During a recent Broker Boot Camp workshop on cross-selling voluntary benefits I conducted for Aon, I had an epiphany: Voluntary benefits are misnamed, which confuses the market and hurts the sale of these benefits. We need to call these benefits what they really are.
Over the years, what we call voluntary benefits have been known by other names, including payroll deduction insurance and worksite marketing. The problem with all of these is that they describe the process but not the purpose of these valuable benefits. Payroll deduction has been how the employee pays the premium for these benefits. Worksite marketing refers to where these benefits are presented marketed to the employee at the worksite. And voluntary implies both that these benefits are optional for the employee and that the employee pays the premium.
Not only do these names miss the real point and purpose of these benefits, what these names say about the benefits is increasingly untrue and misleading. For example, a process known as premium direct deposit (PDD) is beginning to replace payroll deduction for collecting premium. PDD preserves the employees paycheck as the source of the premium payment, but eliminates both the employers workload and the inherent billing problems created by payroll deduction. I predict that, within five years, almost all new voluntary benefits cases will use premium direct deposit. Payroll deduction will become a relic of our industrys past.
Historically, successful voluntary benefits enrollments that generate high participation and, thus, premium have required benefits education in one-to one meetings with a benefits counselor at the workplace. Today, however, some online benefits communication strategies are producing no less than 35% to more than 90% participation in the voluntary benefits offering online. And much of this online benefits education is occurring after work, at home. For larger groups, say 250 lives or more, we now can educate and enroll employees in these benefits with high participation without the disruption of worksite marketing.
And, finally, so-called voluntary benefits are increasingly paid for by the employer. Whether bundled with a high-deductible plan or provided as an additional employer-paid benefit, these are becoming the benefits formerly known as voluntary. While certainly these benefits will continue to be offered largely as an employee-paid option, more and more employers are paying the premium to fill a gap, enhance the benefits plan, or solve an HR problem.
So, if we eliminate payroll deduction insurance, worksite marketing and even voluntary to describe these life and health benefits, what then are they? Im calling them supplemental benefits. This describes their purpose and value since they supplement the major medical, the group term life insurance, and the group long-term disability plan. Whether offered as an employee-paid option, provided as an employer-paid benefit, or bundled with a high-deductible health plan and cost-shared with the employer, these benefits supplement the core benefits offering.
In discussions with employers, discard the word voluntary and talk instead about valuable supplemental benefits that enhance the benefits plan, fill gaps, and provide important financial protection to employees. By reframing and renaming these benefits, you can avoid any knee-jerk reaction to or bias against voluntary benefits. Frankly, these benefits are too important to employees and too lucrative for your practice to risk rejection because of a mere word. Heres to your success with these supplemental life and health benefits.
Griswold is an agency growth consultant and author of DO or DIE: Reinventing Your Benefits Agency for Post-Reform Success. His Agency Growth Mastermind Network helps agency leaders reform-proof their firm. Reach him at (615) 656-5974, nelson@InsuranceBottomLine.com, or through 21stCenturyAgency.com.
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