We trade in older cars for new ones and we move to bigger (or smaller) homes to fit our lifestyle needs. Now, increasingly, we work with customers on trading in their obsolete benefit products for new ones.

The voluntary market has seen a steady increase in the percentage of business represented by takeovers. Carriers and brokers who think the voluntary market is not susceptible to replacement need to be aware of this trend.

But why? Is this good or bad?

From the employee perspective, affordability is a prime concern. This is certainly driven by the economy, but there are other drivers as well. One of them is the proliferation of voluntary benefit options—as employees are offered multiple voluntary products, they'll be viewing their needs and their ability to pay for them. Takeover often includes an element of price reduction—improving both the affordability for participants and the probability of participation for others. A new carrier may provide enhanced or additional benefits to employees and their families. Employers want the best for their employees. They look to their brokers for advice on the best voluntary options. Employers are aware of the positive impact of good voluntary benefit communications and product packages on their employees.

For the broker, takeover opportunities fulfill part of their value proposition of seeking a better deal. This could be reflected in enhanced benefits, lower costs, improved plan designs, better service in such key areas as implementation, billing and claims, or all of the above. They also can be part of an overall strategy of product management for the employer and participating employees. Brokers have been finding improved life, disability and dental plans for years, and many are familiar with these products. But they aren't as familiar with products like accident, critical illness and hospital indemnity, which seem to be the “big three” of new, additional voluntary plans.

Carriers often see takeover sales as a way to gain a quick start in a new or growing market segment. In fact, the trend toward voluntary takeover sales reflects momentum toward delivering better products backed by better services at more favorable price points. Employee engagement is increasing as enrollment communication meetings and support tools become better. In the end, trade-ins often are a good idea in the benefits business. Product features, pricing and underwriting updates make it likely that older products need to be reviewed. But brokers and carriers need to carefully review the pluses and minuses of a replacement transaction to make sure they are delivering the best answer.

Instant Insights /

Considering voluntary product trade-ins

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