To Excel With Worksite DI Products, Understand Differences Between Them
It is easy to fall into the trap of thinking that disability insurance is all the same. But when it comes to worksite products, that kind of thinking can influence how insurers view your business and can cause unstable premiums for your clients.
By understanding the differences between worksite disability products, you can help your clients get the right products and have insurers aggressively seeking your business.
In general, those worksite disability products that use group enrollment meetings and take a true group approach to underwriting achieve an average 35% participation rate. Thats not bad. But the worksite disability products that use one-on-one enrollments and underwriting typically do even betterthey generate an average participation rate of about 45%.
It is the second category of worksite disability that is the topic here. The question is: How do you reach the target participation rate of 45% (or more)? Its simple: Be sure your client offers an appealing contract to all employees of the group.
How do you do that? Look for a contract that features a 100% all-source benefit that allows the employee to receive up to 100% of pre-disability income from all sources (Social Security, workers compensation, etc.) before offsets begin. This feature encourages employee enrollment.
But how do premiums remain affordable when the claimant is receiving up to 100% income replacement, you ask. In reality, offsets are rare, since most worksite disability products sold offer non-occupational coverage and a benefit of less than 12 months. Social Security does not usually kick in until after five months, limiting possible offsets. Furthermore, non-occupational benefits do not pay work-related claims, eliminating even more offsets.
Thus, the 100% all-source benefit does not create a strong liability to the insurer. As a result, the insurer will not add a huge pricing load because it does not have a high degree of concern that the 100% benefit will deteriorate the risk.
The result? High participation and stable premiums.
Other affordable provisions that influence high participation include portability, survivor benefits and waiver of premium.