Insurers and producers selling voluntary employee benefits need to find ways to help employees understand an increasing array of products, says a new study.
As employers cut back on company-paid benefits, insurers have responded by introducing more voluntary benefits, notes the study, “Changing Products for Worksite Marketing,” produced by Conning Research & Consulting Inc., Hartford. It points out that increased choice is creating confusion and a need for more information among workers.
Conning also sees portability as growing in importance for employees, noting the increased job mobility of the U.S. work force. Just as the shift toward defined contribution plans made retirement benefits portable, employees will be taking new defined contribution products, such as consumer-directed health care plans, with them when they change jobs.
The report also suggests the voluntary market could be moving toward a kind of unified defined contribution plan for all benefits, much like 401(k) retirement plans. Health care savings accounts, linked to consumer-directed health care plans, are a case in point, explains Conning analyst Terence Martin.
“Health insurance is not portable,” Martin points out. “However, HSAs are portable.”
This could ultimately boost sales of other insurance products as insurers try to capture this rollover market, the study observes.
As employees move to other jobs and take their defined contribution products with them, many could place those funds in annuities or mutual funds. Insurers have responded by increasing the variety of individual annuities available, to try to capture some of this rollover market, the study notes.
The study also sees the possible growth of portable group life insurance policies, now relatively rare.
The flexibility afforded to employees by portable group life products would make them attractive. Such policies also offer a safety net when workers are between jobs, especially for individuals who otherwise could not obtain or afford coverage.