We live in an increasingly consumer-driven benefit world as defined contribution retirement solutions, health savings accounts, and high-deductible health plans continue to gain popularity. This consumer-driven concept is expanding to other benefits such as dental, which traditionally has had few choices in benefit offerings. New products on the market, such as Employee Choice Dental from Principal Life Insurance Company, have multiple benefit options with customizable benefits and provisions and are an example of this trend. Such products as these place more of the decisions in the employee's hands.
Employee Demographics: A Moving Target for Employers
Medical advances are prolonging the average lifespan, resulting in an increased need for longer payment of disability insurance. The needs of highly compensated people will continue to take precedence over those of the average worker, resulting in a need for increasing focus on voluntary benefits.
Adding to this, workers entering the workforce today have grown up in a made-to-order society, creating a sense of entitlement that likely will put more pressure on employers to offer comprehensive employee benefit packages.
In fact, according to the latest Principal Financial Well-Being IndexSM, 61% expect benefits they receive from their employer to remain the same over the next year. Many people have grown accustomed to the instant gratification of ATMs, high-speed Internet, and TiVo, but there is no instant gratification when it comes to purchasing insurance benefits.
What's an employer to do with a roster that includes employees in many generations and life stages under one roof? They likely either are considering or already have begun implementing a benefits program that places more of the insurance decisions in the hands of employees by increasing employee contributions and offering voluntary benefit options. Voluntary benefit programs offer a low-cost solution, shifting the costs and premiums of benefits to employees while keeping employees covered and budgets intact. Voluntary benefits continue to evolve, meeting an even wider range of employer needs.
While voluntary programs are a great start, employers have to be careful when selecting the right benefit program for their employees. A program heavy on products offers only that -- products. Those usually are one-size-fits-all products, an approach that rarely works for all employees.
The best programs help employees define and prioritize their own personal insurance and financial needs. After those needs are identified, the appropriate kind of voluntary benefits and premium levels can be customized for each employee.
Historically with voluntary programs, employees have tried to balance insurance needs and finances without much help or knowledge. More often than not, employees believed all their insurance needs were being met by their employer's benefit program.
According to information from the Index, disability insurance and life insurance rank in the top five most important benefits to U.S. workers. Therefore, when it comes to voluntary benefits, the task of choosing benefits and premiums can be daunting. Employees certainly can go it alone, relying on friends, online financial advice, or gut instincts, but more than likely this will result in serious gaps in financial and insurance protection or, in some extreme cases, overinsurance.
Few indications, economic or otherwise, signal benefit costs will return to being mostly employer-paid. As companies continue on their quest to lower costs, employees will have to be stewards of their family's financial well-being. In an increasingly consumer-driven world, voluntary benefits are here to stay.
What to Do? Put the Power in the Employee's Hands
By industry accounts, the number one reason employees are unsatisfied with the usual work-site enrollment experience is because they feel they aren't being heard. A smart way to give employees the tools they need to secure their family's financial well-being is to offer a voluntary benefit program coupled with access to salaried financial professionals at the workplace.
According to the Index, 83% of employees would be interested in having access to a professional financial planner as a benefit available through the workplace. And 61% of those employees would expect it to be available at no cost.
Providing access to financial professionals as part of a voluntary program doesn't have to add to budget woes, either. Such programs as Principal Work SecureSM include the services of a team of salaried insurance and financial professionals as part of the work-site enrollment process.
Starting with the voluntary benefits the employer chooses to offer, such as dental, disability, and life insurance, the Principal Employee Benefit Specialist meets one on one with employees in the workplace. The employee benefit specialist provides an overview of the employer-sponsored benefits available and then helps employees identify potential gaps in their coverage using an interactive needs analysis tool.
Different Strokes for Different Folks
Voluntary programs' flexibility means a solution for every employee. For the highly compensated, that might mean an in-depth analysis and down-to-the-dollar insurance and financial planning. Average employees, many of whom are unlikely to have been approached previously by a financial professional, usually need a simple insurance gap analysis to get them started toward building a financial safety net for their family.
After these gaps are identified, the financial professional can help employees prioritize their needs. Employees often find the insurance and financial protection that fills all their gaps is more than they can afford, so an ideal voluntary benefit program considers accessible cash flow in addition to what's most important to employees based on their current situation. For a successful program, the employee benefit specialist needs to return each year to reassess employees' needs.
Change is inevitable, and as employee benefits continue to evolve, one thing is for certain: Employees who have access to a financial professional and are engaged in a personalized enrollment experience will be better prepared for the future. Arming employees with the knowledge and ability to make sound insurance and financial decisions benefits both employers and employees alike.
Deanna Strable, FSA, is an officer with the Principal Financial Group and senior vice president for the Specialty Benefits Division. Ms. Strable joined the company in 1990 as an actuarial assistant, was appointed actuarial associate in 1992 and senior actuarial associate in 1994, and was named officer in 1995. In 1999, she was promoted to second vice president and vice president in 2002, then senior vice president in 2005. Ms. Strable is a Fellow of the Society of Actuaries.
