Choices are great, right? With choice comes freedom but, with freedom, comes accountability. In the context of insurance, choices often provoke anxiety or fear because people are worried they'll make the wrong one.
It's no different for employers. They want to make the right benefits choice for employees but often don't have the expertise themselves to weigh all the options. This is where brokers come in.
Some key questions a broker should ask:
- What is the employer's objective for offering benefits?
- What would other employers offer for benefits?
- What do the employees want? Or need?
- How much is available to spend on insurance?
Few small to medium-sized employers can offer everything so where do they begin? Well, to start, medical insurance and retirement plans are likely the highest priorities for everyone. Those should be the first order of consideration. But what comes next?
Studies show employees place their next highest value on dental because they regularly use that benefit and, hence, find value in it. But, as you know, the underlying reason for insurance is to protect assets, guard against catastrophic risk and help financial security. While employees might want dental or vision, it's far more likely that they'll need life and disability to be better prepared and more confident.
Think about it. Can most people live without a paycheck for three months or longer during a period of disability? Are they set up to financially support their dependents following an unexpected death? For most, the answer is probably no to both. After all, people don't usually plan to become disabled or die, which is why it's hard for them to see the value.
Understandably, most employers provide benefits as a means for attracting and retaining talent, to keep employees happy, productively at work and more prepared for their future. It's entirely appropriate for an employer to offer the benefits that are effective in attracting talent or that employees want (such as dental). But, how do they prioritize and strike the right balance?
The good news is that there are options—well, lots of options—but I've boiled it down to three.
- First, build a core benefit package. This would likely start with medical and/or retirement.
- When feasible, extend the core package to include ancillary benefits, such as life, disability, dental and vision. Depending on what amount the employer can contribute, they could consider providing life and/or disability at no cost to the employee (since they are lower premium products) and then offer the dental or vision on a voluntary (employee paid) basis. Or, vice versa. Either way, these combinations are an effective strategy in helping employees obtain affordable, comprehensive insurance while also minimizing the cost outlay of the employer.
- Consider adding supplemental worksite products which, among other things, includes cancer, accident and critical illness. While these products all fit a unique and important need, they shouldn't be a replacement for a comprehensive core plan. Instead, once the core benefits (as defined above) are in place, add these products as an effective compliment.
As you know, there are lots of factors to consider, which is why your role is so critical. But the good news is that you can help the employer achieve multiple objectives and select the right combination—one that strikes the balance between what employees want versus what they need and one that maximizes the employer's benefit dollar with what they have to spend.
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