Whats Behind The Allure And Growth Of Voluntary Benefits
With health care costs rising at a rate of 15% each year, many employers have been forced to reevaluate all the benefits they offer to their employees. To keep benefit costs in check, many are deciding to reduce or even eliminate employer-paid benefits such as dental, term life and disability insurance.
This has resulted in a rise in sales of worksite-sold insurance products. Also called voluntary insurance, these products are policies that employees choose (volunteer) to buy at the worksite, typically paying 100% of the premium through payroll deduction.
Employers are turning to these products for several reasons: To fill the gap created by the cutbacks; to provide more choice; and to improve employee satisfaction.
One product line in particular has benefited significantly from this trend. That is voluntary dental coverage. A 2003 worksite marketing survey from LIMRA International, Windsor, Conn., found more employers were interested in voluntary dental than in any other voluntary benefit.
The report, “Worksite Marketing of Voluntary Benefits: The Employers Perspective,” also found that 59% of firms with 10 or more employees offer at least one voluntary insurance benefit to employees, and 25% more are considering adding voluntary benefits in the next two years.
What is fueling this growth? First, despite having to shoulder the cost for this coverage, employees say they appreciate the convenience of purchasing voluntary products at the worksite.
In addition, employees indicate they feel comfortable buying a product through a program their employer supports. They like the fact that the employer has conducted the necessary due diligence in selecting a carrier that will meet their varying needs.
Finally, employees enjoy the simplicity of applying for products that are: 1) guaranteed issue or require only simplified underwriting; 2) are competitively priced; and 3) are portable beyond their current employment.
The question then becomes, how best to take advantage of these trends?