Employer-Sponsored Multi-Life Plans (ESMPs)

1
Employer-Sponsored Multi-Life Plans (ESMPs)

• What they are, how to sell them and how to enroll
  participants

2
Marketing Opportunity
3
ESMP Marketing Opportunity

• ? There are more than 6.6 million companies
  in the United States.
• More than 50 of those have less than four
  employees.
• 68 of all small businesses do not carry any
  DI coverage.

Source US Census Bureau, 1998 Statistical
Abstract of US.
4
ESMP Marketing Opportunity
of Companies Providing Employee Disability
Coverage
Number of Employees
Source Response Analysis Corporation,1994
5
Trends in Worksite Sales

• ? Worksite sales for 2002 totaled an
  estimated 4.03 billion, a 15 percent
  increase over sales for 2001.
• Companies are shifting away from
  employer-paid programs and moving toward
  voluntary, payroll deduction plans

Source Eastbridge Consulting Groups U.S.
Worksite Study, 2002
6
Why People Dont Buy DI

• ? Agents/brokers dont ask!
• Sales are being left on the table.

7
Objections to Selling DI

• ? Expensive
• ? Financial documentation
• ? Medical records
• ? Too many choices for plan design

8
Answering Objections

• ? Multi-Life Plans offer discounted premiums
• ? Guaranteed Issue program does not require
  financial documentation
• ? Guaranteed Issue does not require medical
  underwriting
• ? Plan design is done at group level

9
Selling ESMPs are a Win-Win-Win For Everyone
10
Insured Wins

• ? Guaranteed issue (larger qualifying groups)
• ? No detailed underwriting process
• ? Discounted premiums on unisex rates
• ? Rapid turnaround of application
• ? Higher income protection
• ? Can be employer paid

11
Employer Wins

• Create perks for key employees
• Deductible business expense
• ? List billing
• ? Reduce LTD costs
• ? Foster persistency and loyalty among key
  employees
• ? Allow employer to add an additional benefit
  without incurring additional cost

12
Agent Wins

• No detailed underwriting process streamlined
  underwriting
• ? Approach multiple insureds
• cross-selling opportunities
• ? Discounted premiums on unisex rates
• ? One plan design for all
• ? Multiple sales more commission

13
Plan Specifics
14
How Does The Product Work?

• ? Guaranteed standard issue to those meeting
  eligibility requirements
• ? Targeted at executive/professional
  occupational groups within single employer
  (generally 4A and above)
• ? Minimum 15 participating lives for 100
  employer-paid cases
• ? Plan design at group level
• ? Can be 100 employer-paid, partially
  employer-paid, or 100 employee-paid

15
Plan Design

• ? Generally with LTD
• Carve out
• Wrapped around group
• Reverse carve out
• ? Own-occ-to-65/not working (marketplace
  definition)
• ? Available riders
• Residual/partial
• SIS
• Inflation
• ADL
• ? No drug/alcohol limitation (no DAMN rider) on
  employer-paid cases.

16
Plan Design

• ? Minimum Participation
• Employer Paid 100 required minimum of
  15 participants
• Voluntary 30 target minimum of 20
  participants

17
Plan Design
Employer-Paid and Voluntary Plan Specifications
Employer-Paid Voluntary
Min. Size Group 15 participants 70 or more eligible participants
Min. Participation 100 required 70 eligible participants 30
Occ Class 5AP-3AP 3AP cannot be more than 15 of total lives N/A to medical occupations 5AP-3AP 3AP cannot be more than 15 of total lives N/A to medical occupations
Discounts Discounts range from 20 to 30 off unisex rates depending on the case size. Discounts range from 20 to 30 off unisex rates depending on the case size.
GI Max Issue Limits of Issue Part. Max. GI Amt. 15-99 100/life/month to max. of 6000 100 8000 of Eligible Max. GI Issue Participants Amount 70-149 3000 150-299 4000 300 5000
For cases with 15-69 eligible lives, the Home
Office will consider making an offer on a
Guaranteed Issue basis. Such an offer is
contingent on a minimum of 15 paid lives. If
fewer than 15 paid lives are written, full
underwriting will be required. Discounts and GI
maximum Issue Limits are the same as for cases of
70-149 eligible participants. The maximum
amount available can vary based on the
characteristics of the group.
18
Plan Design

• ? Guaranteed Issue Maximum IP Limits for
  Employer-Paid Cases
• ? Specific plan design and maximum Guaranteed
  Issue amounts depend on group characteristics
• - Industry - Turnover rate
• - Occupations - LTD experience
• - Financials - Age
• - Local economy
• ? Each case is different.

19
Discount Structure
100 Voluntary GI Employer-Paid
Eligible Participation Employees
Discount 15 49 70 149
20 50 99 150 299 25 100
300 30

Note Discounts for qualifying voluntary 20-69
life cases are the same as for 70-149 cases.
20
Commission and Schedule
Renewal commissions are 10 in all years.
Note Commissions for qualifying 20-69 life
cases are the same as for 70-149 cases.
21
Bonus Schedule

• ? Paid in years 2-10
• ? Up to 5
• ? Based on and applies only to GI premium
• ? Varies each renewal year as follows
• Inforce premium of 25,000-99,999 and
  persistency of at least 85 2 bonus
• Inforce premium of 100,000 and persistency of
  at least 85 5 bonus

22
How to Present A Case
23
Presenting a Case
Prospecting

• ? Few agents are talking about DI
• ? Make a list of prospects
• ? Look at your personal database, especially
  executives in firms
• - Without knowing it, many executives are
  being discriminated against with the Group
  Plans

24
Presenting a Case
Case Scenario
? Employer offers 60 to 5,000 LTD benefit ?
Executive earns 120,000
25
Presenting a Case
? Example Gross Monthly Income
10,000 Net Monthly Income
8,000 (Assuming 20 tax rate)
Gross Group LTD Monthly Benefit 5,000
Net Group LTD Monthly Benefit 4,000
(Assuming 20 tax rate) This represents 50
of the monthly take home pay. ? Multi-life helps
close the gap
26
Pre-approach Letters
Presenting a Case

• Send pre-approach letters to prospects and
  follow-up with a phone call.

• See ESMP Marketing Guide, UC 4362 for samples.

27
Approach Presentation
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Presenting a Case
 

• Use the approach presentation with an employer to
  explain how Supplemental Disability Income
  Protection works.

 

• See ESMP Marketing Guide, UC 4362 for samples.

 
Prepared by
 
 
Agent
Address 1
Address 2
City, State Zip
Phone, Fax     Date                   UC 617
(12/03)
 
28
Proposal Request Form
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Presenting a Case
 

• Use this as a fact-finder on the approach
  interview to gather information from your
  prospect and to request a proposal from the Home
  Office.

 

• See ESMP Marketing Guide, UC 4362 for samples.

 
Prepared by
 
 
Agent
Address 1
Address 2
City, State Zip
Phone, Fax     Date                   UC 617
(12/03)
 
29
Proposal
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Presenting a Case
 

• Use the proposal to present your solution.
• Proposal includes
• Sample offer letter
• Illustration showing the LTD benefit and eligible
  individual DI coverage
• Examples of Enrollment Kits

 
 

• See ESMP Marketing Guide, UC 4362 for samples.

Prepared by
 
 
Agent
Address 1
Address 2
City, State Zip
Phone, Fax     Date                   UC 617
(12/03)
 
30
Marketing Materials
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Presenting a Case
 

• Use this leave-behind brochure (UC 3135) with the
  employer along with the approach presentation and
  proposal.

 
 
Prepared by
 
 
Agent
Address 1
Address 2
City, State Zip
Phone, Fax     Date                   UC 617
(12/03)
 
31
Short-Form App
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Presenting a Case
 

• Cases approved for Guaranteed Issue use a
  short-form app (UC4348 state specific).

 

 
 

• See ESMP Marketing Guide, UC 4362 for samples.

 
 
32
Enrollment Process
33
Beginning Steps
         
 
 
 
 
 
 
Proposed for
Enrollment Process
 

• To make your job easier in selling ESMPs, weve
  captured the best practices of experienced
  producers in this market.
• Just follow the timeline and use the materials
  included in the ESMP Marketing Guide (UC4362)
  and before you know it, you will have completed
  and ESMP enrollment.

 
 
 
34
Timeline Prior to Date of Enrollment
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Enrollment Process
 

• Allow minimum of 30 days from the date the
  employer signs the offer letter and the date
  enrollment meetings are to begin.
• Inform the employer you will be holding one or
  more 30-minute group meetings and/or one-on-one
  individual meetings.

 
 
 
35
Timeline Prior to Date of Enrollment (cont.)
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Enrollment Process
 

• Forward to Kathy Hoff, at the Home Office, any
  updates to the census or any other information
  about any LTD plan or plan design so the pitch
  kits are accurate.
• Assemble team of enrollers and schedule any
  necessary training.
• Send first announcement letter (UC4419), on
  sponsoring company letterhead, two weeks before
  enrollment meetings.

 
 
 
36
Timeline Prior to Date of Enrollment (cont.)
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Enrollment Process
 

• Send second mailing, Q As (UC4420) about the
  program, one week before enrollment meetings.
• Once enrollment kits are received, prepare a file
  for each eligible participant with
• Pitch kit (UC4417 or UC4418)
• Pre-printed short-form application (UC4348 2
  state specific)
• Blank long-form application (UC2550 state
  specific)
• Designing An Income Protection Plan brochure
  (UC861)
• A case history sheet to take notes (UC4421)

 
 
 
37
Timeline Prior to Date of Enrollment (cont.)
         
 
 
 
 
 
 
Proposed for
Enrollment Process
 

• Meet with enrollment team one week before
  enrollment is to begin.
• Check with your contact at the sponsoring company
  that a private site has been arranged for your
  presentations.

 
 
 
38
Timeline At Enrollment Site
         
 
 
 
 
 
 
Proposed for
Enrollment Process
 

• Have company contact confirm each eligible
  employee will be attending his/her enrollment
  meeting.
• Make notes on the DI Case History Report (UC4421)
  immediately after each meeting.

 
 
 
39
Timeline After Enrollment
         
 
 
 
 
 
 
Proposed for
Enrollment Process
 

• Write a thank you note to each person who
  applies for coverage.
• Create a spreadsheet of all applicants to track
  underwriting program. (Use UC4422)
• Keep your company contact informed of progress.

 
 
 
40
Timeline After Enrollment (cont.)
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Enrollment Process
 

• ? Keep each applicant informed of the progress on
  his/her case.
• Send letter when case is approved. (UC4423)

 
 
 
41
Points to Remember
tal coverage.
         
 
Supplemental Disability Income Protection Plan
 
 
 
 
 
Proposed for
Enrollment Process
 

• Attempt to complete enrollment within two weeks.
• Deliver all contracts.
• Meet with employer to discuss ongoing
  administration.

 
 
 
42
Congratulations. You are now prepared with all
you need to sell an ESMP.