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Considering voluntary benefit program


Guest marie567
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Guest marie567

We're an employer considering adding employee paid group term legal, auto, homeowners insurance, long term care, and universal life.

Any other employers out there who have added these programs and any advice in choosing vendors or setting up this program?

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My experience has been that while these types of plans are a convenient way for employees to pay for such coverages with minimal individual underwriting they are not necessarily the most cost effect for employees. In addition, when employees discover that they could have gotten less expensive coverage from an independent agent or another insurer they tend to blame the employer for letting the selected insurer sell them a bill-of-goods.

These plans are a convenient way for an insurance agent to generate great commissions, but not necessarily a windfall for employees.

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I somewhat agree with Kip's point on the auto & home since not every one of your employees is necessarily going to get the best rate that he or she could in the marketplace. But I think the group setting could really help out your employees for long term care and universal life due to lax underwriting requirements. Additionally, the cost of these products through the employer tend to be less for the majority of your employees and allow for guaranteed issue amounts, something that individual products do not have.

As a side note, I wouldn't go gung ho on Group Universal Life. While it's nice in theory, realize that if any of your employees want supplemental life only and do not want to contribute additional funds to the cash accumulation account, this plan is going to be more expensive (usually about 25%) than your average supplemental life plan in the marketplace. And while the guaranteed interest rate sounds nice these days based on what's out there, realize it's just a matter of time before your employees will be able to earn similar interest rates at their local bank since things will inetivably turn around in the economy.

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Guest marie567

Thanks for info.

The reason I'm interested in auto is I've been told East Coast auto rates are, in general, very high, and the auto through the voluntary benefits might get a better deal for this group. I'm still checking this out.

I don't like universal life myself but have been told that we can get the pure insurance part cheaper than voluntary term insurance because the life insurance company wants to setup this plan and hope individuals will do the added insurance part.

I am coming around to group legal, that it could be valuable.

As for LTC, most of our employees are under age 40, I don't see the value at this point except to help them help their parents signup for LTC. However, do you think it's valuable to offer to younger employees for long term care needed for disability related accident? Maybe if they engage in dangerous sports?

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LTC carriers always make the argument that many of the people who utilize long term care services are under 65, however, unless the company is going to pick up at least a decent chunk of the tab, don't even waste your time offering it because younger people generally don't sign up for it. The advantages of signing up for it when you're younger is that you're locked in at that rate for life (assuming the carrier does not increase the rates over the whole block). The older you are when you sign up, the higher the rate. Do I think it's a good benefit? It depends. The most important thing to realize is that LTC is for asset protection. If people don't have a lot of assets, which a lot of people under age 40 do not, why waste your money on a LTC policy when you could be putting it towards developing assets? I know arguments can be made of quality of care and all the jazz, but that's people wanting to make a sale talking.

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I’ve never been involved in underwriting auto insurance but it would seem to me that even if a firm is offering group auto they would have to comply with laws of each state in which they are offering coverage. Therefore, it seems to me that if auto insurance in the east is more expensive then it will be more expensive in a group plan.

I know that under an employer's fleet auto insurance the underwriting takes into consideration the laws of each statee where they have autos or trucks.

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