Why employers should offer a limited number of voluntary products

Although voluntary products are becoming more prevalent in the market as employees shoulder more of their healthcare costs, a group of product experts warned not to offer too many elective benefits at once, as doing so overwhelms those making the purchasing decision.

Still, the need for voluntary is clear. Seventy-nine percent of employees see a growing need for voluntary insurance in 2017 compared to the prior year, largely due to the rising cost of health insurance and out-of-pocket costs rising, according to an Aflac study.

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To date, voluntary products are not widely offered. Although 58% of employees say their employed offered short-term disability in 2016, according to research by the Employee Research Institute, only 33% are offered long-term care insurance, 28% accident insurance, 19% critical illness and 16% cancer insurance.

With so much need for voluntary and multiple products, it is important for employers to pick the right amount of products to offer.

Speaking last week at a conference sponsored by HR technology company PlanSource in Park City, Utah, a group of voluntary experts suggested starting with a few products because offering multiple causes employee to become overwhelmed.

SourceMedia Research asked more than 200 worksite advisers and brokers what products they sell, service and/or provide consulting services for.
July 26

“At the end of the day, employees have a fixed amount of discretionary income,” Stephanie Smith, associate vice president at Allstate Benefits, said. “Employees will only spend so much money on benefits. You want to make sure it goes to where it counts.”

When too many products are offered, she said that employees may become frustrated and enroll in none. It also creates difficulty for brokers trying to explain them. “It is hard to educate on all products if you offer too many,” said Kent Grimes, assistant vice president at Unum. “Think of how much mind space we create.”

Despite all these challenges, Todd Smick, third party relationship manager at MetLife, advised taking a roll out approach.

“We don’t want to roll out all the products in [year one],” he said, suggested instead to responsibly roll out products at the right time to meet the needs of the employees, as they become accustomed to what they have.

“There are a lot of studies that illustrate and support the need for more choices,” he said. “Employees need choices, but we don’t want to jump into everything at once.”

Another reason why more products can slowly be offered is because the delivery mechanism are becoming better, including technology and decision-support tools that position a product in the right space, he added.

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