Build a Booming Voluntary Benefits Business
Mar 10, 2015
As the dust settles on the second open enrollment for health insurance on the public exchanges, the future of benefits is becoming a bit clearer. Employer-sponsored group coverage is on the decline—S&P Capital IQ predicts that 90 percent of workers currently covered by their employers will transition to a state-based exchange (SBE) or federally facilitated marketplace (FFM) by 2020.
While the door may be closing on group sponsored benefits, another is opening in the form of a robust voluntary benefits business. A survey by Eastbridge found that 14 percent of responding employers said they were thinking about adding a new voluntary benefit and 17 percent said they were considering moving some existing benefits to voluntary. Further, a recent LIMRA study found that 15 percent of employers were “very” or “extremely likely” to add a new voluntary benefit over next couple of years, while 25 percent were “somewhat likely.”
It’s not just the employers who are seeing voluntary benefits in a new light. An online nationwide survey conducted by Harris Interactive on behalf of Transamerica Employee Benefits (TEB) found that 65 percent of employees consider it important that their employer offer voluntary products. Most popular are critical illness, accident, supplemental medical expense, hospital indemnity and cancer, and dental and vision policies.
Tapping Into a Re-emerging Market
As a result of these trends, once-overlooked voluntary plans are enjoying a resurgence in popularity among employers, employees and agents seeking ways to supplement their income. In particular, agents who add voluntary benefits to their portfolio can alleviate the instability in sales cycles created by open enrollment periods.
Success with voluntary products lies in three primary activities.
1. Cross-selling: Existing customers should be the first stop when it comes to expanding into the voluntary market. Indeed, research suggests that most employees prefer to purchase their benefits through the workplace because it is convenient, has already been researched by a trusted source, and may offer the option of payroll deduction for ease-of-payment.
Create cross-selling opportunities by working with clients to identify and close coverage gaps.
2. Increasing customer loyalty: Voluntary benefits can be leveraged to improve customer retention and loyalty. Your relationship with employers can be strengthened by addressing the insurance pain points that are negatively impacting employee satisfaction. For example, enabling employees to expand coverage from just dental to include vision or life insurance helps address their needs.
The key is to educate employers on how voluntary benefits can expand benefits coverage while offering current employees proper financial preparation in the case of an unexpected injury or illness. This preparedness results in reduced employment turnover costs associated with having to recruit and train a replacement, saving your customer money. This willingness to address both employer and employee needs will deliver back to the agent the loyalty that comes with a trusted, consultative relationship.
3. Breaking into new markets: Introducing new products—voluntary plans—and adapting to new sales strategies can open the door to new opportunities that otherwise would have been closed.
A Consultative Approach
A recent study by MetLife found that a third of employees are not actively engaged in their annual benefit plan enrollment, even when employers are communicating with them. This means that communication is crucial to employer/employee engagement, which will help to ensure that the voluntary benefits program you provide is considered ahead of any other competitor.
By leveraging your role as a trusted advisor, you are able to not only meet your employer and employee clients’ needs with voluntary benefits, but it also ensures that those needs won’t be met by a competitor—a move that can wind up chipping away at your existing relationships.
Equally important is finding a partner who can serve as the agents own trusted advisor. Even those who are comfortable with their voluntary benefits knowledge can find it helpful to take advantage of experts in the field who have a complete understanding of the intricacies of certain products. By partnering with a vendor that offers access to an array of high-quality insurance plans from the nation’s leading carriers, as well as the proven business processes and analytics-driven retention strategies, you are better suited to beat your competition.
Guided by these sales strategies, agents can leverage the power of voluntary plans to inject new life into sales and shore up sagging profitability by opening new markets and opportunities.
About the Author
Todd Cowan is Senior Vice President of Sales/Distribution at HealthPlan Services, (www.healthplan.com), the nation’s leading technology, sales, retention and administrative services provider for the insurance and managed care markets.