understanding individual voluntary benefits

The information contained in this tutorial is confidential and intended for the training and education of Colonial Life & Accident Insurance Company employees and benefit counselors (insurance producers in WA) only. Colonial Life has not authorized any other use of this information. Do not give or show it to prospective insureds, employers of prospective insureds, other insurance carrier representatives, worksite marketing competitors, or anyone else not employed by or contracted with Colonial Life & Accident Insurance Company or other Unum Group business units.

Audio narration in this lesson augments the written content, so turn on your computer speakers or headset

Understanding Individual Voluntary

Benefits

Version NY 12-5-11

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Understanding individual voluntary benefits will help you write more business because you will be able to position the need for our products more effectively. Which means to you that you will be able to inform and educate employers and employees on the value that voluntary benefits will bring to them. And the real benefit to you is that you’ll be confident that the product recommendations you make will be the best solutions to help financially protect the employees and their families in case of accident or illness.

What are Individual Voluntary Benefits?

Characteristics of Voluntary Benefits

Advantages of Voluntary Benefits

Major Medical Vs Voluntary Benefits

Units Of Conviction

Our Voluntary Benefits in Action

Small Business Misconceptions

Lesson Objectives

By the end of this lesson you will be able to:• Explain Voluntary Benefits and their advantages in the

marketplace• Explain to an employee how Voluntary Benefits work• Answer the following questions:

– What are some characteristics of Individual Voluntary Benefits?– What are some advantages of offering Voluntary Benefits for an

employer and employee?– How are Voluntary Benefits different from core benefits like

Major Medical?

• Insurance products that employees may choose to purchase through their employer at rates that are generally lower than they could get on their own.

• Examples of Voluntary Benefits include:– Vision– Life– Accident– Disability– Supplemental health– Critical illness– Cancer insurance

• Many employers offer Voluntary Benefits in order to provide a more robust benefits package at no cost to them.

What are Individual Voluntary Benefits?

Understanding Individual Voluntary Benefits

• Guaranteed renewable*• Portable• No coordination of benefits• Benefits paid directly to the policyholder

*May vary by state and product

Characteristics of Individual Voluntary Benefits


Advantages for an Employer


Benefit Costs• Additional benefits at no cost to

the company• Generally less expensive than

employees could buy on their own

Benefits• Helps fill the “gaps” of their major medical• Offers employees wider array of benefits

Employee• Improves employee morale• Helps attract and retain quality

employees

Advantages for the Employee


Non-Medical Expenses• Travel expenses to treatment

centers• Food & lodging while away from

home• Extra childcare• Extra household help• House payment or rent• Car payment• Utility bills• Groceries• Lunch money for the kids

Loss Of Earning Power

Medical Expenses• Deductibles• Co-payments• Out-Of-Network

In addition to gaining some financial peace of mind, employees appreciate Individual Voluntary Benefits for other reasons:

• Flexibility in using claims payments• Intact coverage• More lenient underwriting • Stable premiums• Continued convenience

Additional Advantages of Voluntary Benefits



• Pays benefits to the healthcare provider

• Group plan owned by the employer

• Expense based• Deductible & co-pays• Coordination of benefits• One size fits all• Necessity

Major Medical Coverage

• Pays benefits to the policyholder

• Individual plan owned by the policyholder

• Indemnity based• No deductibles or co-pays• No coordination of benefits• Tailored by individual needs• Was once a nicety, but now is

a necessity

Individual Voluntary Benefits CoverageVS.

Employer: “Our Individual Voluntary Benefit products allow your employees to purchase additional

insurance products because the payroll rates are generally lower than if they bought them on their own. Which means to you; that you’ve added benefits for your employees at no dollar cost to your company. And the real benefit to you is that you save additional FICA dollars with the premiums paid from pre-tax dollars and deducted from the employee’s paycheck.”

Employee:“Our Individual Voluntary Benefit products can help you cover the additional family expenses

associated with a serious illness or injury, because these plans pay cash benefits directly to the policyholder. Which means to you; that you won’t have to drain your saving account or rack up credit card bills for the money for deductibles, out-of-pocket expenses, and lost of wages. And the real benefit to you is that these plans are affordable, averaging around one hour’s wage per week, which your employer will set up as a payroll deduction, making it simple and convenient.”

Units of Conviction – UOCs for VBs


Our Individual Voluntary Benefits in Action

Joe Employee

• House Payment

• Groceries• Utilities• Car Payment• Car

Insurance• Gas• Childcare• Lunch

Money

Monthly Income

+$$

Monthly Expenses

-$$

Understanding Voluntary Benefits


Joe vs. Ski Slope

• House Payment



Money

Monthly Income

+$$

Monthly Expenses

-$$


NOTE: For this example, it is assumed that Joe’s skiing accident qualifies under his policy as a covered accident. No limitations or exclusions apply in this accident claim illustration.


Joe Employee

• House Payment



Money

Monthly Income

Monthly Expenses

• Doctors• Hospital• Surgery• Prescription

Drugs• Deductible• Co-pay• Travel &

Lodging• Out of Network• Extra Childcare • Lost Wages

Major Medical

Savings

Bank

Friends & Family

Employer

Accident Expenses


• Joe lives in South Carolina• Joe’s Accident Plan benefits breakdown:

– Ambulance $200– Emergency Room $125– X-ray $20– Broken Leg (surgical repair)

$1,650– One night stay at the hospital $1,225– Crutches $100– Two follow up visits with his Doctor $100– Six Physical Therapy Visits $150

TOTAL BENEFITS FROM ACCIDENT PLAN: $3,570

What Does This Really Mean for Joe?

This example is based on Colonial Life’s Accident 1.0 rates and benefit amounts for South Carolina. Actual rates and benefit amounts may very by state. Benefits may not be available in all states. Exclusions and limitations apply. See policy for details.


• Concern over HR administration burden • Fear of low employee

participation • Worry that enrollment

monopolizes employees’ time • Belief that Voluntary Benefits are

designed for large corporations

Common Misconceptions of Small Business


True

False

Individual Voluntary Benefits are insurance products that employees may choose to purchase through their companies at rates that are generally lower than they could get on their own.

Lesson Quiz


Portable

Low deductible

Guaranteed Renewable*

Benefits paid directly to the policyholder

No coordination of benefits

*May vary by state and product

Which one of these is NOT a characteristic of Individual Voluntary Benefits?

Lesson Quiz


Helping pay the health insurance deductible

Helping with travel expenses

Helping replace lost wages

All of the above

The benefits received from a Individual Voluntary Benefits claim can be used for____________?

Lesson Quiz


understanding individual voluntary benefits

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