Life insurance was once again the top seller in the voluntary benefits market last year. This marks the fifth straight year in which life insurance extended its lead in voluntary sales, according to Eastbridge Consulting.
Life insurance sales were $1.88 billion, an increase of 22 percent compared to 2012. Life insurance holds a 28 percent share of all voluntary sales, Eastbridge said. Life insurance sales in 2012 increased by 11 percent compared to sales in 2011, according to Eastbridge data.
Total voluntary sales for all products last year was $6.6 billion, up 10 percent from $6.0 billion in 2012, Eastbridge also said.
Voluntary benefits are paid for 100 percent by the employee through a payroll deduction. The benefits are offered in addition to shared benefits for which the employer and the employee contribute toward the premium.
With questions and uncertainty surrounding health care reform, sales of voluntary benefits have gone up.
In the life insurance category, term insurance accounted for 76 percent of new business achieved profit (NBAP) in 2013, up 4 percentage points from 2012, Eastbridge also said. Sales growth of term life in 2013 outpaced sales growth of universal life and whole life.
Total sales of voluntary disability insurance were $1.36 billion last year, up 8 percent over 2012. Short-term disability (STD) accounted for 68 percent of total disability sales and long-term disability (LTD) accounted for the rest.
Disability sales accounted for 21 percent of NBAP, the company also said.
STD sales in 2013 were up 11 percent over 2012, but sales of LTD were up only 2 percent over the same period, Eastbridge also said.
Accident sales, which accounted for 12 percent of total voluntary sales, were down 9 percent last year compared to 2012, according to Eastbridge.
Hospital indemnity and supplemental medical insurance had an 8 percent share of total voluntary benefit sales last year, down 2 percentage points from its 10 percent share in 2012. Sales for the line dropped by almost 7 percent, the company said.
Sales of cancer coverage on a voluntary basis were $356 million last year, down 18 percent from the previous year. Critical illness sales were $327 million, up 11 percent compared to 2012, Eastbridge also said.
Eastbridge, which tracks sales of insurance and benefits in the voluntary market, releases the numbers every year in its U.S. Worksite/Voluntary Sales Report. The report tracks group and individual voluntary sales for more than 60 insurance carriers active in the voluntary benefits market
Employers often find offering voluntary benefits attractive since they don’t contribute to premiums and elect to make voluntary benefits available to workers at the employers’ discretion.
Employees like the benefits as they allow workers to supplement coverage they already have, and are eligible to buy the coverage through group rates.
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 protected].