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Benefits Business Selling disability benefits Typically a hard sell to cost-conscious employers, a program offered by The Hartford boosts sales By Len Strazewski When employers open their doors to renewal presentations for their employee benefits, they usually are listening for ways to lower their cost—or at least limit the steady increases in health care premiums. Most aren’t prepared to discuss purchasing new employee benefits, even if they realize that loss of income from non-occupational disability is a big concern for both management and employees. It takes a well-prepared producer, armed with extensive product knowledge and a vision for the value of short- and long-term disability insurance, to market STD and LTD products these days, says Tony Bruns, an account executive with Southwest Business Corporation (SWBC) in San Antonio, Texas. SWBC is a full-service insurance agency and financial services firm that provides personal and commercial property/casualty insurance, employee benefits and mortgage brokerage, among other services. The company has about 700 employees and has been in business since 1977. Employee benefits has been his focus for about 10 years, Bruns says, and in that time he has seen the complexity of the business increase dramatically. Health care costs dominate employer concerns regarding their employee benefits program, even though most executives admit that the needs of their employees go far beyond managed care, deductibles and co-insurance clauses. “In the past two or three years, it has taken more and more effort to get employers to open up their pocketbooks to improve their benefits, and in most cases, disability benefits have been a difficult sell,” Bruns observes. “Every agent or broker has disability insurance in his spreadsheet—that presentation document that costs out coverage and delivers the bottom line to clients,” he says. “But if you are going to be successful in selling disability and other employee benefits beyond health care, you have to come with a lot more than your spreadsheet.” Learning locally Bruns is working on bumping up disability products to his number two target, right behind health care renewals—and says he finally has the information and resources to make the better pitches. He is one of 150 graduates of The Vault, a disability benefits education seminar provided by The Hartford Financial Services Group. The Hartford had traditionally provided the continuing education and product training program at its home office, but after delivering more than 5,000 hours in 2006 the insurer decided to take its disability program on the road in 2007. Bruns says producers can expect a comprehensive overview of STD and LTD products and policy terms plus the industry background that can help them create more effective presentations for their clients. The program is general in nature and is not restricted to Hartford products. Specifically, the program trains producers to:
Participants also earn continuing education credits for life and health insurance licensing in most states and can test for the National Underwriter’s Group Disability Benefits designation. The insurer has scheduled the three-and-a-half-day program in six cities this year: Avon, Connecticut; Philadelphia; Cincinnati; Chicago; Maitland, Florida; and Palm Springs, California. Steve McConnell, assistant vice president of producer partner programs at The Hartford, says the program is designed to be comprehensive, beginning with an assessment of market opportunities, proceeding through a detailed analysis of policies, terms and conditions available from a range of disability insurers, and continuing with an examination of risk management profiles of typical customer situations. The small employer market—fewer than 100 employees—is particularly ripe for producers, he notes, with nearly half of such employers not yet offering disability insurance. “It really is an eye-opener when you drill down into the disability products, the various policies and services and the case studies of how the benefits meet contemporary risk management needs,” Bruns says. Errick Engert, an employee benefits producer in the Dublin, Ohio, office of The Hylant Group, also attended the program. Hylant is a large insurance brokerage with nine Midwestern offices providing property/casualty insurance, employee benefits and risk management services. “The program was very enlight-ening and helped highlight the importance of having a good disability benefit program for your employees,” he says. “It was a terrific program for preparing you to discuss disability benefits with your clients.” Bruns agrees. “I left the program with an even higher degree of confidence in my ability to assist my clients and the motivation to help them solve a tremendous need that they should be concerned about,” he says. “Disability insurance has moved from being an afterthought to one of the foremost goals for my renewal presentations.” The producers also came away with new respect for the issues involved in disability insurance marketing. And they are manifold. Should you recommend employer-paid disability benefits? If employers are skittish about costs, should you advise voluntary, employee-paid benefits? Will your clients be receptive to STD to fill in a coverage gap between sick leave and LTD? One size doesn’t fit all One size doesn’t fit all when pitching new disability benefits. According to a recent study of disability buyer trends from Chattanooga, Tennessee-based Unum, the largest underwriter of disability benefits, purchases of STD and LTD benefits vary widely by industry. For example, among educational institutions—an industry expected to grow by about 14% over the coming seven years—more than two-thirds of STD and LTD benefits are employer-paid. But in engineering, architecture and related services, only about half of STD plans are employer-funded and a third are completely employee-paid. Other industry profiles reveal a general trend toward employee-paid benefits but higher limits of coverage: • In financial services, expected to grow about 30% by 2014, employer-paid LTD has been declining, and in the past three years the trend has been toward completely employee-paid disability benefits. More than half of the industry chooses monthly benefit maximums of $5,000 to $7,499 and 89% choose a 60% of salary plan design. • In health services and research, one of the fastest-growing industries in the United States, employer-paid benefits are also declining. In the past three years, employee-paid benefits have increased from 28% to 35%. However, more than 80% offer LTD plans with the 60% of salary terms, somewhat richer than other industries. • In information services, about two-thirds of employers have tended to pay all for LTD benefits, but in the past three years the percentage has dropped to 57%, most likely reflecting increased belt-tightening in an industry with slowing growth. • Legal service firms are notorious for paying little toward supplemental benefits, and most LTD plans are still completely employee-paid. However, Unum reports that the industry has become more receptive to higher STD limits and higher levels of executive benefits for critical illnesses. • In management consulting and marketing, about 49% of LTD plans are employer-paid and 40% are completely employee-paid. However, STD plans are on the rise, featuring higher maximums. The majority of the industry offers STD limits of $500 to $1,000 per week. • In manufacturing, where a strong union presence traditionally has mandated employer-paid benefits, employer funding is declining. Only about half of new plan purchases offer employer-paid benefits, down from about two-thirds of previously purchased plans. • In retail and wholesale industries, the two distribution and sales segments are completely divergent. Retail chain employers generally offer only employee-paid disability benefits, whereas more than half of wholesalers pay all or contribute to the cost of coverage. * The author For more information: |
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