Employer-Sponsored Multi-Life Plans (ESMPs)

Employer-Sponsored Employer-Sponsored Multi-Life Plans Multi-Life Plans

(ESMPs)(ESMPs)

Employer-Sponsored Employer-Sponsored Multi-Life Plans Multi-Life Plans

(ESMPs)(ESMPs)

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

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

Marketing Marketing OpportunityOpportunityMarketing Marketing

OpportunityOpportunity

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.

ESMP Marketing OpportunityESMP Marketing OpportunityESMP Marketing OpportunityESMP Marketing Opportunity

Source: US Census Bureau, 1998 Statistical Abstract of US.

0%

10%

20%

30%

40%

50%

5 - 9 10 - 24 25 - 99 100 - 999

Individual Only

Group Only

Both

Number of Employees

% o

f C

om

pan

ies

Pro

vid

ing

E

mp

loye

e D

isab

ilit

y C

ove

rag

e

ESMP Marketing OpportunityESMP Marketing OpportunityESMP Marketing OpportunityESMP Marketing Opportunity

Source: Response Analysis Corporation,1994

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 Group’s U.S. Worksite Study, 2002

Trends in Worksite SalesTrends in Worksite SalesTrends in Worksite SalesTrends in Worksite Sales

Why People Don’t Buy DIWhy People Don’t Buy DIWhy People Don’t Buy DIWhy People Don’t Buy DI

Agents/brokers don’t ask! – Sales are being left on the table.

Expensive

Financial documentation

Medical records

Too many choices for plan design

Objections to Selling DI Objections to Selling DI Objections to Selling DI Objections to Selling DI

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

Answering ObjectionsAnswering ObjectionsAnswering ObjectionsAnswering Objections

Selling ESMPs areSelling ESMPs are

a Win-Win-Win a Win-Win-Win

For EveryoneFor Everyone

Selling ESMPs areSelling ESMPs are

a Win-Win-Win a Win-Win-Win

For EveryoneFor Everyone

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

Insured WinsInsured WinsInsured WinsInsured 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

Employer WinsEmployer WinsEmployer WinsEmployer 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 $$$

Agent WinsAgent WinsAgent WinsAgent Wins

Plan SpecificsPlan SpecificsPlan SpecificsPlan Specifics

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

How Does The Product Work?How Does The Product Work?How Does The Product Work?How Does The Product Work?

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.

Plan DesignPlan DesignPlan DesignPlan Design

Minimum Participation

– Employer Paid — 100% required; minimum

of 15 participants

– Voluntary — 30% target; minimum of 20 participants


Employer-PaidEmployer-Paid VoluntaryVoluntary

Min. Size GroupMin. Size Group 15 participants 70 or more eligible participants*

Min. ParticipationMin. Participation 100% required 70+ eligible participants 30%

Occ ClassOcc Class 5AP-3AP3AP cannot be more than 15% of total lives

N/A to medical occupations

5AP-3AP3AP cannot be more than 15% of total lives

N/A to medical occupations

DiscountsDiscounts 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 GI Max Issue LimitsLimits

# 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

Employer-Paid and Voluntary Plan Specifications

*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.


Guaranteed Issue Maximum I&P 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.


100% Voluntary GIEmployer-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.

Discount StructureDiscount StructureDiscount StructureDiscount Structure

100%Employer-Paid Participation

15–49 50–99 100+

Voluntary GI Eligible Employees

70–149 150-299 300+

Noncan FYC

40% 35% 30%

GR(ages 61-64) FYC

30% 25% 20%

Renewal commissions are 10% in all years.

Note: Commissions for qualifying 20-69 life cases are the same as for 70-149 cases.

Commission and ScheduleCommission and ScheduleCommission and ScheduleCommission and 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

Bonus ScheduleBonus ScheduleBonus ScheduleBonus Schedule

How to Present How to Present A CaseA Case

How to Present How to Present A CaseA Case

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

ProspectingProspectingProspectingProspecting

Presenting a CasePresenting a CasePresenting a CasePresenting a Case

Employer offers 60% to $5,000 LTD benefit

Executive earns $120,000

Case ScenarioCase ScenarioCase ScenarioCase Scenario


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


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

Pre-approach LettersPre-approach LettersPre-approach LettersPre-approach Letters


*See ESMP Marketing Guide, UC 4362 for samples.

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

Approach PresentationApproach PresentationApproach PresentationApproach Presentation


Proposed for:

Supplemental Disability Income Protection Program

Proposed for:

ABC Company

Prepared By:

Agent Address City, State, Zip Phone, Fax Date


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.*

Proposal Request FormProposal Request FormProposal Request FormProposal Request Form


Proposed for:


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

ProposalProposalProposalProposal


Proposed for:

Supplemental Disability Income Protection Program

Proposed for:

ABC Company

Prepared By:

Agent Address City, State, Zip Phone, Fax Date


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

Marketing MaterialsMarketing MaterialsMarketing MaterialsMarketing Materials


Proposed for:

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

Short-Form AppShort-Form AppShort-Form AppShort-Form App


Proposed for:


Enrollment Enrollment ProcessProcess

Enrollment Enrollment ProcessProcess

To make your job easier in selling ESMPs, we’ve 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.

Beginning StepsBeginning StepsBeginning StepsBeginning Steps

Enrollment ProcessEnrollment ProcessEnrollment ProcessEnrollment Process

Proposed for:

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.

Timeline Timeline – Prior to Date – Prior to Date of Enrollmentof Enrollment

Timeline Timeline – Prior to Date – Prior to Date of Enrollmentof Enrollment


Proposed for:

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.

Timeline Timeline – Prior to Date of Enrollment (cont.)– Prior to Date of Enrollment (cont.)Timeline Timeline – Prior to Date of Enrollment (cont.)– Prior to Date of Enrollment (cont.)


Proposed for:

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)


Proposed for:


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.


Proposed for:


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.

Timeline Timeline – At Enrollment Site– At Enrollment SiteTimeline Timeline – At Enrollment Site– At Enrollment Site


Proposed for:

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.

Timeline Timeline – After Enrollment– After EnrollmentTimeline Timeline – After Enrollment– After Enrollment


Proposed for:

Keep each applicant informed of the progress on his/her case.

Send letter when case is approved. (UC4423)

Timeline Timeline – After Enrollment (cont.)– After Enrollment (cont.)Timeline Timeline – After Enrollment (cont.)– After Enrollment (cont.)


Proposed for:

Attempt to complete enrollment within two weeks.

Deliver all contracts.

Meet with employer to discuss ongoing administration.

Points to RememberPoints to RememberPoints to RememberPoints to Remember


Proposed for:

Congratulations. You are now Congratulations. You are now prepared with all you need to prepared with all you need to

sell an ESMP.sell an ESMP.

Documents

Employer-Sponsored Multi-Life Plans (ESMPs)