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Is payroll deduction really necessary?

SOMETIMES, payroll deduction for voluntary products isn't an option. Whether for technical reasons, employee demographics, or employer preference, payroll deduction might not be available. But when it is, it's usually the preferred methodology.

But only considering what is easiest for us and the HR department is risky. It's just as important to take heed of what's best for the employees who buy our products. In a recent Eastbridge study, employees were asked to choose the payment method they'd prefer for benefits they contributed to or paid for entirely. Payroll deduction was the overwhelming choice among those surveyed at 76 percent.

All age groups, except the under-30 group, had strong preferences (84-97 percent) for payroll deduction. About half (51 percent) of the under-30 group prefers payroll deduction while 35 percent said they had no preference or were unsure. Only 14 percent prefers credit card or bank account payment systems.

In fact, the convenience of payroll deduction is one of the most important reasons employees buy voluntary products.

So if you decide to not recommend payroll deduction, understand which parties will benefit from the decision and which won't. Even if you plan to recommend payroll deduction, ask how you might improve the way it is set up and the resulting implementation of the billing processes. But most importantly, it appears that our customers think this is where our efforts should be directed.

Gil Lowerre can be reached at (860) 676-9633 or glowerre@eastbridge. com. Bonnie Brazzell can be reached at (803) 738-1236 or bbrazzell@


* In addition to meeting a need, the convenience of buying at work and of having the premiums deducted are the most important factors in an employee's decision to buy voluntary products.


Reason                                                    2013

Products purchased filled my needs                         99%
Convenience of purchasing at work                          94%
Convenience of having premiums payroll deducted            93%
Reasonable cost for the coverage                           91%
Reputation of carrier for service and claims payments      90%
Name of the insurance company is well known                86%
Endorsement by employer                                    52%
Influence of co-workers                                    25%


Preferred method for paying for benefits

Payroll deductions               76%
Don't know/no preference         13%
EFT from checking or savings      8%
Credit card                       3%

Note: Table made from pie chart.


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Title Annotation:what's next
Author:Brazzell, Bonnie; Lowerre, Gil
Publication:Benefits Selling
Date:Mar 1, 2014
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