Adapt benefit plans to demographics

Seniors make up the fastest-growing age group, according to Human Resources and Skills Development Canada. In 2011, an estimated five million Canadians were 65 years of age or older. The figure is expected to reach 10.4 million by 2036. Many of these seniors will remain in the workforce to stay active, bolster retirement savings, or both.

Many are seeking benefit plans that go beyond the basics. This is changing the face of group benefits, providing advisors with an opportunity to make tailored offerings to seniors.

U.S. employers add value

Employers on both sides of the border are always looking for ways to add value to their employee relationships. But the steps they take to attract and retain employees must be cost-effective.

In the U.S, there’s a strong trend towards value-added benefits and services that act as safety nets for employees, especially as company pension plans and other retirement benefits are reduced or eliminated. Examples include online will preparation and emergency travel assistance. Employers in Canada are also moving away from company pension plans, so they’re looking for valuable and cost-efficient ways to support their employees.

In many ways, group benefits in North America are a commodity: carriers traditionally rely on price and/or service to attract clients. While many benefit plans in the U.S. provide life insurance, a few forward-thinking carriers are expanding their options, offering end-of-life planning benefits. This adds value and differentiates them in a crowded marketplace.

While younger employees might look to dental plans that pay for their youngsters’ braces, for older employees, end-of-life planning for themselves, their spouses and their parents is a welcome addition to the list of service options. The service is currently included in group benefit plans in the U.S through Hartford, Aetna and ING. In Canada, funeral planning and concierge services are available through the Canadian Group Benefits sector through ACE Life, which launched in October 2013.

Why it’s popular with employers

Most people don’t have money set aside for unexpected expenses or emergencies, according to a 2012 study my company commissioned, conducted by Research Now. This is especially true of funerals: only one-third have insurance to cover the cost. The average traditional funeral is more than $9,000; some can exceed $16,000. Cremation averages more than $2,000, and can reach more than $7,000.

End-of-life planning represents a gap in Canada’s otherwise excellent social services. While CPP provides a one-time death benefit payment to, or on behalf of, the estate of a deceased contributor, the maximum is $2,500, and is dependent on a number of factors, including how much and how long the individual has contributed. In any case, the maximum amount typically won’t cover funeral costs.

Paying for a funeral is the third-largest expenditure Canadians will make in their lifetimes, only superseded by the down payment on a home and purchasing a car. The most frequently expressed concerns when dealing with funeral arrangements, according to Research Now’s study, are not being able to afford it (46%), not knowing where to start (37%) and being taken advantage of (36%).

The same study highlights an opportunity for Canadian advisors. Three-quarters (74%) say having the option to pay for their funeral as part of their life insurance package is either “very” (22%) or “somewhat” (52%) appealing. Further, more than half of Canadians (57%) who have planned a funeral in the past say they will likely plan their own funerals now that they understand what’s involved.

Filling the void

To remain competitive, employers must provide benefits that appeal directly to their employees. Canada’s aging population, coupled with a widespread lack of end-of-life planning, gives employers an opportunity to differentiate themselves with plans that address these needs.

Mark Duffey is president and CEO of Everest Funeral Planning.