As American workers transition into the new year, many face increased financial stressors. Insurance plays a vital role in safeguarding employees’ financial stability. However, archaic benefits language that has persisted for over a century threatens to leave employees without the paycheck protection they may need to rely on when the unexpected happens.
Achieving financial stability has become increasingly elusive for American workers whose lives have been upended by inflation and an uncertain global economy. Recent findings from the Federal Reserve show a sharp decline in the number of adults who feel they are doing at least OK financially and are among the lowest levels observed since 2016.
Even for those with steady employment who struggle to save money, their paychecks are redirected toward the rising cost of living, student loans and other daily expenses. Research from The Hartford showed that nearly 40% of U.S. workers say they have less than $1,000 in emergency savings or none at all.
This alarming lack of savings leaves American families financially insecure during sudden and unfortunate life events. According to LIMRA data, one-quarter of U.S. adults would experience financial hardship within one month of the unexpected death of a wage earner in their household. Another 40% could only go six months before succumbing to financial hardship.
Each year, companies offer employees the opportunity to sign up for health insurance and other benefits for the following year, including supplemental health benefits—accident, critical illness and hospital indemnity—as well as life and disability insurance above what their employer may already provide to help them prepare for the unexpected. Enrollment season is also an opportunity to educate workers about the valuable benefits their employer is automatically providing at no cost.
While most people are familiar with life insurance—Forbes research shows that at least three in four Americans have a policy—many other critical insurance products, such as accidental death and dismemberment insurance and supplemental health benefits, remain less known and appreciated.
Supplemental health benefits are complements to major medical plans and provide a cash benefit that can help someone pay for expenses not covered by health insurance, such as deductibles or even other household expenses such as childcare or utility bills.
Improving communication about supplemental health benefits
These benefits are often offered at little to no cost but are not easily understood due to unclear or outdated terms. For instance, accident insurance dates back to the 19th century when rail accidents were common among blue-collar workers as the steam engine revolutionized transportation. Some product names, in use for decades, carry negative connotations, such as accidental death and dismemberment insurance, causing confusion and evoking negative emotions in consumers.
The complex jargon used in benefits education can lead employees to overlook benefits that protect their income, adding unnecessary financial stress to people of all demographics and professions during challenging financial conditions. The jargon can also leave them feeling overwhelmed when choosing the right benefits for their needs.
Consequently, employees may not purchase these types of benefits, believing they do not apply to them or, in some cases, may purchase them without understanding their real-world value. Younger and healthier workers may underestimate the risk of a serious illness or injury, while those with lower income levels might avoid incurring insurance costs due to financial stress.
The outdated language in these benefits packages may also cause confusion about the benefits employers provide at no cost to help care for their employees. Young families, as new parents, may not realize that short-term disability insurance provides income replacement for post-childbirth recovery, which is not traditionally viewed as a disability.
See also: 8 benefits areas HR is focusing on in 2024
Outdated language in benefits communications should not compromise American workers’ financial stability. With many working Americans on the brink of financial hardship, it is time to modernize employee benefits and their communications to increase understanding about the financial security and peace of mind these benefits provide in today’s rapidly changing world.
HR and benefits leaders, along with insurers, must act now to prioritize simplified language and clarify available benefits and how to use them—fundamentally improving U.S. workers’ understanding of their benefits. This can create a safety net for U.S. workers and their families needing support, leading to increased financial stability and a happier, healthier and more productive workforce.
