To Bundle or Not to Bundle: That is the Benefits Question
By Dan Gechter
We have all become accustomed to bundling in our everyday lives. It’s usually presented as a cost-savings vehicle but even jaded consumers have come to suspect there is more to a bundled service offer than just altruism.
When you’re crafting an effective Voluntary Benefits program, should you Super-Size it?
Think about it: buying internet, TV, and phone together is convenient and we are told it can save us money on all three services – but does it really? And is the cost the most important thing? What about convenience? Service reliability? Even in the relatively simple world of buying cable, there are multiple factors to consider when deciding whether to buy bundled services.
When you’re recommending a Voluntary benefits plan, the facts are identical: Do we need it? Will we use it? How much is it?
Do We Need It?
Do you need every available sports network? Do you need HBO and Showtime if you already have Netflix? Maybe
– everyone is different. If you’re making benefits decisions on behalf of your workforce, start by looking at what you have: What is the demographic makeup? Age? Gender? Locations? Employee Culture? And how is your existing benefits program designed?
For example, a young, adventure-prone employee population may not be motivated by the opportunity to purchase long-term care insurance but may see the immediate value in accident insurance. An employer with an older workforce, on the other hand, may find a critical illness plan more relevant. In either case, the value of these plans can be explained quickly with a little time and opportunity: These plans help make sure an unexpected medical situation won’t wipe out your savings.
If the employer has a high deductible health plan, as most do, the opportunity to reinsure that out-of-pocket deductible with an affordable voluntary coverage is truly a benefit.
How Bundling Can Help
Present supplemental lines like critical illness, accident and hospital indemnity together as a single benefit choice with multiple investment options. In other words: You want to make sure your savings are protected from unforeseen medical events, whether it’s your cookie jar vacation fund or your retirement account. Here’s how.
Will We Use It?
Let’s start with Do they understand it? How many times have we skimped on learning a new resource or service only to find out, months or years later, it offered much more than we ever realized? (Silent show of hands: How many still ask for their children’s help scheduling a DVR recording? It’s OK – that’s a lot of hands.)
The key to shortening the learning curve and expanding the value proposition lies in communication. Insurance is most often sold in insurance language, in large part because laws are in place to protect the consumer from inappropriate or inaccurate statements. But somewhere between compliance and conversation, there is a middle ground, and we should all plug that location into our GPS, pronto!
Try communicating benefits the way the internet has taught us – in layers. Start with the employee and his or her family in mind, in their voice, rather than a description of what the coverage is. The best way to understand the difference between traditional benefits communication and better benefits communication is to switch hats. No matter whether you wear an insurance carrier hat, a broker hat, or a benefits/HR hat, take it off. Put on your Mom hat. Or Dad hat. Or neighbor hat. If your elderly mother-in-law asked you a question about a change to her
Medicare benefits, how would you explain it so that she understood how the change specifically impacted her, and if appropriate, what she should consider if there was a decision to be made.
How Bundling Can Help
Simply put, the net benefit of bundling is the opportunity to streamline required decisions. In an enrollment setting, that means checking one box, agreeing to one deduction, satisfying one need. In a claims situation, the ideal would be a single claim form.
Of course, life is rarely this clear-cut, but you can design and promote a program that supplements operational efficiencies with friendly, intuitive communications and decision support – like an easy-to-remember email alias for questions, or an intranet landing page that groups all the related documents and information together.
How Much Is It?
Yes, price is important, but maybe not in the unilateral way that you think. Instead of having an arbitrary price point beyond which you won’t consider offering a new benefit, focus on flexibility and discretion. Salaries differ, needs vary – design your program so that employees can EASILY make cost-benefit decisions. Few people can buy as much of everything as they want, so help them check all the “Need It” boxes before they move to the “Want It” list.
How to Bundle
The first way is obvious, but let’s say it: Work with your carrier to make sure you get any appropriate discounts when lines of coverage are bundled.
The second way requires a little more work but can yield a lot more value: Try grouping “lifestyle” bundles together based on employee profiles. This doesn’t require filing new rates or applications. Just look at the most common groups that exist today: Millennials, young families, and Empty Nesters. Model sample plan bundles at pre-selected benefit levels and assign the right (sample) price. This is a great opportunity to include value-added services like ID Theft or Travel Assistance, where appropriate.
These services speak eloquently to the need and, properly communicated, can add clarity and depth to the illustration.
As long as you’re not restricting anyone’s ability to purchase the insurance coverage as filed (with all due variability) you’re in the clear from a compliance standpoint. And you’re taking a quantum leap in meeting a core objective: help people understand what they’re getting, and for how much.
How Many is Too Many?
A corollary needs to be addressed: How many different lines of coverage can you offer simultaneously before you are operating counter to your mission of adding both clarity and value? There’s no single answer. Instead, the effectiveness with which you can answer the above three questions, perhaps through bundling, will dictate the answer. How good of a job are you doing identifying the need? Communicating the value? Making it affordable and easy?
The more you advance, the better your returns will be on all levels: participation, utilization, and satisfaction. All of which comprise ROI.
It’s a journey, not a destination. Make sure you work with partners who are like-minded and equally passionate about doing a better job with every at-bat.
About the Author
Dan Gechter, Regional Practice Leader, brings over 30 years of sales and sales management success – as well as products and process expertise – in the Voluntary/ Worksite benefits marketplace. Prior to joining Reliance Standard in 2017, he spent time as Vice President of Sales for AmWINS Group Benefits and as a Worksite Director at Lincoln Financial Group.