There is a common and often fatal mistake producers make when attempting to sell supplemental guaranteed standard issue (GSI) disability income insurance programs: They prematurely introduce voluntary GSI as a viable alternative when their employer-paid GSI proposal is met with resistance. In reality, the favorable case characteristics that support a strong underwriting offer for employer-paid GSI don’t necessarily translate to an equally strong underwriting offer for voluntary GSI.
A time-consuming death
In fact, I have been the architect on many employer-paid GSI cases where the producer prematurely goes in the direction of voluntary GSI and the case ultimately dies an awkward and time-consuming death. Although misguided, this reaction is understandable, as the producer is simply trying to rescue his or her case. With a little more research early on, however, these outcomes can be easily avoided.
In the example above, the genesis of the problem was likely the manner in which the producer introduced the concept of a supplemental disability plan. In his early conversations with the employer he set the wrong expectation. Inexperienced GSI producers often fail to perform a thorough evaluation of census data and other factors with the insurance company GSI team before setting expectations with the employer. The four critical characteristics of a good voluntary GSI case are:
1. Strong demographics. The essentials include favorable industry, ages, incomes, occupational risks, male/female ratio, other coverage details and locations.
2. Producer experience in successfully selling and implementing voluntary individual products.
3. Strong and proactive employer support to promote among eligible employees.
4. An experienced insurance company marketing support team.
The first characteristic, strong demographics, is usually well documented in the published GSI underwriting guidelines of carriers seeking GSI business. The other three characteristics generally get minimal attention until the producer is faced with a recalcitrant employer. This is clearly the wrong time for an education.
The determination of whether a voluntary GSI plan offer was successful is based upon achievement of its participation targets. Factors that impact participation success include:
? The value of guarantee issue DI. Consumers who’ve never experienced a detailed medical and financial underwriting process (and the resulting limitation or declination) often do not understand this. Voluntary GSI has to be sold one person at a time, just like regular DI.
? High wage earners rarely perceive a risk and are not internally motivated to protect their income, particularly if at their own expense.
? Women can be more difficult to “close” than men. That’s odd when you consider women experience disability more often than their male counterparts.
? Unless employees are approached multiple times and through different media, they will not appreciate the value of the plan before them. Contact is essential.
? The time and expense associated with effectively selling to employees in multiple locations is beyond the capacity of most producers and has become a highly specialized area of expertise.
? The presence of long-term DI, even when it provides grossly inadequate benefits, is an obstacle and must be properly addressed early on to assure success.
? Employer actions speak louder than words. An involved, proactive employer will make the right voluntary GSI case successful; a distant and uninvolved employer will break even the greatest voluntary GSI case opportunity.
? Aligning with a qualified team of GSI experts can make even a novice producer appear highly qualified to his client.
? Voluntary GSI offers are best introduced to employers with whom you enjoy a strong relationship.
In contrast to the challenges of voluntary GSI, a good employer-paid GSI plan is driven primarily by (1) a strong demographic and (4) an experienced marketing team. A lack of producer experience and/or a minimally involved employer are not necessarily detrimental to the outcome.
In fact, even producers with no experience in disability income insurance can be successful selling and placing employer-paid GSI. But they need to be able to rely on their insurance company’s marketing team for support and expertise throughout the sale process, from leading a conversation with the employer about plan design options to drafting the implementation plan.
Further, with employer-paid GSI plans, there is no ambiguity around the covered class of risk, who will participate, how much benefit will be issued, or individual reasons for participating. The risk is assessed on the basis of the employer making the buying decision for the covered class. The shift from employer decision-making to employee decision-making changes everything about the dynamic, success, and profitability of the case.
A different ball of wax
Disability income insurance has expanded its scope and, in doing so, has become more complicated for the producer. Selling and servicing GSI disability plans (even though the contract used is often the same) is very different from selling and servicing regular, fully underwritten individual disability contracts. And voluntary GSI is likewise very different from employer-paid GSI.
The producer who wants to effectively market employer-sponsored GSI disability plans should either partner with an insurer that specializes in GSI and is willing to educate and support their team or work with another advisor who specializes and has demonstrated experience in voluntary GSI.
Toni Sova, is a GSI national sales manager of Union Central Life, a Lakewood, Colo.-based UNIFI company. You can e-mail her at firstname.lastname@example.org.