Eighty percent of employees rate the workplace as an important source of personal insurance and savings products, and 75 percent of those who shop for such products buy. Welcome to the world of voluntary benefits.
In life insurance—all insurance for that matter—having the right channel to market is all-important. The workplace is emerging as an increasingly important one, as the figures above attest. It makes sense: Financial matters are a natural extension of work life, and people in this market spend a high proportion of their time at work.
The other compelling reason for the growth in importance of the workplace as a channel for life insurance is the emergence of voluntary benefits (insurance products that employees may purchase through their companies at rates that are lower than they could obtain individually).
In short, for employees, the workplace is a convenient and cost-effective way to enhance savings, be it for retirement, medical, dental, supplemental medical and the like. And employers are on board too, because voluntary benefits are a great way to enhance the benefits program they already offer employees without large extra costs or administrative requirements.
The numbers tell the story: in 2010, 32 percent of employers made voluntary benefits a significant part of their overall benefits strategy, rising to 58 percent in 2012. Seventy-five percent of employees said they value the ability to sign up for voluntary benefits at work.
From an industry point of view, the voluntary benefits markets is fragmented, with a range of players, including distributors, service providers and third-party agencies, enrollment firms and payroll companies.
The healthcare providers are also increasingly interested in this market, and have the potential to be powerful competitors. They already have the customer relationship, and voluntary benefits seem to fit neatly alongside their core offerings. And because the health marketplace has become consumerist in nature, these companies have acquired serious skills in marketing, brand-building and customer service. They have the potential to disrupt the voluntary benefits market significantly.
For more on this topic, download Voluntary benefits: A strategy for capturing the underserved middle market.
Next week, a closer look at the dynamics of this market.