In today’s employee benefits marketplace, voluntary products can help solve employers’ most pressing challenges. This creates new, consultative sales opportunities and additional revenue streams for brokers. In the midst of healthcare reform, a time when employer-provided healthcare benefits can give companies a competitive advantage, employers are in change mode and are eager to make their benefits packages affordable and attractive. Voluntary benefits help employees supplement their major medical plan by filling coverage gaps and giving their employees additional coverage they can use a financial safety net—all at virtually no cost to the employer.
Today’s Cross-Selling Opportunity
The timing for selling voluntary benefits is right. Rethinking their employee benefits strategy, employer groups are looking for solutions and turning to the experts—their benefits advisor, broker, or agent—for ways to keep costs down while meeting the needs of a diverse workforce. For employers using a defined-contribution approach and offering high deductible plans that leave employees with more financial exposure, brokers feel that high-value voluntary products are a great fit. 42% of brokers in Prudential’s Eighth Annual Study of Employee Benefits: Today & Beyond think the rise in the defined contribution strategy will lead to more voluntary product sales, the biggest advantage being that employees will have more choices than before.
And choices abound. According to Towers Watson’s recent Voluntary Benefits and Services Survey, the voluntary benefits most commonly offered by the 320 large employers surveyed are:
1. Life insurance (offered by 94%)
2. Vision coverage (84%)
3. Disability insurance (80%)
4. Dental insurance (80%)
5. Accident insurance (68%)
In his June 2014 issue of Health Insurance Underwriter article, “Selling Voluntary Benefits: Timing Is Everything,” Jeff Caldwell of Transamerica Employee Benefits suggests that today, critical illness, accident, and short-term disability are the voluntary benefits that may protect employees the most—with supplemental medical expense and hospital indemnity insurance gaining momentum. The Towers Watson study adds identity theft and financial counseling are gaining popularity.
Brokers are advised to take a consultative approach with clients when offering voluntary products. Employers need to know the “how’s and why’s” behind each voluntary product they’re considering adding to their employee benefits package—how they can supplement the health plan and how they help employees address their overall financial wellness, for example. And because they are serving a diverse workforce with varying benefit needs, employers may need help seeing the generational or life change-based value in offering an equally diverse range of voluntary products that allow them to customize their coverage.
According to findings from MetLife’s 12th Annual U.S. Employee Benefit Trends Study, only 36% of employers are very satisfied with employee participation in voluntary benefits. One challenge facing carriers of financial products today is that many employees don’t know their financial needs. Without a clear understanding of their state of financial wellness, it’s difficult to sell them on the worth of most any insurance or savings-based vehicle.
Brokers can step in to help raise their clients’ enrollment in voluntary products. It’s likely brokers are already providing additional support to employers as they offer defined-contribution/consumer-driven health plans, so adding educational services—such as providing personalized employee consultations at the worksite—can help customers make the most of the product mix in their benefits package.
One way companies may see better voluntary product uptake is by offering off-cycle enrollment. According to the Prudential report, 46% of brokers (up from 33% in 2012) think voluntary benefits communication and enrollment would be more effective if it occurred on a different cycle than medical benefits and 27% (up from 17% in 2013) feel employees would make better life and DI benefits decisions with separate enrollment periods
Today’s broker plays the important role of showing employers—and their employees—that their benefits can work together to provide peace of mind and financial wellness. They just need to understand their needs and recognize the value in the products they’re using. Taking a consultative approach can get the right conversations started and result in more sales and increased client satisfaction.
Towers Watson’s Trends in Voluntary Benefits and Services Infographic
The Rough Notes Company’s Voluntary Benefits: Ten Things Brokers Do Right—And Ten They Do Wrong