Why guaranteed lifetime withdrawal benefit election rates continue to rise.
By Cyril Tuohy
New annualized premium of voluntary benefits bought at work grew 9 percent last year to $4.3 billion. This is as workers, facing plan design changes due to health reform, turned to paying for some coverage out of their own pockets, according to LIMRA.
Voluntary health product sales increased 13 percent to $2.6 billion last year. Meanwhile, accident, critical illness and vision coverage also grew for the third straight year, according to LIMRA’s 2013 U.S. Worksite Sales Survey.
Term and whole life insurance sales reached $1.4 billion last year, an increase of 2 percent over 2012, the survey also found.
The U.S. Worksite Sales Survey summarizes voluntary benefits product sales of 43 insurance companies, including 20 of the top 25 carriers.
Voluntary benefits are paid for 100 percent by the employee through a payroll deduction. The benefits are offered in addition to shared benefits, benefits for which the employer and the employee contribute to premiums.
Employers find voluntary benefits attractive because they don’t contribute to premiums, yet offering the benefits helps retain employees.
Employees like the benefits because they allow workers to supplement coverage they already have, and can buy the coverage through group rates that are lower than in the individual market.
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, according to Eastbridge Consulting Group Inc.
The increase in sales of voluntary benefits is no surprise as 75 percent of 800 employers surveyed by LIMRA last year said they intended to change their medical plans by increasing the amount employees contribute to their employer-sponsored health coverage.
Employer-sponsored coverage is paid for by the employer and the employee, but as health care costs have increased, employers have shifted a larger burden of the cost-sharing arrangement onto employees through high-deductible health plans, for example.
In response, employees have turned to buying coverage in the voluntary benefits market, which are paid for through convenient payroll deductions.
Many insurance companies have launched voluntary accident, critical illness and cancer coverage in the past several months.
A separate survey of 1,714 consumers, conducted by Price Market Research on behalf of Aflac last year, found that 53 percent of consumers say that working for a company that offers supplemental insurance will be important to them post health care reform.
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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