During an open enrollment meeting conducted last year on behalfof a client, one of our advisors began talking about the value ofaccident insurance to supplement the employer's high-deductiblehealth insurance. Unprompted, one participant's hand shot into theair. Her arm was encased in a cast. The advisor acknowledged her,and she enthusiastically explained how a policy she'd purchasedthrough the company paid all of her injury-related expenses.Without it, she would have had to come up with the moneyherself. 

“Buy the accident insurance,” she urged her co-workers. “It'sworth it.” The group—which totaled more than 100 employees—had 100percent participation. 

While we are delighted when serendipity delivers an unexpectedboost to the sales process, here's an even more startlingstatistic. This same consultant—Eric Haglund, a principal inDigital Benefit Advisors' Atlanta office—enrolls 75 percent ofemployees in this voluntary benefit when no broken-limbed employeesare present to illustrate his point. In addition, about half signup for the critical illness insurance he now offers. AlthoughHaglund has been selling health insurance for 24 years, he onlybegan selling these additional policies in 2010. His success isindicative of a huge shift occurring as voluntary benefits evolveand become mainstream.         

Once upon a time, voluntary benefits were the Rodney Dangerfieldof the insurance industry: They got little, if no, respect. Butsuddenly, this neglected niche has achieved a trifecta of appeal:Brokers, employers and employees all want them. Because this is newterritory for many of us, it's crucial to explore how we reachedthe current state of affairs, identify areas for improvement toovercome sales objections, and explore how to create better, moremeaningful products.

Also read: 6 ways to overcome sales objections

5 voluntary products to watch this year

Your guide to selling voluntary benefits

The craziest sales objections you've ever heard

Room for improvement

On the surface, commissions appear to be out of kilter. Anaccident policy that pays a 60 percent commission up front(dropping to 10 percent in subsequent years) seems unfathomablewhen compared to the 3 percent to 7 percent health plans pay today.There's a good reason for these lopsided ratios, however, becausethe enrollment process is tremendously expensive. 

It's not unusual to offer employers multiple onsite groupsessions, followed by individual meetings with each employee. Andmuch of the remuneration disappears when agencies pay up to 80percent of their compensation to outside enrollment firms. Toeliminate misunderstanding, carriers might consider new terminologythat distinguishes commissions from enrollment expenses. Semanticsaside, there is a bigger issue to address and not much is saidaloud about the topic. 

Until recently, the design of many voluntary products made itdifficult for individuals to receive commensurate value for thepremium they paid. The underwriting process eliminated those with ahigher propensity for claims from obtaining coverage, and theproduct design made the claims process confusing and clumsy. Thosedynamics are changing—rapidly.

Changing market forces

In the past, many voluntary benefits were sold directly by thecarrier to the employee. There were few intermediaries to compareplans from a variety of insurers or to help discern what type ofcoverage dovetailed with the health plan offered by an employer.Other factors also were at play. Health insurance was lessexpensive, and deductibles were lower. Higher-compensated employeesoften were able to self-fund unexpected medical expenses, andvoluntary benefits were primarily the province of the working classand underinsured who wanted to protect themselves from financialruin if a health crisis occurred.

Numerous forces recently have coalesced, completely changing themarketplace. The cost of health insurance has skyrocketed, and theeconomy tanked. Businesses reduced benefits, raised deductibles andout-of-pocket limits, and dropped certain coverage altogether.Costs shifted from employers to employees. Suddenly huge gapsexist, and the average family can no longer afford to payout-of-pockets, particularly if the policyholder can no longerwork. Today, supplemental plans—such as accident and criticalillness—as well as gap plans, disability and life insurance havemore relevance than ever before. 

Time for new nomenclature

With the increase in financial exposure created by medical plandesign changes, employees are demanding more choice in theirbenefit plan options. 

Employers now see the value in providing a combination ofcoverage—particularly when there is no cost to them, or if they canfund policies for a reasonable sum. In fact, while many companiescontinue to reduce health benefits, an increasing number are payingfor additional forms of coverage. Consider this: In this changingenvironment, the term “voluntary” serves no one well. Our own firmhas switched to “integrated benefits,” which better describes aholistic approach—and helps justify our role in the process.

With managed loss ratios and other changes dictated by healthcare reform, there will be less room for creativity in the designof future health plans. As medical insurance becomes a commodity,brokers and employers will have to differentiate their offeringsbased on their ability to deliver a benefits portfolio thatartfully incorporates other lines of coverage. With “integratedbenefits,” the positioning is strategic and comprehensive, notoptional as “voluntary” implies. 

Creating better products

Agencies may discover a hidden advantage as they sell more ofthese policies. We currently have the leverage to motivate carriersto design exclusive plans for our clients. For example, we offerguaranteed issue on disability, life, critical illness andaccidental injury policies for small- and medium-sized employers.In addition to no underwriting, we've found ways to further extendrate guarantees and add benefits to the plans. For example, many ofour integrated plans now offer a benefit that rewards the insuredfor obtaining certain wellness-related exams. And as we furtheremploy technology to enhance the efficiency of our enrollmentprocess, we could reduce up-front commissions and transform thosesavings into additional coverage for employers or a new suite ofbenefits products. Powerful changes like these help evolve ourindustry, creating a marketplace where everyone wins.

Enrollment: Grab the reins

Make no mistake; it's time-consuming to communicate and marketbenefits. Health plans alone have become more complex. Add otherpolicies to the mix, and brokers have their hands full. Yet a newsource of revenue and market demand create indisputable allure toancillary and voluntary coverage.

Many agencies are turning to outside firms to handle theenrollment process. Yet as these benefits gain popularity, some aretrying other methods to retain a greater share of the revenue andmaintain control of the process. Rather than outsource to athird-party company, Jeff Schneiderman, principal, Digital BenefitAdvisors, is experimenting with a new approach. His St. Louis-basedagency hires and trains qualified temporary workers and pays theirsalary and expenses at per diem rates while they are onsite withclients. In essence, his agency becomes the enrollmentfirm. 

  “We had a case with the potential to generate$100,000 in commissions,” Schneiderman says. “If our firm had hiredan outside company, they would have received about 70 percent ofthat. By recruiting and training our own representatives, it onlycost us $22,000. Essentially, we reversed the traditional equation,retaining about 80 percent of the compensation.”  

Enrollment Tips

• For others considering this practice, Schneiderman offers thefollowing tips:
• Assign a staff member the responsibility to coordinate theenrollment process and training. 
• Because enrollment engagements typically are set up at leastthree months in advance, use that period to hire and prepareworkers.
• Working with a staffing firm to recruit temporary workers ifyou don't have access to a list of qualified reps.
• Seek prospects who are very organized and conversational. “Wefind the best representatives are retired client servicesrepresentatives or former school teachers.

Educate, don't sell

Whether using an outside firm or hiring his own representatives,Schneiderman has one rule he never breaks. When using outsideenrollers, “we never use commissioned representatives—ever.” Forhim, it's a philosophical issue with ethical overtones that candamage cherished relationships. 

“We want to use these encounters to educate employees—not sellthem,” he explains. “Commissions create pressure. When employeesfeel pushed into signing up for benefits, ultimately, they becomeupset, as does their HR department. That's bad for business.”

Leverage technology

Regardless of what approach you take, technology can enhance theprocess and reduce the time involved for enrollment. While employeebenefits still is a very personal business, there is an entiregeneration of workers—millennials—who grew up with computers.Face-to-face encounters still have their place, but the benefitsindustry is reaching beyond them. One-day, webinars, social media,online videos, mobile apps and texting may replace annualenrollment meetings; meanwhile, electronic brochures, email, onlinenewsletters and websites may go a long way to help educate and signup participants.

What they want

When selling, think disability and life insurance—areas wheremany financial advisors say Americans are underinsured. Accordingto LIMRA, 30 percent of U.S. households have no lifeinsurance. The same study also indicates that the onlylife insurance for one in four households is provided by employers.These are all-time-high numbers. In addition, eight in 10 U.S.households report they don't have a life insurance advisor or knowwhere to find one, and even affluent households, with more than$100,000 in annual income, say they lack sufficient lifeinsurance. 

The one-two punch

Integrated benefits have one more distinction: It's necessary tosell to two targets. First, you must sell the employer; then youmust sell the employee. Agents are developing a variety ofapproaches, but it helps to work with clients who see the advantageof a strategic partnership. 

Haglund bundles his presentation in an appealing format once hegains an audience with employees. “In virtually all cases,” hesays, “I do not market less than seven lines of coverage.” Atemployee meetings, he starts with health coverage, followed byaccident, critical illness, then everything else. Apparently, it'sa technique that works. Haglund is our company's top integratedbenefits producer. 

Wayne Mertel is vice president of integrated benefits ofAtlanta-based Digital Insurance, the nation's largest independentemployee benefits-only agency. He can be reached [email protected].