Changes are happening fast in our industry. The Patient Protection and Affordable Care Act is affecting everything, and the way benefits are purchased is changing, too. More and more employers are finding it beneficial to shift benefit choices to their employees, thus making the benefits employees choose more meaningful and attractive. Increasingly, employers enable benefits rather than providing them.
So what products do employees choose? Where do employees go to learn more when making purchasing decisions? For many, their choice depends on their own personal and financial situation. Let's consider the top five voluntary benefits purchased in 2013, according to Eastbridge Consulting Group: life insurance, disability, dental, accident and critical illness/cancer insurance.
We know why life and disability income protection are at the top—they're part of the basics of financial protection. Dental is paired with medical in the minds of employees, and dental products are becoming more “voluntary” as many employers have migrated dental in the voluntary category instead of employer paid. Dental also ranks high in premium per certificate.
That leaves accident and critical illness as the “new players” in the top 5 of voluntary. Why are they there?
Let's consider accident coverage first. We all know the statistics: Every two seconds someone suffers from an accidental injury. However, what employees may not be aware of is the average cost of an accident. In 2013, the average cost was just over $1,300. And since major medical coverage is moving to higher deductibles and increased out-of-pocket expenses for employee plans, most of this $1,300 per accident will be the employee's responsibility.
There's also a common heading with cancer and critical illness coverage. Critical illness events are not uncommon, as most of us have had close friends or family members touched by cancer, heart disease, strokes, and so on. Those events are likely to trigger the full deductible and out-of-pocket coinsurance in a major medical plan, plus a great deal of additional family financial and emotional stress. These products help preserve savings, and can be a financial bridge during recovery. They help people afford the expense of surviving a critical illness. They help people preserve their savings, which is a big item for active, working people.
The benefits market is heading toward voluntary—and employees are heading toward traditional benefits such as life, disability and dental protection plus accident and specified disease coverage—products that protect them against common losses they cannot afford.
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