Voluntary benefits are one of the most dynamic and fastest-growing areas of employee benefits today. The Willis Towers Watson “2018 Emerging Trends: Voluntary Benefits and Services Survey” supports this. The survey, which presented responses from 336 large U.S. employers of over 4.3 million employees, revealed that 69% of them believe voluntary benefits will be “a very or more important” element of their overall rewards strategy in the next three to five years. Five years ago, 41% of a comparable survey group believed voluntary benefits would have little importance to their rewards strategy.
Other surveys also reflect the growth of voluntary benefits. In its 2018 report titled, “The State of Employee Benefits,” benefits management software firm, Benefitfocus, found that 42% of 540 large employers with 1,000 or more employees and a combined 1.3 million benefit plan enrollees, offered at least one of three voluntary benefits (i.e., accident, critical illness and/or hospital indemnity plans), while 18% of them offered all three.
Clearly, voluntary benefits, which range from an accident, accidental death and dismemberment, critical illness, disability, and portable life insurance, to dental, hearing, identity theft protection and legal, are experiencing a significant growth trajectory. Many, however, believe their growth would be even greater if employees were better educated regarding these benefits. This enhanced education requires that employers/plan sponsors help dispel the common misconceptions and elevate their education methods.
“Common Myths and Misconceptions:"
When it comes to insurance and how well it is understood by consumers, the operative words are confusion and misconceptions. Among the most common misconceptions are:
- You do not need life insurance if you are young and healthy.
- Only a family’s breadwinner needs insurance.
- Only people with dependent children need insurance.
- Term life insurance is the best option.
- Individuals with health conditions cannot get certain insurance.
- One’s savings will cover the additional expenses in the event of an accident, disability or critical illness.
- An employer-sponsored health plan will cover additional expenses stemming from an accident, disability or critical illness.
All of these are incorrect and lead many people down a path to a major financial crisis, which can result in a loss of their home, good credit standing, and personal bankruptcy. A recent study conducted by the MIT economist, Professor Amy Finkelstein, and a team of MIT researchers also found that adults ages 50 to 59 experiencing medical problems incur serious economic ramifications including a 20 percent reduction in earnings and an 11 percent drop in employment. The same study also found that health problems have a greater effect on the uninsured than the insured. Cited as an example of how, four years after being admitted into the hospital, people with insurance still owed $300 in unpaid medical bills whereas those without insurance had remaining balances $6,000 in unpaid bills.
Another common myth, which prevents many employees from considering insurance in general and voluntary benefits, relates specifically to cost. LIMRA’s “Insurance Barometer 2018” found that 44% of Millennials overestimate the cost of life insurance by five times its actual cost. Another finding of LIMRA cited 63% of consumers stating they do not buy more insurance because it is too expensive. This overestimation of the cost of various insurance products is widespread across all ages. By educating employees regarding the facts about insurance, employers can steer them away from a perilous path that can compromise both their physical health and financial well-being.
“Go Beyond Basic Enrollment Season Education”
The first step toward raising employees’ understanding of voluntary benefits; their roles and value propositions, is to expand the education initiative. Many organizations contain their education solely to end-of-year enrollment periods and nothing in between. Providing year-round voluntary benefits education will improve employee decision-making regarding voluntary benefits. This requires a major shift on the parts of benefits managers who have traditionally aligned benefits education with the enrollment season. Typically, this enrollment education involves a licensed agent and/or designated professional to enroll individuals in new policies on one or more days, onsite at the organization’s offices. Employees, whose schedules prevented their participation on these days, were often left on their own. For many, a lack of insurance knowledge causes them to avoid pursuing information about the voluntary benefits being offered. By conducting voluntary benefits educational seminars throughout the year -- at various times and on different days -- more employees will have the opportunity to learn about these benefits and the need each product addresses. These more frequent sessions also are likely to coincide with more of the employees’ various life “trigger” events (i.e., marriage, the birth of a child, etc.), key motivators for individuals’ purchase of essential insurance products.
Onsite educational seminars are the only way to educate employees about voluntary benefits. Today, organizations can leverage of variety of communications vehicles, many of which are already in place.
“Leverage New Platforms”
An organization’s website and specifically, the employee portal, is a great place to provide ongoing voluntary benefits education. White papers, links to well-written articles in consumer financial magazines or newspapers, insurance carriers’ product sheets, answers to frequently asked questions (FAQs), and even a glossary of insurance terms are all very valuable sources of information. Further, the online platform can be accessed on a convenient 24/7 basis from any device, anywhere.
Multimedia presentations incorporating educational videos, podcasts, and even mobile apps are other ways to educate employees about voluntary benefits. These digital platforms also provide readily accessible voluntary benefit information in platforms many employees prefer over paper brochures. This is especially true of the “digital native” Millennials.
On a more sophisticated level, there are now decision support tools being introduced that employers can use to customize their employee education regarding voluntary benefits. Through these tools, employers can tailor special messages on landing pages and provide directions in the enrollment sections of these platforms. They can customize information on various products to present individualized product value propositions.
Social media also is a valuable platform for educating employees about voluntary benefits. It is ideal for providing short posts and helpful tips about voluntary benefits, as well as announcements regarding upcoming educational sessions.
“The Win-Win of Voluntary Benefits Education”
Employees and employers alike derive benefit from employees’ enhanced understanding of voluntary benefits. Employers receive goodwill in projecting a sincere interest in helping promote their employees’ improved health and financial security. Through voluntary educational programs and tools, employers gain a reputation as an employee-centered organization; important for increasing employee morale, productivity, and retention, as well as for attracting new employees. By gaining more insight into voluntary benefits, employees can make more informed decisions. In doing so, they gain greater peace of mind knowing that they have taken the appropriate measures to protect themselves in the event of an accident, disability, critical illness, etc., while also gaining access to other high-value benefits such as identity theft protection, legal services, etc.
Author’s Bio - John Thornton is Executive Vice President, Sales and Marketing of Amalgamated Life Insurance Company (White Plains, NY, www.amalgamatedlife.com), a leading provider of life and health insurance solutions serving the corporate, institutional and labor markets. For the last 43 consecutive years, Amalgamated Life has received an “A” (Excellent) Rating from A.M. Best Company attesting to its financially strong condition and excellent claims-paying ability.