company life insurance policy covers an employee for two or three times annual salary upon death. Most industry statistics show a person in the middle of their earning years requires seven to 10 times annual income to ensure their family stays at the same financial level if they are deceased.

Long-term disability (LTD) insurance is also offered in a typical group benefits plan and again, is a great tool within a full financial plan. Most company LTD insurance covers a portion of employees’ wages (e.g., 67%) up to some maximum number (e.g., $5,000/mo.) This amount may be satisfactory for many employees but some of the higher wage earners would find it difficult to live on this amount.

Also, most group LTD plans have a limit on how long you‘ll be insured at your own occupation. Again, it’s essential employees understand this and know whether or not the coverage is adequate. Without real analysis on their own personal situation they will not know.

Read: Why don’t plan members take free money?

Critical illness (CI) insurance is offered in fewer plans than life and LTD but it’s become an important part in a person’s financial plan. Life-threatening illnesses such as cancer and heart disease are affecting more individuals than ever. The Canadian Cancer Society says about 40% of Canadians will contract cancer in their lifetime. CI insurance pays a lump sum if you’re diagnosed with one of many illnesses included in the policy, allowing you to take care of whatever needs arise from the sickness. CI is a more expensive coverage and when offered in a group plan it’s usually at levels less than $25,000.

Any of the above occurrences can knock an employee off their path to their financial goal. It’s important employees are reviewing both sides of their financial plan, insurance and savings, when they assess their needs and goals.

Read: Overcoming group retirement plan apathy

What can employers do to accommodate employees who would like to enhance their group benefits’ base coverage?

  • Most companies with a group retirement plan have an advisor that’s licensed to give financial advice to members. Ask him/her if they can offer education sessions or planning sessions with employees.
  • Encourage employees to use the tools on the group benefits and group retirement websites; they are free, offer unlimited access and are very educational and enlightening.
  • Offer additional voluntary coverage on your group benefits plan that employees can access without increasing costs to the employer. Many insurers offer coverage options that enhance the group plan coverage—employees can access these options online and learn about them in a comfortable setting.

If you impart one piece of financial wisdom to your employees make it this: saving is not the only part of reaching your financial goals.