Advising Today’s Business

Planning & The Evolution of Voluntary Benefits

4 Myths that your business clients need to forget

by Brian Vestergaard
Mr. Vestergaard is Vice President of Product & Marketing for LifeSecure Insurance Company, based in Brighton, Mich. LifeSecure is dedicated to helping you see insurance differently and delivering an exceptional insurance experience. The company offers accident, critical illness, hospital recovery, and long term care insurance products. LifeSecure is licensed in 49 states and the District of Columbia. Additional information is available at www.YourLifeSecure.com.

Employers expect a lot from their benefit offerings. They’re essential to attracting job seekers, keeping current employees happy and even preserving productivity. But what if their benefit strategy isn’t keeping pace with employee priorities?

You and I know that voluntary health products are an important part of a holistic employee benefit package, but employers may be holding on to old misconceptions that act as roadblocks to refreshing their benefit strategy. The result is a growing gap between employer offerings and employee demand, which can have a big effect on their desired business outcomes. Here are four common myths that you can address with employers to change the way they think about voluntary benefits and help them make the right decisions for their business and employees.

Myth #1: Voluntary benefits are nice to have, but nonessential

There was a time when voluntary health products like accident and critical illness insurance were considered fringe benefits that were nice add-ons to core offerings. This is outdated thinking, plain and simple. Today they’re a must.

Five generations are working side by side in today’s workplace. While each group has different perspectives and priorities, they all want the same thing: choice. Employees want to make their own decisions and create a personalized benefit plan that can meet their needs and improve their lives.

And the numbers help tell the story. The voluntary industry has a compound annual growth rate of 5% over the last 10 years and outside of traditional voluntary benefits, health products like accident, hospital indemnity and critical illness have become go-to options. They consistently rank among the top-selling voluntary life and health products and workers across different demographic groups see them as valuable solutions to protect their finances and plan for the unexpected.

Employers need to think like Starbucks. Instead of serving everyone coffee, offer them a customizable menu as diverse as today’s workforce that can be tailored to different demographics, lifestyles, and financial habits.

Myth #2: Our employees are happy with their insurance benefits

As you can probably guess, this isn’t always the case. Seven in 10 employers believe their benefits are meeting employee needs, but employees don’t necessarily agree – only half of workers are satisfied with their benefits.

Naturally this disconnect is causing a shortfall in the availability of worksite benefits that employees want. In fact, nearly half of employees want at least one benefit that isn’t available to them, while products like hospital indemnity, critical illness/cancer and accident insurance are some of the least available benefits to workers who want them the most.

This is where using voluntary health benefits to complement core offerings can really pay off for employers. While worksite benefits have long been a critical tool in helping employers attract and retain top talent, they’ve also been shown to improve productivity, reduce financial stress and improve job satisfaction. A recent study even found that customizable benefits are a top-five driver of workplace happiness.

With the variety of workplace incentives available today, it’s easy to understand how employees can misjudge the importance of certain voluntary products. Offerings like student loan assistance, pet insurance and wellness programs get a lot of buzz and certainly address important issues...

And more employers are starting to notice, as 57% of employers say they’re committed to expanding their offerings with voluntary products like accident and critical illness insurance, while nearly 70% of employers believe voluntary benefits will continue to be an increasingly important piece of their employee value proposition in the next few years. Employers who don’t adapt risk losing ground to their competitors.

Myth #3: We need outside-the-box voluntary benefit ideas that appeal to younger employees

With the variety of workplace incentives available today, it’s easy to understand how employees can misjudge the importance of certain voluntary products. Offerings like student loan assistance, pet insurance and wellness programs get a lot of buzz and certainly address important issues. But jumping to the next big thing often overlooks the role mainstream insurance coverages can play in creating a holistic, customizable benefit package that can appeal to employees of all ages.

In general, employers – especially small and middle market employers – assume that voluntary health products appeal much more to older workers, which underestimates their importance to all employees. In reality, baby boomers, Generation X and millennials place nearly the same amount of importance on coverages like accident, critical illness and hospital indemnity insurance. Considering that only 20-30% of employers offer accident, critical illness or hospital indemnity coverage, this unmet demand suggests there’s plenty of room for growth.

Myth #4: Expanding employee benefits requires too many resources

New enrollment periods, staff demands, administration, communication… expanding worksite benefit offerings can seem daunting from an employer’s perspective. But having a team of experts on staff and extra resources aren’t always required.

Many voluntary health carriers have been taking big leaps to improve the customer experience to make life easier for employers and benefit administrators.

Here are a few examples:

  • Simple administration – most voluntary health products can go from introduction to enrollment in just a few weeks. Online tools make it easier than ever for employees to quickly quote, apply and sign electronically, while also streamlining administration functions like automatic payroll deduction and list bill reconciliation.
  • Custom communication – making sure employees are educated and engaged is a critical part of any workplace benefits strategy. Carriers are helping their worksite partners in this area with custom communication plans that include a variety of personalized resources – all of which help an employer get the most out of their investment in a new voluntary offering.
  • Little to no cost – voluntary health insurance can be offered at little to no cost to employers, which will help your clients balance benefits and their bottom line.

These services provide extra value to small businesses, where the benefits battle is just another challenge they face in competing with larger rivals. Simple voluntary offerings can level the playing field for smaller companies by helping them build stronger benefit packages and better compete for top talent. It can also create new business opportunities for agents by opening up more of the employer market. For example, LifeSecure’s worksite health products can be offered to as few as three qualified employees.

There are plenty of other voluntary myths not covered here, and there’s always more to learn about voluntary benefits. But the bottom line is this: there’s a bigger role for voluntary health benefits at the worksite than some employers think – and it’s growing.

Employers need to modify their strategies to close the benefit gap and offer a wider range of customizable offerings that more closely match employees’ perceived needs and priorities. The challenge for producers and brokers is seizing this opportunity, lending their expertise to help employers reshape their offerings, and making sure voluntary health products get a seat at the table during worksite conversations.