Which voluntary insurance platform is right for your business — group coverage or individual plans?Article added by Tye Elliott on July 23, 2014
Tye Elliott

Tye Elliott

Joined: March 21, 2014

Some of life’s activities are better in groups — card games, scavenger hunts and dance parties are examples. At other times, we’re on our own — beating a personal record at golf, completing a Sudoku puzzle or playing classic solitaire. The same is true of health insurance coverage. Sometimes it’s smarter for your clients to make group insurance available to their workforce, while at other times it’s best for them to provide individual coverage options.

As you educate them on the ins and outs of group versus individual plans, ensure that they understand that most employer-paid health insurance benefits — including major medical coverage — fall into the “the more the merrier” category, with employees enrolling in group plans. But when it comes to voluntary coverage, both group and individual plans have distinct advantages and your clients have the option of providing workers with access to one or the other, or even both.

Critical illness, short-term disability, accident, dental and life insurance plans are all examples of supplemental policies that are paid by the employee, helping keep company expenses under control, while providing employees with the health benefits they want. These plans also give employees the freedom to select coverage that suits their particular needs and life stages and, at the same time, allow businesses to differentiate their benefits plans from those of rival companies. After all, voluntary coverage can be a powerful tool when it comes to attracting and retaining a talented workforce.

The advantages of supplemental plans are clear, but your clients have to decide what type of coverage they’ll make available to workers:
  • Individual plans are unique to each employee; they’re often issued and priced based on medical history, age and other personal factors.

  • Group plans may offer coverage options without requiring applicants to answer health-related questions regardless of age or other considerations.
Individual assets: Fixed premiums and guaranteed renewal

When deciding whether to offer individual voluntary products to their workers, encourage your clients to consider the features and benefits unique to this type of coverage. To begin with, individual voluntary insurance policies are just that — individual. These plans are usually based on a person’s or a family’s unique health situation; however, individual policies are beginning to lend themselves to less underwriting, sometimes including guaranteed issue. Prospective participants often meet one-on-one with an insurance professional to discuss their needs and choose the amount of coverage that’s right for them. Here are other important talking points as you discuss the options with your customers:
  • Individual voluntary insurance coverage is guaranteed-renewable. Once employees are enrolled, they can continue coverage even if their relationships with their companies end as long they continue to pay the premiums.

  • Individual plan premiums don’t change based on the experiences and claims of fellow workers. Rates can only be changed by a state’s department of insurance and apply to everyone in the state who’s enrolled in a particular coverage plan.

  • In some cases, individual plans may have higher premiums than group plans. This is because individual plans feature premiums that are based solely on an individual applicant’s health, age and other circumstances, as opposed to the overall health of all employees.
Group insurance points: Cost conscious and customizable

Many people don’t seek out individual coverage because it can be easier to enroll in their employers’ group plans. Enrollment is simple — all they need to do is fill out the provided forms — and the plans are marketed as among the least expensive available. Here are a few things your clients need to know about group voluntary coverage:
  • Group plans generally require limited underwriting. That’s great news for those with health conditions that preclude them from qualifying for individual coverage. (Some plans include pre-existing condition limitations.)

  • In some instances, group plan premiums may be lower than individual plan premiums. This may benefit employees who have pre-existing conditions, as well as older employees, because premiums are based on shared risk within the group.

  • The insurance contract is issued to the employer, not the employee. With group plans, employees receive certificates of coverage, and the employer is the master policyholder. If the company decides to terminate the master policy for any reason, employees’ coverage ends.
Rely on your expertise, as your clients will be better equipped to make knowledgeable decisions about selecting a group or individual voluntary insurance platform that best fits their business needs. Be sure to remind them that items to consider include cost benefits — for both employers and employees — as well as renewability, portability and the potential for customization.

See also: The role of voluntary insurance in an evolving health care landscape
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