When an employee – male or female – takes parental leave for childbirth, adoption, or foster parenting, the employer must file a claim. The employee continues to get their salary while on parental leave, and the employer gets reimbursed by the carrier up to $2,000 per week per employee. 

If an employer is already offering paid parental leave as an employee benefit, they can still purchase paid parental leave insurance coverage and get reimbursed all the same.

Now that we've covered how paid parental leave insurance works, let's talk about why this insurance coverage/employee benefit is poised to take off.

The following sections will also make discuss conversations advisors can have with employer clients regarding paid parental leave insurance.

Previous options are lacking

One reason why paid parental leave insurance is a great opportunity for benefits advisors is that the other options are limited at best. 

On the federal level, the U.S. is the only developed nation without a paid family leave policy. There's the Family & Medical Leave Act (FMLA), but this is an unpaid program that protects the job, but not the income that makes the job worth doing.

On the state level, 11 states and Washington D.C. offer their own paid family leave programs. So not only are there 39 states that don't offer paid family leave, but paid parental leave insurance could actually complement the small number of state-based programs.

For example, a California-based employer could purchase a policy that has a 50% income-replacement benefit, which would usually be more affordable than a 100% income-replacement benefit. This benefit then could supplement the California state-based program, where around 50% of their weekly income is replaced. 

Outside of public paid family leave programs, there isn't much happening on the private side of things, either. Only 25% of US workers have access to paid family leave through their employers. 

To say the market to sell paid parental leave insurance as an employee benefit is untapped would be an understatement. This may not be the case in five years, but the early bird will get the worm.

The rarity of paid parental leave is a stand-alone selling point, but can also form the basis of a strong conversation with employers interested in purchasing this employee benefit.

Recruit and retain top talent

Because paid parental leave is lacking in the US, employers that purchase paid parental leave insurance will immediately set themselves apart in the never-ending competition to recruit and retain the best workforce talent.

Ever since the pandemic ushered in remote work culture and The Great Resignation, there seems to have been a shift in the power balance between employer and employee. There are more jobs than employees to fill them, and employees have utilized this leverage to make sure they're getting the most out of their current or future employer. A company not offering the best and most up-to-date employee benefits will lose out on the most coveted talent.

Since just 25% of employees have access to paid family leave, what better way for an employer to differentiate themselves than by offering paid parental leave insurance as an employee benefit? A In fact, a survey from Unum found 86% of millennials are less-likely quit if they are offered paid parental leave. 

The employers that are amongst the early adopters of paid parental leave insurance should reap the benefits. They instantly become different from other companies and get upgraded as a potential landing spot for workforce talent.

When speaking with employers about paid parental leave insurance, this should be a very effective selling point.

A meaningful benefit

Not only will paid parental leave insurance make your employer-clients a more attractive destination for talent, it will truly help their employees as well.

It's hard to think of a bad employee benefit; most of them serve a useful and well-intended purpose. That said, it'd be fair to say some employee benefits are more meaningful than others. 

An employee-paid lunch once a week is great, as are Summer Fridays when the office closes at 3PM. But could either of these ever be more meaningful than paid parental leave insurance? It gives employees peace of mind knowing they can take months off work to care for a newborn or young child and continue to receive their salary so they can afford groceries, diapers, and everything in between.

A survey of 1,000 actively-employed women between the ages of 18 and 44 found 74% wouldn't have any cash savings left if they had to go on unpaid maternity leave for eight weeks.

An employer with paid parental leave insurance can ensure the above never happens to their employees, which is as powerful a selling point as any.

Mike Brown is the Director of Communications at Breeze, the leading online income protection company.