Voluntary benefits have become a standard part of the modern benefits package. But the industry hasn’t always looked the way it does today—and its evolution raises important questions about cost, value, and ethics.
The Early Days: Kitchen Table Sales
Twenty years ago, voluntary benefits were simple. Employees were offered a handful of individual insurance products—often cancer insurance or accident coverage—at relatively low cost.
Sales were informal. Young brokers, just entering the industry, pitched products over the kitchen table or in company cafeterias. Because sales volumes were low, commission rates were high. Employers often allowed payroll deductions but otherwise stayed hands-off.
The result was a “buyer beware” environment. Products tended to be poor value propositions, commission percentages were ridiculously high, claims were difficult to collect, and employees were left to navigate denials on their own.
The Big Consultants Take Over
As time went on, large insurance consultants spotted the opportunity. They saw three things:
- High commission rates.
- A captive employee audience.
- Access to employer relationships and distribution channels.
Using their scale and influence, consultants convinced employers to actively promote voluntary benefits. Sales exploded. Today, you’ll even see voluntary benefits advertised during the Super Bowl.
What Didn’t Change: Commissions and Product Quality
With booming sales and massive scale, one might expect the industry to lower commissions and improve products. Instead, the opposite has been true.
Because voluntary benefits remain largely unregulated, commission structures have stayed high and product value has lagged. The outcome: the insurance industry grows richer, while employees are left with weak benefits and poor claims experiences.
The Ethical and Fiduciary Question
Employers and HR leaders should reflect on the implications of this shift. Allowing high-commission, low-value products into your benefits program may generate short-term revenue sharing, but it raises:
- Ethical concerns: Are employees being sold products that don’t serve them well?
- Fiduciary concerns: Could employers face exposure for allowing predatory practices?
The voluntary benefits market has evolved—but not for the better.
Moving Forward
Employers don’t need to accept the status quo. With the right oversight, voluntary benefits can provide real value to employees without hidden conflicts or inflated commissions.
At Cofi, we believe employers should hold the industry accountable. That means running competitive RFPs, benchmarking broker arrangements, and ensuring that voluntary benefits serve employees first—not carriers or consultants.
Final Thought
Voluntary benefits have evolved from cafeteria pitches to billion-dollar marketing campaigns. But evolution doesn’t always equal progress. Employers who want to improve outcomes—and protect themselves—must rethink how these programs are sourced and managed.