Marketing Key-Employee LTC Insurance Should Work In The Corporate Market
By Jeff Sadler
Back in the 1970s, singer-songwriter Harry Chapin wrote a song with the lyrics “All My Lifes A Circle.” This is never truer than it is in the insurance industry. What you learn at one time often comes back to help you in surprising ways in the future.
So it is with disability income insurance and long term care insurance in the corporate market.
Regarding DI, there has always been a good living to be made by helping employers establish and fund a sick pay plan for employees. Employers who do not do this funding risk adverse tax consequences should an enterprising Internal Revenue Service auditor wonder why the boss paid an employee who was listed as absent.
The employer certainly appreciates this help. More importantly, producers can show employers how to carve out key employees from the mix, extend them lengthy sick pay time and then fund the plan with an individual DI policy.
In such arrangements, key employees can be selected without discrimination concerns, if the design uses such plan criteria as years of service, job title or income, or any combination thereof. The plan can be written on a simple one-page document and communicated to the key employees without any IRS filing requirements.
Such approaches have been used for the past several years. Now, fast-forward to todays environment of post-HIPAA LTC insurance sales. HIPAA, as you will recall, refers to the Health Insurance Portability and Accountability Act, the 1996 federal law that opened the door to sale of tax-qualified LTC policies.