FAQs About Insurance
How can voluntary benefits help me and my employees?
The voluntary benefits market is growing, and for good reason. Voluntary benefits—offered through the workplace but paid for fully by employees—enable an employer to make a wide array of supplemental benefits available to employees, at little or no cost to the company. Voluntary benefits products are so attractive that, according to one study, more than six in ten employers now offer at least one type of voluntary benefit.
The advantages of voluntary benefits are well known. Because a voluntary benefit product is marketed and sold in a group setting, employees can purchase the benefits at a group rate, pay for them through payroll deduction, and save the time of shopping for them on their own. These and other reasons were cited as the perceived advantages of voluntary benefits, according to MetLife's 2003 Study of Employee Benefit Trends. Employers surveyed pointed to these advantages: the convenience of payroll deductions, 55%; the convenience of buying in the workplace over retail, 51%; better prices when purchased at group rates, 46%; the disciplined approach to saving represented by payroll deduction, 43%; time saved through workplace availability, 42%; and no medical exams usually needed, 38%.
Some employers implement voluntary benefits to cushion the impact of cutbacks or cost increases in a core benefits package. Because voluntary benefits typically entail little or no cost outlay from the employer, a company that needs to modify its benefits program for financial reasons can add voluntary benefits products without losing sight of cost constraints. However, the number one reason employers add a particular voluntary benefit is not cost but an expressed employee interest in that benefit, according to Eastbridge Consulting, a marketing advisory firm to insurance and financial services organizations.
Perhaps driven by benefits cutbacks or cost shifting, the most in-demand voluntary benefits continue to be those that supplement core medical, life, or disability coverages, according to surveys. These include dental, critical illness, specific illness, hospital supplemental, medical supplemental, disability buy-up, and supplemental life coverages. However, demographic trends are contributing to growing interest in long-term care and financial planning products. As more people become faced with their parents' eldercare needs, they begin to appreciate the cost of extended care and anticipate what their own needs may be in a few short years. And, many workers, beginning in mid-career, face the double crunch of saving for retirement at the same time they are attempting to finance their children's college education.
Other products in the voluntary benefits market include vision insurance, legal services plans, auto/homeowners'/renters' insurance, and pet care insurance.
Perhaps reflecting the multiple and competing demands on their time and money that today's workers feel, 28% of employees in the MetLife survey said they were interested in their employers providing a wider array of voluntary benefits, and 30% said they were interested in having their employers provide access to financial planners to assist them in making decisions about all of their financial needs.
In deciding upon a particular voluntary benefit product or vendor, an employer should keep several things in mind:
- Is the type of product one for which employees have expressed an interest (as demonstrated by requests made or surveys done of the workforce) or one that you are comfortably sure employees will want?
- If administrative processes by the company's human resources/benefits staff will be required, are they easy to understand and economical in terms of the amount of time they will require?
- After examining detailed information on the product, does it seem to provide what its name implies?
- Is the carrier/vendor financially stable and reputable?
- If chosen properly, voluntary benefits can be a welcome, win-win supplement to an employer's benefits package.
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