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.
Another value the focus group participants identified is the ability to hear about, and have the opportunity to buy, coverages they may not otherwise have an opportunity to purchase. These include coverages such as critical illness and long term care insurance.
This finding tracks with industry trends. Traditional agents have moved upscale, tapping the lucrative affluent market. This has left an underserved middle-income market, which insurers now are tapping via worksite products.
The survey found that offering the benefit during working hours is essential. This reaffirms the employers endorsement of the plan. (Insurers say this also helps maximize participation.) Without on-site meetings during work hours, employees said they feel the employer is not really “behind” the benefit and is just making an accommodation to someone who wants to “peddle product.” The meetings send a message of true employer buy-in, they indicated.
Given that they are footing the bill for the cost of voluntary benefits, the employees said they have high service expectations. They indicated they demand more assistance and ongoing service, just as if they were buying the coverage from an individual agent. They also tend to review marketing materials more closely.
Technology is another aspect of worksite marketing that comes into to play in both communication and enrollment. Generally, the participants were very receptive to technology and the flexibility it provides, although some said they are uncomfortable with the impersonal approach. While they do not mind using the Internet, they said they would like to have the ability to contact someone if they have a question.
Interestingly, their comfort level reflects their familiarity with the benefit and the company. That is, they indicated they would be more willing to sign up for a benefit over the Internet for products they know about and from a company with which they are familiar.
One comment seems to sum up much of the good feeling about worksite benefits: “I like the comfort level. I like the payroll deduction. I like the convenience. You know, I dont have a lot of time to do a lot of research. I really dont want the hassle.”
The takeaway for companies and producers is this: Going the extra mile to meet employee needs for attention and service will lead to success in this popular market.
Patrick Leary is manager, distribution research at LIMRA International, Windsor, Conn. His e-mail is [email protected].
Rick Hekeler is senior strategic consultant, markets research at LIMRA International. His e-mail is [email protected].
Reproduced from National Underwriter Edition, March 24, 2003. Copyright 2003 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.