What DI Producers Need To Succeed In Multi-Life

The producer needs to know that there is a sales concept, known as executive carve-out, that addresses this problem. It does this by combining individual DI and group LTD to provide an adequate level of coverage for highly compensated employees.

Manage group LTD rate stability.

If a group LTD plan has a very high monthly maximum benefit to meet the coverage needs of just a few high wage earners, the plan may be prone to rate volatility. The effect of a claim by a highly compensated employee, who receives a high maximum LTD benefit, can be significant on a rate renewal.

The producer should know that, by using executive carve-out in this situation, the employer could limit the exposure of a group LTD from a claims perspective. That will help the benefit manager control the cost of LTD benefits over time.

Find a solution to medical benefit funding.

The cost of medical health insurance is putting pressure on virtually every other benefit that employers provide. A group LTD plan, regardless of its level of coverage, may offer a source of additional benefit dollars to an employer.

By lowering the maximum monthly benefit significantly–say from $5,000 to $3,000–an employer may be able to re-deploy the LTD savings to a group medical plan.

Of course, lowering the monthly benefit maximum also lowers the income replacement ratio for a large group of employees. But a voluntary LTD Buy-Up plan gives employees the opportunity to bring their coverage back up to the level of income protection they desire.

In sum, multi-life sales commonly are focused on harvesting sales opportunities created by the dynamics of group LTD.

As a result, when marketing multi-life individual DI insurance, it is important for the producer to maintain objectivity about LTD coverage, since the 2 plans will most often work together.

Finally, always keep in mind that the decision-maker in the multi-life saleoften a benefit managermay also be responsible for installing the LTD plan.

Mark R. Ameigh, CLU, is manager of sales support and industry research at Berkshire Life Insurance Company of America, Pittsfield, Mass., a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. His e-mail address is [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 27, 2004. Copyright 2004 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.