Fall 2006 / No. 69
Voluntary is Becoming the Primary
Delivery System for Financial Services
That
statement always gets people’s attention (and usually
gets a few looks of astonishment). But we do believe it is
happening, and further, is inevitable. Follow our logic and
see where you come out.
- Employers
are moving towards a defined contribution
approach to benefits.
More and
more, employers are moving to limit their exposure to rising
benefits costs, sometimes capping their contributions and sometimes
through formal cafeteria-plan mechanisms. But regardless of
the mechanics, the move towards defined contribution benefit
programs is unstoppable.
- Employees
will be making more and more of the benefit choices.
As the employer
steps back from funding benefits, employees will be forced
to determine how to spend their dollars and their employers'
dollars within the benefit program.
- All
benefits are going to be “voluntary.”
Already,
employees are choosing between multiple medical plans, employee-paid
products, buy-up plans and contributory coverages, and the
direction is clear. While employer dollars will still be available
(see step #1), all benefits are ultimately voluntary, meaning
the employee is electing whether or not to purchase them from
available funds.
- For
most employees, other channels fail to deliver.
The individual
insurance agent has all but disappeared from the middle market,
and direct mail and Internet are not succeeding at filling
the void.
- Employees
welcome the opportunity to purchase financial security
products through their employer.
Repeated
studies have confirmed this fact.
- Therefore,
voluntary will become the primary delivery system for financial
services.
Most people
will get the majority of their financial security products
through their employer’s benefit program, and all benefits
will be voluntary.
Contact
one of our consultants to discuss your company’s future
in the voluntary marketplace. |
