Boomers and life: improved group life insurance benefits could entice boomers to keep contributing at work.

The baby boomers have had a heavy influence on every area of society as they've moved through various stages of life. Now, as their oldest members approach age 65, they are poised to challenge the expectations of retirement as well .This may be especially noticeable in the workplace, where older workers may not only be common, but vital to a company's success. In turn, this will also have a boomer-sized impact on employee benefits, especially group life insurance.

Keeping Boomers Working

The demographic baby boomer bulge is accentuated by the smaller numbers in the generations coming behind it. The Bureau of Labor Statistics predicts that by 2011, the 76 million baby boomers will comprise 40% of the work force. By 2030, every boomer will be age 65 or older and the shortfall of workers could be as high as 10 million. The U.S. Department of Labor predicts that within the next five years, the current number of workers between the ages of 35 and 44 will decline by 19%.

According to MetLife's "2005/2006 Employee Benefits Trend Study," 46% of the surveyed employer groups with more than 25,000 workers believe that the aging work force will have a significant impact on their human resources, yet 79% of these companies have not begun to plan how they will retain their experienced older employees.

Employers are realizing it is in their best interest to encourage boomers to keep working beyond age 65. In doing so, they may face stiff competition from other companies and from the boomers themselves as they consider all of their lifestyle choices. Competitive employee benefits and flexible schedules will be important. Fortunately for employers, studies show that many boomers plan to continue working past 65 for a variety of reasons, including staying active or to stretch their retirement savings as average life expectancy moves toward 85 to 90, thanks to medical advances. While the boomers will live longer and be healthier than any generation before them, a recent survey by the Employee Benefit Research Institute showed that 37% of seniors over age 70 are already receiving more income from work than from earnings on their assets.

Group Life's Challenges

Accommodating the needs and desires of employers and boomers will mean re-thinking the present business models, assumptions and even laws. Regulations of the Internal Revenue Code, Employee Retirement Income Security Act, and Age Discrimination in Employment Act will affect efforts by employers to extend benefits beyond age 65.

Underwriting methodology and plan design for group life insurance also will be under pressure as employers may push insurers to eliminate age reductions, remove age-related waiver-of-benefit terminations, and make group life insurance easier to buy at older ages. While this could increase the cost of coverage, it may be partially offset by the trend toward decreasing mortality costs even at older ages.

The baby boomers also will have a direct impact on group life plan designs. Their flexible working schedules will loosen up the requirements for coverage by revising the current actively-at-work provision as well as the eligibility requirements of employees. There may be a trend for employer groups to allow insureds to port their basic and voluntary life insurance for an indefinite period of time. Whole life conversions may increase in popularity. There may be an increase in the life volumes of retired life insurance on group plans.

Also, a new interest in group variable and group universal life insurance policies may develop because employees will look at these products to protect their assets and create a cash value. These policies may have port provisions that allow the employee to port their cash value into an annuity to help support their retirement needs.

To stay competitive, group life carriers should consider increasing their product offerings on their group life policies through the use of riders. Some examples include long-term care, elder care or critical-illness benefits. Elder care may, in fact, become a very popular rider as many retirement-age boomers find themselves taking care of their parents.

Baby boomers will continue to shape everything with which they come into contact, especially their work and leisure activities, and employee benefits will play an important part in this in coming years.

Contributor Carol Muncil is a senior reinsurance underwriting consultant for ING Reinsurance in Minneapolis. She may be reached at [e-mail].