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Putting a happy face on benefits coverage

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Insurance is there in case of calamity, providing immediate coverage and longer-term peace of mind. Lydia Jilek, who is vice president of employee benefits innovation, thought leadership and private exchange strategy at Voya Financial Inc., writes that the industry could benefit by being less blunt.

I have worked in the employee benefits, or “ancillary insurance,” industry for nearly 10 years and have seen the market evolve, in many ways for the better.

We've created products that make a difference in an individual's or family's ability to plan, invest and protect their finances for a better retirement.

Disability coverage in particular allows for employees to have a stream of income if they are unable to work, so can avoid drawing down retirement investments and working longer than they had planned. Critical illness and accident coverage also allow employees to cover costs associated with a serious health event while continuing to save for retirement on a monthly basis.

As health care costs continue to rise, we see employee benefits filling a void for employers and employees looking to offset costs and safeguard their financial futures. Today, 95% of private U.S. businesses with at least 100 employees offer insurance benefits.

Though our products are consumer-friendly, many of their names are not. The old adage with insurance products is that they are not bought by, but sold to, customers. Perhaps that's because they have names such as disability, critical illness or accident insurance. After all, is it surprising that customers aren't clamoring for products that remind them of illness or injury or worse?

On the other hand, the more neutral homeowners, automobile and even health coverage don't have the same baggage. And, while only 1% of U.S. domestic pets are covered by pet insurance, employees often inquire about the cost, which starts between $20 and $30 but can skyrocket dramatically depending on breed, age and several other factors.

Accentuate the positive

Aren't products that help protect your financial future just as important as those that insure your home, pet or automobile? Of course. But coverage that highlights the positives — your home, your good health, etc. — is more appealing than those that emphasize the negatives, such as death, sickness or injury.

Some naming conventions arise from regulatory requirements, which came up while working on a product launch. Despite our best efforts to create a name that focused on the positive purposes of the product, we could not alter the name because of state and federal requirements. For instance, we're unable to characterize disability insurance as income or paycheck protection because of specific state requirements.

Notwithstanding these restrictions, insurers and brokers need to determine how best to convey the value of these coverages in a way that is meaningful to consumers without being too blunt.

So, what's the plan?

Beyond adhering to all regulations in regard to naming and disclosure, we do have flexibility.

Let's look at disability insurance. Rather than highlighting the “disability” element, the focus should be on income and lifestyle protection — on peace of mind.

Providing real-life examples or testimonials from individuals and families who have benefitted from these products can also cast them in a better light.

A little humor also goes a long way. For instance, a commercial for the National Flood Insurance Program shows a family sitting calmly in the living room as flood waters rise around them. Of course, no one would react this way, but it conveys a powerful message — that things will be all right — in a much less frightening manner than showing a home with peeling drywall, mold and high water marks.

So, let's challenge ourselves, our marketing teams and our compliance partners to take a step back and remember that, in the end, these messages are designed to educate consumers about the benefits of our products, not the doom and gloom from which our products could protect them.

Carriers and brokers can do this by focusing on the tangible outcomes and benefits of having life insurance — children graduating from college or a spouse paying off the mortgage, for example.

By involving compliance and legal partners early on in development discussions, we can create messages and materials that adhere to regulatory requirements while underscoring the value of the product.

As an industry, we need to continue to beat the drum about ancillary insurance products and their ability to support Americans in their retirement planning.

In the wake of an unexpected health event, these products can help cover monthly expenses and alleviate a significant financial burden.

Increased preparedness for retirement starts with a better understanding of financial solutions, and we have the ability to provide that education to our customers.

Lydia Jilek is vice president of employee benefits innovation, thought leadership and private exchange strategy at Voya Financial Inc. Contact her at 612-342-3088 or lydia.jilek@voya.com.