Voluntary Benefits Demand Surges as Employees Seek to Defray Costs

Sales of voluntary group benefits grew at a record pace in 2023 as more employers expand their offerings and demand continues booming as employees seek out benefits that can defray costs, according to new research.

Premiums collected for employer-sponsored voluntary benefits jumped 6.7% during the year to an aggregate $9.3 billion, with all lines of coverage contributing to the growth, according to the Eastbridge Consulting Group’s annual “U.S. Voluntary/Worksite Sales Report”.

The findings underscore the value that employees place on these benefits, particularly in defraying health care-related costs.

According to the report, in 2023:

• Group term life insurance premiums increased 10% from the 2022 level.
• Group universal life and whole life were up 9%.
• Critical illness insurance premiums were up 7%.
• Hospital indemnity premiums were 6% higher.
• Dental coverage was up 5%.
• Short-term disability coverage was up 4%.
• Accident insurance rose 4%.

The biggest driver: personal finances

One of the main drivers of this surge in employee uptake of voluntary benefits is that they can often defray expensive and sudden expenses.

With the increase of high-deductible health plans and the resulting potential high out-of-pocket expenses workers may face, they are gravitating towards products that can provide much-needed cash in case of an unexpected event. These include many of the benefits that have seen strong sales growth in the last few years:

Accident insurance — This coverage provides a lump-sum cash payment to an individual due to an event covered under the policy. The funds can be used as needed to help cover things like deductibles, out-of-pocket medical costs or everyday living expenses.

Critical illness insurance — This provides a lump-sum payment or monthly payments to help cover expenses if a policyholder is diagnosed with a serious illness covered by the policy. This type of insurance supplements their existing health insurance and is designed to help them focus on recovery instead of costs.

Hospital indemnity — Hospital indemnity insurance supplements existing health insurance coverage by helping pay expenses for hospital stays. Depending on the plan, the insurance gives the policyholder cash payments to help pay for the added costs that may arise while they recover.

Other products that help policyholders save money include dental and vision insurance, pet insurance (in the face of massive increases in veterinary costs), income protection and telemedicine services.

The takeaway

There are a number of other voluntary benefits that employers can offer, but the above are the ones that directly can help your employees if medical bills hit unexpectedly.

Premiums for these various coverages are either paid by the employer, split between the employer and employee or solely paid by the worker. Arrangements will vary between employers. Premiums are often reasonable.

More importantly, these coverages offer peace of mind that in the event of an accident or illness, the related expenses won’t break the bank.