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Todays workers face an uncertain employment world. Mergers, acquisitions and business failures have translated into downsizing, layoffs and forced early retirement for thousands of Americans.

The good news is, employees can plan for–and help mitigate the effect of–lost jobs and the employer-paid benefits that often ensue. They can do this through purchase of supplemental insurance. Also called worksite, voluntary, or payroll deduction insurance, such coverage is individual insurance employees can buy at the worksite.

The key to remember is, this coverage has many advantages not associated with group coverage thats paid wholly or partially by the employer. Before looking at that, lets see why this type of insurance is important in todays workplace.

As you already know, more and more employees face the specter of lost jobs and benefits. According to a study by Challenger, Gray & Christmas (reported in Workforce magazine, April 1999), job cuts added up to 678,000 in 1998. Merger-related job cuts totaled nearly 74,000 that year–double the year earlier figure.

That trend has continued. The Bureau of Labor Statistics reports, for instance, that there were more than 21,000 mass layoffs (50 or more people from a single company) in 2001, affecting 2.5 million workers. Manufacturing has taken the hardest hit, accounting for 46% of all mass layoffs in 2001. But all types of industries have felt the pinch.

Its widely known that unexpected employment change and the accompanying loss of income can be devastating for most workers. But lost benefits can also be devastating.

Thats because, though often taken for granted by employees, employer-paid benefits are generally worth an amount equal to a third of a workers salary. In fact, according to the U.S. Chamber of Commerces 2001 Employee Benefits Survey, employers paid an average of $16,617 per worker for employee benefits in 2000.

Its true that some employer-paid benefits can continue for a period of time after employment ends. But others cannot. And, when the continued coverage of those in the former group does terminate, they too can face financial hardship.

When employees own supplemental insurance, however, they have more control over their benefits situation.

While they are employed, for example, they can select coverages from the companys supplemental insurance program that best meet their individual needs, creating a personally tailored benefits package. They often can pay for it through payroll deduction, too. Then, if their employment should terminate, they can take their supplemental coverage with them.

Supplemental insurance is a value for employers, too, especially those struggling with potential or imminent layoffs due to financial challenges. The attraction is, the supplemental benefits are paid for by employees. This means the employer can continue to provide a strong benefits package while controlling costs. Many employers find they can change plan designs to include higher deductibles, or reduce employer-paid benefits, and then substitute with supplemental products.

To make the most of this opportunity, the employer should look for a supplemental insurance provider that can offer a broad portfolio of products that can meet a wide variety of needs among the employees. Typical supplemental products include disability insurance, life insurance, accident insurance, hospital confinement insurance, and cancer and critical illness insurance.

Employees are unlikely to want or need every supplemental product the carrier offers. But by making a variety available, the employer gives employees what they greatly desire–choice. In effect, employees in multi-choice plans have a voice in their benefits program.

At enrollment time, the professional benefits enroller can help employees identify their greatest needs and current coverage gaps in a brief one-on-one meeting. Then, the employee chooses the coverages that meet the needs from the available options.

For example, an employee who has recently married or added a new baby to the family may be interested in more life insurance. Parents of very active children may be receptive to accident insurance. This needs-selling approach is a key part of the benefits communication and enrollment support that a good supplemental provider offers.

Then, if a job cut occurs later on, the family can continue paying the premiums and keep the protection in force while the wage earner seeks out new work.

When you are discussing supplemental insurance with employees or employers in this uncertain economy, here are some pointers to bring up:

Supplemental coverage is portable. This is individual coverage selected and paid for by employees at the worksite. Because the policies are individual rather than group, employees can keep their coverage when they change jobs or retire, as long as they keep paying the premiums (an exception might be a disability policy, which is designed to provide income protection during normal working years, such as ages 18-65).

The coverage stays intact. No provisions of a supplemental policy change when an employee leaves a job, whether the move is made voluntarily or not. As a policyholder, he or she enjoys the same protection and coverage whether employed or not.

Employees who leave the group dont have to “start over.” “Every time I start a new job I have to start my life insurance over, and it usually costs more because Im a little older,” a friend in the computer industry complained recently. Employees who keep their supplemental policies when changing jobs or retiring can keep their coverage at the same premium.

The premiums remain stable. The premiums for supplemental insurance will not go up simply because an employee is no longer working at the company where the policy was first purchased. In fact, a supplemental insurance provider cannot raise premiums on any policy unless it raises them on all similar policies in that state.

The employee will enjoy continued convenience. Many employees especially appreciate the convenience of paying premiums for supplemental benefits through payroll deduction, because there are no checks to write and no premium payment deadlines to remember. Employees who leave their jobs usually can continue that convenience simply by changing the payment method to automatic bank draft.

As you know, the above features are not typically available in most traditional group insurance plans. Supplemental insurance addresses very specific individual needs, with individual coverage the employee can keep, no matter which employer he or she joins next. In todays uncertain market, that message is compelling.

is vice president of sales-Northeast Region of Colonial Supplemental Insurance, a marketing arm of Colonial Life & Accident Insurance Company. The Columbia, S.C.insurer is a subsidary of UnumProvident Corp. His e-mail is drather2@unum.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 17, 2002. Copyright 2002 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.