Families are financially ill-equipped to maintain their standardof living should a primary income-earner die prematurely. In fact,according to a resource from MetLife, Three Steps to Closingthe Underinsured Gap: Evaluate, Enhance, Educate, aboutthree-quarters of 1,000 beneficiaries surveyed did not feel thatthe amount of the life insurance proceeds they received, if any,after the death of their spouse sufficiently met their needs.Two-thirds of surviving spouses also reported that their lovedone's death had a major or devastating effect on the family'sfinancial security.

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Most employers provide some amount of life insurance coveragethrough the workplace. Although this coverage is valuable, manyemployees often do not take full advantage of workplace programs asa means to help protect their families from the devastating impactsof being underinsured. The challenges surrounding helping employeesobtain the right type and amount of life insurance coverage,however, present opportunities for brokers and consultants tostrengthen their client relationships.

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"Life insurance is a critical component when building afinancial safety net, and inadequate amounts of coverage can leavegaping holes," says Graham Cox, vice president, Group LifeProducts, MetLife. "Helping employers promote the need for adequatelife insurance coverage and helping them design a comprehensiveoffering are two steps brokers and consultants can take to enhancethe strategic value of an overall benefits program whilesimultaneously working to address the larger societal issue ofunderinsurance."

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While many employees take advantage of an employer-providedbasic life insurance benefit of one or two times salary, they don'tgive consideration to supplementing that coverage through theworkplace. They fail to understand the long-term financial impactthat a spouse's or partner's premature death can have on familymembers. According to the study, even five to seven years aftertheir loss, more than one-third (36%) of surviving spouses surveyedsaid they remain financially vulnerable.

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Strategies for Closing the Underinsured Gap

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Cox suggests that brokers and consultants discuss with theirclients the following strategies to help maximize the value oftheir group benefits program and help close the underinsuredgap:

  • Evaluate the Plan: Clients should determinethe extent to which employees are underinsured by conducting ananalysis of current participation and coverage levels. It'simportant that clients understand which populations within theworkforce are most underinsured, and target communicationapproaches to meet their needs. Suggest that your clients gain anunderstanding of key demographic differences among the workforceand address them as part of any educational and communicationoutreach.
  • Enhance the Group Life Benefits Package:Encourage clients to provide a comprehensive life insurance programthat features both term and permanent coverage options, andadequate coverage amounts to meet the multiple needs. Additionalfeatures, such as will preparation and estate resolution services,are another way to help employees meet their evolving needs todayand tomorrow.
  • Educate and Promote the Value of Life Insurance throughPersonalized Communications and Enrollment Support:Demographic factors clients may consider when communicating withemployees include generational preferences, and ownership trendsthat indicate that women participate in group life insurance plansat lower rates than their male counterparts. Remind employees thatcertain life events may trigger the need to take action toreevaluate coverage levels. Clients can help employees makeinformed decisions about their unique needs by providing access todecision-support tools and educational materials, such as onlineincome-assessment calculators and tutorials.

"Employers often look to their broker partners for help indesigning effective enrollment strategies," says Cox. "A successfullife insurance enrollment starts with an effective communicationscampaign."

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Cox adds, "Effective communications are an invaluable resourceto an employer looking to optimize the value of a benefits programand ensure employees are adequately covered in the event theunexpected happens. Year after year, MetLife's Annual EmployeeBenefits Trends Study consistently shows a strong correlationbetween effective benefits communications, improved benefitssatisfaction and improved job satisfaction."

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According to the study, of those employees who felt theiremployer's benefits communications were very effective at educatingthem, about eight in ten were also satisfied with their benefits,satisfied with their jobs, and felt loyal toward their employer. Ofemployees who felt their employer's benefits communications wereineffective, only one in ten was satisfied with the benefits theyreceived through the workplace and just three in ten were satisfiedwith their jobs or felt loyal to their employer.

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Brokers can work with their clients to implement severalstrategies to help make life insurance communications campaignsmore effective. Hosting an off-cycle enrollment just for lifeinsurance can help employees focus on effectively addressing theircoverage needs and allows employers to reinforce ongoing messagesthat keep employees more engaged in a supplemental lifeprogram.

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Communicating the consequences of inadequate life insuranceprotection can serve as a valuable reminder about the need foremployees to take action. Multiple communications channels anddecision-support tools can help ensure employees have access to theinformation they need to understand their coverage needs, andobtain adequate coverage levels.

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Employers have the opportunity to take action and offer anadditional layer of financial protection to their employees. Coxsays, "Too many employees and their families are vulnerable to adevastating financial impact in the event that a primaryincome-earner passes away. Brokers and consultants have solutionsat hand that can help employers address gaps that likely exist intheir employees' financial safety nets." Employers that helpemployees understand their workplace benefits and ensure that lifeinsurance programs meet diverse employee needs can see returns inthe form of increased loyalty and employee retention. Goodwill fromemployees is likely to follow as a result of the confidence theymay feel knowing their employer has helped them obtain adequatecoverage levels to protect their families.

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For more information on the consequences of inadequate lifeinsurance coverage from the beneficiary's perspective and thesignificant role employers can play in helping employees build astrong financial safety net, visit metlife.com/grouplifewhitepaper.

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