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May 12, 2002 at 08:00 PM
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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.
