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Perceptions, potential and
voluntary benefits Sun Life Financial Thought Leadership Results
Presented by:
Tom Gilligan
Vice President of National Sales
Voluntary Benefits
Sun Life Financial
Agenda
Get to know your audience
• Long-term disability
• Critical illness
Guided decision making
Long-term Disability
Research Methodology
• Conducted by Kelton Research in March 2012
• Online survey
• Polled 2,011 U.S. full-time employees age 18 and over
• +/- 2.2% margin of error
Full-time workers
One-third (33%) of
surveyed full-time
workers say they don’t
have group long-term
disability insurance.
Men purchasers versus women purchasers Nearly 30% more men purchased voluntary long-term disability
insurance than did women.
Married versus single
More married workers bought long-term disability insurance compared
to single ones
Married Single
42% 35%
Over half (53%) of respondents believe if they’re disabled the
government would cover expenses.1
But only 35% of SSDI annual claims applications are approved.2
1. 58% of respondents age 40 and over believe that if they are disabled for two years, government programs such as Social Security will
cover their living expenses once their savings run out. In contrast, younger workers are less likely to feel this way: only 47% of workers from
18 to 39 express such unbridled confidence in Social Security.
2. As of 2011, the average wait time to obtain even a decision from the Social Security Administration on a claims request was one year.
www.ultimatedisabilityguide.com/ssdi_ssi_hearing_wait_times.html and www.ssa.gov/oact/STATS/dibStat.html.
Misconception about Social Security
Personal bankruptcies: Medical problems contributed to 62% of all personal bankruptcies filed in the United States in 2007, a 49.6% increase over
results from a similar 2001 study. The American Journal of Medicine, June 4, 2009. David U. Himmelstein, MD; Deborah Thorne, PhD; Elizabeth
Warren, JD; Steffie Woolhandler, MD, MPH, “Medical Bankruptcy in the United States, 2007: Results of a National Study.” Home foreclosures:
Medical problems contributed to half of all home foreclosure filings in 2006. Christopher Tarver Robertson, Richard Egelhof, and Michael Hoke,
“Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures,” Health Matrix, Journal of Law-Medicine, August 8, 2008.
50% of all
foreclosures
62% of all
personal bankruptcies
How a disability affects financial security Medical problems contribute to:
The gambler The mole The ostrich
They hadn’t thought
about whether they
need coverage
They don’t think their
chances of suffering a
disability warrants
paying for coverage
They don’t like thinking
about the possibility of
experiencing a disability
38% 38% 19%
Why workers don’t buy coverage
79%
Own Dental vs. Long-Term Disability
Dental
58%
Long-Term Disability
More workers own dental than disability
Workers need to understand the risks Risk of disability vs. dental incident (for worker earning $50,000 salary)
Probability
Very
High
Probability
Very
High
Financial Risk
Low
Financial Risk
Low
Dental incident Disability
($50,000+)
($600)
Sun Life Financial disability projections are based on information from the Society of Actuaries, Group Long-Term Disability Actuarial Tables,
1987, latest available data as of February 2012. Sun Life Financial estimates dental financial loss using an annualized average for what an
individual can expect to pay in dental costs during their professional lifetime if uncovered by dental insurance.
Who chooses to buy voluntary LTD coverage?
The responses of workers in the following industries were compared to one another and to the overall pool of respondents: technology (115
respondents), education (242 respondents), health (188 respondents), and manufacturing (119 respondents). Only the tech workers
displayed significantly distinguishing behavior.
58%
38%
Tech
Workers
Workers in
Other
Industries
46%
37%
Minorities Non-
minorities
44%
29%
Younger
Workers
(18-49)
Older
Workers
(50+)
Tech Workers Minorities Younger Workers (18–49)
Who are underserved? How to reach them? For women, singles, and older workers
MINIMIZE complexity and
use PLAIN LANGUAGE
• Long or short
• Benefit amount
• Elimination Period
• Duration
• Optional benefits
• Optional services
Bring the WHY and the WHAT
• Why disability insurance?
• What it means to me?
Consider demographic
messaging
CRITICAL ILLNESS
Research Methodology
• Conducted by Kelton Research in August 2012
• Online survey
• Polled 4,116 U.S. full-time employees
• Median household income: $51,000
• Median investable assets: $11,000
• Median age: 43
• Male: 56%, Female: 44%
• Married: 60%, Single: 25%, Divorced or separated: 13%
• +/- 1.5% margin of error for total sample (4,116)
• All responses have a minimum sample size of 100
36%
<5%
Think that they have critical
illness insurance
U.S. workers who actually have
critical illness insurance,
according to industry estimates
Scarcely more than one fifth of employers even offer access to workplace critical illness insurance. Those few employers who do offer such coverage
generally offer it as a voluntary benefit. And only about 10% of employees offered such coverage actually purchase it. Thus, perhaps less than one
twentieth (5%) of U.S. workers actually have critical illness coverage: Weathering The Storm, LIMRA, 2011 & LIMRA estimates.
Workers think they’re covered, but it’s more
likely that they are not
Many workers fear the financial impact of a critical illness—even more
than dying from one
Workers understand there’s a financial impact
47% Finances
29% Dying
22% Emotional burdens
2% Other
Understanding financial concerns
X times more likely to be concerned with finances than with dying
Workers
age 40-50
Single
workers age 40-50, earning
<$50,000 in HHI
Single
parents age 40-50, earning
<$100,000 in HHI
Single
women age 40–50, earning
<$50,000 in HHI
2X more likely
3X more likely
4X more likely
Who worries most?
HHI = Household income
Understanding financial concerns Workers in which industries worry most?
Industry
X times more likely to be concerned
with finances than with dying
Transportation/utilities 2.0
Professional business services 1.9
Manufacturing 1.8
Wholesale / Retail 1.6
Finance (ex. ins.) 1.6
Education 1.5
Health / Wellness 1.5
Tech 1.5
Construction 1.5
Leisure / Hospitality 1.2
Critical illness is relevant and relatable
Employees worry most about a cancer diagnosis
48% Cancer
32% Heart attack
15% Stroke
5% Other
2012 CDA Long Term
Disability Claims Review
Claim diagnosis
category
% of new
2011
claims
Cancer and
Neoplasms 14.4%
Cardiovascular/
Circulatory 8.7%
More women fear cancer,
more men fear a heart attack
Critical illness of most concern Women Men
Invasive cancer 56% 42%
Heart attack 25% 37%
Stroke 14% 16%
More younger workers fear cancer,
more middle age workers fear heart attack
Critical illness of most concern
Younger
workers
(age 22-39)
Middle age
workers
(age 40-54)
Invasive cancer 53% 45%
Heart attack 29% 35%
Stroke 12% 16%
Personal experience with a CI
Of workers who had personally experienced a critical illness:
66% say they had to make significant financial sacrifices
37% say that the illness required them to stay out of work
for 4 months or longer
Personal experience with a CI
Out-of-pocket
medical costs
by condition
Based on 2007 medical
claims data adjusted for
health care inflation
Based on medical claims data of 319,580 employees (including their spouses and dependents) who are covered under multiple employer-
sponsored health plans. First dollar claims data provided by Sun Life Stop-Loss policy holders.
Though cancer, heart attack, and stroke are the three most commonly occurring critical illnesses, the average total out-of-pocket costs for “critical
illness” ($7,575) includes numerous and varied diseases weighted by incidence rate.
$7,575 $6,740
$14,234
$17,680
Critical
Illness (avg.)
Cancer Heart Attack Stroke
Personal experience with a CI
Where they turned to for money
Dipped into savings earmarked for future needs
Tapped emergency funds
Borrowed money from family or friends
Declared bankruptcy
Sold or foreclosed on their primary residence
Borrowed from a bank or other lending institution
28%
28%
21%
12%
11%
11%
Respondents were able to choose more than one option.
Know your audience for critical illness
insurance
MINIMIZE fear,
encourage
conversation
Bring the WHY and
the WHAT
• Why critical illness
insurance?
• What it means to me?
Explain how it
complements health
and LTD
Consider demographic
messaging
Agenda
Get to know your audience
• Long-term disability
• Critical illness
Guided decision making
How to make choosing easier
Press here
for video
Voluntary Benefits are increasing
As many as 1 in 3
employers is
considering replacing
employer-paid benefits
with voluntary benefits
“Voluntary Worksite Benefits: Penetration and Market Potential,” LIMRA, 2011.
Voluntary Benefits are increasing
Total 2012 industry
Voluntary sales
$6.0 billion
Source: Eastbridge Consulting Group, U.S.
Worksite/Voluntary Sales Report—Carrier Results
for 2012, April 2013. Used with permission.
LTD
$429
STD
$834
Term Life
$1,113
Accident
$855
HI
$596
Vision
$338
AD&D
$68 CI
$294 Cancer
$436
Dental
$577
UL/WL
$433 LTC
$26
Top Voluntary Products Sold
Source: Eastbridge Consulting Group, Inc. 2013, “What’s
up with Brokers and Voluntary Benefits?” Used with
permission.
Product
Benefits
brokers
Short-term disability 60%
Term life insurance 54%
Dental insurance 45%
Critical illness insurance 38%
Accident insurance (personal injury, not AD&D) 36%
Vision insurance 33%
Cancer insurance 25%
Long-term disability insurance 21%
Non-Traditional Products Sold
Product
Benefits
brokers
Wellness programs 73%
Discount health programs 38%
Legal plans 31%
ID theft coverage 29%
Pet insurance 16%
Computer, appliance, furniture purchase programs 8%
Vacation programs 5%
Source: Eastbridge Consulting Group, Inc. 2013, “What’s
up with Brokers and Voluntary Benefits?” Used with
permission.
Choice Architecture
“If you indirectly influence the choices other people make,
you are a choice architect. And since the choices you are
influencing are going to be made by Humans, you will want
your architecture to reflect a good understanding of
how humans behave.”
Nudge
By Richard Thaler and Cass Sunstein
Google this article:
“A Better Choosing Experience”
By Sheena Iyengar and Kanika Agrawal
Published in strategy+business, Issue 61, Winter 2010
Prioritize choices
Prioritize the benefits menu order intentionally;
SHELF SPACE MATTERS
•Is LTD more important than dental? Accident?
•Is cancer coverage more important than life
insurance?
•Talk about sick pay and voluntary disability together
•Talk about employer paid life and voluntary life
together
Categorize their options
Sephora
High, Mid, Low plan designs
Basic, Good, Best
Bronze, Silver, Gold
Personalize
Personalized enrollment forms
can increase participation
• Avoid generic, multi-dimensional
charts
• Show cost per pay period
Prevent errors and regret
Paycheck “guard rails”
• Employee cannot spend more than 1 hour per
week of wages on a voluntary benefit
• Incorporate constraints in choices offered
Review “total spend” of all Voluntary products at
employee level
Create confidence through recommendation
Independent industry expert recommendations
such as LIMRA or Disability Council
Guarantee Issue levels
Highlight recommended choice
First choice is recommended choice
Choice expertise = competitive advantage
“If the market for your product is saturated with choice, you can’t gain a
competitive edge by dumping more choices into the mix. Instead, you can
outthink and outperform your competitors by turning the process of
choosing into an experience that is more positive and less
mind-numbing for your customers. You can design a more helpful
form of choice.”
— Sheena Iyengar and Kanika Agrawal,
A Better Choosing Experience
Summary
Using research and an applied approach
to managing choice, you can . . .
• better understand how different employees view, want,
and need different types and levels of insurance
protection
• make the education and enrollment process simpler and
more meaningful
• help more employees make better choices for
themselves and their families
Thank you
The Sun Life Financial group of companies operates under the “Sun Life Financial” name. In the United States and elsewhere, insurance products are offered by
members of the Sun Life Financial group that are insurance companies. Sun Life Financial Inc., the publicly traded holding company for the Sun Life Financial
group of companies, is not an insurance company and does not guarantee the obligations of these insurance companies. Each insurance company relies on its
own financial strength and claims-paying ability.
Group insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states except New York. In New York, group
insurance policies are underwritten by Sun Life Insurance and Annuity Company of New York (New York, NY). Product offerings may not be available in all states
and may vary depending on state laws and regulations.
© 2013 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life Financial and the globe symbol are registered
trademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us.
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