Pet insurance or life insurance? Help employees select the voluntary benefits they need

November 2, 2023 2:56 PM

Your employees are eager to take advantage of supplemental benefits offerings — but are they choosing the right ones?

Sixty three percent of employees said they were likely or extremely likely to sign up for voluntary benefits — intended to supplement more traditional offerings like healthcare and retirement — through their employer in 2023, according to Voya Financial. That enthusiasm is a good thing, but to ensure your workforce has the protections they need and not just the trending, buzzy benefits they want, communication is key.

"Pet benefits, identity theft, prepaid legal — these are the hot buttons that employees are quicker to click and become educated on, just because they're different sounding than disability, life insurance, dental, medical, or any benefit in between," says Eric Silverman, founder of Voluntary Disruption advisory.

That interest can be used to help steer employees toward often-overlooked benefit options, such as hospital indemnity and critical illness, which may prove more vital in the long-run, Silverman says. Despite lower interest and less appeal than, say, a free gym membership, employees are more likely to need these benefits to stay financially, physically and mentally healthy.

From the traditional to the trending, we spoke to Silverman as well as adviser Drew Neslin, head of ancillary benefits solutions at BCS Financial, to better understand the supplemental benefits that can be critical to employee wellness, and the ones that will get them excited about the perks available from their employer

Disability and accident plan insurance

Where gaps in medical insurance exist, disability and accident insurance can help cover employees financially. Employees should know that disability insurance is not just for on-the-job accidents, and replaces a portion of income when an employee cannot work due to illness or injury. It can cover 50-80% of income, and can be applied to essential expenses such as food, mortgage and loan payments, according to insurance company Guardian.

Accident insurance can go beyond injuries and also keep employees and their families from succumbing to high medical bills, with payments generally covering treatment versus loss of income.

"Disability is the most important thing you can ever cover because it protects your ability to earn income," Silverman says. "It's your asset protection. It's basically insurance on your paycheck."

Life insurance

Expanding on the need to protect employees financially, life insurance is one of the most commonly-offered voluntary benefits. Neslin reminds employers to seek out their brokers for guidance on how to vary communication methods for maximum understanding and engagement of traditional voluntary benefits such as this — mixing team meetings and webinars in with emails and mailed information, for example — and having someone readily available to answer any questions.

"It has to be a combination," he says. "And that's what a good consultant or a good broker will have in mind when they're placing these benefits or if they're trying to increase participation — they bring the employer and the carrier and the consultant all together to make sure whatever communication strategy they're trying is meaningful for that company's culture and for the employees within that company."

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Critical illness and hospital indemnity insurance

Critical illness insurance can help ease the financial strain if diagnosed with an illness on an employee's policy. While younger employees may see a low risk of these conditions — such as cancer, stroke and heart attack — as a reason not to invest in this particular benefit, employees 40 and up should revisit this option continually as their risk increases. Cancer diagnoses alone, for example, were projected to impact an additional 1.9 million Americans in 2023, according to the National Library of Medicine, making this a particularly impactful benefit for all employees. Hospital indemnity insurance covers employees for a hospital stay, and pays them directly even if they don't have out-of-pocket expenses.

"The migration to higher deductible plans is happening, and a lot of workers are just crossing their fingers [thinking] I'm fairly healthy — I'm going to save some money on my medical premiums and hope nothing bad happens," says Neslin.

Pet insurance

Nearly half of Gen Z and millennials said they would be more likely to stay with an employer if pet benefits were offered, according to Nationwide. Using this as a conversation starter is a great way for employers to get employees interested in supplemental benefits that fill gaps in their own healthcare plans, says Neslin.

"You can start with, 'Just like an unplanned emergency with your dog, what happens when you have an unplanned emergency — how are you going to meet that deductible?'" he says. "It's a tough spot to be in because you've got the majority of workers in a high deductible health plan, so it's [helping them to] connect the dots."

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Identity theft

Issues around identity security have been dominating headlines, making this a timely and hyper-desirable benefit, says Silverman. Identity theft was responsible for $5.8 billion in losses in 2021, and fraud cases increased by 70% between 2020 and 2022, according to the National Council on Identity Theft Protection. In addition to covering expenses related to identity theft, employees can also receive risk monitoring and reimbursement in the event that funds are stolen.

"At some point in the next five to 10 years, [these benefits are] going to be considered table stakes," Silverman says. "They'll be no different than just offering and making available medical, dental and vision."

Fertility benefits

Almost 90% of employees would consider changing jobs if it meant access to fertility benefits, according to family-planning platform Carrot, but a study by the International Foundation of Employee Benefit Plans found that only 40% of employers offer them. To recruit and retain talent, Silverman urges employers to utilize their brokers to help make sure communication around this and all other supplemental benefits is most effective.

"Employers should be asking more of their adviser, broker, or consultant team," he says. "That team should not only be shopping and quoting benefits and proposing benefits and insurance, but they should also be a full-service marketing division that is there to help the employer communicate benefits during open enrollment and engage employees and their family members year round."