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For Benefits Intermediaries, Voluntary Spells Opportunity

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More and more employers are recognizing that voluntary benefits allow them to enhance their benefits offerings and provide employees more choices without incurring significant additional expenses or administrative burdens.

As we approach the fall benefits open enrollment season, workplace demand for voluntary benefits is stronger than ever. According to the 2005 MetLife Employee Benefits Trend Study, roughly one-third of all employees would like their employers to offer more voluntary benefits.

Driving employees’ growing appetite for these products is the desire for convenience. They often view protection and savings products that they purchase at work and pay for on their own more favorably than they do products that they buy independently. According to the survey, they cite “the convenience of payroll deduction” (63%) and the ability to “sign up for insurance without going through medical exams” (48%) as particularly important.

Interest varies by life stage

Young families express a stronger interest in voluntary benefits than do their peers. MetLife found 44% of employees with children under 6 want a broader range of voluntary offerings at the workplace, compared with 34% of employees overall. Among singles, boomers and pre-retirees, roughly one-third of employees in each of these groups want access to a broader range of voluntary benefits.

Like employees, employers favor voluntary benefits for their convenience and ease of administration. Of the employers surveyed, 33% view voluntary offerings as a cost-effective way to meet the diverse needs of employees, and 32% believe these offerings enhance the attractiveness of a company’s overall benefits package. Overall, 53% of the employers surveyed make voluntary benefits available to their employees. The largest employers lead the pack, with 68% of companies with 5,000 to 24,999 employees offering voluntary benefits, compared with 40% of companies with 2 to 49 employees and 43% of those with 2 to 99 employees.

Effective education is key

While employees’ appetite for workplace products continues to grow, their confidence in making the right decisions for themselves or their families is on the decline.

“Having enough money to pay bills during a period of sudden income loss” topped the list of employees’ financial concerns. Among boomers, 52% are concerned that they are behind schedule in their retirement savings. Singles and young families in particular are living paycheck to paycheck, and only about one-third of each segment understands which benefits options best meet their needs.

More on this topic

At a time when employees are so hungry for advice about benefits that they are increasingly selecting and financing them on their own, employers are wrestling with other challenges. When asked to rank senior management’s top benefits-related concerns, employers cited healthcare costs (81%) as number one. In terms of overall benefits objectives, only 14% of employers identified “helping employees make better benefits decisions” as most important.

As a result, just 30% of employees say they feel their company effectively educates them on benefits options so that they can select the ones that best meet their needs. Singles (17%) feel much less educated than preretirees (62%).

Employers concur: Only 30% believe their benefits communications programs effectively reach every employee in the channel the employees prefer.

Education and communications

While 52% of employers distribute a package of communications materials in the workplace, 42% of the HR and benefits executives surveyed would prefer that employees initially obtain information on benefits via group meetings led by an insurance company representative at the workplace.

Employees agree, saying they would prefer to meet with an insurance company representative either in a group setting (33%) or individually (30%) at the workplace to obtain information about benefits.

However, interest varies by life stage. For instance, baby boomers (34%) and singles (34%) are more interested in group meetings with insurance company representatives than are pre-retirees (29%), while young families (28%) and singles (24%) are more interested in receiving benefits information via the Internet or employer intranet than are pre-retirees (14%).

Across all life-stages, one trend is clear: Employees as well as employers have a strong appetite for voluntary benefits, and many would welcome a wider range of offerings.

For intermediaries selling voluntary benefits in the workplace, this trend spells opportunity. Employers are eager to partner with brokers and agents who can offer turnkey voluntary benefits packages that require minimal administration and coordination on their behalf. To deliver on this opportunity, intermediaries need to work with employers to satisfy employees’ growing demand for advice and guidance. For those that meet this demand, the rewards are clear: access to a large and growing market of employee-customers who are looking to the workplace for their protection and savings needs.