Why Parental Leave Insurance is a Better Option for Your Customers

White-Label Insurance Parental Leave Insurance

All Tags

White-Label Insurance Parental Leave Insurance

By The Boost Team on Mar 24, 2023

8 min read

A greyscale photo of a woman smiling and checking her phone while holding a baby. A green-blue gradient cuts across the back of the picture, highlighting the figure of the woman.

Parental leave is the third most requested benefit for US workers, but with no universal parental leave requirements, there are limited options for how businesses can provide this important benefit to their employees. In this blog, we’ll unpack the four most common parental leave options for US businesses and explain why parental leave insurance is a better alternative.

What is the Purpose of Parental Leave?

Parental leave is a benefit designed to financially assist employees who become parents, and ensure job security while they take time off work to care for a new child. If an employee becomes a parent and needs time off to bond with their baby, parental leave could cover a portion of their salary until they return to work after a certain period of time.

Because the U.S. has no national requirements for parental leave, options can vary widely by state, and often have caveats, exclusions, and limitations. For example, some options don’t cover adoptions or foster care, or exclude fathers. While the federal Family and Medical Leave Act (FMLA) applies nationwide, it only guarantees unpaid leave, which limits its usefulness to working families.

Parental leave is a significant DEI issue for retaining and acquiring employees who may become parents—especially female employees. Nearly 30% of working women quit their jobs after giving birth, and 66% of employees said that paid parental leave is an important factor to them when they are deciding whether or not to accept a job offer. In states that do require paid parental leave, the rate of mothers leaving the workforce dropped 20-50%.

Parental Leave Options Available to Parents Today

The leave options available to U.S. businesses and prospective parents can vary widely based on location, length of employment, and more.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act of 1993 (FMLA) is a federal requirement for companies with 50 or more employees within a 75-mile radius of the company to offer their employees 12 weeks of job-protected unpaid leave due to childbirth. As a federal law, the FMLA act makes this leave available to parents in all 50 states whose employers meet the requirement, but the key word is unpaid leave.

While these federal protections ensure new parents have a job to come back to, most employees cannot afford to take 12 weeks of unpaid leave regardless. This makes taking FMLA leave a non-starter for many prospective parents.

Short-Term Disability (STD)

Short-term disability (STD) is a benefit that covers temporary medical issues that prevent an employee from working. Typically, STD covers things like non-job-related injuries, illnesses, or other medical issues that workers' compensation does not cover, and pays a portion of the employee’s salary during the claim period.

STD is often selected by companies as a potential way to address parental leave, but it has several shortcomings. First, in every state besides California, New York, Rhode Island, New Jersey, and Hawaii, STD is a voluntary benefit that employees have to pay into. That means that outside those five states, employees would have to anticipate their potential parenthood and plan for it before open enrollment. If an employee were to unexpectedly become pregnant or bring a child into their family, they would not have access to this benefit. In some cases, an employee who wants the benefit added after open enrollment can undergo a medical review to determine if they are eligible, but not all companies offer that option.

Another drawback is that STD coverage usually only applies to pregnant mothers, which leaves a significant portion of parents ineligible. Additionally, the amount of time an employee can take on leave is based on the number of days they’re worked at the company. This is a problem for newer employees who would want to take leave because it can exclude them from coverage entirely.

Some employees can benefit from applying for private STD coverage, and in some cases, they can combine their private STD coverage with what is offered by their employer. However, that is frequently a complicated application and coverage selection process. It requires employees to jump through several hoops to receive the coverage and paid benefits they need.

State-Funded Paid Leave and PTO

While the U.S. has no national paid parental leave solution, a minority of states offer programs to help fill the gap. These programs can offer considerable benefits over STD, but often fall short of providing a complete solution.

Let’s start with the benefits. Unlike STD, state-funded leave usually is more inclusive of what it means to be a parent, and often includes fathers, adoptive parents, and foster parents. In many cases, state-funded leave also allows employees to take off more time than what's offered by short-term disability. Some states even require employers to offer paid or unpaid leave to employees.

For companies whose employees are all based in states with leave programs, this can be a helpful support for offering paid parental leave. However, since only a few states currently offer state-funded parental leave, these programs will be of limited help to larger companies with employees scattered across the U.S.

While state-funded leave programs generally offer more flexibility and extensive coverage than STD and FMLA, there can be drawbacks for parents as well. States may require doctor’s notes and official medical examinations, and different states have different limits on leave, percentages of salary reimbursements, time off requirements, etc. Even for parents who live in states that provide these programs, the time off and level of reimbursement offered might not meet their needs.

When state-funded leave falls short, parents can sometimes supplement the program by banking PTO days to fill in the gaps. However, this can be problematic for some employees. Banking enough PTO days for parental leave requires serious planning ahead, which doesn’t always benefit those who might become pregnant unexpectedly. Additionally, depending on the company’s PTO accrual policies, this may only be available to employees who have been at the company long enough to bank a significant amount of PTO hours.

On the company side, state leave places a greater emphasis on internal HR or administrative teams to manage these benefits. Every state has different laws, so managing employees across multiple states and different programs can be tricky. Ensuring compliance requires very specific legal expertise, knowledge of each state’s rules and regulations, and systems in place to follow them correctly. Not every HR team has the expertise or bandwidth to handle those responsibilities, and it can be expensive to hire the necessary specialists.

Company-Funded Paid Leave

Finally, some companies who offer paid leave to employees simply pay for it themselves. This requires the business to set aside money for employees who may become parents in order to pay them while they are out of office. It could also double expenses if the company needs to hire temporary replacements for the employee on leave. That would mean that both the temporary employee’s salary and a portion of the employee on leave’s salary would be coming out of the company’s pocket.

For many SMBs this option is far too expensive to afford on a sustainable, equitable basis. It can also be extremely difficult to forecast and budget for. How many employees will take leave in a particular year, and how much money needs to be set aside?

In short, most parental leave options leave something to be desired, be it inclusivity, pay, availability, or affordability. Employers have traditionally had limited choices for how they can provide this much-needed benefit, but there’s a new option that’s picking up steam —parental leave insurance.

What is Parental Leave Insurance?

Boost’s parental leave insurance is a first-of-its-kind business insurance designed to make parental leave affordable for small and medium businesses (SMBs).

How Parental Leave Insurance works

As someone who partners with or caters to SMBs, you can offer the parental leave insurance product to your customers. By purchasing this commercial insurance product, your SMB customers can customize the level of benefit that they want to offer to their employees. This includes factors like what percentage of the employee’s salary will be covered and the length of leave the SMB will offer.

Once your customer is satisfied with their package, they buy the policy from you and pay a recurring premium based on their selected benefits and employee demographics. When a covered employee takes parental leave, your customer will file a claim through your claims process. The customer will then be reimbursed for the cost of paying their employee during the covered leave period, as spelled out in the parental leave insurance policy.

Parental Leave Insurance: Comparative Benefits

When comparing parental leave insurance to the existing options, there are many areas where elective, state, federal, and company-funded solutions fail but parental leave insurance thrives, including:

Affordably increases top talent attraction and retention

For prospective employees with highly valuable skills and experience, benefits are the real differentiator for jobs. For companies to stand out from the competition to attract and retain the best talent, they need to offer great benefits that employees actually want. Parental leave insurance enables companies to affordably offer a highly desirable benefit: reliable, comprehensive, and inclusive parental leave programs.

Eliminates large, unexpected leave expenses

Parental leave insurance provides predictability to a typically unpredictable financial dilemma. Instead of trying to estimate how many employees will need paid parental leave, forecasting their salary payments, reserving capital, and funding a paid parental leave program internally, your customers can pay a set amount in premiums and avoid surprises.

Reduces internal HR admin requirements

In comparison with STD, FMLA, and a mixture of state-funded leave and PTO, parental leave insurance is much simpler for employees to receive and understand their benefits and easier for internal teams to manage. Especially for smaller HR teams or companies who have employees across multiple states, this can be a huge time-saver and incentive to get started with parental leave insurance without the administrative burden of state or federal options.

Inclusive of all parents

The alternative options like STD often only apply to pregnant mothers. Dads, foster parents, adoptive parents, and others are frequently ineligible. But Boost’s parental leave insurance product covers all employees in the event of the birth of a child (natural or surrogacy), or the adoption or foster placement of a child into their home. Parental leave insurance provides equal benefits to parents regardless of their gender identification.

If you partner with small to medium businesses, offering parental leave insurance to your customers can help differentiate you from the competition. By providing your clients with this unique insurance product that can increase their employee retention and productivity, you can enhance your brand as a leader in your space. Establish your brand as one focused on employees’ well-being, while helping your customers do the same.

If you want to learn more about growing your customer LTV with Boost’s Parental Leave Insurance, contact us.

Explore Popular Categories

Boost News Insurance 101 Insurance Infrastructure New Product Development White-Label Insurance

Explore Popular Tags

Business Owners Insurance Captive-as-a-Service Crypto Insurance Cyber Insurance Data in Insurance Embedded Insurance Employee Spotlight Growing Your Business Guides Insurance Industry Management Liability Insurance Parental Leave Insurance Pet Insurance Reinsurance Why Boost

Share this Article

The top 3 takeaways from our embedded insurance consumer survey

Embedded Insurance Survey Results: What We Learned From Consumers

Feb 3, 2023

You may have heard that embedded insurance is a big opportunity to grow your business, but are your customers actually interested? We wanted to get the story straight from the source, and so in Q4 2022 Boost surveyed 650+ US consumers. We asked about their experiences with insurance, how they felt about their current insurance options, and what mattered most in their insurance purchases. Here are the top 3 things that we learned from our consumer insurance survey results. [See Full Size] In our insurance survey, a whopping 73% of consumers had either already bought insurance from a non-insurance brand, or would be interested in doing so. While price was mentioned most often, other reasons included brand loyalty and convenience. Trust was another important factor. 62% of respondents were interested in buying financial products from a trusted brand, rather than a bank. For millennials, the number went up to 95%. First movers might have an advantage here as well. 20% of our respondents had never been offered financial products from a retail brand - but they liked the idea. All this is promising news for companies outside the traditional insurance sphere who are looking to build revenue and customer loyalty with embedded insurance. If you can deliver the product and experience consumers are looking for, the appetite is there. It’s hardly a secret that convenience is crucial to customer experience in the digital age, so it comes as no surprise that it was important to our respondents. 59% told us that they’d be more likely to buy insurance if it were offered digitally, as part of a related transaction. Younger consumers were more likely to be enthusiastic about digital insurance: nearly 70% of respondents aged 18-29 were interested in buying insurance directly through a transaction on a retail website. For half of our respondents, embedded insurance wasn’t a novel idea. 50% had already bought embedded insurance at least once, at the point of sale in a related transaction. For many consumers, insurance is a long-term purchase. 68% of our survey respondents told us they’d had the same insurance provider for at least two years, and 10% had had the same provider for more than five years. For retailers, insurance could also be an overall boost to retention. 62% of respondents said that when a retailer offered protect-your-purchase options, they were more likely to be repeat customers. Learn more about offering embedded insurance in our free guide, or contact us to get started.

Get the Guide: Growing Your Revenue with Embedded Pet Insurance

Jan 12, 2022

It’s a great time to get into the pet insurance market. In fact, more than 70% of American households now own at least one pet, and with the rising cost of vet care, those households are more and more likely to insure their pets’ health. For businesses that serve pet owners, offering embedded insurance is a significant opportunity to grow their revenue and deepen relationships with their customers. At the same time, for most pet-related companies, insurance is a whole new line of business outside their core expertise. The opportunity is there, but it can be hard to know how to get started in the pet insurance market. Partnering with Boost can make it easy to get underway! Download The 2022 Guide to Growing Your Revenue with Embedded Pet Insurance, and learn everything you need to know to get your business started with pet health insurance: Learn how pet health insurance works and what coverages are most commonly available, and explore the use cases that make pet insurance valuable to your customers. Learn which types of businesses have the best opportunity for offering white-label pet insurance, along with what it takes to actually get started (spoiler: less time than you’d think). Learn how to reach your customers with your new insurance offering, using the knowledge you already have about their preferences and buying habits for their pets. The 2022 Guide to Growing Your Revenue with Embedded Pet Insurance is free to download HERE. And as always, if you have any questions about our pet health insurance product or anything else, our team is here to help.

Introducing The New Boost Brand

Nov 9, 2022

It’s an exciting day for Boost: today we’re officially launching our new brand identity, and a shiny new website to go along with it. When we started Boost in 2017, we had one big goal: to drive innovation in the insurance industry. The insurance market is highly regulated, inefficient, technologically underdeveloped and traditionally dominated by a handful of large players, who haven’t had much incentive to change with the times. This added up to an environment that made it very difficult for new players to get modern ideas to get off the ground - which is why buying insurance was still a painful, largely offline process, with often-outdated products. We built Boost to change that. Our mission is to make the insurance industry accessible to innovators by providing the compliance, capital, and technology infrastructure they need to offer modern protection to their customers. We wanted to make it easier for new players to get to market, and to make insurance work better for everyone - the people buying it, and the people offering it. Five years later, it’s been a wild ride. We’ve built an API-based platform that enables any company to offer branded, digital insurance through their website or app, powered by one of the most advanced policy administration systems in the industry. We’ve launched a suite of first-of-their-kind insurance products like parental leave insurance, crypto wallet insurance, and management liability insurance designed for startups, as well as launching improved, more customer-centric versions of established products like business owners insurance for small businesses, cyber insurance and pet health insurance. Since Boost’s inception, we’ve powered more than 40 insurance innovators as they’ve improved the insurance buying process. I couldn’t be more proud of what we’ve accomplished. But we’re nowhere close to finished. Boost’s overall vision for the insurance industry is much bigger than where we are today: we’re building the insurance market for the modern world. Our vision is to democratize the industry through technology and innovation so everyone can have access to the protection they need, when they need it. To tackle that vision, we’ve grown a lot as a company - and it’s time for our brand to grow, too. The updated Boost brand better reflects who we are now: a bold, modern, tech-forward leader in the insurance space. It allows us to tell our story in a way that’s easier to understand, and gives us room to scale as we continue moving forward. The central element in our new brand identity is one you’ll hear us talk about often - the idea of the platform. Boost delivers more than just robust tech infrastructure, white-labeled insurance products or access to risk capital through our managed reinsurance facility (though we have those too). With Boost, you get an end-to-end platform comprising every layer of the embedded insurance value chain, all in one turnkey solution. The platform is what gives our customers the tools to scale their insurance programs and build long-term, profitable lines of business, and that’s why we made it the cornerstone of our brand. Alongside our new brand identity, we’re also excited to unveil the all-new Boost website. Our new online home isn’t just prettier to look at - it’s also packed with more information about what we offer, and more ways to connect with us. Boost has come a long way since the beginning, and I look forward to the next steps we take on our journey. Much more to come!