Demand for Supplemental Health and Other Voluntary Benefits Has Grown

LIMRA finds increased sales for workplace life, disability and supplemental health products, and that COVID-19 increased employees’ interest in accessing additional voluntary benefits.  

New sales for workplace life insurance, disability insurance and supplemental health products have increased significantly from 2020, according to new data from LIMRA’s workplace benefits sales surveys. 

“After the disappointing results in 2020, workplace benefits sales have rebounded in 2021,” says Patrick Leary, corporate vice president and director of LIMRA’s workplace benefits research program. “In a very competitive job market, employers recognize the need to offer a robust benefits package to attract and retain the best talent. Our research suggests non-medical benefits will rise at least 20% over the next five years.”

Life insurance sales saw the biggest bump, the research shows. Total workplace life insurance new premium reached $646 million in the third quarter, a 29% increase compared with the same period in 2020. Year-to-date, total workplace life insurance premium increased 7% to $2.9 billion.

The jump in workers accessing life insurance benefits through the workplace was prompted by the COVID-19 pandemic, the research director says.  

“Our research finds that COVID-19 has raised workers’ awareness about the importance of workplace life insurance,” Leary says. “In a recent survey, half of workers said workplace life insurance was more important to them due to the pandemic. This increased employee awareness, coupled with a tight job market, should continue to propel life insurance sales over the next several years.”   

For example, approximately 21% of adults with employment-based life insurance coverage reported purchasing additional workplace coverage due to COVID-19. Half of workers say life insurance benefits are more important now because of the pandemic, and one in four employers that offer life insurance to their employees view the benefit as more important now due to the pandemic, according to LIMRA’s workplace benefits research

Disability insurance sales have also increased, the firm’s research shows. New premium total workplace disability insurance premium was $515 million in the third quarter, an 11% increase from the prior year, and year-to-date total workplace disability new premium was $2.7 billion, a 5% increase. 

Research showed that employee-paid voluntary products drove most of the rise, as the voluntary disability premium increased 12% in the first three quarters and the employer-paid premium increased 1%.

Additionally, supplemental health insurance has increased, as all workplace supplemental health insurance premium was $4.4 million in the third quarter, a 16% increase from Q3 2020. Year-to-date, supplemental health new premium was $1.9 billion, a 4% increase.  

COVID-19 has had widespread impacts on the workplace, affecting everything from health and life insurance access and coverage to employees’ retirement readiness. As a result, employees are showing more interest in accessing supplemental workplace health and voluntary benefits.

And, in response, employers are bolstering their offerings. An Aon study found a 27% increase in the number of employer clients that offered new or additional voluntary benefits through the company.

Workplace health and safety concerns, the tight labor market and employees’ increasing interest in workplace health and voluntary benefits have prompted employers to bump up health and voluntary benefits offerings.

“Voluntary benefits are and continue to be an inexpensive way for employers to broaden their benefits offerings to meet the needs of more of their workforce,” Kim Buckey, vice president of client services at DirectPath, an employee engagement and health care compliance consulting agency, previously told PLANSPONSOR. “As employees have become aware of offerings that might offer additional protection for their families during the pandemic, they are likely to be more aware of and be receptive to any other voluntary benefit offerings they might have previously overlooked.”

LIMRA U.S. workplace sales trends can be viewed here.