Individual Disability Insurance

Individual Disability Insurance

Presented by:
Steve Woods

March 12th, 2008


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Slide 1: Individual Disability Insurance Understanding Supplemental Individual Disability Insurance for Executives and Highly Compensated Employees

Slide 2: Marketplace Opportunity • There are 1.2 million firms with 10 to 1,000 employees • Of those 1.2 million firms: – Half (.6 million) offer no Executive Benefits – 28% offer Disability Income Coverage – 28% have never been approached to purchase any Executive Benefits Source: Executive Benefits: Employer Viewpoint, LIMRA International, Inc., 2004

Slide 3: Employees Are Concerned About Finances • The top concern (63%) is having enough money to pay bills during a period of sudden income loss • Only 58% have disability coverage • Nearly half (43%) of those with disability coverage admit that their coverage is inadequate • Twenty-three percent made a job change in past 18 months Source: 5th Annual MetLife Study of Employee Benefits Trends, 2007

Slide 4: Employer Benefit Strategies • 88% expect the competition for talent to increase or remain at current levels over the next 18 months • 55% rated employee retention as one of their most important goals of a benefits program • Employers are turning to voluntary benefits as a means to address the challenge of offering “more with less” – Citing the top 2 advantages as: 1) convenience of payroll deduction and 2) no medical exams – Employees rank “no medical exams” as the #1 advantage of voluntary benefits Source: 5th Annual MetLife Study of Employee Benefits Trends, 2007

Slide 5: Disability Industry Response • Variety of plan designs to meet employer and employee needs • Creation of Supplemental DI programs to facilitate easy enrollment

Slide 6: Supplemental DI • Individual Policies issued with – Limited underwriting – Premium Discounts – Unisex rates – Payroll Deduction – No Pre-Existing language • Supplemental DI issue for a class of employees – Incomes over $75,000 – Executives/Grey/White collar – Minimum eligible lives • Supplemental DI amount based on number of eligible employees, employer or employee pay, length of elimination period.

Slide 7: Group LTD Coverage Gaps - TIM + Portability • For Highly Compensated Employees, Group LTD coverage may not be enough • Taxability – Many group LTD plans are at least partially employer paid – If the employer pays the premiums on the group LTD plan, the benefits under the policy are usually taxable to the employee • Incentive Income – Many group LTD plans cover base salary only and do not cover incentive income like an annual bonus and/or commissions • Maximums – Many group LTD plans have low maximum benefit amounts that may not adequately protect highly compensated employees • Portability – Many group LTD plans are not portable, meaning that coverage is tied to employment – If the insured leaves his/her employer, they often lose the group LTD coverage

Slide 8: Gap associated with group LTD Employer Paid Group LTD Plan: 60% of base salary $ 23,333 per month Gross $16,800 $9,600 month Income per month Short / Gap While Net Working After Tax Income Salary Income While $10,000 While per month $200,000 Working $7,200 + Working Taxable per month Salary Bonus Salary Income After Tax $80,000 + From Income Bonus Group LTD From While Group LTD Disabled While Disabled Assumes a 28% Tax Bracket

Slide 9: Supplemental DI- Up to 100% replacement 120% year one 100% Catastrophic* Protection Long Term Every Care 5 Purchase Disability years 75% Option Buy-Up 60% Group Long Term Disability * See policy for full details

Slide 10: Advantages- A Win, Win for All Employee: Employer: Allows a higher net income during a Helps attract and retain talented disability employees Employee Provides strong policy provisions Enhances the competitiveness of as compared to Group LTD the employer’s benefits package with no direct cost to the employer Provides portable coverage even if he/she changes jobs Allows employer to provide easy access to Individual DI Offers discounted premiums May stabilize overall rates Employer Broker No medical exams or lab work required Claims experience for the supplemental DI will not impact Premiums are fixed the basic LTD rates Ease of payroll deduction Broker: Deepens client relationships and producers’ value by adding more product solutions Competitive Broker compensation First year commissions and renewals Vested Broker of Record for inforce business-client retention

Slide 11: Target Markets • White Collar Executives • Professional Corp (Law, CPA, Architect, Engineers) • High tech and telecommunication industry • Service industry • Financial industry • Transportation (white collar employees)

Slide 12: Turn-Key Enrollment Approach • Full Service Dedicated Enrollment Operation • No Cost to the Broker or Employer • HR Online Billing • Designated Implementation Case Manager • Personalized Enrollment Packages • Email Campaign Design • Webinar Utilization • After hours voice mail messages-Reminder • Disability Income Consultants • Online Enrollment

Slide 13: In Conclusion • The need for individual disability insurance exists for most executives and highly compensated employees who are in an employer paid LTD plan • Employers and employees need education on how to “fill” the gaps in their LTD coverage • Executives and highly compensated employees appreciate this benefit and participate at high levels

Slide 14: The Supplemental DI Marketplace Case Studies

Slide 15: Acme Accounting Firm • 27 Eligibles / 27 Participants • Traditional Buy Up – 60% total replacement, less LTD of 60%, to $10,000 – Both IDI and LTD tax free benefits – IDI covers total comp / LTD covers salary only – All 27 executives had variable compensation • How we got the case – MetLife LTD renewal premium increase of 75% / Able to reduce the renewal rate increase to 50% with the sale of the IDI • The numbers – $51,000 Annual Premium

Slide 16: Acme Law Firm • 10 Eligible Partners / 10 Participants • Traditional Buy Up – 60% total replacement less LTD of 60% to $5,000 – Both IDI and LTD tax free benefits • How we got the case – MetLife LTD in force – Non MetLife Broker – ER pushed for MetLife, wanted both with one carrier • Why it worked – Small LTD cap left large coverage gap with high partner incomes – Allows for streamlined claims process with one carrier • The numbers – $11,000 of Annual Premium

Slide 17: Acme Manufacturing Firm • 100 Eligible White-Collar EE’s / 35 Participants • Traditional Buy Up – 75% total replacement less LTD of 60% to $6,000 – IDI covers total comp / LTD covers salary only – All eligibles had variable compensation • How we got the case – MetLife able to offer competitive offer with options such as Catastrophic Disability coverage and a Long Term Care Guaranteed Purchase Option, without the use of a Pre-Existing Condition Limitation – One-stop customer service with the Account Manager assigned to the case, providing answers for all questions regarding billing, policy issue, administration, etc. • The numbers – $21,000 of Annual Premium

Slide 18: How to get started For more information contact your local Plus Group office To find a Plus Group office near you: Go to and click on the agency locator map or call 1(800)831-1018

Slide 19: MetLife and The Plus Group a winning combination


Don’t hesitate to contact your local Plus Group office for more information on how an affiliation will benefit your practice and your clients.