Supplemental Disability Income Insurance Continues To Expand Its Reach

For example, many highly compensated individuals earning bonuses or commissions should be made aware that only a portion of their salary (approximately half after taxes) is covered by their group long term disability plan. They should also be made aware that most times bonuses are not included in the group plans.

In positioning the program for middle-income earners, consider providing an analysis tool to let the individuals measure just how much of a shortfall they will experience.

In addition, consider the employers situation and needs. Less than one-third of employers polled in the July 2002 "MassMutual Benefits Barometer Survey" said they offer both group and supplemental individual DI insurance.

However, there are now employer and association discounts that are opening more doors to worksite marketing of supplemental DI. These worksite programs are helping ease financial pressures by reaching into the underserved middle market.

Interestingly, nearly one-third of respondents to the survey mentioned above cite rising benefit costs and the economy as key considerations for offering supplemental benefits such as individual DI. More than half of those polled indicated that employee satisfaction and recruitment are important considerations.

However, even though traditional insurance sales tend to increase in a worsening economy while equities tend to be hot in a good economy, the economic environment should be irrelevant for those who are truly "financial" professionals.

Point out that it is just common sense to insure what we have before investing for what we would like to have, no matter what the economy.

Looking ahead, the need for supplemental DI will not go away, regardless of how the economy turns. Voluntary products supplementing company sponsored plans are here to stay. However, in a more robust economic environment, employers may partially or fully subsidize premium payments on behalf of employees.

When they are part of employer benefit packages, these products become a tool to recruit and retain employees. Indeed, ever since the early 1990s, multiple DI sales through employers have increased, no doubt because of that fact.

The products have benefits for carriers and producers, too. For example, carriers have realized that, when Supplemental DI is offered at the worksite, DI sales potential increases while spread of risk (persistency and morbidity) improves. As for producers, they have found that renewal streams from supplemental DI business are very attractive.

Patrick D. Morris, RHU, is vice president, disability income insurance sales and marketing at Massachusetts Mutual Life Insurance Company, Hartford, Conn. His e-mail is [email protected].

Reproduced from National Underwriter Edition, February 24, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.