Emerging workplace benefit trends for 2025

By Ayo Mseka

Successfully selling employee benefits in today’s market requires a wide range of skills, including focusing on benefits that address employees’ concerns, engaging them regularly, and emphasizing how these benefits improve their well-being and financial security. Kara Hoogensen, senior vice president and head of Workplace Benefits at Principal, recently shared a few emerging trends in this growing market and offered some critical insights on finding success.

The state of the market

The most popular types of employee benefits include health benefits, life insurance, retirement plans, wellness benefits and profit sharing. According to LIMRA’s workplace benefits sales surveys, U.S. workplace supplemental health product sales ― accident, critical illness, cancer, hospital indemnity, and other supplemental, health insurance products― totaled $543 million in the third quarter of 2024. "Other supplemental health products” includes products that do not fit other categories, such as gap insurance, minimum essential coverage plans, limited benefit medical, and heart/stroke products.

Accounting for 91% of supplemental health sales, the product lines of accident, critical illness and hospital indemnity insurance combined posted growth of 11%, when compared to the first nine months of 2023.

In addition, according to LIMRA, workplace life insurance this year is expected to grow by 3%, just shy of its historical average of 3.1% before the COVID pandemic. And both long-term and short-term disability benefits are projected to land above their historical averages this year, with long-term disability reaching 3.8% in 2025 (compared to its historical average of 2.7%), and short-term disability achieving 4.0% (slightly above its historical average of 3.8%).

“We are cautiously optimistic about workplace benefits in 2025,” said Anita Potter, assistant vice president, workplace benefits, LIMRA. “The labor market is still tight with low unemployment, and employers are focusing on employee-retention strategies. Forty-five percent of employers said they added one or more benefits within the past two years.”

Yet, carriers should remain vigilant about the headwinds they face in the years to come, the report pointed out. The economic climate, rising healthcare costs and receding wallet share all could impact carriers and their success in the workplace market.

Trends in 2025

So, as agents work with their clients in this market, what are some of the emerging trends they should look out for? “We’re seeing an increased focus on personalization for employees when it comes to their benefit options,” said Hoogensen. “Every employee is different, and most find value in accessing a wide range of benefits to make choices that best fit their specific needs and financial goals.”

Hoogensen added it’s important for employers to realize that they can add some employee-benefit offerings at no additional cost to their business. “By providing more employee-paid options, they can provide flexibility for their employees to decide what combination of benefits best fits their needs,” she said.

With the cost of health care continuing to rise, employees are turning to products like accident, critical illness, and hospital indemnity insurance to help cover their medical expenses, Hoogensen added. She explained that these types of insurance coverage pay benefits for pre-defined accidental incidents, illnesses, and hospitalization-related expenses, respectively.

Impact of the Trump administration

Many in the industry believe that the Trump administration will have an impact on some of the employee-benefit products existing in the market today, and Hoogensen shared some of her insights. These are:

--Paid Family and Medical Leave: Congress has made expanding access to paid family and medical leave a priority in recent years- with strong bipartisan support, she said. In his first term, Hoogensen said that President Trump was an advocate for expanded paid family and medical leave (PFML), and “we are optimistic that support will continue. This support may ultimately yield legislation that helps broaden access to these important benefits for more individuals and families.”

--Taxes: 2025 is the year of tax in Washington DC, with expiring Tax Credits and Jobs Act provisions, Hoogensen said. “We expect discussions on both the Paid Family and Medical Leave tax credit and Child Tax Credit provisions, both of which are industry priorities for the benefits space, and should be included in any comprehensive tax package,” she said.

--Supplemental Benefits: There is a clear opportunity for education on the role of benefits like Accident, Hospital Indemnity, and Critical Illness coverage to ensure employers can easily offer these products, all of which are important benefits to help protect individuals and bolster financial security, Hoogensen said.

Tips for success

So, what are some of the most effective methods that agents can use to sell employee benefits in today’s market?

“As we continue to incorporate new digital tools and artificial intelligence into benefit sales strategies, financial professionals should emphasize the value of personalized communication,” Hoogensen said. “Employers feel most comfortable working with financial professionals and benefit providers offering both digital and human options.”

Hoogensen added that when it comes to making decisions about employee benefits, employers prefer a combination of human and virtual resources, which also holds true when learning about new products and services, educating employees, and enhancing or adding benefits, she added.
“To effectively sell employee benefits in 2025, financial professionals can use the different resources available to personalize their clients’ experiences and communications,” she said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].