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Tue, 02 Apr 2013 04:15:00 GMT | By Gordon Powers, MSN Money

The importance of insurance to Canadian workers

While Canadians value vacation time above all other benefits, they view group insurance as another equally attractive perk.

Gordon Powers, MSN Money

In a global survey by Mercer of 10,400 workers, Canada was the only country surveyed that chose additional paid time off as their most preferred benefit, followed closely by either more money or improved income protection from insurance.  

The study, called Making Smart Benefit Choices, sought to measure the perceived value employees place on various employer- and employee-paid benefits.

Overall, employees tend to favour benefits that offer immediate gratification rather than those that potentially deliver value over the long term, says Brian Lindenberg, who heads up Mercer’s health and benefits practice.

While it’s understandable that workers value more time off and increased pay in the current economic environment, “there are other benefits that have the potential to create more income protection through health benefits and income replacement,” Lindenberg notes.  

The survey asked workers to rank the kind of benefits they’re willing to pay for themselves, often referred to as “voluntary” or “flexible” benefits. These benefits are usually paid for by the employee out of pocket or through an employer’s flexible benefits plan.

While the results varied slightly among countries, in Canada at least — where a wider range of health benefits are provided through government health programs — benefits that provide additional insurance were clearly among the most popular options.  

“The survey shows Canadian employers that there is a wide range of preferences across demographic groups,” Lindenberg explains. Employees, for instance, are willing to pay out-of-pocket for additional coverage in areas like critical illness insurance, as well as home and auto insurance.

These are benefits that people are accustomed to paying for themselves. Therefore, offering them through an employer, possibly at a discount to what would be available in the market, is a convenience that appeals to many employees.

Critical illness insurance, supplemental life insurance and long-term care insurance had the broadest appeal to older employees in Canada, Mercer reports.

Out-of-country medical coverage was very popular among young singles living with their parents. Lifestyle support such as weight loss programs, smoking cessation and fitness programs also appealed to this group.

Looking at these results more closely, however, it’s clear that one size doesn’t fit all and that certain groups of employees are interested in particular benefits through their employers.

Small businesses in particular have been hard-pressed to fund such employee benefits and risk losing a competitive edge in the battle for critical skills as a result — particularly among younger workers.

Younger workers have different perspectives on the business marketplace, their jobs and the work-life balancing act. Facing the harsh truth that they may never be able to retire, they work harder at blending their non-work life and career.

Total rewards packages that incorporate voluntary benefits offer this cohort not only the flexibility to balance work and life, but also the ability to establish financial security for them and their families.

While the cost and complications of developing such packages may seem daunting for many small business owners, research suggests they pay dividends in terms of long-term success.

“One common employer misconception is that older employees value benefits more than younger employees,” says Anita Potter, researcher director for LIMRA, an industry trade association.  

“In fact, when it comes to benefits, younger employees value benefits nearly as much as older employees. The different values that employees place on benefits appear to be more a function of life experience rather than life stage, income or education levels.”

At the same time, it’s clear that employees of all ages underestimate the costs of such programs, particularly non-medical benefits.

“Overwhelmingly, our research found that employees simply didn’t know how much their benefits were worth,” Potter notes. “Without understanding the value of their benefits, how are employees making knowledgeable choices about who they work for and the benefits they select?”

Realizing this, companies are introducing or improving online venues where employees can access relevant information, tools and tips about their benefits packages.

LIMRA’s research suggests that when employees understand both the breadth and costs of such programs, it boosts their satisfaction with their overall work situation.

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