The Standard's recently released Your Choice voluntary long-term disability insurance looks to further empower employees with more options for plan customization. Terri Levine, director of products and service management, talks about the Oregon-based firm's new approach.

Tell us about Your Choice.

We've had it for a couple of years in our pilot project in a couple of states, and we had a fantastic response, so we've opened it up to other states. We started with the benefit in the K-12 education industry and now we've opened it up to other industries. We're seeing an explosion in proposal activity.

The choices we wanted to offer are features that [the employee] values the most. There are six elimination periods, from zero accident/seven sickness to 180 days, so there's a really wide range in there [with] varying price points for different needs. The employees can also choose from three maximum benefit periods: two years, five years and to SSNRA. Then they can choose their benefit amounts in $100 increments that start at a minimum selection of $200 up to the lesser of 60% or $8,000. Features of the product include a 90-day pre-ex waiver because of the shorter elimination periods. The lifetime security benefit is included for those who select the SSNRA maximum benefit period. We also include the family care expense adjustment, which pays family care expenses while an employee may be trying to go back to work. Optionally, we have a first-day hospital benefit for the shorter elimination periods that the employer can offer.

What prompted this type of product?

We saw a lot of trends in the marketplace. Certainly the economy has pushed us in the direction of cost shifting among employers, so that means more voluntary benefits. Also the high cost of medical insurance; before the economy went south we were seeing that trend of voluntary benefits. We responded to that by focusing on our voluntary benefits portfolio.

We also wanted to focus with this product on maximizing participation. We saw employee choice as a way for them to add input and value because now they're paying the bill. We also wanted to focus on simplicity, so this product is an LTD plan that has some aspects of short-term disability. It's easier to administer, easier to explain and easier to understand.

How does it improve their understanding and eventual uptake?

Compared to other products that might be offered like medical, vision, dental, even life insurance, disability insurance really is relatively difficult to understand, and we know it's often purchased as an afterthought - if it's purchased at all.

Other benefits like medical are perceived as more important, so sometimes there are just not enough dollars left over at the end of the day for the employee to buy the disability insurance. But with Your Choice, the employee can tailor that product to their own circumstances, and they can buy only the amount of insurance that they need and can afford after they've paid for all of their other benefits. So we do expect improved participation over traditional products that don't allow that choice.

Some other factors that help the employees understand the product and increase uptake are the fact that it is in $100 increments and not percentages. That is just easier for people to understand and relate to.

The plan doesn't differentiate between STD and LTD - it's all just disability, and the employee doesn't have to think about it.

Do all of these options create more work?

In our pilot program, we haven't seen issues with administration from either the producer or the employer. We haven't heard from the employer that it's more work. We have developed employee booklets specifically for this product that are written in very simple language. We also support various types of enrollment. We have an online enrollment that walks them through the choices, and paper options that are very straightforward materials to make it easier for those employees.

Providing the choice for the employees may be a little more complex, but it does increase participation, and it makes the employees happier with their choices when they get to choose what they buy. So I think answering a few more questions during enrollment is really a small price to pay for employee satisfaction and for increased retention.

It's also less administration for the employer if the employer had a traditional STD and LTD plan before and now they just have one plan.

Will you continue to expand disability benefit choices? Other voluntary benefits?

We aren't going to expand this type of product in the disability world because we want to keep the choices simple, and if you get too many choices in a product, it becomes overwhelming for the employee. More than three options might create some confusion.

I think if you're talking about choice, a lot of [other voluntary benefits] already have choice built in. For example, dental plans already do. If an employee is the one paying, they should have the choice of what they pay for, so I would think that it would catch on.