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Voluntary Employee Benefits Can Serve You Well

Are you offering voluntary benefits? If the answer is "no" and you have more than 10 employees, you're missing the boat.

That's a strong statement, but I stand by it. There are lots of reasons why you can't (and shouldn't) try to be all things to all people when it comes to benefits:

  • At some point, every business reaches its effective dollar-expenditure limit. Yes, you want to have your employees be loyal and you want to meet their needs, but there aren't enough dollars to go around to do that for everyone.
  • Not all benefits apply or appeal to all employees. We have an increasingly diverse culture. The nuclear family isn't the ultimate end point for every employee. Heck, the number of end points for employees is almost beyond conception, much less counting.
  • Because of the lack of appeal or application, some benefits just won't be appreciated - and might even be resented - by some employees.

And yet, because of that same diversity of employee makeup, there are unmet needs out there among your employees - and if you can help those with needs meet them, you gain from that assistance.

8 Reasons to Offer Voluntary Employee Benefits

1) Voluntary benefits are paid for by the employee, not the employer.

Your only "cost" to the plan is the loss of whatever time the employee spends meeting with someone who explains the products being offered and the time spent making a decision. There is no direct cash cost.

As an aside, the benefits are virtually always paid for via payroll withholding. Once you set up the original employee selections, your payroll company handles the withholding from there, and you need only send a check to the carrier on a monthly basis.

2) Voluntary benefits Improve morale, productivity and profits.

There is ample evidence that providing access to voluntary benefits improves morale and productivity and lowers absenteeism, presenteeism and turnover. So they are arguably a source of increased profits to you. See the info below about employees liking the availability of voluntary benefits, the sense of ownership voluntary benefits engender, and it's hard (for me, at least) to see any reason why morale, productivity and profits wouldn't be improved.

3) Voluntary benefits expand the range of benefits available to employees.

You can offer as many products as you need to - and as you'll see later in the chapter, the number of benefits available to offer is lengthy. Employees can choose to protect their needs in the event of accidents, dental, loss of life, disability, meeting a large healthcare deductible, vision, cancer, critical illness ... and other possibilities surely to emerge in the future.

4) Voluntary benefits let you, the employer, meet your employees' important, personal needs that extend beyond the scope of your core benefits portfolio.

As I said initially, the nuclear family is only one of a range of family structures that we see today. The needs of the single parent are different than the nuclear family's needs, which are different than the young single professional or the gay couple.

Traditional group coverages don't adequately address that multiplicity of needs - but that doesn't mean that the needs are any less important or worthwhile to the employee involved. By allowing your employees to select the coverages that are important to them, you're saying, "You're important to us, and we want to help you address all your concerns."

Will that attitude result in a more loyal, productive employee base? I think so, and some studies suggest exactly that...but again, it's happening at no cost to you, so even if morale doesn't improve and neither do profits and productivity, you haven't lost a thing.

But candidly, as I said above, it's hard for me to imagine that you won't see improvement in your employee base.

5) Voluntary benefits can be offered to people who aren't eligible for core benefits.

So for example, you may offer health insurance and other core benefits only to those employees who work more than 30 hours per week. But at the same time you can offer voluntary benefits to any employee with more than 20 hours, which would of course include those covered by core benefits.

However, the "part time" employees now feel as if there's more to the job than just the weekly paycheck.

6) Voluntary benefits are in fact "voluntary". Employees only choose those benefits that they need, want and can afford.

In fact, one of the biggest hazards of the benefits is that they're so well received that employees, faced with a multiplicity of options, end up purchasing more products than they can realistically support on their pay.

Good brokers and voluntary benefits carriers take care to prevent that from happening.

Voluntary benefits can be and are customized to both the needs and budget of each employee.

For example, let's take life insurance.

  • One employee is married with children and is in his/her late 20's.
  • The next employee is an empty nester in his/her 50's.
  • A third employee is a single parent with teenaged children.
  • Some, but not all, of these people own a home and have a mortgage.

Do each of these employees have the same need for life insurance? Should each of these employees get the same amount of life insurance? Should they all get a term policy, or would a Whole Life or Universal policy be better?

You get the point. They have different needs, and a "one size fits all" approach (such as with a Group insurance policy) - while still a valuable benefit - will not really meet the need of each different situation. With Voluntary benefits, the employees get the "power of choice."

7) Most voluntary benefits are employee-owned, and "portable."

That is, they go with the employee when he leaves your firm. From your perspective that may seem like a weakness, but the fact is that it confers a sense of ownership that employees appreciate - and that they don't get from their other benefits.

It's like offering a money-back guarantee on your product or services. Some people see that as a "cost," but the fact is that offering a guarantee lowers the resistance to purchase, generates more enthusiasm for your product, and will result in more NET sales than you will have without a guarantee.

Letting benefits be owned and able to be taken to the "next job" by the employee might seem like you're "allowing" them to leave without sacrifice, but the enthusiasm of ownership gives your firm a stronger position in the employees' minds and will actually lower, not increase, turnover.

8) Both employers and employees like having voluntary benefits!

According to the 2011 Workplace Survey conducted by Mercer, a leading HR consulting firm:

  • Nearly 8 of 10 employees say their benefits are an important reason why they work where they do.
  • And 76% of employees say that benefits make them feel appreciated by their company

Couple that with a separate 2011 study commissioned by Benefits Selling magazine (Oct. 2011, pg. 47) that found employees offered voluntary benefits are 20% more satisfied with their benefits package than are employees at companies without voluntary benefits (and that includes responses from employees who were offered but did not select voluntary benefits).

And Prudential's Sixth Annual Study of Employee Benefits in 2011 found that 70% of employers feel that offering voluntary benefits has had a positive impact on employees' overall satisfaction with their employee benefits program, and the number of responding companies that offer at least one voluntary benefit to their employees has grown to over 80%!

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