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Traditional voluntary benefits remain on top

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Although the range of voluntary benefits includes such diverse programs as pet insurance and legal services, observers say traditional coverages, such as life, disability and auto insurance, remain among the most popular for both employers and employees.

"There's still a lot of emphasis, I think, on some of the core benefits, where employers don't want to provide as much life insurance, or don't want to provide disability insurance from date of hire," said John Vollmer, a principal with Buck Consultants L.L.C. in St. Louis.

Salinas, Kan.-based Sunflower Bank decided to offer short-term disability coverage as a voluntary benefit for its 460 employees in light of its benefits offerings, said Patrick Salmans, vp of human resources.

"Some of the things that we looked at were the shortcomings of our benefits package," which, for instance, covers long-term disability, but not short-term disability. It "was a gap we needed to fill," said Mr. Salmans. The bank offers its voluntary benefits through American Family Life Assurance Co. of Columbus, in Columbus, Ga.

"We certainly see a lot more interest" in coverages, including vision and dental, said Jay Savan, a St. Louis-based principal with Towers Perrin.

In addition, "I think the areas of voluntary (accidental death and dismemberment) and voluntary life insurance is as robust as it's ever been," said Mr. Savan. Several companies lately have either eliminated, or greatly reduced, the level of core life insurance they offer and replaced it with a voluntary program.

"I think more and more people are looking at life insurance as something that's an individual's choice," rather than a benefit that should be offered by employers to employees at two times base salary, said Mr. Savan.

"There are still a lot of people in this country that don't have personal life insurance. We see those sales continuing to be good," said Charles Baggs, executive vp and chief administrative officer of Jacksonville, Fla.-based American Heritage Life Insurance Co., a subsidiary of Allstate Corp.

Also, companies are "rethinking their core disability offering, and going to a much more Spartan core offering," with options for employees to buy additional coverage, said Mr. Savan.

Rick Elliott, Atlanta-based chairman of Willis Benefits, a unit of Willis Group Holdings Ltd., said he is seeing "a greater influx of individual disability policies, particularly for executives," because group plans typically have limits that will not provide coverage for those above a certain salary level.

Financial planning tools are also popular, say observers. "I see employers putting in more and more voluntary benefits to assist" their employees in financial planning, such as a benefit that offers workers several visits with a financial planner, said Barry Barnett, a principal with PricewaterhouseCoopers L.L.P. in New York.

But employers are selective. For example, The Aerospace Corp. of El Segundo, Calif., which offers voluntary benefits including vision, life insurance and disability coverage, has considered adding others, such as legal and pet insurance, but has not done so, so far. "You have to weigh the administration," and conduct a cost-benefit analysis, said Charlotte Lazar-Morrison, director of human resources.

Atlanta-based Home Depot Inc. is cautious about adding new benefits, said benefits Vp Ileana Connally. "We're always looking at new opportunities, but we want to make sure that when we do offer something, that it's solid in terms of its sustainability, in terms of its quality, in terms of the value" it provides employees, said Ms. Connally.

"If I'm just going to offer an associate something they can go out and get on their own, without adding value to it, it may not make any sense," she said.

Home Depot's voluntary benefits, which are provided by New York-based Metropolitan Life Insurance Co., now include long-term care, legal services, auto and homeowners insurance and pet insurance.

Meanwhile, New York-based Innovest Strategic Advisors Inc. offers a voluntary benefits package to its 20 U.S.-based employers that includes life insurance, long-term disability and AD&D coverage but only two employees have opted for the coverage, said Chief Financial Officer Alex Marks.

The company is considering a subsidy to encourage enrollment. It may also add more benefits "It might help to have more choices within the voluntary benefits," he said. "Perhaps that's one of the reasons why there's low participation."