Most economists seem to agree that we are in the middle of a slowly expanding economic recovery. What will be the long-term impact of this historic financial collapse and recovery on the employee benefit and voluntary landscape?

Voluntary benefits proved to be an important component of employee benefits packages last year for businesses and the employees who work for them. Sales numbers for voluntary products reveal a compelling story.

2009 year-end results from LIMRA showed sales of many voluntary products up 10% overall. The workplace sales of life insurance products alone jumped by 11%. Term life, accidental death and dismemberment and long-term disability products were the most popular voluntary products bought by workers. But an uptick in demand was also seen in critical illness and dental plans.

Employees' ongoing desire for voluntary benefits

At first glance it might be hard to understand why employees would embrace programs that require them to pay out-of-pocket for their benefits when little more than a decade ago it wasn't uncommon for employers to cover the cost of most, if not all, employee benefits. Upon closer examination, it's easy to understand why employees value voluntary programs, especially during a time when the economy has caused widespread vulnerability.

In a survey by The Guardian Life Insurance Company of America, Benefits & Behavior: Spotlight on the Economy, full-time U.S. workers revealed their feelings about voluntary benefits and how they would react if it came down to a choice between either salary cuts or maintaining benefits.

Employees value their benefits so much that nearly 60% said they'd take a salary cut or go without a raise or bonus in order to retain their current level of workplace insurance coverage or retirement contributions.

This sentiment held steady in 2010: 41% of full-time employees would consider obtaining benefits their employer currently does not offer if their employer made them available but they had to pay all or most of the cost. Disability coverage (58%) and critical illness coverage (56%) top the list of products employees would consider. However, closely trailing were also dental (55%), life insurance (52%) and vision (48%).

What will happen as the economy rebounds?

Despite the unease that workers faced last year, and may continue to experience until the economy gets on more solid footing, benefits still are top of mind and employees aren't willing to sacrifice them. Guardian's 2010 survey revealed that as the economy improves, 82% of employees plan to stay at their job - with 70% citing good employee benefits as the reason.

Voluntary benefits can serve as a tool for employers to achieve the balance between managing the bottom line and helping them retain top talent. Employers that offer their employees stability and income protection during the worst of times will be in a better position to maintain a loyal workforce in the best of times.

However, incorporating effective employee-pay-all insurance into a package doesn't just mean passing the buck on to employees. Well-designed plans can offer ways to help employees get maximum protection out of what they're paying, enabling them to be appealing no matter what the state of the economy.

Features of dental plans, particularly related to annual maximums, also enable employees to get the most value out of their premiums by helping them stretch their coverage.

For example, one feature worth looking into allows members to obtain preventive care without it being deducted from their annual maximum - rewarding healthy behavior and preserving the annual maximum for other needs. For voluntary benefits to maintain their appeal and keep employees motivated and happy, plan design elements which reinforce benefit value to consumers are necessary.


Elena Wu is group marketing officer and 2nd vice president of worksite marketing at The Guardian Life Insurance Company of America.

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