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by Jilian Mincer | March 10, 2009

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A growing number of businesses, large and small, are offering employees so-called voluntary benefits ranging from pet insurance to homeowners insurance to help with house closings and estate planning.

The signature character of these voluntary benefits is that employees pay for them, but at a discounted rate obtained by the employer.

Companies use benefits plans as tools to compete for talented workers. Nowadays, one key benefit, health insurance, has become so expensive that it can eat up most of employers' benefits budgets. Voluntary benefits are inexpensive for employers to offer and appealing to employees because they cover services that often weren't previously covered.

"As companies have found employer-provided benefits increasingly expensive, they're finding that they're getting a greater return if they invest in voluntary benefits," said Michael Thompson, a principal at PricewaterhouseCoopers.

Employees often don't appreciate free benefits, Mr. Thompson said, especially if they are benefits they don't use. However, workers "value having a whole shopping cart of benefits that they can select from," he said.

MetLife Inc. found in a 2007 survey that for the first time in the past five years, employee retention was the top benefits objective, edging out costs, said Randy Stram, vice president of voluntary benefits at MetLife. The company also found that 76% of employers "believe the fight for talent will intensify." In this type of environment, Mr. Stram said, voluntary benefits have become an important tool for inexpensively attracting and retaining employees.

Some of the most popular benefits include supplemental life insurance, group homeowners insurance and auto insurance, and critical-illness insurance, which pays a lump sum when someone is diagnosed with a serious illness.

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Filed Under: Workplace Issues
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