Saturday, 25 May 2019

Let’s stop taking life for granted – BenefitsPro

Lifesaver on dock Group life insurance doesn’t come across as a very exciting product, partly because it’s so familiar to employers and employees. (Photo: Shutterstock)

Group life insurance is one of the most common benefits offered by employers. When asked about the importance of benefits in a 2018 LIMRA study, employees rated life insurance only behind medical benefits, paid vacation and retirement plans. In the same study, a survey of employers indicated they think employees rank life insurance lower than they do. Perhaps these employers are taking life for granted.

Related: 3 reasons life insurance is essential to any benefits package

Group life insurance doesn’t come across as a very exciting product, partly because it’s so familiar to employers and employees. Employers know employees want to provide financial security to loved ones. Basic group life insurance provides sufficient money to cover basic final expenses. Providing for dependents’ future financial security expands the need and amplifies the amount of necessary coverage. That’s where term and permanent voluntary life insurance provides a great solution.

Marty Traynor is vice president of voluntary benefits at Mutual of Omaha.

It seems unlikely that group life is being overlooked, but let’s look at the facts:

• In a recent LIMRA study, 17 percent of employers indicated they plan to drop group life insurance as a benefit. The overall number offering group life insurance was down 14 percent between 2006 and the 2018 study.

• When LIMRA surveyed employees, they underestimated both their risk of dying before retirement age and the amount of insurance they need. Only 56 percent of workers even understand that the money from life insurance can be used for any purpose, while just 45 percent realize that life insurance purchased at work is generally portable if they change jobs or retire.

• In a separate study, LIMRA found 58 percent of all employees have insufficient life insurance to cover their family needs.

Employees clearly need further education, yet employers are placing less emphasis on it. Perhaps we are part of the problem. We tend to treat group term life insurance as a commodity, focusing on price instead of employee needs.

Many employers think voluntary life eligibility needs to be matched to eligibility for employer-paid plans. Since employers often have valuable part-time employees, why not make them eligible for voluntary life, even if they’re not eligible for the employer paid plan?

Second, most group life plans and voluntary group life plans don’t require death of the insured for benefits to be payable. Most group plans allow acceleration of the death benefit in the event of a terminal illness, and many accelerate benefits in situations like inability to perform activities of daily living.

Third, the guarantee issue amounts available in voluntary term life plans have increased steadily and evidence of insurability processes supporting employee buy up plans have been simplified. Access to guarantee issue and easy buy up options take much of the pain out of shopping for and buying life insurance. Every employer’s plan should be reviewed accordingly.

Fourth, while online enrollment can be beneficial, there’s no substitute for the human touch. Employees need guidance in understanding the value of their benefits. This need for education during the enrollment process presents an opportunity for employers and their advisors to provide value to employees and their dependents.

Let’s stop taking life for granted.

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