Long-Term Disability Riders Can Help Make The Sale

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Selling group long-term disability plans on price alone is tough–especially when virtually every LTD plan has the same basic features.

Its the special features that help differentiate a plan from competing proposals. And it is those unique additions, combined with a competitive price, which will help a producer make the sale.

Special features can take the form of product enhancements or options that limit benefits but help manage the cost of a plan.

Some insurers choose to add new features directly into their standard contracts. Others prefer to provide a basic offering, and then allow a policyholder to elect the features they find desirable.

The additions are usually handled in the form of a policy rider–a document that fully describes the features of the plan adjustments and becomes part of the policyholders contract.

LTD insurers use a number of variations to make their offerings more enticing to the market. Weve selected some of the most popular below.

Special Conditions Limitation Rider: In disability policies, it is common to find 12- or 24-month limits on benefit payments for disabilities caused by mental illness, alcoholism and drug abuse. But insurers trying to market unique plans offer a rider that limits other “special conditions” to the same 12- to 24-month time period.

Special conditions might include the mental illness, alcoholism and drug abuse conditions mentioned above as well as chronic fatigue syndrome, fibromyalgia, carpal tunnel syndrome and others.

The result? A lower premium for the employer, and adequate coverage for employees.

Supplemental Disability/Activities of Daily Living Rider: Insurers are borrowing concepts from the now overwhelmingly popular long term care policies.

Specifically, LTD carriers have begun adding definitions for disability that include references to “activities of daily living,” a benefit trigger common to most LTC contracts. Others are offering separate ADL benefits. (ADLs include such basic activities as bathing, dressing, mobility and eating.)

Two examples of this trend follow:

  • Change in Definition of Disability: This provides that once an insured is unable to perform his or her own occupation for a period of time–typically 24 months–he or she will continue to receive a disability benefit only if he or she has a loss of one or more ADLs.

This rider is typically marketed to blue-collar workers and provides a reasonable rate for good long-term disability coverage.

  • Additional Benefit: Here, if a claimant becomes disabled and is unable to perform one or more ADLs without stand-by help, has cognitive impairment or suffers from a terminal illness, the claimant will be eligible to receive an “additional benefit.” The additional benefit is based on a percentage of earnings, not to exceed a pre-determined dollar amount.

For example, the additional benefit could equal 10% of the claimants pre-disability earnings, not to exceed $3,000 per month. This type of rider appeals to white-collar workers, and offers increased security but not necessarily a lower premium.

Worksite Modification/Accommodation Rider: A disabled claimant may be able to remain at work or return to work if some adjustments are made to his worksite. The worksite modification rider reimburses the employer for a percentage of expenses incurred for accommodations that allow an employee currently receiving a disability benefit to remain at work or return to work.

The advantage: This helps employees get their lives back to normal, and employers can save on the costs of absence.

As you can see, riders can add distinction and differentiation to everyday LTD plans.

The truth is, riders can actually make or break a sale.

So, sell employers on these valuable features by homing in on the overall benefits and watch your close rate soar.

are senior compliance consultants with

Disability RMS, a Portland, Maine provider of disability reinsurance services owned by CORE Inc., Irvine, Calif. To e-mail them, write:

contactus@disabilityrms.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 2, 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.