Sales
Reeling In Voluntary Benefit Sales
We Get Below the Surface in our Annual View from the Top

by Leila Morris

Industry executives tell us that several factors are making 2010 a banner year for the voluntary benefits industry. In today’s economy, many employers simply can’t afford to offer a rich package of fully paid benefits. At the same time, the economy has woken people up to the need to protect their families from financial disaster. Voluntary-employee paid benefits offer a compelling solution. They give employees access to lower group rates while allowing employers to offer coverage at no cost to them. In addition, as today’s workforce becomes increasingly diverse, voluntary benefits allow employers to go above and beyond the one-size-fits-all benefit package to meet the needs of a diverse workforce. The following article lays out the trends and the path to success for brokers.

1) What is a compelling argument for employees to have extra money taken out of their paychecks for voluntary benefits when they are cutting back on all kinds of small expenditures in a tough economy?

Scott R. Llewellyn

Scott R. Llewellyn, Western Regional sales vice president for -Ameritas Group: Insurance can limit your unexpected expenses down the road, so financially it makes sense. I think most people understand how insurance helps pay for the unexpected costs and can in the end save you money. But, when you think about it, what is more important than maintaining your health. Take dental, for example; regular dental check-ups and cleanings, which are normally covered 100% with most dental plans, really help keep teeth and gums healthy. In any economy, you have very little if you don’t have your health. This goes for protecting your family with life insurance or making sure your children can see by having a vision benefit to cover their exam and glasses. What is more important than health and family?

Robert Risk

Robert (Bob) Risk, vice president, Group Protection Sales, Lincoln Financial Group: The importance of income protection becomes even more obvious during a tough economy. Last year helped many realize the impact of being laid-off. For those who remained employed, there was recognition that, while things were tough, it could have been much worse without an income. Paying for voluntary benefits through their employers is a cost-effective way for employees to purchase the income protection (disability insurance) and family protection (life insurance) they need. Additionally, these types of benefits are significantly cheaper than the cost of health insurance. With automatic payroll deduction, employers offered an easy way for employees to elect the coverage.

Brian Vestergaard

Brian Vestergaard, VP Product and Marketing for LifeSecure Insurance Company: A product like long-term care insurance has become even more important in economic conditions like the present. As employees (and retirees) have experienced dwindling returns and negative growth on their retirement savings (401ks or other retirement assets), protecting those remaining values becomes important. More than 60% of Americans over 65 will need some amount of long-term care services during their lives. And long-term care services can be very expensive – ranging from $25,000 per year for basic home care assistance to more than $75,000 per year (average) for care in a nursing home. No other insurance covers these expenses. LTC services can quickly deplete one’s retirement savings.

Elena Wu

Elena Wu. Group Marketing Officer and Steve Toby is director, Worksite Marketing, The Guardian Life Insurance Company of America: As today’s workforce becomes increasingly diverse along age, gender, life stage, and ethnic lines, voluntary benefits provide a great way to customize employee benefits so that businesses don’t have to force a one-size-fits-all benefit package on a diverse workforce. The type of benefits that are important to a 65-year-old employee approaching retirement may not be the same as their 35-year-old colleague with a new family.
Additionally, when an employer sponsors a benefit on a voluntary basis, necessary protection is more accessible from an underwriting and financial standpoint. It boils down to having more benefits and more choices for less than what employees would pay if they had to buy protection on their own, outside of the workplace.

Employees who are living from paycheck-to-paycheck are often the ones who benefit the most from the financial leverage that is created when they buy financial protection products in a group environment. Tough situations like facing a disability or death, or even getting routine dental care are even tougher to manage without insurance.

The extra money to pay for benefits can often be found by shifting priorities. Financial experts often help their clients find money by changing behavior, such as reducing dependence on credit card debt, kicking luxury coffee habits, and taking advantage of free culture and entertainment events. Employees often overestimate the cost of non-medical benefits and they don’t realize that they can secure protection for just a few dollars each month and use money found from cutting back on non-essentials. Enrolling in an employee benefit earlier rather than later can also be advantageous. For example, having voluntary life insurance coverage that increases an insured’s coverage amounts automatically each year, builds up greater coverage than what the initially signed up for. Neither the employee nor employer has to do anything. These increases have no affect to premiums so it pays to enroll early.

Jay Hutchins

Jay Hutchins Vice President, Broker Marketing, Colonial Life & Accident Insurance Company: The economy may be tough, but employees shouldn’t cut back on their insurance plans, especially those that help protect their financial risk, such as life, disability, and critical illness coverage. These products can provide benefits that help employees and their families maintain their lifestyles when they need help the most.

Tim Knott

Tim Knott, SVP, Voluntary -- Assurant Employee Benefits: The economy seems to have made people more aware of their financial security or lack thereof. Seeing friends and family lose jobs and fall into debt heightens the awareness to protect our own income from risk, such as job loss, unforeseen illnesses, or accidents.

Shawn Smith, Territory vice president, Transamerica Worksite Marketing: Our overall worksite business was up 40% in 2008. With most of our personal savings and retirement assets reduced significantly over the past year, voluntary insurance products become more valuable to the employee and their families. The most affordable and convenient way to purchase important individual insurance products is through payroll deduction at the workplace.

Mark El-Tawil

Mark El-Tawil, Humana: The economic downturn has most people reassessing their personal financial strategy and, for many, this includes revisiting their employee benefits. As more employers are moving toward consumer-directed health plans, voluntary benefits fill substantial financial gaps in coverage, preventing exposure to uninsured risk.
For instance, according to the American Cancer Society, 59 percent of costs associated with cancer treatment are non-medically related and not typically covered by a medical plan. For just a few dollars a month, cancer insurance can help with those kinds of costs, which might otherwise result in personal financial ruin.

Glenn Petersen

Glenn Petersen, MetLife: For employees, the economic climate has served as a wake-up call that financial protection is a growing priority. MetLife’s 8th annual Employee Benefits Trends Study found that 89% of employees are interested in their employer providing a greater array of employee benefits that they can choose to pay for on their own, and nearly six in ten employees say that payroll deduction is a convenient way to pay their premiums. Payroll deduction not only helps employees with budgeting their premium payments, but depending upon the benefit, this payment method could qualify employees for additional discounts and/or waiving the requirement for down payments.

2) Considering that brokers generally make less commission on voluntary benefits, how can they offer these benefits to clients in an efficient way that provides a good return-on-investment for the broker’s efforts?

Tim Knott, Assurant Employee Benefits: Well, it’s not always the case that brokers make less commission! We offer a higher commission scale because we know more work goes into selling voluntary. We also provide tools and resources to help increase a broker’s return-on-investment, such as personalized enrollment forms or providing enrollers to increase participation. I think the industry understands that selling voluntary can require more work. The industry wants to make it rewarding for brokers.

Elena Wu and Steve Toby, Guardian Life: Voluntary benefits can help close the deal when employers are reluctant to offer a benefit because they are struggling with budget constraints. A voluntary employee benefits solution enables the broker to sell a valued product that will cost an employer little to nothing while helping the employer retain talent and maintain morale. It helps to keep the relationship with an employer intact, which may lead to additional sales opportunities when times are better. The most effective packages often include a combination of voluntary benefits and employer-paid benefits that complement and enhance each other’s value.
It isn’t one versus the other. The supplemental approach bolsters the value that the broker brings to the table. The most successful brokers provide expert enrollment services or they lean on carriers for enrollment support. Experienced carriers even waive minimum participation requirements for many voluntary plans when industry-best enrollment recommendations are followed to ensure offering voluntary is worry-free.

Brian Vestergaard, LifeSecure: Voluntary long-term care insurance is still recognized as a product that requires extensive education of the buyer and good marketing and enrollment worksite campaigns. It is one voluntary product for which insurance companies still tend to compensate the agents at full- or near-full commission structures.

Jay Hutchins, Colonial Life: Find a voluntary benefits carrier that offers your agency a turnkey operation that consists of products, benefits communication, education, and enrollment services. A turnkey carrier can help you determine the best solutions for your clients and then take care of the rest for you. You don’t have to be the expert. It’s like having a free employee for your agency who handles the work and pays you commissions.

Shawn Smith, Transamerica Worksite Marketing: We find that a broker’s percentage of commissions will more than double compared to the core benefit commissions depending upon the voluntary products selected. I’m seeing a stronger broker push towards offering voluntary critical illness, cancer, accident, and term life insurance on an employer sponsored website with call center backup.

Brokers will retain a higher percentage of commissions when offering voluntary products via website. Website employee participation will suffer unless the employee is required to enroll via website and/or call center and the employee must view and take action to opt in or out of the voluntary product offering.

Strong employer support is critical to the ROI for the broker. A good broker will stress to their clients the positive impact of the voluntary benefit program and how imperative employee access or working conditions are for a successful voluntary benefits offering.

Scott Llewellyn, Ameritas Group: With reduced costs, it is now more financially sound for brokers to be involved in voluntary benefits. From Facebook to Twitter, e-mail to Google, everyone is online these days. Many brokers are working with employers to distribute information on voluntary benefits via their intranet -- company website or e-mail. Employers post their voluntary products and enrollment procedures right online. Just like returning an e-mail, employees are now able to enroll in benefits in a very economical and easy fashion.

Bob Risk, Lincoln Financial Group: I don’t know that that’s necessarily true; compared to what -- employer-funded benefits like Life and DI? They probably make as much if not more on voluntary. Enrollment and communication can be relied upon through the carrier to make sure it goes well. Additionally, offering voluntary benefits can also be an income generator for brokers and a way to retain business. By offering additional benefit options, they can more easily meet the varying needs of employers, which encourages employers to remain with them instead of moving to another broker.

Mark El-Tawil, Humana: This is not necessarily true. Brokers receive highly competitive first-year and renewal commissions on voluntary benefits. Studies show how employers that currently offer voluntary plans appear willing to add additional product lines. Selling voluntary benefits provides the broker the tools to help employers manage their medical plan costs with a multi-year product and funding strategy. These unique strategies can help brokers to win more new customers as well. By selling multiple product lines, brokers can maximize their compensation by providing a comprehensive solution to their clients.

3) How can you tell whether a particular voluntary benefit product will provide real value to your clients?

Shawn Smith, Transamerica Worksite Marketing: I think most insurance professionals agree that medical, disability, and life insurance are the three most valuable individual insurance products that every working person should own. The value is to each employee will differ based on the person’s needs. To be competitive in today’s marketplace, employers should offer a well-rounded benefit program that includes meaningful voluntary benefit products.
Today, most employers have reduced medical benefits by increasing the deductibles and coinsurances to be capable of offering affordable family catastrophic medical coverage.
Offering voluntary products that provide first-dollar benefits paid directly to the employee for unpredictable accidents and illnesses will help offset the employees new financial exposure in their cost-sharing medical plan.

Bob Risk, Lincoln Financial Group: The broker needs to know the overall benefit package being offered to employees. All products provide value; it’s important to match to the underlying program, offered by the employer, to ensure that the offerings make sense together. For example, if the employer already offers a life insurance plan that provides up to three times salary, additional voluntary benefits may not be necessary. However, if the employer only offers a small base amount of life insurance, then it would be of value to offer a complementary voluntary option. It really depends on what the employer offers. However, there is always a need for a long-term disability program.

Jay Hutchins, Colonial Life: Voluntary products add value to the policyholder because they’re designed to help fill gaps in coverage and add additional protection for their financial risks. Different people have different coverage needs. One employee may need more life insurance. One may have a family history of cancer. Every employee can benefit from voluntary benefits.

Scott R. Llewellyn, Ameritas Group: In general, the advantage of offering a variety of voluntary benefits is that members can pick and choose what they need most. What is important to one employee may not be important to another. Term life for a 20-year-old single employee may not be what they are looking for, but maybe this same employee is in the middle of buying his first home and wants the security of having insurance for legal assistance. Because voluntary benefits are often listed on a menu, what might look good to one person may not for another; that is the real value of offering voluntary benefits.

Brian Vestergaard, LifeSecure: Companies that sell long-term care insurance and agents who represent the product, tend to be very strong believers in the value of long-term care protection. This value is often apparent just through their sharing of personal caregiving experiences that take place within their own families. Almost all workers can envision or share a story of a close family member or friend who has been in a long-term care situation. The resulting financial struggle (unless the particular patient qualified for Medicaid) is enough for the individual to take pause and consider the additional financial protection.

Tim Knott, Assurant Employee Benefits: First, look at what’s offered at the group level. There may be some gaps in the overall benefits offered; that’s where voluntary comes in handy. Second, think about the life stages of employees. Many newly married men or women with families may want additional life insurance; on the other hand, young singles may not. Taking those two things into account will help employers offer voluntary benefits that will be most useful to their employees.

Elena Wu and Steve Toby, Guardian Life: Support starts with raising awareness of plan offerings and helping employees through the enrollment process with services like on-site group meetings, enrollment kits personalized to each employee, online enrollment, and phone support. Brokers and employers who follow simple, proven enrollment recommendations have their minimum participation rates waived. Our research shows that consumers often value key benefits through an educational approach when you describe what the coverage will do for them, but they don’t always realize what they are getting based on the name of the product. For example if you say to someone do you value protection that would give you a lump-sum of cash if you are recovering from a major illness most will say, “yes.” But if you ask them if they value critical illness protection, they might not understand the value proposition. Having multi-channel support that helps a diverse workforce understand the benefit package is critical when you are rolling out a voluntary program.

Mark El-Tawil, Humana: Take time to understand the needs of your clients. It’s important to listen to your clients and ask questions to ensure you are providing the solutions that align with their needs. Start by inventorying their current employer sponsored benefits as well as their employee pay all programs. Learn more about the demographics of the employee population. This analysis will show where the employer is providing adequate coverage and other areas of exposure. You can then recommend voluntary benefits that are most appropriate for the employees and will allow them to fill gaps in coverage.


Glenn Petersen, MetLife: Benefits programs can go a long way toward contributing to employee loyalty and retention. MetLife’s 8th annual Employee Benefits Trends Study revealed an increased correlation between benefits satisfaction and job satisfaction, and 69% of employees that were very satisfied with their benefits indicated that benefits were a reason to stay with their current employer (compared to only 12% of employees that reported low benefits satisfaction). Maintaining benefits satisfaction will be imperative once the job market improves as a tool for retaining top talent.

A solid understanding of the benefits trends across a particular industry, and also among employers of similar size and geography, is important in the competition for talent. Also important is understanding the preferences of the employee demographics comprising a client’s workforce. Using MetLife’s Benefits Benchmarking Tool can help brokers and advisors develop a benefits strategy that takes into account the preferences and attitudes of a particular employee population, which in turn enables more strategic discussions with clients. MetLife’s Benefits Benchmarking Tool, available at whymetlife.com/benefitsbenchmark, provides an easy way to compare and contrast benefits offerings, objectives, strategies and preferences across more than 80 dimensions.

4) Are there certain types of voluntary benefits that go well with different types of employer groups, such as blue collar vs. white collar?

Jay Hutchins, Colonial Life: It depends on a person’s needs. Look for a carrier that has a wide variety of products and flexibility to meet pretty much every employee’s needs.

Bob Risk, Lincoln Financial Group: Dental is essentially a universal coverage. With other coverages, the perception of need is what varies and the lines are getting blurred. Blue-collar groups will likely continue to equate the need for short-term disability (STD) or accident coverage with worker’s compensation coverage; they view worker’s comp as coverage that protects them on the job while accident or STD covers them off the job. However, they may not envision the need for long term disability protection as easily as white-collar workers.

Brian Vestergaard, LifeSecure: Long-term care tends to be more popular among white-collar industries, but still receives good attention from most all upper middle-income ranges. Remember, the very poor can qualify for Medicaid after most personal assets are depleted; the very rich can self-insure for their LTC risks, but the remainder (the whole middle class and upper middle class) really do need to consider the added financial protection of long-term care insurance. They may have saved diligently for comfortable retirement years, but also need to now protect such savings.

Tim Knott, Assurant Employee Benefits: There’s not much of a difference in basic needs for these two groups; it includes any person who wants to make sure they’re protecting their income in the right way. However, as a very broad generalization, white-collar employers may offer more employer-paid benefits whereas blue-collar employees might have a bigger need for voluntary benefits. Being able to offer cost-conscious options would be important there.

Scott R. Llewellyn, Ameritas Group: With the economy affecting nearly every employer, voluntary benefits are important to offer to all employers. With so many carriers offering voluntary benefits, brokers can tailor an offering specific to the needs of the employer regardless of their color of collar.

Elena Wu and Steve Toby, Guardian Life: The appeal of voluntary benefits crosses many employee demographics. According to Guardian research, employee interest in voluntary insurance products is strongest among professional and managerial employees. That’s not surprising since they generally have more income to protect and might have more discretionary income to fund their benefits. But blue collar and clerical workers also express interest in voluntary coverage and the appeal isn’t exclusive to any employee segment. A 2009 Guardian study revealed that nearly half of employees would prefer to have layoffs at their companies as opposed to losing their benefits. Women (60%) were more likely than men (44%) to consider obtaining benefits on a voluntary basis (employee-paid) if their employer did not offer coverage, but made it available at work. Full-time employees (52%) and employees making more than $50,000 (54%) were more inclined to prefer layoffs to benefit reductions than part-time workers (37%) and lower income earners (36%). The survey results consistently show that benefits are important to employees. In fact, nearly 10% of full-time employees said that they were postponing a divorce and another 6% were accelerating a marriage to obtain or keep their benefits coverage. Guardian research also shows that employees tend to overestimate the cost of their group benefits.

As employees take on more financial responsibility for their benefits it becomes increasingly important to educate them about the value and the relative affordability of voluntary benefits. Sometimes there is a perception that voluntary offerings are less robust than employer-paid benefits.

Shawn Smith, Transamerica Worksite Marketing: The need for voluntary benefits is very similar across all employer demographics. The primary difference would be the amount of protection necessary to fulfill ones personal insurance objectives. Based on incomes, I believe individual Long-term care would be one product that I would not offer to a blue-collar group.

Mark El-Tawil, Humana: Voluntary benefits fit all types of employer groups because they meet a variety of employees’ lifestyle and life-stage needs. Disability and life are among the most sought-after benefits and both employers and their employees generally understand how these products work. Accident, critical illness/cancer, and supplemental health coverage are ideal complements to the group medical plan they may already have in place. The American Cancer Association estimates that two-thirds of the total cost of fighting heart-disease, cancer and stroke comes directly out of the patient’s pocket. Also, recent studies have reported that more than 200,000 children go to the emergency room because of playground-related injuries each year.

5) Which voluntary benefits are becoming more or less popular?

Bob Risk, Lincoln Financial Group: It seems like dental is very popular and voluntary (term) life also continues to be one of the most widely sold programs. Voluntary benefits are still popular, overall, as a way for employers to offer quality cost- effective coverage to employees.

Brian Vestergaard, LifeSecure: Long-term care insurance is still finding its exact footing in the worksite arenas, but over the past several years, worksite sales of LTC insurance have experienced much stronger new business growth rates than pure individual (face-to-face) sales. LTC is a perfect alignment with healthcare considerations; it is really a continuum of the healthcare spectrum. An individual with a high deductible health plan and an HSA can use funds from the HSA to pay for long-term care insurance on a pre-tax basis up to certain limits.

Shawn Smith, Transamerica Worksite Marketing: In today’s economy I see bundling of products becoming more popular. Bundling life, long-term care and critical illness can save an employee on average 40% over buying each product on a stand-alone basis. Limited medical plans have gained in popularity over the past year primarily due to economic conditions have forced employers to move full-time employees to part-time status in lieu of layoffs, in-turn hiring more part-time employees as opposed to full-time. In our business, I see cancer insurance losing some traction to critical illness insurance. Critical illness insurance provides lump sum first dollar benefits for diagnosis of several other illnesses besides cancer.

Tim Knott, Assurant Employee Benefits: Voluntary benefits, in general, are becoming more popular. I think we’ve seen vision, term life, accident, and critical illness products increase over the last few years. There may be more awareness for these types of coverages and the growing need to protect income.

Scott R. Llewellyn, Ameritas Group: There are a lot of voluntary benefits on the market today. Worksite programs can offer a huge range of products, including, legal, pet, and cancer insurance -- to mention only a few. But during these times of limited available funds, dental, vision, life and disability seem to be the most popular.

Elena Wu and Steve Toby, Guardian Life: A recent Guardian study revealed that disability and vision insurance are top voluntary choices. Since disability and vision insurance have a relatively lower penetration in the workplace, it isn’t surprising that employees said they would be willing to pay for these benefits on a voluntary basis. A lot of employers already pay for dental and life insurance so employees might not be as willing to offer to pay extra for coverage that they already have. But, if an employer can’t afford to maintain dental insurance and it’s a choice between not having it or gaining access on a voluntary basis, employees would most likely choose voluntary dental. Dental insurance is enormously popular as a voluntary benefit. Dental is an affordable highly valued benefit and works well in a voluntary environment. Particularly when the employer previously did not offer dental coverage and now wants to bolster their benefits package without adding to their fixed costs. We are also seeing a lot of employers offer a base line of coverage for disability, life and critical illness and then they give their employees the option to buy-up on a voluntary basis.

Jay Hutchins, Colonial Life: Jay Hutchins, Colonial Life: With the focus around increasing healthcare costs and rising major medial deductibles, we’re seeing a large increase in employees who want to purchase supplemental health plans. Hospital confinement indemnity, cancer and critical illness plans are very popular because they have real value to employees right now. Employees see the headlines about healthcare problems, and they have friends or family members who have been touched by cancer. They realize the financial risks they face. Voluntary dental seems to be less popular. It has been around for a long time and the coverage hasn’t changed that much.

Mark El-Tawil, Humana: Critical Illness, accident and hospital indemnity are very popular. Consumers facing changes to medical plans, including higher deductibles, are often not able to afford the expenses that are associated with an accident or serious illness. Expenses are not limited to actual medical care; many other family and other household expenses are incurred when an employee is injured or needs significant medical care and is unable to work. A majority of American employees are living paycheck to paycheck and are unprepared for these prohibitive expenses. Unexpected illnesses and injuries cause 350,000 personal bankruptcies each year – according to the Council on Disability Awareness, 2008.

Glenn Petersen, MetLife: Voluntary offerings are up across all group products, but particularly for Critical Illness Insurance (CII) and Auto & Home. CII is an ideal offering particularly when employers are making changes to their medical plans, such as switching to a high deductible plan. Of the Critical Illness cases MetLife implemented in 2009, the product has been most successful when it is offered alongside other benefits (especially medical insurance), during open enrollment. CII is an effective complement to medical coverage and disability income protection to help fill in the financial protection gaps that become apparent when major illnesses create a spike in expenses not covered by traditional insurance. Auto & Home is popular as a voluntary benefit because it provides employees with access to group rate savings on coverages they likely already have.

Legal plans are another area of growing interest. Comparing 2009 vs. 2008, employee usage is up 213% for refinancings and home equity loans, 103% for property tax assessments, 62% for personal bankruptcy and 34% for debt collection defense, among other matters. Enrollment in group legal plans is also growing since employees facing financial pressures are unlikely to be able to afford a private attorney on their own. Employees also appreciate the value of the legal plan for long-term legal needs such as wills and trusts. Enrollment at many organizations that implemented a Hyatt Legal Plan through MetLife with a start date of January 2010 surged well above average enrollment figures.

6) How do you choose a carrier?

Bob Risk, Lincoln Financial Group: Based on ease of doing business, the carrier must offer quality products, the strength of enrollment support desired by the employer, and quality administration support with billing, future enrollments, etc.

Shawn Smith, Transamerica Worksite Marketing: As equally, if not more important than the product is the enrollment process. Strong employer support and a strong enrollment team will generally lead to a high employee participation percentage.

Tim Knott, Assurant Employee Benefits: I think there are three things that anyone should think about when selecting a carrier. First, what’s their reputation for service in both claims and administration? Are they going to be easy to work with when you need them? Second, what kind of additional tools and resources do they offer to help you through the enrollment process? And third, look at their financials. You want to do business with someone who will be around to pay your claim in 10 years!

Scott R. Llewellyn, Ameritas Group: I think it is all about relationships; do you know your carrier rep? Have you worked with the company in the past? What is their service like? Are they there when you need them? Keeping your clients happy is job number one, so you need someone that you can trust. Avoid going with the cheapest carrier. Sometimes you get what you pay for. Do you really want your benefits from the lower bidder, especially voluntary benefits that can be a little more work-intensive? I don’t think so. Someone is always trying to buy the business in the first year. Just wait until the renewal comes, yikes. I think you want to take the solid stable company with the reasonable rates.

Elena Wu and Steve Toby, Guardian Life: Brokers should work with carriers that make an ongoing effort to understand the needs of their clients and offer a breadth of products and services that make it easier for brokers to help employers and their employees

Mark El-Tawil, Humana: Look for carriers that have a long tenure offering voluntary benefit plans. Carriers need to have an effective benefit communication strategy and an ability to enroll employers in a wide variety of benefit plans. Carriers must also be able to streamline new case installation, offer a billing process and provide excellent ongoing customer service. They must thoroughly understand employer paid benefits as well as voluntary benefit programs. It is important to offer complementary products that are appropriate for the employer and employees.

Glenn Petersen, MetLife: Look for a carrier that has a long history of offering voluntary benefits and can provide a broad suite of market-leading products and solutions. It is also important for a carrier to offer diverse enrollment options and excellent customer service, while also being financially sound. It is beneficial for the carrier to have a national presence and to have representatives in major cities throughout the U.S. that your clients are in, and to have sales and service teams that work closely together to meet the unique needs of you and your customers. Representatives should specialize in voluntary benefits and have significant experience in designing benefit programs to help provide solutions that meet the needs of your clients.
.
7) When you are presenting voluntary products, do some types of coverages just naturally sell well together?

Bob Risk, Lincoln Financial Group: Short-term disability and long-term disability make a natural combination for integrated and comprehensively managed benefits. In addition, life insurance, and disability insurance sell well together because they offer income protection (STD/LTD) and long-term, family protection (Life). However, all programs have to make sense in conjunction with the base programs offered by the employer.

Scott R. Llewellyn, Ameritas Group: Yes, I think some coverages are like peanut butter and jelly; they just make sense together. Life and disability, dental and vision -- these have always been sold together.

Jay Hutchins, Colonial Life: Voluntary products should be sold based on each employee’s individual needs.

Tim Knott, Assurant Employee Benefits: It really depends on the overall employee benefit package being offered. The most important thing is to make sure that gaps are pointed out and filled in with voluntary benefits. It really depends on the needs of employers and their employees.

Elena Wu and Steve Toby, Guardian Life: At Guardian, we’ve been promoting the advantages of pairing both voluntary and employer-paid critical illness insurance with consumer driven health plans. Critical illness insurance can be bundled with your health plan to provide greater coverage when serious illnesses strike. We also tend to sell dental and vision coverage as a package. Life, disability, critical illness coverage tend to be sold together.

Shawn Smith, Transamerica Worksite Marketing: In a small group market, the combination of guaranteed issue gap plan, critical illness, and accident insurance naturally compliment one another in our high deductible medical plan environment as long as the gap plan does not impact the utilization of the medical plan. For part-time employees, Limited medical with dental, vision and short-term disability work well together from both a pricing and underwriting perspective.

Mark El-Tawil, Humana: Yes, certain products do make sense to sell together. However, this is typically dependent upon the particular situation of the employer. If the employer provides a small amount of life insurance for their employees, it could make sense to offer the group a voluntary term and/or whole life plan.

Glenn Petersen, MetLife: The most prevalent voluntary benefits offerings that are offered at the same time are Group Auto & Home, Legal and Critical Illness Insurance. These products have broad appeal and can help meet the diverse needs of employers and their employees. While these products are often adopted by employers at the same time, in order to maximize employee awareness and understanding of the benefits, it is important to develop a customized communication and enrollment strategy. Of employees that believe their employer’s benefits communications educate them effectively, 78% said they were satisfied with their benefits (according to MetLife’s 8th annual Employee Benefits Trends Study). On the contrary, of those employees that do not believe their employer’s benefits communications educate them effectively, only 13% said they were satisfied with their benefits.

8) How do you present voluntary -benefits in a way that doesn’t overwhelm employees with confusing options?

Tim Knott, Assurant Employee Benefits: Making sure that the products and educational materials are easy to understand is extremely important; people won’t buy what they don’t understand. Offering at most two or three options for each product is also smart, because any more than that can begin to get overwhelming and create confusion.

Bob Risk, Lincoln Financial Group: It’s critical to handle this through the enrollment process. Personalized, simplified enrollment forms offer clear direction and options for employees to minimize confusion and assist in the education and selection process of benefits. Pre-filling the enrollment form with as much personalized information as possible helps clearly outline for employees what the per-pay-period costs and amount of coverage will be, on life as well as disability. Both the employer and broker have to do legwork to help ensure employees are offered a reasonable number of quality choices that address their most important needs.

Jay Hutchins, Colonial Life: This is where I think voluntary benefits carriers fail the most. If a carrier wants to enroll a lot of voluntary benefits products in one enrollment, employees can get very confused. The best way is to offer two or three voluntary products and take the time to help employees understand their coverage gaps and their most pressing needs. Having a benefits counselor conduct a one-to-one benefits session can help employees figure out where they’re most at risk financially and select products to protect their most important risks.

Brian Vestergaard, LifeSecure: Limit the choices when possible, but still provide some basic low-medium-high variations of protection.

Shawn Smith, Transamerica Worksite Marketing: Keep it simple. My experience has been never to offer more than two new voluntary benefit programs annually. It’s best if the two products do not compete for participation and premium, such as offering a separate accident and disability insurance or critical illness and cancer insurance during a first time offering. I have always been a believer in offering the same riders to all employees or employees in a certain employer classification. When offering life insurance, we find that 75% of employees will buy permanent over term due to their long-term life insurance needs and the simple fact that most employees already own some level of term life insurance.

Scott R. Llewellyn, Ameritas Group: This is a critical area and one that is often overlooked. Often, the presentation of voluntary benefits is confusing, overwhelming, and difficult for any person outside the insurance industry. I think this is where the broker has an obligation to offer high quality products that do not have loopholes or missing provisions, or are scaled back to achieve a low price point. Benefits should be straightforward and honest. They should be offered in such a way that you would be OK if your elderly mother selected one of the programs. Offerings should be tested before launched. Create a sample group and see how they respond. Do employees understand the cost benefit?

Mark El-Tawil, Humana: First, talk to the client about an enrollment strategy that works best for their business. Work with the client to determine the most effective benefit communication methods considering the selected product mix, age of employee population, available technologies, and corporate culture. There are a variety of enrollment tools and service models that can be used to effectively communicate and enroll a benefits program. It is important to leverage best practices, which can include group meetings, one-on-one meetings, web based tools, etc. The key is to have a plan that allows educating employees on their voluntary benefit offerings. Once the employees fully understand their voluntary benefit options, you see very positive results: high participation rates and a very happy employer.


9) Do you see more unbundling of voluntary benefit options?

Scott R. Llewellyn, Ameritas Group: Yes, as electronic enrollment, billing, and eligibility become easier and easier to use, we are seeing the need bundling of voluntary benefits declining. Now, carriers that specialize in one product can be selected, rather than an employer selecting life, disability, vision, dental, hearing, and other benefits all from the same one company that may only have expertise in one or two products. There can be an advantage to selecting a company based on their core competency. Wouldn’t you rather have your heart checked by a cardiologist rather than a general practitioner?

Shawn Smith, Transamerica Worksite Marketing: In today’s economy, I’m seeing more bundling than unbundling. I refer to bundling as combining products under one policy. The discounts, preferred underwriting, and benefits are all compelling reasons to bundle products. We can offer products either stand alone or bundled, but I see a much greater value for the employee disposable dollar when bundling products.

Bob Risk, Lincoln Financial Group: No, I see a greater desire to bundle things, for one main reason -- simplification. Employers want simplification of administration and enrollment, and integrated benefits management. Bundling can help accomplish this in a consistent way.

Tim Knott, Assurant Employee Benefits: We actually see more voluntary products being offered together because it makes the administration much easier for the employer. However, what we do see is a separation of the medical and voluntary enrollment. It can be overwhelming for an employer to select all of the medical benefits and then turn around and make more decisions; some brokers find it easier to split the sessions up so more attention can be paid to each one.

10) Do you have anything else to add about voluntary benefits?

Bob Risk, Lincoln Financial Group: The trend towards voluntary coverage is continuing. With ongoing uncertainty in healthcare reform, we could see more forms of voluntary benefits taking place over the next five years. There are still a lot of unknowns; there may be new types of products, or increases in simplification of products, and the industry may head more toward employee-paid benefits. The worksite will continue to offer the greatest opportunity for employees to access quality products and carriers.

Shawn Smith, Transamerica Worksite Marketing: The voluntary benefits market is consistently evolving in coordination with the changes to healthcare. Carriers must be aware of the constant change and offer competitive products that fit the needs of our working class. Our target market is the 80% of the employee population that earn an hourly wage. The hourly waged employee is most affected when the cost of healthcare increases, which leads to higher personal financial exposure at the doctor’s office and hospitals. Most of our products include a wellness benefit rider and we are experiencing higher utilization for wellness claims. Hopefully the wellness trend will continue to rise.
• Healthcare Reform will change the voluntary products/distribution model: It has already had an impact on the voluntary market. More health brokers are diversifying and offering voluntary worksite products to their clients. Several worksite carriers have changed their core distribution model to include direct client marketing alongside the traditional health insurance broker marketing.
• Certain worksite products have the highest employee participation: The two most important and popular voluntary benefits are life insurance and short-term disability. When offered together, generally we see a 50/50 split in employee participation between the life insurance and short-term disability. It’s important to offer a voluntary permanent life insurance option alongside a voluntary term life insurance option. Basically, most employees already own term life insurance from their employer, so they will buy permanent life insurance based on their personal post-retirement life insurance needs.
• Technology sells worksite products: Worksite product commissions are the primary source of funding for the HRIS benefit modules for larger employer groups. Some worksite carriers will offer free HRIS benefit modules leave-behind systems if the client purchases just two or more of their voluntary products. When implementing the HRIS benefit module leave behind system, it’s very important to train or coach employees on how to use the system and is always a good time to have a voluntary benefit fact finding conversation.
• Many employers prefer a call center and web based voluntary benefits enrollment over face-to-face: Employee time at work or patient care in a hospital environment is important to the bottom line for most organization. Pulling employees into group or individual meeting at work can create employer production issues. There has been a slow shift from the traditional face-to-face voluntary benefits enrollments to call center and web based enrollments. The phone call can be scheduled during the day or evening with a spouse available. The call and web coaching generally feels more comfortable for the employee to make important benefit decisions. Some employees are reluctant to sit with an enroller/agent based on their fear or embarrassment of what they don’t understand about their own benefits. Generally speaking, a phone call and web appointment is less intrusive than a face-to-face appointment.
• An enrollment firm essentially works as additional personnel for the employers’ benefit department: Core benefit communication is very important part of the retention of the employers’ best employees. An enrollment firm can communicate all employee benefits, provide benefit statements to help the employees understand the real employer cost value of the core benefits, and provide employee dependent eligibility audits to be certain the employer is not overpaying for the expensive benefits they provide for their employees. Most brokerage firms do not have the staff to provide the added services an enrollment firm can provide.
• There are new product marketing ideas that employers and brokers should be aware of in today’s voluntary marketplace: For the small group clients I see bundling of life insurance, critical illness, accident insurance and disability income on a guarantee issue basis down to five employees. Also, bundling GAP insurance with critical illness and accident insurance down to two employees. With the higher-than-normal HSA medical renewals, the GAP insurance provides a strong first-dollar solution and as long as the GAP coverage does not impact utilization of the medical plan, this will minimize the renewal increases.
• Having employer buy-in when offering voluntary benefits is essential: If the employer chooses to offer voluntary products, there must be a reason why management made the decision to offer voluntary products. If management is not properly informed or sold on the voluntary offering, employee access will be difficult and participation will suffer. Leveraging the worksite products underwriting offer with the employer buy-in and employee access is one soft way to approach the employer for buy-in. Most employers will ask for the best possible underwriting offer for their employees without realizing they just sold access to their employees.