Always keep in mind that most employee benefits VANISH when you retire or separate from service. This concern is greater now that improved pension formulas have made early retirement even more attractive. And for Public Safety employees, a disabling INJURY can force retirement at ANY age.
Job-Related Death Benefits (Public Safety Employees).
Labor Code section 4800 states that if you have been in public safety service for 5 years or more, and your death or disability is caused by cardiovascular impairment, stress, certain communicable diseases, or some forms of cancer, that death or disability is PRESUMED job-related. Although presumptions shift the legal burden of proof, they are NOT automatic. The employer can challenge "causation" – forcing the ESCROW of Workers Compensation and Retirement System benefits. These disputes often take YEARS to resolve.
Non Job-Related Death Benefits.
Non Job-Related benefits are nearly always deficient: TOTAL replacement income is $1,807 per month - only 34% of Richard's current salary.
Action Step: Eliminate the Gaps in your Protection.
Follow these critical BCN rules: (1) Know your benefits. (2) Don’t pay for coverage your employer already provides. (3) Make every effort to eliminate the gaps in your protection. (4) BEFORE a death, disability or other claim against your benefits.
Replacement Income (6.50% Projected Return on Investment).
To convert your survivor benefits into monthly Replacement Income (or an equivalent Lump Sum), we use a projected return on investment: currently 6.50%. This rate should reflect a blend of short-term (5 year) interest rates and expected long-term (10+ year) growth rates. This conversion assumes the beneficiaries will use ONLY investment earnings - and leave principal untouched. A LESS restrictive standard would permit a HIGHER conversion rate.