Looming changes from health care reform, combined with increased cost-shifting to employees, has put voluntary products at the forefront of the benefits industry—or, at least, that’s what’s about to happen.
The Eastbridge Consulting Group’s Voluntary Industry Confidence Index shows brokers are increasingly confident about the voluntary employee benefits industry. Based on sales growth, profitability of the industry and employee enthusiasm about voluntary products, confidence increased to 99.7 at year-end, up from 98.4 in a mid-year 2011 survey.
If you're not talking voluntary, you're behind the times, industry experts say. And it goes beyond vision and dental insurance—though those ancillary benefits are still important to employees.
After talking to industry vets, find out which five voluntary products to keep your eye on>>
Disability insurance’s potential is obvious, says Marty Traynor, vice president of voluntary benefits and products at Mutual of Omaha, because disability income protection meets such a basic need but continues to be undersold.
Workers in this country remain woefully uninsured—and underinsured—when it comes to disability insurance. According to The Hartford, only 49 percent of U.S. employees have short-term disability coverage, and 44 percent own long-term disability coverage. In fact, 100 million Americans aren’t protected by private disability insurance, based on Social Security Administration numbers.
That’s because most employees know little or nothing about disability insurance. A national survey of 1,200 employees from the Consumer Federation of America and Unum found that just 13 percent of employees say they know “a lot” about this insurance. But when given information about this financial protection benefit, a whopping nine out of 10 employees say they want disability coverage and would pay for it.
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Critical illness is one voluntary product that brokers agree has a huge growth potential.
Without this coverage, a critical illness such as a stroke, heart attack or cancer can have a devastating effect on a typical household budget.
“The recession and the slow economic recovery have awakened and renewed people’s interest in the idea of financial protection,” says Jodi Anatole, vice president, critical illness insurance at MetLife.
And younger people are even purchasing the coverage: Research from the American Association for Critical Illness Insurance and General Re Life Corp shows that roughly half of both men and women who purchased individual critical illness insurance were younger than age 45.
Adding critical illness to an employer’s benefits program can help the employer move toward high deductible health plans, says Donna Joseph, CEO of Rhodes-Joseph & Tobiason Advisors, LLC.
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Traynor says the “entire family of supplemental medical” opportunities is on his personal voluntary watch list because “health care reform continues to drive innovation and interest in this area." Supplemental medical includes accident, hospital indemnity and cancer insurance.
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Legal plans/identity theft protection
Industry sources say employers should take a close look at offering group legal benefits for their employees—and the reasons why can be measured in dollars and sense.
Legal plans can help employees reduce stress and reduce absenteeism—and that increases an employer’s bottom line. Plus, most plans are affordable—not more than $20 per month and cover a host of pre-determined legal services.
This goes hand-in-hand with identity theft protection, Joseph says. “Whether as a voluntary standalone product or combined with legal plans, identity theft protection, as seen by employees, are a valuable part of an employer’s benefit program adding vital financial protection.”
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Long-term care is expensive. Nationally, the hourly rate for home health care is $19. The annual cost of an assisted living facility is $39,600 and has increased nearly 6 percent annually over the past five years.
And, according to the Department of Health and Human Services, most will need it during their lifetime. About 60 percent of individuals over age 65 will require at least some type of long-term care services, and more than 40 percent will need care in a nursing home for some period of time.
So the math itself can—at least in theory—make LTC insurance an easy sell.
“New products that combine life and long term care protection—often together with disability plans—will help to expand the appeal of long-term care protection in a way that’s appreciated by the different generations in the workplace,” Joseph says.
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