The Voluntary Benefits You Should Be Offering
July 19, 2022
Employers are increasingly turning to voluntary benefits and services to personalize their benefit offerings, support their employees’ overall well-being and security, and attract and retain talent.
Voluntary benefits and services offerings today tend to be geared toward baby boomers, who are a large segment of the workforce. But, as baby boomers will be retiring in increasing numbers across the next decade, expect to see voluntary benefits and services redesigned for younger generations, who are generally attracted to customized benefit packages.
Nearly half of 320 large employers polled for the Towers Watson “Voluntary Benefits and Services Survey” said they expect voluntary benefits and services to become more important than ever over the next five years.
The survey also found that the importance of voluntary benefits in companies’ total rewards strategy will grow 27% in the next half-decade.
If you are considering starting to offer voluntary benefits, these might be a good place to start. They are the five voluntary benefits most commonly offered by employers:
Life insurance is the most popular voluntary benefit, with 94% of employers surveyed offering it.
Individual life policies were some of the first voluntary products sold in the U.S. workplace. Today, 81% of individuals with life insurance have workplace coverage, while half of individuals look to their employer as the only source for coverage, according to a 2021 ING study.
But despite life insurance offerings at work, industry experts say most Americans are underinsured, if they are insured at all.
According to a survey by New York Life Insurance Co., Americans want their life insurance to last around 14 years beyond the breadwinner’s death, but in reality they only have enough to last three years after the breadwinner’s death. That means the payout might need to be close to 15 or 20 times the breadwinner’s salary, rather than the common rule of thumb of seven to 10 times the salary.
There are various calculators online that individuals can use to test if they are well insured.
Some 84% of employers offer vision insurance.
Voluntary vision coverage is typically a popular product. Employees view a vision benefit a high-value/high-return product because you don’t have to be sick to use it and its cost is typically one-tenth that of a medical plan.
It is also a product that appeals to many individuals: two-thirds of all adults report wearing some type of eyewear, on which they spend more than $15 billion each year, according to the Towers Watson survey.
Eighty percent of employers offer dental coverage as a benefit.
Diabetes, heart disease, blindness and pregnancy complications all can be affected by dental hygiene and inflate health costs overall.
Benefits experts have long argued disability insurance is just as important as life insurance. And employers seem to agree: 80% of employers surveyed by Towers Watson offer it.
According to the Social Security Administration, a staggering 30% of people will encounter a disability of three months or longer at some point during their working years.
5. Accident insurance
Accident insurance is among the most prevalent voluntary benefit offerings provided by employers: 68% offer this coverage to their employees.
Accident benefits may help cover deductibles and other services standard health care coverage may not provide. Some voluntary accident benefits can be both a reimbursement and an indemnity insurance policy – expense reimbursements are paid for actual charges or up to the maximum amount stipulated in the plan.
Embedded benefits of accident coverage typically include:
• Accident medical expense
• Ambulance benefit
• Hospital confinement
• Accidental death and dismemberment
Optional benefits and riders include accident total disability, hospital intensive care, bone fracture and dislocation, and coverage for spouse and children.
A last word
Other voluntary products that have grown in popularity over the last few years are college loan assistance, critical illness insurance, identity theft and financial counseling as the top voluntary benefits to watch in the coming years.