Democracy at Work
November is traditionally when Americans go to the polls to elect local, state and national candidates for government offices. Voting on the first Tuesday of November is as American as grilling hotdogs, igniting fireworks on the Fourth of July, or carving a turkey on Thanksgiving. It’s what Americans do.
But many workers also participate in a different kind of election in November or thereabouts, the traditional time when many people choose their employee benefits. While many workers automatically choose the same benefits every year, research provides some insights about what benefits workers truly value when they need to make choices.
When polled, many workers express interest in specific protection benefits. For example, 78 percent of workers said they were “very interested” or “somewhat interested” in disability insurance, according to the MassMutual Workplace Benefits Study1. MassMutual’s study found disability insurance drew high levels of interest across middle income levels.
Several other benefits also attracted interest from large majorities of employees. For instance, 74 percent were attracted to disability insurance that makes retirement plan contributions while the insured cannot work due to illness or injury..
But other financial protection benefits proved just as or nearly as popular among those polled:
Three in four respondents (74 percent) said they would be interested in critical illness insurance from their employer. Critical illness coverage may help cushion the financial impact of a heart attack, stroke or invasive cancer or other covered critical illnesses. Critical illness coverage provided by MassMutual pays a lump-sum benefit, paid directly to the employee, to help cover medical costs, mortgage payments, childcare, or even groceries.
Two thirds (67 percent) expressed interest in accident insurance. Few emergencies can derail personal finances more quickly than an accidental injury, especially for those who live paycheck to paycheck. And, injuries are more prevalent than many people realize. The U.S. Centers for Disease Control reports that emergency rooms treat more than 40 million injuries a year across the country (Centers for Disease Control, Home & Recreational Safety2). Policies typically pay benefits in a lump-sum, which can be used to help cover any expense, including medical insurance deductibles, co-pays and other unanticipated expenses.
More than half (57 percent) were interested in the availability of low-cost emergency loans. Some emergency loan programs allow employees to obtain credit online without having to fill out forms or visit a bank. The most helpful programs prequalify employees for credit based on their employment and their ability to repay. Often, employees can repay the loans through payroll deduction. The rates on these loans can often have relatively low interest rates when compared to credit cards. While that rate may be higher than the rates assessed on many retirement plan loans, it may be low enough to discourage borrowing from retirement plans and potentially missing out on market experience.
Interest in financial management benefits also scored high in MassMutual’s study, including financial planning services (67 percent), Social Security counseling (58 percent), budgeting assistance, (49 percent), tuition reimbursement (42 percent), debt counseling (39 percent), automatic bill payment (37 percent) and college loan repayment (34 percent). Yet, aside from retirement planning and healthy living education, fewer than one in four employees who were surveyed said their employer offered financial management benefits. Perhaps it’s an opportunity for benefits brokers and insurance agents to spread their wings.
Meanwhile, MassMutual is launching a marketing campaign promoting the value of critical illness and accident insurance to protect workers’ personal finances from unexpected financial impacts. MassMutual offers group critical illness, group accident, individual disability and life insurance at the workplace.
Sales of voluntary benefits continue to grow as employers and employees alike learn more about how such benefits can enhance financial wellness. Employers are encouraged to expand their voluntary offerings as a way to meet a wider range of benefits needs without expanding their benefits costs.
Employees can then pick and choose from a wider menu of benefits that best meet their individual financial needs. It’s democracy at work.
Jon Shuman is leader of Workplace Distribution for Massachusetts Mutual Life Insurance Co. (MassMutual).
1MassMutual Workplace Benefits Study, http://massmutual.com/-/media/files/MM%202018%20Benefits%20Study_Final.pdf. The internet-based research was conducted on behalf of MassMutual by Greenwald & Associates and polled 1,010 working Americans ages 25-65 who had annual household incomes of between $35,000 and $150,000 and participated in making household financial decisions.
2Centers for Disease Control. Home & Recreational Safety, http://www.cdc.gov/homeandrecreationalsafety/falls/adultfalls.html