If millions of American adults have no life insurance, that creates dilemmas for families and the entire nation. It doesn't have to be that way.
First, some background. In recent years, the cost of employer paid benefits has risen dramatically.
While current benefit expenses adversely affect the ability of any employer to operate within the bounds of solvency, employees nevertheless continue to demand further enhancement of existing benefits.
Therein is a source of employer/employee frustration. It likewise represents a potentially large human and labor problem.
Concurrently, lower and middle wage earners are finding it increasingly difficult to receive individual attention when they look for life insurance protection. Many agents simply can't afford to offer the smaller life policies that correspond to the expectations and economic constraints of individuals in these socio-economic strata. This lack of access to much needed individual coverage fuels employee dependence upon employer-provided programs.
All of these factors have combined to propel growing interest in, and actual growth of, voluntary life sales.
The sponsorship of a true guaranteed issue voluntary life insurance program directly addresses these issues and provides distinct advantages to employer and employee alike. It allows the employer to introduce a new program which, despite its voluntary no-participation requirements and non-contributory nature, is construed by employees to be a legitimate benefit (as evidenced by typical employee participation rates of 40%-70%).
Furthermore, it does this without significant out-of-pocket employer cost. Direct expenses are limited to providing the employee on-the-job enrollment time and a methodology for payroll deduction. This approach fills the gap left by the lack of access to individual life products for lower and middle wage earners.
Until recent times, no single voluntary product approach could adequately address all employee security needs. Traditional universal life is often used but the variable interest rate creates more uncertainty than many employees can tolerate. Term life has affordability on its side, but its short-term focus robs employees of the lifelong protection which many need. Traditional whole life is good for long term needs and guaranteed benefits, but it is way too expensive for a good number of employees.
