Demand for voluntary benefits is soaring, with 94% of employers expecting such benefits to hold greater importance in their organizations over the next three years.
The days of voluntary benefits being sold in blocks where one product size fits all should be over. However, only 51% of employers believe their benefit programs address the individual needs of their workforce, and only 39% say their programs offer significant flexibility and choice.
Employee benefits carriers have an opportunity to increase their revenues by up-selling voluntary benefits that meet the evolving needs of today's workforce. Research from Agentero says insurance companies can increase their profitability by 60% to 70% through selling products to existing policyholders.
Let's take a look at some in-demand voluntary benefits that carriers are offering to seize these new revenue opportunities, along with some analysis of why these offerings are now so popular.
Trend #1: Personalized Wellness Offerings
Wellness benefits are in high demand as 90% of consumers opted for mental health support in 2022, increasing by 24% from 2020. However, 49% of employers have not yet formally articulated a wellbeing strategy for their employees despite the need. Carriers can help them fill the gap.
The core function of a wellness program is to motivate employees to adopt healthier habits to prevent illnesses and injuries typically covered by healthcare coverage.
While traditional voluntary benefits like topped-up dental care, vision care and wellness-expense reimbursements will continue to be in demand, employee benefits carriers should acknowledge the shift toward personalized wellness packages that support all aspects of an employee's physical and mental health.
Today, personalized voluntary wellness programs might offer a broader array of services and resources such as access to medical tests, work/life balance programs, smoking cessation, nutrition, stress-management classes and mental health resources at preferred group rates.
Recent research finds that 38% of employees say they have at least one family member who suffers from severe stress, anxiety or depression. The same study finds that 45% of employees who suffer from mental health illnesses and extreme stress are not getting the help they need. Additionally, those same employees are 50% less likely to be highly engaged and often miss four more workdays a year than the average employee.
According to Mayo Clinic, “Metabolic syndrome is a cluster of conditions that increase your risk of heart disease, stroke and type 2 diabetes. These conditions include increased blood pressure, high blood sugar, excess body fat around the waist and abnormal cholesterol or triglyceride levels.” Up to one-third of adults have it. Wellness programs promoting extensive lifestyle changes can prevent major health problems.
Gartner's research indicates organizations can boost employee discretionary effort by 21% by providing holistic well-being support. That’s twice as much impact as companies that offer only traditional programs.
As the wellness crisis continues, voluntary wellness benefits will be a cost-effective way for employers to assist employees in living healthier lives while improving employee retention.
Trend #2: Pet Insurance
Pet insurance is a popular voluntary benefit many employees are eager to obtain. In fact, in 2022, 56% of consumers opted for pet insurance as a voluntary benefit, an increase of 22% from 2020.
One survey found that 76% of millennials own a pet, with about 42% saying they think of their pets as they would their own children. Another recent survey shows nearly 50% of pet owners would not be able to cover a $5,000 pet expense out-of-pocket. Owners of sick pets have higher rates of depression and anxiety, potentially resulting in poor performance and disengagement from work.
There is an opportunity for employers and voluntary benefits providers to appeal to millions of people with pet insurance.
Pet insurance may even be the difference between keeping and losing employees. 30% of respondents in a Nationwide survey said pet-related benefits would influence them to stay with their current employer or leave their company for one that offers pet insurance.
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Trend #3: Identity Theft Protection
Identity theft is a growing problem responsible for serious financial headaches, including stolen funds, out-of-pocket costs, legal fees, record request fees, childcare costs, tax challenges, etc.
Allstate Identity Protection says a good identity theft protection benefit should cover all of the costs mentioned above to make an employee's financial recovery as complete and straightforward as possible.
In a Gallup survey about what crimes Americans fear the most, 71% of respondents said they worry about their data being hacked, and 67% are worried about identity theft.
The Federal Trade Commission (FTC) received 1.4 million identity theft complaints in 2020, an increase of 113% from 2019. In 2020, identity theft cost Americans about $56 billion, with about 49 million consumers falling victim.
As a result, more employers are offering voluntary benefits that help protect their employees from identity theft. In fact, 60% of consumers opted for identity theft protection as a voluntary benefit this year, increasing by 18% from 2020.
Trend #4: Hospital Indemnity Insurance
Unexpected lengthy hospital stays are a growing concern in the U.S., causing many Americans to fall into serious debt. There were nearly 33 million hospital admissions in the U.S. alone this past year. Sixty-one percent of Americans say they would not be able to cover an unexpected $1,000 out-of-pocket expense from their savings.
As a result, hospital indemnity insurance has become an increasingly popular voluntary benefit, as 47% of employees opted for hospital indemnity coverage this year, increasing by 30% from 2020.
A typical hospital indemnity insurance plan provides employees with additional financial support beyond usual health insurance. Every hospital indemnity plan is different. For example, some programs may offer fixed benefits for admission to a hospital, an overnight stay, treatment in an emergency room, outpatient procedures or overnight stays in an intensive care unit.
Carriers should emphasize customizable hospital indemnity plans that can best meet their clients’ coverage needs.
Trend #5: Voluntary Childcare Benefits
A survey by Care.com finds that nearly half (47%) of families are more concerned about the cost of childcare than they were before the pandemic.
Rising childcare costs put intense pressure on working parents. In 2020, 79% of working parents reported having symptoms of workplace stress and burnout, and over 55% say they are dealing with mental health issues.
Nearly 44% of consumers opted for childcare benefits this year, increasing by 26% from 2020. However, while supporting working parents is a top priority for 74% of employers, only 39% feel their programs are effective.
Childcare benefits provide working parents of young and school-aged children with resources, childcare services and financial support so they can afford to take care of their kids.
Such benefits can come in many different forms. For example, Willis Towers Watson finds that 30% of employers offer access to backup childcare services, 27% offer discounts for childcare centers and tutoring resources, 26% offer subsidies to employee dependent care spending accounts for childcare expenses and 97% offer parents flexible work hours.
This presents employee benefits carriers and employers with an opportunity to help working parents alleviate financial stresses and anxieties with additional childcare offerings.
See also: What to Understand About Gen Z
Technology Makes Personalizing Voluntary Benefits Feasible
The number of companies offering voluntary benefits will continue to rise, as will the number of options in a benefits package. The Society of Human Resource Management says 92% of employees say that benefits are essential to their overall job satisfaction.
Employee benefits carriers have an opportunity to increase their revenues by up-selling increasingly important voluntary benefits like pet insurance, identity theft protection, childcare benefits, hospital indemnity insurance and personalized wellness programs as well as traditional life, disability and critical illness coverage.
Fortunately, modern technology makes it much more feasible for carriers to craft personalized benefit programs for employers and their employees. Thanks to advances in AI and big data analytics, insurance carriers can recommend optimal voluntary benefits selections based on an individual employee’s unique customer profile with a digital sales and underwriting platform built specifically for the group insurance industry.
