The “New” Life Insurance 

Selling more than just a death benefit

by Stephen Pontecorvo

Let’s face it—individuals tend to consider life insurance only when they go through a major life milestone—purchasing a house, getting married, having a child, or when approaching retirement. Traditionally, these individuals viewed their options as limited: a basic term policy with a simple lump sum benefit. While those are indeed standard offerings, we are in the midst of a dynamic shift in the life insurance landscape with the emergence of a continuously expanding variety of group life insurance products and features. Today, life insurance has evolved and is more than just a financial protection product designed to pay a benefit upon death. Today, life insurance available through an employer sponsored plan includes new and meaningful product features and benefits have been enhanced to provide additional benefits during life.

Services such as grief counseling, face-to-face will preparation and face-to-face estate planning are part of this new generation of life insurance products offered through the workplace. And their value – to both employers and employees – cannot be overstated. There are several elements that both groups need to consider when looking at life insurance and all it offers including: education about products, understanding what is available to them, and, ultimately, what it takes for employers to communicate to their workforce effectively when it comes to life insurance benefits.

Focus on the “Small” Stuff

There’s a fine line when it comes to life insurance. According to the 2014 Insurance Barometer Study conducted by LIMRA, individuals who are buying life insurance want to be certain they are purchasing the right coverage for their needs. A paradox seems to exist: individuals are focused on what they are actually buying and the benefits they will gain, yet despite this desire for in-depth understanding, individuals don’t often focus on the extra policy features that are available to them as these features can add a layer of confusion to an already potentially complex purchase. It’s as if when buying a car they focused only on the engine and not on some of the additional options like automatic windows and power steering. Essentially, by not considering these add-ons, employers and employees are not benefiting from all life insurance now has to offer.

More than Just a Death Benefit

Features that are often offered with life insurance policies today – including grief counseling, face-to-face will preparation and legal services – offer significant advantages to both employers and employees. In fact, many features offered through a group life insurance can be used today rather than years into the future and can help policyholders prepare for, or deal with, major life events. These benefits can also save employees the additional cost of meeting face-to-face with an attorney, grief counselor or having a will prepared, which may amount to hundreds or even thousands of dollars.

For the employer, features such as grief counseling may improve productivity. This aligns directly with the benefits employers are looking to deliver. According to MetLife’s 12th Annual Employee Benefits Trend Study (EBTS), increasing productivity is a very important benefits objective for approximately 79% of employers. The Study also revealed that 40% of employees are turning to their employer for more help in achieving financial security through employee benefits (increasing from 29% the prior year). Features now available with life insurance do just this: for example, face-to-face will preparation can benefit an employee and/or their spouse, even if there is a will already in place.

The benefits extend beyond productivity. According to the MetLife EBTS, providing employees with extra benefits, diversified products and customized solutions can help drive greater loyalty. Sixty-four percent of employees report being interested in having a wider array of voluntary benefits offered to them. Highlighting the extra services available with life insurance then is a win: win – employees gain additional benefits and employers do not need to bear any additional cost.

Greater Value without Greater Cost

The EBTS revealed that 88% of employers report cost control is a very important benefits objective and 80% of employers intend to optimize benefits plans to reduce costs. The extra features offered through life insurance allow employers to provide employees with more robust benefits offerings that can be personalized to fit individual needs at no additional cost to them.
And research shows personalized benefits ultimately lead to more loyal employees. The MetLife EBTS found that employees who are very satisfied with their benefits are more than likely to be very satisfied with their jobs. Benefits are also a very important reason why these employees remain with their employer. For employers who don’t currently offer a broader and robust benefits plan, employees report that having benefits options that meet their needs would increase their loyalty.

Communication Critical

When it comes to life insurance specifically, research conducted by MetLife in 2013, highlights that nearly nine in ten employees believe it is valuable to receive life insurance benefits from their employer. The research also indicates that there is a generational gap when it comes to the perception of life insurance benefits. As might be expected, Gen Y employees require the most education on the full benefits of life insurance coverage—for this group the additional benefits are particularly important. Interestingly, Boomers also appear to also have a limited understanding of the uses of life insurance. Based on MetLife research, 54% of Boomers view life insurance for covering burial costs and have a narrow scope of the benefits policies can offer. This furthers the case that employers need to find simple and concise ways to educate employees not just of the death benefit but on the full array of features that comes with life insurance.

Clear guidance and direction from the employer is valued by employees, according the MetLife study, though not surprisingly, the same groups of younger consumers value it more. Employee education is essential not just to promote the full breadth of life insurance offerings but also for closing the gap between those employees who currently own life insurance policies compared to those who don’t and are currently uninsured. Overall, employees are most influenced by education at the workplace to purchase the right amount of life insurance.

Employers are the ones that can really empower their employees to take on the challenge of selecting the right insurance benefits for their needs. To do so effectively, there are several things employers can do: consider the life insurance benefit options available in the marketplace,  as well as the suite of additional features associated with these products and create a selection that reflects the employee base; consider how the features are provided (face-to-face or web); provide a limited number of selections so employees can choose the products that meet their needs; offer clear and concise education materials that explain the array of benefits; work with their benefits consultant/broker to make additional information available to anyone who wants it; and communicate frequently and clearly so all employees receive regular messages.

Further education and broader communication from the employer regarding ancillary benefits that are now often part of a life insurance policy will help evolve the dated perception that life insurance is for death only. These extra features– provided at no extra cost – are a benefit that can deliver value for employers and employees.