In the group term life insurance market, sales often hinge on three things, says Blaise DiFedele, national sales coordinator at Reliance Standard Life Insurance Company, Philadelphia, Pa.
Its a “you die, we pay, whats it cost?” kind of transaction, he says.
Seeing that, Reliance decided to give its own group term product a competitive edge by adding a new “living benefit” to the contract.
This living benefit is a critical illness feature that pays a lump sum equal to 10% of the employees group term life coverage, up to $100,000.
To trigger the benefit, an employee must qualify for waiver of premium benefits as a result of total disability caused by one of five critical illnesses: cancer, heart attack, stroke, kidney failure, and major organ transplant.
The employee can use the money for any purpose.
The CI payout is an additional benefit, offered through the group policys waiver of premium provision, not a death benefit acceleration, DiFedele stresses.
Therefore, the life policys death benefit remains intact.
The insurer believes the CI benefit will differentiate its group life product from others in the market. A few other insurers do offer a CI benefit with their group life plans, DiFedele allows, but these typically accelerate the death benefit rather than pay a separate CI benefit.
And some insurers do offer stand-alone CI coverage to groups, he points out, but these tend to be voluntary plansi.e., the benefit is available only to employees who elect the coverage, not as an automatic benefit to all employees in the group plan.
DiFedele believes a significant factor, in the Reliance product, is that the company does not require policyholders to pay an extra charge for the CI benefit.
There is a load for the CI feature in the overall group pricing, he notes, but its impact is so insignificant that “it would be lost in the rounding” in competitive situations.
The insurer is offering the CI benefit automatically with all new group contracts written on 10 lives and up, DiFedele says. It will also offer existing accounts the right to elect the feature, at renewal time.
This marks Reliances entry into the CI market. The insurer is positioning it as a value-added feature.
That should help raise awareness about CI coverage in Reliances target market and also to gauge how employers and employees view the benefit, DiFedele says.
Other things being equal, he predicts, “the CI piece of our product might be the incentive the employer needs” to sign on with Reliance and to stay with the insurer.
“We do expect to see some CI claims,” he adds, but with this design, “we can spread the risk over all employees in the group.”
In terms of marketing appeal, the fact that the CI benefit helps offset illness-related financial burdens that arent covered by health or disability insurance should provide peace of mind to employees, he contends. “I think employees will be pleasantly surprised when they get the (CI) check.”
It should result in better productivity for the employer, too, DiFedele suggests.
Awareness about CI coverage is already growing, he says, giving the credit to voluntary CI carriers (now in the market).
For employers, the appeal is that CI fills a gap in insurance coverage, he says, and also enables them to “give something” to employees at a time when rising medical insurance costs are hurting budgets.
–The feature is approved in most states.
–The underwriting is true group.
–If the employer has a Reliance plan that allows departing employees to take their term life coverage with them, they can still do so and also keep the waiver of premium. They may not, however, port the CI benefit.
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 3, 2001. Copyright 2001 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.