For employees, selecting which voluntary benefits they need isn’t always as simple as taking measurements for a suit or coming up with the numbers and letters they want on their license plate. Making decisions regarding health care and insurance is far more complicated. And for brokers, determining the appropriate products to offer can be a challenge. To get it done right, this decision should be taken with the same care and level of attention given to core benefits.
The likelihood of using a benefit in the near future is the No. 1 factor influencing the purchasing decision, according to a recent Sun Life Financial study.
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This begs the question: What are people most likely to use? For brokers looking to offer the customization available through voluntary benefits, what products they should offer can differ depending upon life stages.
It’s easy to underestimate one’s need for insurance when a person is young and feels invincible. Especially if without children, many might not see the need for common voluntary products such as life, accident or disability insurance.
This can be a challenging time for many young adults. For the first time, they are no longer covered as a dependent on their parents’ plans and are now responsible for buying their own insurance. Everything from health insurance, to dental, vision and auto insurance are products they might need to consider. For all these changes, it’s often worthwhile for them to talk to an advisor to gain a better understanding of the types of benefits available and how they pertain to their specific situation.
When it comes to core medical insurance, it’s not uncommon for younger adults to look at high-deductible health plans. These individuals are less likely to go to a doctor unless they have an accident or serious condition, so the high deductible isn’t as much of a worry. They also might look at health savings accounts as a way to build cash reserves for future health costs or conditions.
Life insurance can be a worthwhile investment for those at a younger age because it will likely come with lower premiums for being young and healthy. It’s also a good place to start investing money for the cash value feature in some life insurance policies. The accumulated cash values could be used as a loan for other expenses down the road.
The needs for disability and accident insurance are surprisingly important for young people to consider. In fact, one in four 20-year-olds will experience an income-interrupting disability before they retire. Despite these odds, wage earners exhibit low awareness and understanding of the need to safeguard their income. And, accidents are just that – accidents – which means they are hard to predict. It never hurts and can only help to have added protection especially for young people living an active lifestyle.
There are a variety of changes that can arise throughout a person’s middle years; marriage, children or grandchildren, schooling and the growing possibility of health issues. These changes, as well as the inevitable curveballs life throws one’s way, all contribute to changing needs in insurance which can be met by the flexibility of voluntary benefits.
At this point, individuals may be enrolled in more comprehensive medical coverage as they have a greater likelihood of using their benefits. Also, if expanding their families, the comprehensive coverage will help protect families as well. It’s not uncommon that the start of a family comes with the purchase of a home, so homeowners insurance becomes an option.
It’s also no secret that children can be accident prone. One study suggests a third of all fall-related visits to the hospital emergency room comprise children younger than 14. Thus, an accident policy which protects an individual and his or her family may be something to consider.
Simply from the standpoint of age, the likelihood of a critical illness may increase the need for protection against the staggering costs for treatment and recovery. As for people in their middle years considering their options for protection, looking more closely at a critical illness policy will often be worth considering.
While not everyone will be married or have children, for those who fit this demographic, the need for life insurance may be increased. Marriage and children mean that individuals have dependents and life insurance provides security for those dependents should anything happen to them. Many don’t want to jeopardize their homes, their children’s educational futures or their family’s way of life if they aren’t around to help provide for them.
A combination of short- and long-term life insurance policies may be something to consider to help account for the heightened responsibilities that people face at this age. In addition to life insurance, many may start thinking about long-term care coverage. This financial tool can sometimes be coupled with life insurance and be an incredible asset which grows over time. This is especially true when coupled with a voluntary discount legal program, which is useful for drafting a will or estate planning. These are other ways individuals can plan for their families’ future security and financial protection.
Employees’ middle years are often their prime working years and, as such, disability insurance takes on greater importance. A person’s income is his or her most valuable asset, and it’s difficult to predict the length of any disability. That’s why using a mix of coverages that can account for disabilities whether employees are out of work for short and long periods can help mitigate financial risks.
For employees approaching pre or post-retirement, their needs are likely to be different. Again, voluntary benefits can offer the flexibility for people in this situation.
An older individual might not have or need as much life insurance, but it’s still a valuable permanent form of protection. If an older adult still working, life insurance is important to protect a spouse and family from coping with the financial repercussions of lost income. This is also the point in a person’s life where the cash value from a permanent life insurance policy could be used for end of life expense planning. In addition, life insurance policies that offer options for LTCI will come in handy, since 70 percent of people over age 65 will eventually need it, according to the U.S. Department of Health and Human Services.
At an older age, and certainly during retirement, the option to replace part of an individual’s income through disability insurance will certainly decrease. But, products such as critical illness and accident insurance still remain relevant. Aside from protection against the costs of a critical illness, many critical illness plans offer health screening features to help detect illnesses or prevent late-stage diagnosis. With limited mobility of some aging individuals, the likelihood of an accident can increase. This protection is all the more important when retirement savings can dwindle quickly if one is faced with a costly critical illness or an unforeseen accident.
Flexibility is key
Through thoughtful consideration and a comprehensive enrollment process, employees at different life stages can identify the best solution for themselves and their families. It’s vital employees are educated and engaged.
Ultimately, customization teamed with the diversity of individuals means there is no one-size-fits-all solution. But there are common considerations depending on where people are in life and where they want to be. The key message is the importance of voluntary benefits for individuals’ ability to customize their insurance coverage and plan for their unique financial needs.