How can insurance brokers help their clients make the right choices?
In the past decade, online commerce has reached a point where you can buy everything from cat food to car insurance (and even a car!) online. But just because you can doesn’t mean you should, especially when it comes to big-ticket purchases.
It might be convenient, but how will you know you’re making the right choice? This applies to personal shopping expenses, and also in business. Company owners have to spend money wisely and need to know they’re making the best decision, whether they’re buying office equipment or employee benefits.
When businesses shop for statutory insurance — — like New York disability benefits and paid family leave, TDI in New Jersey and paid family and medical leave in more than a dozen states – many don’t know exactly what they need. Add ancillary benefits into the equation to create a full employee benefits package, and many decision-makers feel overwhelmed by the choices. Insurance brokers can help with a consultative selling approach: Ask questions and then work together to find the right answers.
Although many purchases are commoditized today, employee benefits shouldn’t be.
How Much Do Businesses Spend on Employee Benefits?
Roughly one-third of all employee compensation comes in the form of benefits, according to data from Salarycube.com. In the private industry, nearly 30% of compensation covers benefits, while roughly 38% of government workers’ compensation goes toward benefits. Health insurance (including dental, vision, and hospital indemnity coverage) accounts for 26% of the overall cost of employee benefits.
Other benefits that make up 74% of the costs include federally mandated benefits (social security, Medicare, unemployment insurance, and worker’s compensation), state-mandated benefits like New York disability, TDI in New Jersey, or paid family and medical leave in many states, and ancillary benefits like retirement plans, life insurance, and long-term disability.
Some of these rates are set by state and federal governments. But if business owners can save money by privatizing disability benefits and paid family leave in states that allow it, they can roll that savings into benefits employees want. Here’s where insurance brokers play an important role.
A Comprehensive Risk Analysis Can Help Ensure Your Clients Are Covered
If you’re a P&C broker, you may not specialize in disability benefits or ancillary employee coverage. But you can see it’s a big line-item for business owners, and there’s commission to be earned. With more states introducing paid family and medical leave, brokers have more opportunities to help businesses privatize these benefits.
The concept is simple: Help your clients navigate complicated new paid family and medical leave laws, write the benefits they need, and then explore risk gaps in their coverage they can fill with voluntary benefits.
A comprehensive risk analysis explores all the benefits available, gaps in coverage, and where adding benefits would make sense to a specific workforce. For instance, enriching DBL in New York is almost always a wise choice, since you can increase benefits as high as 60% of an executive’s salary and add in-hospital coverage, too.
Life insurance with executive carve-outs or buy-up options can also provide employees and c-suite executives with the peace of mind they want.
How The DBL Center Can Help
Best of all, you don’t have to be an expert in ancillary benefits, disability insurance or paid leave. The DBL Center is here to guide you, providing a custom risk analysis for any client and using our volume and industry relationships to get your clients the best benefits packages through trusted carriers.
FAQs about Employee Benefits
What is the most common employee benefit?
Health insurance is the most common employee benefit not mandated by law but offered by most companies. However, health insurance only covers the cost of medical bills – most policies don’t provide paid time off for employees who are ill or injured. Employers should consider disability insurance, in-hospital coverage, and life insurance to build a more balanced benefits package.
What are the three basic employee benefits required by law?
Federal law mandates that provide Social Security, Medicare, and unemployment insurance benefits. A growing number of states now require Paid Family and Medical Leave or short-term disability insurance.
What percentage of salary are employee benefits?
Employee benefits make up roughly 30% to 40% of a worker’s total compensation package.
