Unlocking the Hidden Value of Ancillary Benefits: Life, Disability, and Worksite

As insurance carriers redesign contracts to meet the changing needs of a multi-generational workforce, enhanced ancillary benefits – life, disability, and worksite, are becoming highly sought-after by employees in a post-COVID world.  

Employees highly value these benefits, and many employers are looking closely at these enhanced benefits to give them an edge in recruitment and retention. 

And yet, many employee benefits brokers do not spend enough time evaluating the details of ancillary benefits. 

Life, disability, and worksite benefits are increasingly significant staples in employees’ financial plans for their families. Employees across all generations count on their employers to offer strong benefits to protect their income and savings should the unforeseen worst occur in their lives – death, accident, injury, or a significant illness – protecting a family’s standard of living. 

While filing claims for these benefits does not occur nearly as frequently as in medical, dental, or vision plans, they will have a significant impact on the rest of a family’s life. The average medical plan claim is not life-altering – the average life or disability claim is often that significant.  

Over the past decade, brokers have done employers an unintentional disservice by over-focusing on price rather than benefit strength and value when evaluating life, disability, and worksite/VB contracts. The insurance carriers responded to this price pressure – a race to the bottom RFP format – by gradually eroding the level of protection these benefits historically provided. Most employers and brokers have not noticed how weak their contracts have become. The fine print in these contracts is critical, and small changes in wording can mean big reductions in protection when employees need it most, at a death, accident, injury, or significant illness. 

The Ancillary Benefits Diagnostic Top-15 Common Issues:
(Hint: the answer to all 15 should be “No”) 

1. Does Life/Voluntary Life portability require evidence of insurability?  
2. Do the Vol. Life rates straddle Table 1? 
3. Does the Definition of Covered Income in Life, short-term disability (STD), or long-term disability (LTD) exclude key compensation categories that employee’s and their families rely on like Bonus, overtime, or commissions? 
4. Does the Sick Leave / PTO Policies in the employee handbook conflict with the integration language in the STD contract? 
5. Does the Return-to-Work Policy in the employee handbook conflict with the maximum capacity language / return-to-work requirements in the LTD contract? 
6. Does the LTD Any Occupation definition have an income test under 80%? 
7. Does LTD Pre-X clause include additional special limitation language like “Prudent Person”? 
8. Does the LTD utilize a 40-Hour Week Definition of Disability? 
9. Does the LTD utilize a National Economy Definition for Own Occupation?  
10. Does the Partial Disability Offset calculation formula used in the LTD contract negatively impact employees based on income levels?
11. Do the Worksite/VB benefits have age reductions?  
12. Does the Hospital Indemnity Policy have a Pre-X or a specific pregnancy limitation? 
13. Does the Critical Illness Policy pay a reduced benefit for Spouses or Children?   
14. Does the Accident Policy have expensive and redundant features like AD&D? 
15. Does the Accident Policy exclude key protections like 24-Hour Coverage or Youth Organized Sports Rider? 

OneDigital has a dedicated team of strategists that work with key clients and prospective clients to evaluate these lines of coverage to make sure employees have the protection they expect and deserve.  

Connect with an experienced partner to help you ensure your employees receive the protection they deserve. Take the first step towards securing their overall wellbeing by reaching out to a trusted professional who can guide you through the intricacies of these essential benefits.  

Ready to learn more about the significance of disability benefits? Check out this recent article: Protecting What Matters Most by Offering Disability Benefits.  

This article was co-produced by Josh Roland, Ancillary Benefits Practice Leader at Centro Benefits Research. Centro Benefits Research provides cutting-edge technology for group insurance benefits brokers and carriers collaborating to provide the best service to their clients.