Back to voluntary benefit basics
With all these voices telling everyone how exciting voluntary benefits are, surely everyone must understand the basics, right?
Voluntary benefits are hot. I read about them in BenefitsPRO and other places virtually every month. They’re talked about in carrier promotions online, in print and in webinars. Benefit administration companies tell us they make it easy for employers and their employees, while brokers, advisors and benefit enrollment/communications claim their expertise will assist employers design the right benefits package and will help employees make great enrollment decisions. With all these voices telling everyone how exciting voluntary benefit opportunities are, surely everyone must understand the basics, right?
Certainly there is a core group of people who understand voluntary benefits. After more than 35 years of working in the voluntary market, and another 15 years working in adjacent markets, I think I’m one of them. This month, I decided it’s time to make sure my list of basic voluntary benefit principles is plainly stated for everyone’s reference. In brief, voluntary benefit offerings need to be relevant, easy and affordable.
Related: Growing market for voluntary insurance products
Relevant benefits are those that pass the first gate on the customer journey; they lead to a positive response when a customer asks “why do I need this?” Some needs are obvious. For example, it’s easy to find relevance in life insurance. Other products gain relevance via familiarity with use–dental, vision and base medical protection, to name a few. Some offerings, like disability income protection, critical illness, and hospital indemnity insurance, may need to overcome the “it won’t happen to me” syndrome.
The need for still other products may be driven by lifestyle and family situations (pet insurance, accident coverage). Finally, new needs are constantly emerging. Some, like the need for identity theft protection, are the result of new technology. Others, such as mental well-being benefits, have become more relevant due to the lingering effects of the pandemic.
Easy processes have been part of voluntary benefits for over 40 years. It didn’t take a team of behavioral economists or state-of-the-art technology driven by artificial intelligence to tell pioneers in the business that people hate long underwriting forms, medical exams to qualify, and bills from insurance companies. The company I worked for in the 1980s had a national advertising campaign built around a big red button that said EASY. In some ways, that is still at the core of voluntary success. We have changed from preprinted paper forms to pre-filled glowing screens, but the essential value to customers is unchanged: We take pain out of the process of buying financial security via insured benefits.
The affordable benefits part of the discussion is where difficulty often arises when it comes to voluntary program success. This is the point where four factors reach a crossroads: the affordability of an individual product; the affordability of a package of products; an individual employee’s personal and family needs; and that employee’s income. This creates a dilemma the designers and implementers of voluntary programs need to address. On the one hand, employee participation drives the success of the program, measured in terms of employee acceptance which is what employers, their advisors, and their service/product providers want.
The other side of participation is that oversold benefits, which often cost more than the employee can afford, turn into a negative because employees feel they have been pushed into spending more than they should. Success depends on creating campaigns that educate employees on prioritization of their needs, and an awareness of how those needs rank compared with other ways they could spend their money.
The optimum package of employee benefits for a given situation can be very fluid. Some employees have a greater need for identity theft protection, while this protection might be unnecessary for others.
The challenge all of us face in marketing voluntary benefits is to keep a clear perspective on my third, most basic, principle–affordability. It’s easy to define relevance for people and to use a good enrollment communications process to fulfill that relevance in a sale. It’s easy to describe and show people how simple purchasing needed benefits and financial security can be. But it’s difficult to make sure employees are making the best decisions for their personal situations. That’s the core of turning voluntary benefit basics into long-term success.
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