Offering employees health care coverage is one of the most important decisions a business owner or executive can make. “Keeping employees healthy and capable results in a more focused and productive workforce,” said Stephen Bankson, vice president of supplemental, life and disability underwriting, product and commissions for USAble Life. “Plus, investing in the well-being of your employees gives your business a competitive edge by attracting and retaining the best talent.”
Employers can provide extra security and peace of mind by offering ancillary products such as supplemental coverage and life and disability insurance to help protect employees’ financial health as well as physical health. “This extra protection complements the value of an employee’s health coverage,” said Bankson. Supplemental coverage can be paid by the employee, the employer, or funded through a shared payments model.
Supplemental insurance — accident, critical illness and hospital indemnity coverage — offers an affordable way for employers to offer additional coverage beyond traditional health benefits. Supplemental coverage provides employees with cash benefits to pay out-of-pocket costs for medical and nonmedical expenses.
Nearly two-thirds of employers offer accident insurance to supplement an employee’s health coverage. This coverage is affordable, and in addition to paying benefits directly to employees, some plans may include a wellness benefit for covered preventive care — complementing medical coverage.
“People often underestimate out-of-pocket medical care costs and unexpected, uncovered expenses associated with an accident," Bankson said. "Additionally, an employee’s health coverage may have limits. Both hospital indemnity and critical insurance plans provide an additional layer of financial protection in the event of a hospital stay or an unexpected major illness. These coverages provide cash benefits paid directly to the employee, which can be used for copays, deductibles, treatment, travel, and childcare, or any other way the employee chooses."
Five reasons to have life insurance
Only 60% of Americans have life insurance, leaving many families financially vulnerable. “Most 20- or 30-somethings do not consider buying life insurance, even though sound, financial planning shows this is the best time to buy,” said Bankson. “Offering life insurance to your employees when they are young and healthy is far more affordable. Life insurance premiums are higher if we wait until we are older to take out a new policy.”
Bankson offers five reasons to own a life insurance policy:
1. The Life Insurance and Market Research Association reports that 1 in 3 families might not be able to meet their day-to-day expenses within a month of the primary breadwinner’s death. If an individual supports a spouse, children or aging parents, you need life insurance.
2. Life insurance can help offset end-of-life expenses. Today’s average funeral expenses are from $7,000 to $10,000. Estate and inheritance taxes can also be expensive. Life insurance can pay for those costs, easing the burden for loved ones left behind.
3. If an individual is planning to get married or start a family, it’s wise to take out a life insurance policy now. Your spouse and children may depend on your life insurance benefit for their financial future.
4. If an individual works for themself or has a family-owned business, a life insurance policy can help keep your business alive once you are gone. This will help protect the economic loss that would result from the death of the owner or key employee.
5. If an individual has accumulated a large student loan debt or other substantial debts, a life insurance benefit can pay off those bills when you die so your survivors aren’t saddled with your debt.
Always expect the unexpected
Most Americans think being injured or disabled will never happen — but it can. Social Security Administration statistics say 1 in 4 of today’s 20-year-olds will become disabled before reaching age 67. “Disability insurance can serve as paycheck protection for employees by replacing a portion of their earnings if they are unable to work due to an accident or illness,” Bankson advised.
Two types of disability insurance
“Most Americans don’t think they’ll ever need disability insurance — until they do,” said Bankson. Short-term disability is designed to fill in the gaps caused by an illness or injury that keeps an employee out of work for several weeks up to six months. Long-term disability insurance provides financial support or income replacement if recovering from an injury or illness keeps the employee from working longer than six months. The amount of coverage required depends on how much income needs to be replaced while the employee cannot work. Long-term disability insurance benefits are, on average, about 60% of one’s pre-tax income. Short-term disability benefits can kick in during the long-term disability waiting period, so there is not a gap in protection. Disability insurance may be funded by the employer or by the employee on a voluntary basis.
The strategic use of benefits
A Society for Human Resource Management survey on the strategic use of benefits found that organizations that use benefits as a tool for recruiting and retaining talent reported better overall company performance and above-average effectiveness in recruitment and retention compared with organizations that did not.