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Voluntary benefits: Fast food or fine dining?

By: Brent Simmons, Regional Sales Director, Georgia

There are times where it’s okay to trade quality for convenience. In a hurry to get out the door in the morning? Maybe you can skip on using the waffle maker for breakfast. There are also times where it’s best to take your time and aim a little higher. Going out for your anniversary? Maybe fast food isn’t your best bet. Offering voluntary benefits is definitely one of those situations where taking shortcuts isn’t in your best interest.

Due to a number of market factors, too often, I see the balance between convenience and quality shifting in the wrong direction in the world of voluntary benefits. It’s a risky move given what’s at stake for employees; this is their finances and their health that we’re protecting. So, while it may be tempting to look for the “easy button” in terms of managing benefits and product design, it’s not always what’s best for employees. 

This isn’t to say that offering voluntary benefits should be difficult, but it’s a balancing act where, as industry professionals, we have to be careful not to sacrifice quality for an easier path. We can’t see voluntary benefits as just a commodity, as a generic tool where any product will do. Instead we need to be diligent and take the time and energy to not just find a solution but find the right solution.

What’s driving the commoditization?

One of the key factors driving the commoditization of voluntary benefits is that they’re positioned in a complex landscape. Employers and employees are managing options for medical, dental, vision, disability, life, financial wellness, health Wellness, long-term care, pet, legal, accident, cancer, critical illness, GAP, hospital indemnity, home and auto insurances (AND more). On top of that, you have more players than ever in the voluntary market meaning even more options for each benefit. 

With the landscape being so complex in terms of products, it’s easy to see how the emphasis for employers can switch from finding the right benefits, to things like marketing allowances, consolidating benefits with one carrier and technology credits. With more players in the market, you also have more generalists offering voluntary rather than voluntary experts who may be more in tune to product nuances. This is pushing the conversation even further towards an “any product will do” attitude that promotes only the easiest solution.

What is this doing to the market?

The net result of this shift is being seen in a number of factors:
  • An emphasis on low-cost solutions – When voluntary benefits are seen as a commodity, price becomes the key factor rather than protection, which leads to…
  • Rising claim denial rates – Employees aren’t getting the protection they need, leading to more claim denials, which leads to…
  • Lower employee satisfaction with their benefits package – When the coverage employees have isn’t what they expect, they’re less satisfied with their benefits package. This inevitably causes…
  • Reduced benefits participation – If employees aren’t satisfied with their benefits and are seeing high claim denial rates, they’re less likely to purchase protection, meaning…
  • Lost revenue – With the reduced participation, you’re losing out on revenue which could be used to help cover the costs of new benefits administration technology, reporting tools and other helpful services for the employer. In addition, you’re now faced with…
  • Poor spread of risk – Fewer people purchasing, means less spread of risk which can affect pricing and coverage of conditions further down the road.

What can we do?

When looking at your benefit options, ask yourself this simple question: “Would I buy this plan for myself or my family?” Employees can and will pay for voluntary benefits but to make sure we’re giving the right protection, we have to start looking closely at limitations, exclusions, benefit triggers, benefit schedule payouts for the most likely treatment and claim scenarios. We can’t just base decisions off of what is easy. Offering voluntary is more than just a checkbox to be filled; we have to put the employee back at the center of the decision making process. If voluntary benefits become a commodity we’re essentially saying we are ok with truck stop steak on special occasions over a memorable meal with family and friends at a fine steakhouse. Let’s aim to do better.

Posted on May 02, 2019 in Sales

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