New research is shedding light on how consumers look at benefits and why they have become increasingly popular. It has produced some surprising insights as well as some messages for companies and producers who want to succeed in this market.
The background: In 2002, LIMRA International, Windsor, Conn., conducted six focus groups of full-time employees to understand how they approach decisions about benefits in general and voluntary benefits specifically. The employees were covered by at least two employer-sponsored insurance benefits. Participants in three groups were ages 25-44 and in three other groups, 45-59.
The research confirms that many employees are familiar with the voluntary benefit concept and view them favorably. All strongly affirmed the value of obtaining insurance at the worksite. In fact, they made little distinction between the value of subsidized and voluntary benefits, and praised both.
Not surprisingly, lower cost, convenience, payroll deduction and support from human resources staff are among the reasons employees gave for preferring to obtain insurance through their employers. They showed awareness that their employers grapple with how best to manage the cost of medical coverage, too.
The participants were very sensitive to any changes in their medical plan. In fact, they said they are willing to accept more responsibility for the cost of other benefits so they can still have comprehensive medical benefits. Some even said they would be willing to give up their employers subsidy for certain benefits (such as disability, life or dental coverage) and buy them on a voluntary basis in order to keep their costs for medical insurance in check.
From the employees perspective, the worksite has several key advantages that would make individuals more apt to consider purchasing a benefit.
They like the fact that coverages can be obtained at a discount. However, they also realize that although the offering is a good deal, it may not necessarily be the best deal if they are willing to shop around. Most indicated, however, that the purchase process is relatively passive, and they would not shop around to a great extent.
Participants also cited the convenience of payroll deduction as being attractive.
In addition, they indicated that they trust their employer has chosen the benefit that best meets their needs. This “seal of approval” is often cited by employees as a major advantage. Due to their lack of expertise with benefits and companies that provide them, many indicated they make their decisions on faith. That is, they trust the employer to have done its homework on the company and offerings.