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June 10, 2004 at 08:00 PM
Disability Buy-Up: Completing The Coverage For Executives
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If you’re looking for creative executive benefits to offer business owner and employer clients, unique opportunities can be found in an emerging area known as individual disability income insurance buy-up, or simply disability buy-up.
The term is commonly used when selling individual disability insurance with group long-term disability (LTD). While LTD is offered to all eligible employees, executives can be carved out for additional coverage. Disability buy-up provides increased coverage for executives, business owners and other highly compensated and highly valued employees.
In addition, the benefit allows for more flexibility in disability benefit plan designs and increased benefit cost effectiveness. While plan designs and carrier offerings may vary, disability buy-up is an increasingly popular component of comprehensive disability solutions geared toward executives.
What’s In It for You
By selling to a group of employees, with the employer’s facilitation, you are selling multiple policies and greatly increasing your commissions on each case.
But it’s not all about premiums and compensation. You also are expanding your contacts within your clients’ organizations.
By meeting and building relationships with your clients’ senior management teams, you are not only reaching the key decision-makers, you are also creating new avenues for cross-selling other executive benefit options.
According to MetLife research, executive disability had premiums of $1.3 billion in force in 2000, with only 20% of employers offering this type of coverage. The remaining 80% represents an incredible opportunity for deeper business market penetration.
How do you start? Begin by prospecting among your existing LTD clients. These clients already understand the value of offering disability benefits to their employees.
Value for Clients
The 2003 MetLife Employee Benefits Trends Study shows that employers’ top 3 benefits objectives last year were controlling costs, retaining employees and increasing job satisfaction. These same findings suggest that employees who are highly satisfied with company benefits are at least 3 times more likely to say they are highly satisfied with their job and that they feel a strong loyalty to their employer.
Disability buy-up lets employers and business owners cost effectively offer their executives more value in a disability plan, helping to attract and retain key personnel. Additional value for clients include:
Greater flexibility when developing a disability plan for employees;
The ability to offer increased disability coverage voluntarily as an employer-paid or employee-paid benefit enhancement;
Increased rate stability over the long term for the group program, since the individual disability component is generally fixed and the aging of the executive group will not raise individual disability rates;
