Gain Worksite Entr?e By Introducing Executive-Level LTD

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Despite all the media attention to worksite benefits, it is still one of the most untapped insurance markets. I believe the reason is simple: Most producers do not understand what it is and what they can sell in this market.

I have focused on a worksite product that I have found to be highly profitable and that can lead to exceptional cross-selling opportunities: supplemental disability coverage as an executive benefit.

Supplemental executive LTD is a product that effectively answers the business owners question: “What can I do for my executives?” Providing supplement individual LTD to executives where a group LTD plan exists (or a stand-alone plan if there is no group plan) is a compelling answer.

To initiate this sale, the producer must first sit down with the business owner to discuss the importance of attracting and retaining top talent in the executive ranks. One way to hold the owners attention: Discuss the dollar costs, both direct and indirect, of high executive turnover.

To make this sale, you also need to educate the owner about the 2 disadvantages of group LTD plans: monthly caps and taxes. Then explain that the goal of supplemental LTD plans is to help executives keep their net income while disabled as close as possible to their net income while working. You then can discuss various ways the company can pay for this coverage (i.e., a Section 162 bonus, and the various tax effects of doing this for the company and executive).

Owners usually respond favorably to this idea because they see the value in helping protect the executives income and the ability to be selective about including whom they want in these plans.

I have found that most owners and executives know a fair amount about their businesss health and life insurance benefits but have little understanding of their disability coverage. This gives the producer an opportunity to educate them on how their group LTD plan works and identify the limitations of the plan for someone who is earning a high income.

This ultimately leads them to see the gap in their coverage and the value of the benefit the employer is providing. It also forces them to evaluate what their day-to-day living expenses are and what would happen to them and their families if they were to become disabled. I am always amazed at the number of people who cant answer my simple questions, “If you were sick or hurt and couldnt work, how you would pay your bills? Where would the money come from, and how long would it last?”

This education process allows you to make a personal connection with the executive. By the time you are done, you will be viewed as an advisor, not a salesperson.

You also can point out several advantages to buying supplemental LTD at the worksite rather than individually:

  • Discounted rates, which are portable.
  • Unisex instead of sex-specific rates.
  • Favorable underwriting concessions.
  • Streamlined underwriting and administration.

For larger companies (75 or more executives) its best to offer the convenience of a Web-based application method along with an interactive marketing needs analysis to assist in the decision-making and education process.

There are many benefits the producer derives from the worksite market.

For starters, it is all daytime activity. You will be talking to executive-level prospects in a business setting during business hours. I have found on-site meetings to be a very effective use of my time that allow me to see the type of prospect that is ideal in my target market.

Another advantage: By having all your meetings at the company location, you constantly are being seen meeting with various executives. I find this exposure usually gives me a kind of status as an executive advisor. Because I have a reputation as someone who can provide sound financial counsel, I often find people approaching me when I am visiting their worksite, to set up a meeting.

Without a doubt, the major advantage to executive LTD is the cross-selling opportunities, both within the company and to the executive personally. By leading with supplemental disability, the producer will find that it will open the door to other corporate opportunities such as deferred compensation, key person coverage, buy-sell funding, group health, long term care and pension plans.

Once I have implemented LTD, I typically have been able to place 2 other types of coverage or plans within the same company. The cross-selling ratio is even better with company executives.

Once youve succeeded at introducing supplemental LTD at the executive level, you have established a fairly strong relationship, gathered an understanding of the executives personal situation and can redirect the focus easily to other areas of insurance coverage or take a comprehensive look at their financial plan. This usually results in the sale of a fee-based plan. I find that it allows me to play in the league that I want to be in every day.

Worksite sales offer producers a great opportunity if they are willing to take the time to explore the market. You owe it to yourself and your practice to do it.

is senior partner of Capital Financial Partners, a MassMutual agency in Vienna, Va. His e-mail is gjradican@finsvcs.com.


Reproduced from National Underwriter Edition, September 23, 2004. Copyright 2004 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.