Families are financially ill-equipped to maintain their standard of living should a primary income-earner die prematurely. In fact, according to a resource from MetLife, Three Steps to Closing the Underinsured Gap: Evaluate, Enhance, Educate, about three-quarters of 1,000 beneficiaries surveyed did not feel that the 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 loved one's death had a major or devastating effect on the family's financial security.

Most employers provide some amount of life insurance coverage through the workplace. Although this coverage is valuable, many employees often do not take full advantage of workplace programs as a means to help protect their families from the devastating impacts of being underinsured. The challenges surrounding helping employees obtain the right type and amount of life insurance coverage, however, present opportunities for brokers and consultants to strengthen their client relationships.

"Life insurance is a critical component when building a financial safety net, and inadequate amounts of coverage can leave gaping holes," says Graham Cox, vice president, Group Life Products, MetLife. "Helping employers promote the need for adequate life insurance coverage and helping them design a comprehensive offering are two steps brokers and consultants can take to enhance the strategic value of an overall benefits program while simultaneously working to address the larger societal issue of underinsurance."

While many employees take advantage of an employer-provided basic life insurance benefit of one or two times salary, they don't give consideration to supplementing that coverage through the workplace. They fail to understand the long-term financial impact that a spouse's or partner's premature death can have on family members. According to the study, even five to seven years after their loss, more than one-third (36%) of surviving spouses surveyed said they remain financially vulnerable.

Strategies for Closing the Underinsured Gap

Cox suggests that brokers and consultants discuss with their clients the following strategies to help maximize the value of their group benefits program and help close the underinsured gap:

Evaluate the Plan: Clients should determine the extent to which employees are underinsured by conducting an analysis of current participation and coverage levels. It's important that clients understand which populations within the workforce are most underinsured, and target communication approaches to meet their needs. Suggest that your clients gain an understanding of key demographic differences among the workforce and address them as part of any educational and communication outreach.

Enhance the Group Life Benefits Package: Encourage clients to provide a comprehensive life insurance program that features both term and permanent coverage options, and adequate coverage amounts to meet the multiple needs. Additional features, such as will preparation and estate resolution services, are another way to help employees meet their evolving needs today and tomorrow.

Educate and Promote the Value of Life Insurance through Personalized Communications and Enrollment Support: Demographic factors clients may consider when communicating with employees include generational preferences, and ownership trends that indicate that women participate in group life insurance plans at lower rates than their male counterparts. Remind employees that certain life events may trigger the need to take action to reevaluate coverage levels. Clients can help employees make informed decisions about their unique needs by providing access to decision-support tools and educational materials, such as online income-assessment calculators and tutorials.

"Employers often look to their broker partners for help in designing effective enrollment strategies," says Cox. "A successful life insurance enrollment starts with an effective communications campaign."

Cox adds, "Effective communications are an invaluable resource to an employer looking to optimize the value of a benefits program and ensure employees are adequately covered in the event the unexpected happens. Year after year, MetLife's Annual Employee Benefits Trends Study consistently shows a strong correlation between effective benefits communications, improved benefits satisfaction and improved job satisfaction."

According to the study, of those employees who felt their employer's benefits communications were very effective at educating them, about eight in ten were also satisfied with their benefits, satisfied with their jobs, and felt loyal toward their employer. Of employees who felt their employer's benefits communications were ineffective, only one in ten was satisfied with the benefits they received through the workplace and just three in ten were satisfied with their jobs or felt loyal to their employer.

Brokers can work with their clients to implement several strategies to help make life insurance communications campaigns more effective. Hosting an off-cycle enrollment just for life insurance can help employees focus on effectively addressing their coverage needs and allows employers to reinforce ongoing messages that keep employees more engaged in a supplemental life program.

Communicating the consequences of inadequate life insurance protection can serve as a valuable reminder about the need for employees to take action. Multiple communications channels and decision-support tools can help ensure employees have access to the information they need to understand their coverage needs, and obtain adequate coverage levels.

Employers have the opportunity to take action and offer an additional layer of financial protection to their employees. Cox says, "Too many employees and their families are vulnerable to a devastating financial impact in the event that a primary income-earner passes away. Brokers and consultants have solutions at hand that can help employers address gaps that likely exist in their employees' financial safety nets." Employers that help employees understand their workplace benefits and ensure that life insurance programs meet diverse employee needs can see returns in the form of increased loyalty and employee retention. Goodwill from employees is likely to follow as a result of the confidence they may feel knowing their employer has helped them obtain adequate coverage levels to protect their families.

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

Instant Insights /

How Your Clients Can Benefit from Closing the Life Insurance Coverage Gap through the Workplace

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