A Q&A with John Thornton, Amalgamated Life Insurance Company’s Executive Vice President, Sales and Marketing
Q: There continues to be a lot of hype around voluntary benefits. Is there really that a great demand for them?
JT: Yes. Industry data from multiple sources continues to project increasing demand for voluntary benefits, both on the part of employers and their employees. Earlier this year, DirectPath and Gartner released the findings of their study, 2019 Medical Trends and Observations Report. In it, they reported that 66% of employers now offer long-term disability voluntary benefits and 50% offer short-term disability. Further, the report indicated that 75% of employers offer supplemental life—up from 45% in 2018; 60% offer AD&D up from 27% in 2018, and most other voluntary benefits such as identity protection and legal services are also showing upward trends.
Q: What’s the main reason more employers and plan sponsors are offering various voluntary benefits? Is it largely to shift the costs of benefits to their employees?
JT: The primary reason which is to retain and attract employees. Of course, cost-shifting is a factor and an incentive for employers to offer voluntary benefits.
According to unemployment data released by the U.S. Bureau of Labor Statistics, unemployment has held at 3.7% for consecutive months; the lowest rate since 1969. The candidate market is tight, especially in certain white collar and professional roles including those in the Science, Technology, Engineering and Mathematics (STEM) fields. Today’s workers are very savvy and many place a high premium on financial security and quality of life. They recognize that having access to high quality voluntary benefits will ultimately accrue long-term life benefits and financial wellness for themselves and their families. As a result, they are seeking out employers who realize the importance workers place on these benefits. This is not lost on businesses.
Q: So, I guess you’re saying there is a huge opportunity for brokers relative to their selling voluntary benefits?
JT: Yes, without question. We’re seeing it in our own product sales. Our voluntary product sales have continued to climb, which is why we have been actively expanding our voluntary portfolio for the past several years. In June, for example, we announced that we are now offering a voluntary Portable Term Life product. Last year, we added an identity protection and credit monitoring voluntary benefit and are continually looking for other solutions that serve America’s workforce.
Q: Do you think brokers are missing out on the voluntary boom?
JT: No. I do believe many are capitalizing on it and bringing these solutions to their clients. Where there may be a gap is that many are marketing voluntary benefits just as they would group benefits. They do require a different approach. It’s not enough to have a great working relationship with the client, the employer/plan sponsor. Marketing voluntary benefits requires a new process that takes into account that the employees are the ultimate customer for voluntary benefits. Therefore, brokers must take the time to understand their clients’ workforce demographics, and do the research to understand what voluntary benefits resonate most with the different generations. In this way, the sales emphasis can be on those products that best reflect the needs of the client’s employee composition.
It’s also important to know what percentage of their group health plan premium employees are paying for. This will be a factor in how much they might be able to afford in other voluntary benefits. Clearly, there will be some accounts where all voluntary benefits will not make sense based on their workforce demographics; that is whether workers are largely highly-compensated employees or in lower paying jobs, and how much of their health benefit cost they are assuming.
Q: How important is the enrollment process and how can broker optimize enrollment periods to market voluntary benefits?
JT: Of course, enrollment periods are when a broker has both the employer’s and employees’ attention. It’s when the focus on benefits is highest, perhaps with the exception of life events such as marriage, birth of a child and the onset of a major illness occurs—all of which can trigger an interest in various insurance products. To capitalize on this heightened share of mind, brokers should do all they can to educate and motivate both parties.
Employers and plan sponsors need to understand the value proposition voluntary benefits offer them, especially when paired with their company’s high deductible plans. Together, the combination is an extremely cost-effective way for employers to help their employees gain the added protection they want and need, without incurring extra costs which, over the long run, could jeopardize the company’s financial stability.
Brokers should arm employers with consumer-friendly, jargon-free information about the various voluntary benefits and let them know there will knowledgeable product specialists on hand during enrollment sessions to explain the benefits to their employees and answer their questions. Additionally, it’s important that brokers remind employers that voluntary benefits can be offered to all employees, including part-timers who, like full-time employees, benefit from not having to conduct all the research on their own.
As for employees, in addition to providing product information that is easily understood by the average worker, and when necessary, provided in a second or third language, brokers need to let employees know that product information is readily accessible online. Brokers should inform employees that information on the carrier or company behind the voluntary benefits is also available online. This provides employees with added confidence that they will be purchasing products from organizations that the broker has carefully vetted.
Q: You’ve spoken about employees as a whole, but isn’t it true that marketing voluntary benefits to millennials may require brokers to be even more tuned in to their priorities?
JT: To the extent that millennials have surpassed Generation X as the largest number of workers in the American workforce, yes. Based on this Pew Research data and other research, millennials have priorities that, in many ways, differ from Generation X and the baby boomers. Whereas the boomers’ focus is on retirement and Generation X members’ are focusing on retirement and paying down their debt, millennials—ages 23 to 38 in 2019 —have placed a higher premium on making enough money primarily so they can enjoy their lives and feel financially secure. Many millennials witnessed their parents and grandparents lose a lot of money in their retirement plans during the Great Recession; some even lost their jobs. Being financially secure is particularly top of mind for them. Brokers marketing voluntary benefits to millennials should educate millennials as to the role voluntary benefits have in supporting financial security.
Millennials, the first generation who grew up using digital communications, also have an expectation that you’ll communicate with them as they communicate—largely through their mobile devices with a high emphasis on text messaging. They also appreciate, as do the other generations, a personalized approach that lets them know you understand them, took the time to educate them regarding the risks various voluntary benefits address, different levels of coverage and related cost factors.
Q: Any last words of advice to brokers selling voluntary benefits?
JT: Yes. Voluntary benefits were made for cross-selling. They are an ideal way for brokers to build higher revenues from an existing client, while also strengthening that client relationship and reducing the potential for another broker selling voluntary benefits to breach that relationship. There is every reason for brokers to be marketing voluntary benefits to their existing clients and using them as a hook to build new client relationships.
John Thornton is executive vice president of sales and marketing for Amalgamated Life Insurance Company