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Where Did the Voluntary Life Sponsors Go?

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Employer sponsorship of voluntary life insurance programs has plummeted at one large benefits compliance and communications firm.

Analysts from a unit of Gartner and from DirectPath, the benefits services firm, have reported that finding in a look at data from 907 DirectPath employers clients that use DirectPath’s benefits program benchmarking service.

Only 45% of DirectPath’s clients are offering voluntary supplemental life this year, down from 83% in 2017.

The percentage of DirectPath clients offering voluntary accidental death and dismemberment (AD&D) coverage plunged to 27%, from 59%.

(Related: Lincoln Financial Agrees to Acquire Liberty Mutual Life Unit)

DirectPath is a Birmingham, Alabama-based company that serves large employers all over the United States. About 70% of its employer clients have 8,100 or more employees, and the clients tend to be the kinds of employers that offer solid benefits packages.

Analysts say the sharp drop in the offer rate for voluntary life and AD&D coverage is  the the result of improvements in the labor market, and in employer-paid benefits packages, rather than of efforts to cut benefits packages.

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The shift in voluntary life and AD&D use “may reflect those benefits becoming part of an employer’s standard offering versus a voluntary benefit,” the analysts write.

The analysts found that the percentage of employers offering voluntary critical illness insurance increased to 31%, from 26%.

The percentage offering voluntary identity theft protection benefits increased to 19%, from 15%.

In other survey findings, the analysts found that the DirectPath clients:

  • May be starting to reduce health plan enrollees’ share of some types of out-of-pocket health care costs. The median in-network co-pay for emergency room care, for example, fell to $100, from $148.
  • May be nervous about the privacy concerns and regulatory uncertainty surrounding wellness incentive programs. Only 31% are now offering wellness incentives, down from about half in 2017.

A full copy of the Gartner/DirectPath report is available here.

If the trends the DirectPath clients are reporting show up at other large employers, agents and brokers in the life and health market could find that a higher percentage clients who come in may have kind of employer-paid life insurance and AD&D coverage. Because those clients received the coverage passively, rather than purchasing it themselves, they may need more help understanding the coverage they already have, and what gaps remain.

— Read 5 Top Thoughts From Principal’s Benefits Boss on ThinkAdvisor.

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