Did you know that employee benefit programs have existed in the United States since colonial times? According to the Employee Benefit Research Institute Databook on Employee Benefits, “Early programs include the Plymouth Colony settlers’ military retirement program in 1636; Gallatin Glassworks’ profit-sharing plan in 1797; American Express Company’s private employer pension plan in 1875; Montgomery Ward’s group health, life and accident insurance program in 1910; and Baylor University Hospital’s formalized prepaid group hospitalization plan in 1929.”
The Federal government’s involvement expanded coverage further with Social Security in 1935, disability in 1956, and Medicare in 1965. Further, federal tax incentives to provide private benefits has stimulated voluntary employment-based benefits programs.
According to the Employee Benefits Research Institute’s (EBRI) most recent information (2010), following is the employee participation rate in benefit programs:
Percentage of Employees Participating in
Employee Benefit Programs: 2010
(Medium and Large Private Businesses)
Type of Benefit/Insurance Percentage
Disability
Short Term …………………………………. 52%
Long Term …………………………………. 44
Life Insurance …………………………………… 75
Health Insurance ………………………………. 63
Dental ……………………………………………….. 51
Vision ……………………………………………….. 28
Prescription Drugs ……………………………. 61
Long Term Care ……………………………….. 24
Health Saving Accounts …………………… 21
Retirement
Defined Benefit ………………………….. 30
Defined Contribution …………………. 54
http://www.ebri.org/publications/books/?fa=databook (Chapter 4, excerpted from Table 4.1b)
“More and more people are turning to their place of work to get the financial products they need,” according to Kim Landry, Analyst, LIMRA Group Product Research. “Clearly, the convenience of having the resource at their place of work, coupled with the feeling of security of working with someone their employer has (implicitly) approved, is drawing consumers to this channel.”
LIMRA’s U.S. Life Insurance Buyer-Nonbuyer Study of Americans’ buying habits found that nearly 20 percent who shopped for life insurance went through their place of work, and 75 percent of workplace shoppers actually bought life insurance. LIMRA’s research has shown that life triggers—like changing marital status or having or adopting a baby—are most likely to drive people to shop for life insurance. Similarly, in the workplace, a change of marital status or a new baby round out the top three reasons consumers said they shopped for life insurance.
According to LIMRA’s study, workplace shoppers are more likely to be male than female (55 percent versus 45 percent). More than three-quarters are married or living with a partner, and a majority have children under 18 in their households. Workplace shoppers tend to be younger than those who shop through other channels; they have higher average incomes than other shoppers and tend to have more investable assets.
LIMRA asked these shoppers to provide their opinion of the producer they met. The good news is that 8 in 10 workplace shoppers felt their producer provided good information and was very knowledgeable about insurance in general. Nearly three-quarters felt they could trust their producer.
Unfortunately, shoppers also provided some negative feedback. Nearly half of workplace shoppers said their producer failed to follow up with them (a third of workplace shoppers who didn’t buy said that they were not finished shopping), and 4 in 10 didn’t feel that their producer considered what they could actually afford. More than a third said they didn’t receive enough product options.
There are three things LIMRA identified that workplace producers can do to improve. (1) Since workplace shoppers tend to be younger and less experienced, producers should ensure these consumers fully understand the products and how they work. (2) If additional information is needed during the decision-making process (such as printed reference materials or a link to information online), producers must be sure to stay in touch and provide support materials. (3) More follow-up is required for workplace shoppers.
“We were surprised to see so many workplace shoppers feeling that they needed more follow-up from their rep; it was a significantly higher percentage than we found for consumers who shopped through other channels,” noted Landry.
Are you selling benefits in the worksite/voluntary market? Perhaps you should. This issue will provide you with some useful information. [SAC]
