Demographics drive voluntary product offerings

Voluntary benefits are creeping more and more into the everyday dialogue of benefit managers and advisers, but for those just getting involved, partnering with voluntary carriers and other vendors can sometimes be a difficult field to navigate.

Vinnie Daboul, vice president of national accounts at Employee Family Protection Inc., a Connecticut company that designs voluntary programs for brokers and its employer-clients, says finding the right carrier is different for every employer, depending on workforce size, employee makeup, location and unique culture.

“Here’s the big thing: I don’t think any one carrier is bad,” says Daboul. “Wherever or whoever it may be, our business is still very relationship-driven,” he says.

So what makes a good voluntary partner, aside from that relationship factor? The editors of EBN and Employee Benefit Adviser set out to get to the bottom of both benefit manager and broker perceptions of the voluntary industry and gather what brokers and their employer-clients are looking for from the business in 2014 and beyond.

Also see: Using voluntary benefits to attract the best talent – even temporarily

Overall, voluntary benefit sales grew more than 4% from 2012 to 2013, according to Eastbridge Consulting Group — the voluntary industry researcher that tracks final sales totals and releases them every spring for the year prior. All told, according to the organization, life insurance leads the field with $1.88 billion in sales in 2013, which makes up 28% of all voluntary sales that year. Following are:

• Disability insurance, with $1.37 billion, making up 21% of all industry sales;

• Accident insurance, with $775.1 million at 12% of all sales; and

• Hospital indemnity/supplemental medical with $551.8 million at 8% of all sales.

The remaining 31% of industry sales last year went to dental, cancer, critical illness, vision, and accidental death and dismemberment combined.

But those old-fashioned cornerstones of the voluntary world are no longer the be-all, end-all for a rapidly diversifying workplace — or the kinds of benefits that are now critical for attracting and retaining a potentially flighty millennial workforce, much less serving the needs of their older Gen X compatriots. Not to mention the distinct challenges facing baby boomers, many of whom are dealing with “sandwich generation” responsibilities at home.

Demographic shifts

Laura Kerekes, chief knowledge officer at ThinkHR, says those resulting demographic shifts make it necessary for employers to consider including a range of nontraditional benefits in their voluntary offerings, many of which can be excellent tools for getting top talent.

“Employers are trying to find that sweet spot in the mix, with benefits that employees want and perceive to be super-useful, but aren’t an administrative hassle and don’t cost much,” she notes.

To that end, Kerekes suggests that a broader portfolio of voluntary benefits may now include such innovative notions as concierge tools (allowing overly busy workers time-saving access to banking, shopping or cleaning) or even sick child care assistance or elder care for adults, in addition to legal services or long-term care insurance.

Also see: More nontraditional benefits on the horizon

Also popular, she notes, are money saving financial services including credit verification and identity theft protection, plus a range of career-building benefits, such as tuition assistance or enhanced training for employees.

“Dental and other older voluntary benefits are all me-too benefits; these newer ideas help to create an environment that helps attract the best and brightest, and then keep them longer, as well,” she adds.

Baby boomers

In its recent Voluntary Benefits and Services Survey, Towers Watson found that voluntary benefits offerings still tend to be geared at baby boomers, who remain the largest segment of the workforce. The report also suggests that employers are not adequately communicating the value of voluntary benefits to their employees — while these services can be accessed at any time of the year, outside open enrollment, less than a quarter of the employers surveyed said they had a year-round communication strategy to inform their workers of the offerings available.

Echoing Kerekes’ sentiment, the survey found that critical illness, identity theft and financial counselling are the three new top voluntary benefits employers are considering for the years ahead.  

Benefits decision makers have likely noticed a couple of different trends in the way that the ever-expanding universe of voluntary benefits is positioned to them by brokers and agents. As employee health insurance coverage oscillates with the still-unfolding provisions of the Affordable Care Act, many advisers who traditionally focused on group medical are now choosing to opt in to voluntary sales, in addition to those who always concentrated on voluntary products.

Critical illness, along with accident insurance, has driven voluntary sales’ rise in the last year — according to data from industry research group LIMRA — because CI and accident are being presented as a supplement to protect employee pocketbooks in this increasingly consumer-driven health care marketplace.

That idea is exactly what Troy Cook, principal at Mercer Voluntary Benefits in Des Moines, Iowa, says is going to drive an increase in voluntary sales across employer-clients of all sizes. “You’re going to see more voluntary benefits at all employers because they understand they need to be more efficient with their resources today, and at the same time they want to take care of their employees in any way they can,” he says. “The complementary products … like critical illness, hospital indemnity … continue to be a trend because these are products that help complement consumer-driven health care.” 

Also see: Should you offer hospital indemnity insurance?

Cook says that more and more employers are asking for voluntary. “The ACA created a mini-revolution in the speed that employers are asking for voluntary,” he says.

What benefits managers need to know about selecting a voluntary carrier involves looking very closely at the products to see if they have an “individual touch and feel.” Most voluntary products are unique in that they can be taken with employees from job to job, says Rob Shestack, senior vice president and voluntary benefits national practice leader at AmWINS Group. That’s because even if they’re sold at a group rate at the worksite, many are actually housed on the individual platform as an individual policy.

Sophistication of products, service

The carriers that tend to be good at this are the traditional worksite voluntary carriers that have been in the business for years, according to Daboul. For example, Unum and Transamerica both have strong products and strong service, he says. Sun Life and Guardian, carriers that are newer to the voluntary space, don’t have products that are as sophisticated as the older players, he believes.

However, when providing feedback on strong voluntary carriers for brokers, Sun Life rose to the top of at least three of our industry experts’ lists in the areas of voluntary life and disability insurance. These varying opinions underscore Daboul’s original premise, that no one carrier is “bad,” and the “good” ones rise to the top based on a benefit manager’s unique relationships. 

Shestack says it’s critical to remember the following when selecting a voluntary carrier: “No. 1, that the carrier has both group and individual programs. They need a carrier that can provide solid backend administration functionality — really good billing and claims, reasonable and sound underwriting, things like that.”