In the world of workplace nonmedical benefits, product design can seem like a bit of an arms race. Seeking to differentiate their products in the market, carriers continue to add new benefit triggers, features and riders. Employers selecting a new plan or carrier must sort through an increasing number of options, hoping to choose a product that will provide the most value to their workers at a reasonable price. At the same time, this growing complexity can make it more difficult for employees to understand their benefits, negatively impacting the customer experience.
Which benefit features are actually important to employees — the users of these products? To explore this question, LIMRA recently surveyed employees about their views oo product features for three common workplace benefits: accident insurance, critical illness and life insurance.
|What matters most?
It is worth noting that employees have generally positive views of most potential product features, with at least 50 percent of employees rating almost every feature as "important" to them. However, some benefit attributes are clearly valued more than others.
Some of the most important attributes to employees vary by product. For example, 24-hour coverage is among the most-desired features for accident insurance, whereas this distinction is generally not relevant to most other benefits. In contrast, the ability to obtain coverage without medical underwriting is considered very important for critical illness insurance.
In addition to these product-specific preferences, several common themes emerge regarding which types of features tend to be most important to employees across all three products.
|Coverage they can keep
Employees place a lot of value on benefit attributes that ensure they will be able to keep their coverage in the future. For example, a provision that the benefit amount will not reduce when employees reach a certain age is the most desired feature for all three products. Other features that help employees keep their coverage are also highly ranked, such as the ability to continue coverage during a temporary strike or leave of absence, general portability and disability waiver of premium.
It is possible that employees' memories of widespread job losses during the Great Recession are contributing to this emphasis on benefit continuation. It may also be a result of the general human tendency to believe that serious illness and death will only happen to people when they are very old, making employees want to keep their benefits until they are needed later in life.
|Families matter
Employees also place a lot of value on the ability to obtain coverage for their spouses, partners and dependent children through workplace plans. As expected, married employees and those with children under age 18 are the most likely to care about these features.
While coverage for children is important, employees express little interest in obtaining coverage for their grandchildren through the workplace.
|Keeping it level
When it comes to rate structure, most employees prefer "issue age" pricing, where the initial cost may be higher but premiums remain flat, rather than "attained age" pricing with lower initial premiums that increase with age.
It is understandable that employees want predictable costs they know they will be able to afford in the future. It is important to note, however, that this type of pricing can create challenges when cases move between carriers. On takeover business, customers often expect the new carrier to maintain pricing based on the original issue age, but it can be difficult for carriers' pricing models to accommodate this. Employers should be made aware of these challenges when selecting a plan, since friction over this issue can result in lower customer satisfaction.
|"Value adds" are not adding value
Which benefit features matter the least to employees? Ironically, they tend to be the "value added" services that carriers often attach to their products to provide additional resources to employees. In particular, offerings such as travel assistance, financial planning and will preparation services tend to be ranked as least important to employees.
Younger workers are somewhat more likely to value these services, perhaps because they are less financially knowledgeable and therefore want more assistance with these matters.
|Setting the right priorities
By helping employers understand which benefit attributes will be valued the most by their employees, brokers can guide their clients to selecting the most appropriate benefit packages for their workforces. Employers may also want to focus more effort on educating employees about these key product features during open enrollment, which may pique employees' interest and potentially result in higher participation rates.
By prioritizing the benefit features that truly appeal to the users of these coverages, brokers and employers can provide better value to employees and improve the customer experience for everyone involved.
Kimberly Landry is assistant research director, Workplace Benefits Research, LIMRA.
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