Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
A survey of 1,714 consumers who are likely to buy supplemental insurance products in the next 12 months finds that 53 percent say working for a company that offers such insurance will be important to them.
Supplemental insurance, typically offered on a voluntary basis for which employees pay 100 percent of premiums, is important as employees fill gaps in their employer-sponsored coverage, said Michael Zuna, executive vice president and chief marketing officer with Aflac.
“Businesses that add voluntary insurance to their benefits offerings can help their employees cope with out-of-pocket expenses due to an injury or illness while not incurring any additional cost to the company," Zuna said.
Supplemental insurance policies cover critical illness, accident, hospital indemnity, disability, whole life and dental coverage. Over the past two years insurance companies have broadened supplemental benefits they offer on a voluntary basis.
Supplemental coverage is offered in addition to the regular benefits made available by employers and the cost of which is paid for by the employer and the employee. Employers choose whether to offer supplemental coverage to their employees.
Employers like offering supplemental insurance on a voluntary basis because premiums are paid for 100 percent by employees.
The market for voluntary benefits is growing. An index measuring the confidence of insurance carriers, brokers and advisors serving the voluntary benefits industry hit a record 102.9 points at the end of last year, up 3.9 points from year-end 2012, Eastbridge Consulting Group found.
Voluntary insurance also lowers employer costs on the claims side, a separate Aflac survey also found.
The Aflac Workers’ Compensation Report found that 42 percent of all companies providing access to voluntary accident and disability insurance reported declines in their workers’ compensation claims.
“For years, insurance agents and brokers have heard anecdotal rumors linking voluntary accident and disability insurance to reduced workers’ compensation claims, and we learned the anecdotes are true based on our recent study results,” Tye Elliott, vice president of core broker sales for Aflac, said in a news release.
The Workers’ Compensation Report survey, conducted by Lieberman Research Worldwide, queried 600 U.S. employers of all sizes.
The survey found that 55 percent of larger companies that provide access to accident insurance saw a drop in workers’ compensation claims, while 34 percent of small and midsize companies also reported declines.
In addition, 47 percent of large employers providing access to voluntary disability insurance reported decreases in workers’ compensation claims, and 43 percent of small companies and 33 percent of midsize companies that offered the coverage saw their workers’ compensation claims decline, the survey found.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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