By offering additional compensation to your employees, you can get them early in their career lifecycle and improve employee satisfaction and loyalty.
The U.S. job market has changed significantly over the past few years, fueled by the coronavirus, mass retirements, and demographic shifts. Whether it’s increased remote work or workers’ willingness to switch employers if their needs aren’t being met, we’ve all seen these shifts. One thing is certain: today’s job market is employee-driven. Employers, therefore, need to realize that they have to work harder if they want to find and retain the right talent.
But the good news is that companies are responding to this and starting to change their benefit packages accordingly. The right benefits can be life-changing for employees, and what we’re seeing now is employees becoming more self-motivated, centered around flexibility, health and the long-term safety of their families. wanting welfare. The last point deserves further consideration, as life insurance benefits offered by many organizations are rather meager and may not meet the needs of today’s workers.
To better understand why, let’s take a closer look at the arguments for adopting broader insurance benefits and how organizations can make these changes.
Group and individual life insurance
Employer-sponsored group life insurance has been a staple of the American workforce since the 1940s. While such policies have benefits for employees, such as guarantees of coverage, they also have drawbacks. For example, the low adverse selection of group insurance (that is, the way insurers measure risk) means that such policies offer minimal coverage and payouts. As a result, most employees with group insurance are underinsured.
The second big problem with Group Policy is that it’s tied to a specific employer and doesn’t migrate when an employee changes jobs. In an age where workers change jobs more frequently than ever before, such restrictions are unattractive. Millennials and Gen Z combined, who are expected to become a major part of the workforce in the next few years, are particularly reluctant to such non-portable benefits.
In contrast, individual life insurance policies offer a wider range of coverage and higher payouts. Best of all, it’s completely portable so employees can take it with them when they leave. Such insurance is highly customizable, giving policyholders a lot of freedom over the type of plan they want to purchase and the structure of the payment. A cash value option is another feature of an individual policy that offers the insured the option to pay an additional fee to make an advance withdrawal, take out a loan or increase the death benefit. To do.
So individual life insurance is a much better option and can be an important part of a company’s benefits package. However, while individual policies offer greater financial protection and flexibility, they are a little more work to put together.
Leverage technology to provide better coverage
As you can imagine, individual life insurance requires a more detailed risk assessment than group insurance. Applicants are required to submit a large amount of documents such as medical history and financial history, as well as documenting their lifestyle and preferred hobbies.
In addition, applicants are required to undergo several medical examinations to check their current health status. Assuming the applicant is in perfect health, the typical time it takes for the individual insurance underwriting process for her is 45-60 days. This long wait is the main reason why most benefit packages, at least historically, have not included a personal life insurance policy.
But that has changed a lot in the last few years. The rapid digitization of the insurance industry is driving the rise of insurtech. It is a new technology-driven approach to insurance that eliminates the slow and cumbersome processes of traditional underwriting. The cornerstone of InsurTech is the use of artificial intelligence (AI) and machine learning (ML) algorithms that can quickly and autonomously gather all the information required for underwriting purposes. Additionally, these algorithms can also be trained to evaluate applications, determine applicant risk levels, and form pricing models in minutes.
Such speed allows us to provide near-instant underwriting for employees and their dependents, allowing them to view, apply for, obtain approval for, sign and pay for a quote, all within 5-10 minutes. Now This greatly expands the possibility of including personal life insurance as a voluntary benefit, especially if the entire enrollment process can be completed through a digital omnichannel – a type of online marketplace for purchasing insurance. Such omnichannel is another InsurTech feature that allows employees to purchase additional life insurance at any time of the year. For example, according to one study, 29% Increase in online life insurance purchases over the past six years.
communicate the benefits
Adequate life insurance benefits alone are not enough if employees do not recognize the need for coverage. This is what many of our business clients have told us over the years, and many employees, especially millennials, are unaware of the need for additional life insurance and prefer not to buy their own group insurance. I think that is enough. This is a problem that life insurance industry insiders have known for quite some time. People complained that their group insurance coverage was limited and paid only $10,000 for him to $50,000 for him, which for many employees was less than his year’s salary. I don’t know that there isn’t
With that in mind, educating employees on the benefits of obtaining separate insurance should be an equal priority as providing those coverages. Sure, not everyone will encounter a time in their life when they need comprehensive life insurance, but at least they should know that these policies are available when they need them. So HR managers should spend time with both new hires and current employees to understand what benefits are available, why they are worth taking advantage of, and how employees can enroll. should be discussed.
By offering additional compensation to your employees, you can get them early in their career lifecycle and improve employee satisfaction and loyalty. This is the main purpose of all benefit packages and why it is worth the time and effort to create the best package possible.
RELATED: Why Employers Should Offer Individual Life Insurance Options
It’s never too late for companies to update their benefits packages. Companies that update in the face of changing employee expectations will reap the benefits of a more dedicated workforce. Individual life insurance may be just one part of voluntary benefits, but it can be a key service for organizations to win the battle to attract and retain talent. Nor does it have to be difficult or complicated to include it in your benefits.
Bob Gaydos, Pendera CEO
