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April 05, 2009 at 08:00 PM
Traditionally it has been my experience that the marketing of voluntary insurance products is for the purpose of enhancing an employer’s benefits package.
Somewhere along the way several issues have crept into the sales process.
For example, when does the marketing of a voluntary insurance product cease being a valuable benefit and become just a way of marketing insurance?
I would submit this occurs when the benefit is not available to all full-time employees. If all employees are not eligible, then it becomes just a marketing method, and coverage of the workforce is scattershot.
Furthermore, over the years, the industry has brought out so many voluntary insurance products that employers don’t know how to evaluate them all. More to the point, the employers have difficulty determining what the employees truly need in order to complement their employer-paid benefits.
This surplus of product ultimately hurts the workers.
For example, supplemental health insurance products have been offered under Internal Revenue Code Section 125 cafeteria plans for many years. As National Underwriter readers know, these plans allow various voluntary products to be offered on a pre-tax basis. But now, due to the worsening finances of employers who have been hurt by the national recession, many employers have closed their doors, thus terminating millions of workers from those plans.
Each time a shutdown occurs, what happens to the supplemental Section 125 coverage of the now unemployed workers? Basically, that coverage is gone. Now, the workers are facing no job and no benefits. That is, they have no group benefits and no Section 125 plan benefits.
The terminated employees would be in a much better position today if the industry had continued to focus on selling what the workers really need–true guaranteed issue permanent life insurance and disability income plans, sold on a voluntary, portable basis. (Remember that, under federal law, such plans cannot be sold as part of Section 125 plans.)
