How Different Generations View, Value and Select Voluntary Benefits

Voluntary benefits provide a lower-cost way for employers to expand their benefit offerings and meet the needs of a diverse workforce — but offering them effectively requires taking generational differences into account.

New research from ARAG Legal Insurance found each workforce generation understands, prioritizes, selects and uses benefits in significantly different ways.

Voluntary benefits generally refer to supplemental benefits that employees can opt into using. They often are partially or fully funded by the employee but may be available at a lower cost than they can access on their own. Common examples include supplemental disability insurance, gym memberships, identity theft protection, auto or homeowners’ insurance, pet insurance, legal counseling, and financial wellness programs.

Employers are increasingly offering these benefits, with organizations listing dozens of program offerings in WorldatWork’s 2024 Total Rewards Inventory of Programs & Practices. Most surveyed organizations now offer life insurance, disability insurance, and wellness and well-being seminars or literature, but programs continue to evolve. For instance, 2% of surveyed employers offered paid pet leave for the first time this year.

“Today’s employees, particularly those from the younger cohorts, are looking for a holistic approach to overall well-being that supports their physical, mental and financial health as well as [the health of their] dependents and work-life balance,” said Tom Kelly, a health and benefits practice principal at Gallagher.

Generational Differences in Benefit Priorities

ARAG found both Generation Z and millennials were the age groups most concerned about financial stability (although it was a high-priority issue for all groups studied). Gen Z workers were the group most worried about work-life balance and were most likely to experience high levels of stress and anxiety. Millennial workers were the group most concerned about job security and complex family matters. And, health issues — both for the employee and family members — were a top concern for Gen X and baby boomers.

Generations’ voluntary benefit priorities fall along these lines, according to Kelly and Jen Daker, a principal and voluntary benefits sales leader at Mercer. They identified the following for each group:

Gen Z: Financial wellness, mental health and pet health. These workers tend to be less interested in “traditional” voluntary benefits such as accident, critical illness and hospital indemnity.
Millennials: Family-forming benefits, child benefits, life and disability insurance, banking services, tuition assistance, accident and critical illness benefits, and hospital indemnity plans.
Gen X: 529 college savings, long-term and elder care, identity and cyber protection (including protection that can be extended to parents and grandparents), and health and exercise benefits.
Baby boomers: Retirement readiness, charitable involvement, long-term and elder care, identity and cyber protection, and critical illness benefits.

Some benefits, particularly ones that offer significant flexibility, can appeal across generations. One common example is lifestyle spending accounts, which could cover anything from wellness to education, said L. Marta Turba, vice president of content strategy at WorldatWork.

Benefits Knowledge and Communications Preferences

Nearly 40% of ARAG survey respondents were not at all, or only slightly, familiar with non-medical voluntary benefits. Younger generations said voluntary benefits programs are complex and difficult to understand, while one-third of Gen X employees pointed to a lack of communication about voluntary benefits, said Jennifer Beck, vice president of customer experience and insights at ARAG.

“Employees can’t appreciate what they don’t see,” Beck said. “Employers must clearly articulate the value of their benefits in ways that resonate with — and through channels that matter to — each generation.”

Older generations generally prefer printed material, while younger employees generally prefer electronic material such as digital booklets, online articles and videos, and texts, ARAG found.

Innovative ways to share benefit information with employees include brief, engaging TikTok-style videos, social media channels, podcasts and interactive quizzes that provide personalized benefit recommendations, Kelly said.

Turba added that utilizing effective storytelling in benefits communication can be a way to reach employees of all ages.

Why Voluntary Benefits Matter

Among employees who were dissatisfied with their overall benefit offerings, Gen X employees and millennials cited high cost. Millennials were also most likely to note that the benefits available to them are too “traditional,” and that they can’t access newer benefits they hear are offered by other employers, ARAG found. Gen Z employees were most likely to view benefits as limited, not customized or flexible, and difficult to use.

Employers that get voluntary benefits right may address their staffing concerns. Retention efforts are more important than ever, according to Kelly, with 46% of workers surveyed by Gallagher saying they are actively considering switching jobs in 2024, up from 35% in 2022.

Kelly urged employers to use data, surveys or focus groups, and insights gathered from and about their employees to determine the varying needs of each generation that can be addressed through voluntary benefits and targeted benefits communication.

Keep in mind, though, that while different generations have similarities in priorities and benefit needs, “it is important to recognize that no generation can be treated as a homogeneous group,” Daker cautioned.

That’s why the ability to personalize benefits is key — and targeted benefits communication may be even more important than adding more programs, Turba said.

“High benefits engagement should focus more on communication and enhancing understanding and appreciation, perhaps even more than on core benefit design changes,” she said. “However, achieving targeted communication with a small benefits team is challenging. The solution is to embrace new technologies, including artificial intelligence. AI can simplify the complexity of offering more benefits by providing personalized, meaningful options without overwhelming employees with too many choices.”

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