Make Voluntary Product Features Meaningful To Employees
Conventional wisdom is that voluntary products have to be simple.
Though true, the insurance industry should not use “keep it simple” as an excuse to take the value out of voluntary benefits. Its not necessarily the number of features or options that make a product confusing; its whether those features and choices are meaningful to the consumers who we want to buy them.
Id argue that a product that has the right features and options–those having relevance to consumers–will be far more successful than the product with the fewest features and options.
Consider how employees respond to voluntary insurance products at group enrollment meetings. Ive noticed they are typically much more insurance-savvy than industry professionals usually give them credit for. But they respond with confusion, questioning and loss of trust when presented with various product features or when asked to make choices that have no relationship to their own lives.
In a moment, well look at how to make features and choices more relevant to the lives of employees. But first, lets see how employees view some of the features that are common to todays products:
Take-aways: No matter how well intentioned certain features are–such as a rehab program or a return-to-work provision–many employees choose to interpret them as ways for the insurance company to get out of paying claims.
Reduced benefits: These are often seen as ways for a company to get out of paying the full benefit the employee has purchased. Examples include integrated disability benefits or services to gain Social Security claims approval.
Options with no relevance. When asked to choose options for which employees have little or no real-world basis for deciding, this creates major difficulty. One example is the option to select the duration of long-term care insurance benefits. What real basis–other than cost and perhaps some family history–does a 40-year-old have for deciding how long this benefit period should be?
Cost-controlling features: On the other hand, when well explained (see Chart 1), some of the more technically complex voluntary product features–such as pre-existing condition limitationsare quite acceptable to many employees. If they see the way the features control the consumers cost, it makes sense.
Relevant choices: Most of all, employees seem to want to be able to control the amount of coverage they purchase, whether its life insurance, long-term disability options or a hospital supplement plan.
Whats the solution? Knowingly or unknowingly, insurers cover a wide variety of risks. For example, a company may set a participation target for a voluntary product, knowing that actual participation–and therefore financial results–will either be above or below that target. Such a company is taking a risk that enrollments will produce the desired results.
A better approach might be to insure certain risks, rather than to ask employees to make choices for which they have no rational basis.
For example, why not offer an LTC insurance benefit without a choice of benefit durations, as is the case with most long-term disability plans? The price might be higher. But too often, asking consumers to make irrational decisions creates confusion, which keeps them from buying the product at all.
How do we make sure features and choices are relevant for the buyer? One test is to be sure they address one of three dimensions of “lifestyle.” Chart 2 illustrates how this might be done.
Im not suggesting all product provisions have to appeal to the consumer. But they all should make sense to the consumer, either in their own right or through open and clear communications.
The goal is not to make voluntary products simple. The goal is simply to provide features and choices the employee will value.
Alan F. Barthelman is president of AB & Associates, a worksite marketing consulting firm based in Cape Elizabeth, Maine. E-mail at: email@example.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.