Tackling the confusion of product choice by ‘setting the foundation’
by Steven Lynch
Mr. Lynch is vice president of sales and service for OneAmerica employee benefits business.When asked whether they have health, auto or home insurance, 80 percent of Americans reported they have at least two of those types of insurance. This was determined in a survey, commissioned by my company and conducted online by Harris Poll in late March.
Meanwhile, only a third of employed Americans (34 percent) reported they have disability coverage provided by their employer .
That statistical disparity is validated by our own experience; we are often on the front lines of conversations about the value of life and disability insurance – two core components of an employee’s benefits package. We believe that life insurance and disability insurance are critical benefits that help people improve their financial futures. They are voluntary, but they are a necessity.
Yet one of the biggest hurdles to overcome —marketplace confusion—remains a worrisome constant in this industry.
Overwhelmed with choice
The dilemma that decision-makers at companies and nonprofits face is certainly understandable, given the extreme amount of noise about healthcare reform, technology services, the complexity of benefits administration and more. Add to that carriers who are tacking on a range of extras, such as critical illness, accident insurance, and even pet insurance!
A marketplace crowded with benefits products for every imaginable scenario isn’t always helpful; it’s overwhelming. And too often this confusion comes at the expense of sufficient financial planning. Instead of offering up all the shiny new insurance products for employees to sift through, employers should offer products that protect the most basic insurance need – paycheck protection.
This type of benefit insures someone’s most valuable asset – their ability to earn an income. Disability insurance can keep an employee on track to achieving their financial goals. That’s a purchase that makes the real difference in their lives. People have limited discretionary dollars, so we have to be prudent about what we put in front of them, and use our knowledge to educate them about the roles group life and disability insurance play in preparing them for a rosier financial future.
People don’t want to lose their income if they get sick or hurt. People don’t want their loved ones to suffer when an incident occurs and their take-home pay is suddenly reduced or eliminated because they die. They typically aren’t exposed to a proper education program where they have the information and the time they need to complete an informed needs assessment about sudden financial hardships that would leave them vulnerable.
Yes, you may use a benefit like dental coverage, but you need disability insurance to protect your paycheck and you need life insurance to protect the loved ones you leave behind. Do most people know that the combined cost of these two products is often less than dental?
No law requiring income-insurance
It’s just amazing to me that if you buy a house, you’re required to provide proof of home owner’s insurance before you can close. If you buy a car, you have to provide proof of auto insurance before you drive off the lot. Why don’t those rules apply as soon as you get a job? There are no laws requiring people to protect their income, but that creates an opportunity and a mission for us.
For employers, it all starts with proper education. If they’re going to introduce life and disability insurance for the first time, I would suggest they separate this from their annual open enrollment sessions where they’re probably talking about the changes to medical insurance or their dental program. Life and disability benefits are so important that we need employees to be focused so that they can truly get it. And if you can do that well, we experience over 50 percent participation every single time.
To educate employees effectively, our sales representatives and account managers recommend a combination of pre-communication, small group meetings, and personalized enrollment forms. The combination of these things equals an exceptional enrollment experience for employees, employers and advisors. When I’ve hosted my own enrollment meetings, I’ve tried to break things down in the simplest of terms by answering the question: What is this insurance really designed to do? I’ve also used this scenario: “If you had a money machine in your house and that money machine was spitting out $3,000 a month, would you insure that money machine?” When you talk about insurance without using industry jargon, it resonates with people.
No one can be truly financially well if they aren’t insuring their ability to earn an income or their ability to replace that income if they pass away. If you’re getting paid any amount of money and you support yourself or your loved ones, we need to talk to you, regardless of your age or income status. The importance of insuring your paycheck is the foundation on which a person builds, and sustains, all of their other financial goals, including what they are able to build in their retirement plan. In other words, a brighter financial future starts with insuring what you have today.
