Worksite Benefits Insurance Policies
What are Worksite Benefits / Voluntary Benefits?
Voluntary benefits, often referred to as Worksite Marketing products can be any type of additional benefit that is added to an employer’s menu of benefit options. These benefits may be provided through insurance products that can be classified as either core products or ancillary products.
Core benefits typically consist of group major medical insurance, dental insurance and group term life insurance. Premiums for these core benefits are usually paid for by the employer, although in many cases at least a portion of the premium is paid for by the employees.
From the perspective of the Benefit Professional non-core benefits can be further broken down into ancillary and worksite products. Ancillary products are usually thought of as group short and long-term disability income coverage and optional group term life insurance. The disability income products may be sold as an employer-paid benefit, a voluntary employee-paid benefit or as a combination of a base employer-paid benefit with an option for the employees to buy-up to a high benefit. Worksite products have historically consisted of a variety of individual insurance policies that are paid for entirely by the employee through payroll deduction. These policies may be life insurance policies, cancer insurance, accident insurance short-term disability income, critical illness and limited medical benefit plans. Today many carriers are introducing many of these same products on a group chassis so that they can offer lower premiums, guarantee issue of coverage and simplified enrollment procedures.
Due to the rise in cost for major medical coverage in recent years, there have been a number of non-insurance products introduced to the marketplace. Many of these products claim to provide medical benefits for an incredibly low premium such as $89 monthly to cover the entire family. Employers should take care when selecting one of these medical discount programs. It is easy for an employee to believe that they have medical coverage when in fact they do not.
Voluntary Worksite Marketing products today will often include offering both group and individual policies as well ancillary coverage. The Voluntary Benefit Professional understands that in order to help an employer achieve his benefit goals it will require a better understanding of all products available.
What types of voluntary products are typically offered?
The most common voluntary benefit by far is life insurance. Voluntary Life can be offered on either a group or individual chassis and may be either term, U.L. or Whole Life insurance.
Group Term Life Insurance: This is the most common of the various life insurance options. As a general rule the group policy is available to all active employees regardless of health. Rates are in 5-year age-banded increments and change when an employee moves from one band to another (i.e. employee turns 35). In addition there is generally an opportunity to purchase coverage on a spouse and children.
Individual Term Life: As an alternative to the group model companies may choose to offer their employees the opportunity to purchase an individual policy. While the employer will make the appropriate deductions from the employee’s paycheck, the employee is really buying and individual policy. Individual Term Life Insurance may be either a 5-year, 10-year, 20 or 30-year term. Underwriting (health questions to qualify) will vary by insurance company as will the amount of coverage available.
Universal Life Insurance: Like Term Insurance this type of product can be offered on either a group platform or as individual policies. The choice of which to offer can best be determined by working with a high quality Employee Benefit Professional. Universal Life is designed to be a cost-effective approach to permanent coverage. It builds cash value that earns current interest rates. Rates for a Universal Life policy are higher than for Term Life but lower than that of a Whole Life policy.
Whole Life Insurance: This plan can also be offered on a group or individual platform. Whole Life Insurance is very much a ‘what you see is what you get” type of product. All aspects of the policy are guaranteed such as premiums, cash value and death benefit.
In choosing which life product to offer you will want to consider your benefit objectives and the make-up of your employees. For most of your employees the only life insurance that they will ever own will be what they can purchase at work.
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