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YOUR MONEY-Should you buy extra insurance at work?

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(This is part of a five-story package on employee benefits andopen enrollment season. The author is a Reuters contributor andthe opinions expressed are her own.)

By Katie Kingsbury

NEW YORK, Oct 11 (Reuters) - Does an office perk count as abenefit if you pay for it yourself? Apparently so, because anincreasing number of companies are using so-called voluntarybenefits to bulk up workplace offerings.

More companies now offer extra coverage or benefits thatworkers pay for themselves. They run the gamut from life anddisability insurance to vision and dental care, all the way tolegal services, shopping discounts and pet care coverage.

About 85 percent of mid-sized companies offer at least onevoluntary option, with nearly half offering three or more,according to a 2011 survey by industry-backed research groupLIMRA International. Almost half of all companies planned to addmore options in the future, according to a similar study byinsurer Colonial Life.

That may sound nice, but these offerings are usually made inthe context of companies trying to save money, and they put theonus on workers to decide whether they want to buy in.

So far, workers are unconvinced. Participation in life andlong-term disability plans remained nearly the same from 2006 to2010, at 34 percent of workers for life insurance and 24 percentfor disability, according to LIMRA.

Employer-offered group plans can be cheaper and moreconvenient than plans individuals buy on their own. Group plansoften carry discounts of 5 percent to 10 percent, as well as theconvenience of having your payment automatically deducted fromyour paycheck.

But they are n o t necessarily better. Just because a policyis employer-sponsored does not automatically make it the bestdeal available, says Tom Billet of the human resourcesconsultancy Towers Watson. "Do a little research first."

Smaller benefits like vision coverage or pet insurancearen't very significant; workers can opt in if they can affordthe premiums and think it will save them some money around theedges.

But deciding about more expensive benefits -- disability,long-term care and life insurance -- is trickier. Here are somepointers.

LONG-TERM DISABILITY

Group disability coverage usually replaces 50 percent to 70percent of your salary if an illness or accident leaves youunable to work for three months or longer. Group premiumstypically top out at 1.5 percent of your salary, estimates BarryLundquist of the Council for Disability Awareness. Individualpolicies can cost three times that.

Even so, private coverage is generally worth the extramoney, says New York disability attorney Evan Schwartz. "With anindividual policy, premiums are locked in and your policy can'tbe changed or canceled as long as you are paying premiums,"Schwartz says. On group plans, "terms can change on annualbasis."

If you change jobs, you can take your privately purchasedplan with you; that's rarely the case with workplace groupplans.

Furthermore, workplace policies may pay benefits for onlytwo years, and may cut them off even more quickly for mentalhealth or stress-related conditions, says Schwartz.

Group coverage policies also can include offsets, cautionsAlan Olson, an employment lawyer in Milwaukee, Wisconsin. Thatmeans that before you ever receive your benefits, you must runthrough other income sources, such as workers compensation orstate disability. Buying a private policy without offsets, "candefinitely offer a greater return if you actually use thebenefits," Olson says.

Finally, if your disability claims are denied, privatecoverage provides more remedies. Under group coverage - due tothe federal Employee Retirement Income Security Act (ERISA),which covers a wide range of employee benefit plans - claimantsmust go through a lengthy appeals process before they can sue.ERISA also prohibits claimants from receiving jury trials. "Thatis one of the most powerful tools you have against an insurancecompany, and you're giving it up," Schwartz says.

Several online tools can help employees compare theircompany's disability offering, including MassMutual's DisabilityBenefits Benchmarking Survey ().

LONG-TERM CARE INSURANCE

If you think you want long-term care insurance, you may nothave many choices beyond buying it at work - many carriers havestopped offering it privately, and some are not offering groupplans anymore, either.

"You absolutely need to be sure, even with group coverage,that you're buying from an insurer you know and trust," saysFrank Darras, a California-based disability lawyer. "What goodis cheap insurance if there's no one to file a claim with whenthe time comes?"

Major carriers that are no longer selling new policies havesaid they would honor existing coverage but several smalleroutfits have gone out of business. States have stepped in to aidexisting claimants but not future ones.

Policies can provide financial lifelines for the 70 percentof Americans over 65 who the U.S. Department of Health and HumanServices says will require long-term care like assisted livingat some point in their lives.

Employees who are already dealing with chronic medicalconditions will sometimes find it easier to qualify for groupcoverage than an individual policy.

Fine print to consider: What is the daily benefit? Do I getto select where and when nursing home care is covered? Does thepolicy include home healthcare or coverage if a family member isproviding the care?

Unlike life or long-term disability insurance, long-termcare insurance stays in place after you've retired or have lefta job, but there's no guarantee that the premiums will stayaffordable once you've left your group. For that matter, there'sno guarantee they will stay the same even while you're at yourjob.

Healthy employees, on the other hand, are likely to findbuying on their own more affordable. Spousal discounts, forinstance, are common on private policies but not workplace ones.

Another downside: Group long-term care policies also aresubject to the same federal laws as long-term disability interms of appealing claim denials detailed above.

TERM LIFE INSURANCE

Life insurance is one benefit that many employers still payfor - 44 percent of employers did in 2010, according to LIMRA -and if that is the case, there is almost no downside to signingup. These policies, usually equal to about one year's salary,are essentially free money. And they don't require medicalexaminations to qualify - especially important to anyone with apre-existing condition.

If you want more coverage than your company is providing forfree - or if you worry that you'll need coverage after you leaveyour job - shop around, says former Vermont insurancecommissioner and Consumer Federation of America expert JamesHunt. "You can often find better deals on the outside," Huntsays.

(Editing by Linda Stern, Jilian Mincer and Steve Orlofsky)

((Linda.Stern@thomsonreuters.com; 202-898-8347))

Keywords: MONEYPACK BENEFITS/LTCI