A seamless transfer of group life insurance from one carrier to another can be a beautiful thing. The customer is happy. Employees are happy. And the broker and carrier are happy (because they have a book of business thats more likely to stay put).
In short, everyone gets the coverage they expect, and there are no surprises.
On the other hand, when a transfer is not done well, chaos can ensue. Employees out on disability sometimes fall into a “black hole” of no coverage. Retirees who thought they could get continued life coverage are dropped unexpectedly. An employees widow might call to claim benefits promised to her husband, only to learn the agreement wasnt included in the transfer.
If you want to ensure that chaos does not reign on your transfer, add the following key ingredients.
Full and complete census. It may sound basic, but the first step to successful transfer is to obtain a full census. This means including employees dates of birth, sex, salaries, and current amounts of insurance split out between basic and optional coverage.
Whenever possible, include employee classifications if they affect benefit amounts. If dependent life insurance is part of the package, show the dependent information, too.
If such key information is omitted, your proposal may suffer. For instance, if something as basic as employees date of birth is not included, the premium may end up being higher than necessary. In the case of a high tech firm, the insurer might assign an average age of 45, but if the actual younger ages were provided, the proposal could be much more competitive.
Current plan details. One of the most valuable tools for the new provider is the current carrier booklet. This contains details on the current plan design–plan maximums, guaranteed issue limits, waiver of premium benefit, portability, actively at work rules, any special benefits offered, age reduction rules, etc.
Details on these features are vital to a sound transfer. For example, if a waiver of premium benefit isnt considered, then does everyone know what to do at cancellation? Do they know what happens to coverage if an employee becomes disabled? Not elaborating on these details can create havoc down the road.
Providing the current plan booklet ensures that the same guarantees and benefits, if requested, continue with the new plan.
Information on the proposed plan design and how it differs from the current one is essential, as well.
Similarly, supply the case experience. On cases of over 1,000 lives, for instance, its especially important to provide the premium and claims for the last three years. This along with rate history (renewal rates, effective dates of change, etc.) provides your insurer with the ammunition it needs to present a competitive package.
Special agreements. Unfortunately, its all too common to leave special agreements out during the quote process. These agreements might include special severance agreements, retiree agreements, an extension of coverage to “special” employees not typically covered, or coverage for employees who come to the company as part of a merger, acquisition or buyout.
Since these special agreements represent added risk to the carrier, they need to be considered as part of the proposal. Otherwise, when that senior executive leaves the company and asks for the continued coverage he was promised, the broker or employer will be left trying to negotiate with the provider for unplanned coverage.
Checklist. Using a checklist is one of the easiest ways to assure that all employees continue to receive adequate coverage after the transfer.
The checklist can cover all of the possible areas in which an employer could lose an employee down the “black hole” of no coverage. In addition, it helps the provider obtain the necessary specifications to assess the risk accurately. (See sample.)
In sum, to ward off chaos, take the time to include these key ingredients during transition from one group life plan to another. They not only allow the provider to offer a more competitive rate, but they also ensure the seamless transfer that everyone deserves.
is assistant vice president-group life products at Sun Life Financial in Wellesley Hills, Mass.Her e-mail: firstname.lastname@example.org.
Reproduced from National Underwriter Life & Health/Financial Services Edition, May 13, 2002. Copyright 2002 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.