Despite widespread layoffs, sales of many voluntary employee benefit products shone brightly in the dismal economy of 2009, according to year-to-date data from LIMRA International, Windsor, Conn.
Worksite firms polled by LIMRA reported sales up 7% overall, with substantial gains for term life, accidental death and dismemberment and long term disability products.
(LIMRA’s survey does not include data for the market leader, Aflac Inc., which has an estimated 30% of the market. An Aflac executive reported sales were up for voluntary products but would not say by how much.)
Overcoming a lackluster performance early in the year, sales of life insurance products in the workplace were up 14% by the end of the third quarter, while voluntary health products rose 3%, LIMRA reports.
Term life product sales grew 22%, overcoming a 7% decline by universal life products and a slim rise in whole life sales.
Term sales may be up at least partly because of the policies’ relatively low cost compared to other voluntary benefits, Ron Neyer, a LIMRA analyst, believes.
The difficult economy also may be causing workers to refocus attention on protection products, Neyer adds.
“Term is an affordable option, and if you don’t have a lot to spend but realize you need life insurance, it may be a safe way to go,” he says. “They may want something more permanent later.”
Robust sales were also reported for voluntary AD&D policies, long term disability, critical illness and dental plans.
A third quarter surge helped AD&D bounce back from two years of declining sales. Premiums for the product overcame a mediocre first half, when sales were barely even with the same period of 2008, Neyer notes. By Sept. 30, AD&D premiums were up 15% over the same period the year before.
That was a sharp jump over 2008, when premiums for the product were down 28% from the previous year.
Figures for AD&D actually may be understated, because many life insurance policies sold in the workplace include AD&D riders, notes Neyer.
Vision product premiums were up only 2% YTD, says LIMRA, but that was a big improvement over the first 9 months of last year, when vision plans fell 27%.
Over last few years, some workplace products such as long term disability have fluctuated quite a bit, LIMRA data shows. Last year, LTD was down 6% by the end of the third quarter, and 14% for the year, but by the end of third quarter 2009, sales of the product were up 11% YTD.
There was no strong move this year by employers to replace their paid benefits with voluntary products, Neyer said. “But some are asking employees to share more of the cost, not just in medical but also with disability.”