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September 28, 2009 at 08:00 PM
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.
