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February 23, 2005 at 07:00 PM
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New products are coming out that should help brokers mine new disability markets.
Consider: Group long-term disability protection historically has been viewed as an employer-paid product for more highly paid professionals or what may be viewed as low-risk industries.
Workers in perceived higher-risk industries and professions have not been widely targeted for LTD for various reasons but fundamentally because traditional products may not adequately address this segments unique demands from a cost or design standpoint. In an attempt to contain costs and risk, those traditional products include longer qualifying periods, shorter benefit durations, lower benefit amounts or more restrictive limitations on pre-existing conditions. That formula may help with cost and risk, but it also can make the product less attractive and therefore a tougher sell.
This underserved market began to get some attention from carriers as voluntary plans started becoming more popular. While many employers were interested in making LTD coverage available, they just didnt feel they could take on the expense. So, attempting to make a bigger pie, carriers started offering voluntary LTD plans. Often, however, they tried to control costs and selection in pretty much the same way they always had.
Innovative carriers have taken an alternative approach to selling voluntary LTD to this segment by developing products that control costs through definition of disability. By limiting qualifying claims only to those with the most serious disabling conditions, such products can offer benefits comparable to traditional coverage with fewer limitations and no health questions. Thats a very attractive combination and the new opportunity: affordable rates and generous long-term benefits through age 65.
Some employers are very reluctant to shift costs for disability or other ancillary benefits to employees. For these employers, it is vital to work with a carrier that can provide options to customize a true group plan to make it affordable. For example, an important selling point is that a disability benefit can be offered according to eligibility class. Many employersespecially in the small and medium categoriesmay be surprised to learn that employees can be offered different levels of benefits according to factors such as management status, income or tenure. The cost savings of such a package can be a real eye-opener for small-but-growing employers.
