1. Supplemental disability insurance seen as linchpin for
highly compensated employees’ financial protection
T
here has never been a more
critical time to raise the bar
on income protection, par-
ticularly for professionals
and highly compensated employees.
Why? Most group long-term disability
(LTD)planstypicallyreplacejust60%of
basesalary,uptoamaximummonthly
amount,beforetaxes.Leftoffthetableis
incentive compensation, bonuses and
retirement plan contributions – all of
which can add up to a substantial sum
of money. In effect, the result is under-
insurance and reverse discrimination
for people whose income exceeds
$75,000 to $100,000.
Onereasonforthissenseofurgency
isthattheU.S.economyhasbeenstuck
in neutral for the past several years, fu-
elingunemployment,benefitcutbacks,
stress and health care costs. Housing
and most personal financial invest-
ments have still not recovered, and in
many cases, are still on the decline. As
true today as ever: the most valuable
asset an individual has is their ability
to earn an income.
The risks are real
Another factor employees need
to consider is that in order to remain
productive, they also have to remain
healthy. Unfortunately, employees are
morevulnerabletoinjuriesandillnesses
thatcausethemtomissworkthanthey
maythink.Commonafflictionsinclude
neck and back pain, as well as a host
of disorders involving joints, tendons,
feet, ankles and hands, not to mention
cancer,cardiovasculardiseases,stroke
and behavioral health conditions.1
“Just over one in four of today’s 20
year-olds will become disabled before
they retire2,” says Ray Marra, Guard-
ian’svicepresidentforgroupinsurance
products. “It is a very staggering num-
ber. Many of us think we’re invincible.
What’smore,mostdisabilitiessuffered
are not work-related, particularly in
the case of white-collar employees, so
workers’ compensation can’t help.”
The majority of working Ameri-
cans (82%) worry about paying living
expenses if they become disabled3 – a
perfectly understandable fear, since
an employee’s entire financial plan
can unravel without adequate income
protection. Those who are living from
onepaychecktothenextare,ofcourse,
mostatrisk.However,evenmanyfinan-
cially secure individuals do not have
enoughincomeorsavingstowithstand
more than six months of being away
from work, explains Marra.
Supplemental coverage
helps fill the gap
There’s a promising solution that
not only offers comprehensive, flex-
ible and affordable coverage, but also
represents lucrative commissions
for brokers and advisers – as well as
a means of distinguishing their ser-
vicesinahighlycompetitiveemployee
benefits marketplace.
DI@Work, a supplemental income
protection program offered by Berk-
shireLife,cansupplementagroupLTD
policy and cover retirement plan con-
tributions, or be sold as a stand-alone
disability insurance program.
“Onekeyfeatureisguaranteedstan-
dardissue(GSI)coverageavailableata
discountwithnomedicalunderwriting
– employees need only answer a few
simple questions,” says Kyle Mercer,
national sales director for Berkshire
Life Insurance Company of America,
awholly-ownedstocksubsidiaryofthe
Guardian Life Insurance Company of
Americathatissuesindividualdisability
incomeinsurancetoemployeegroups.
Policies are individually owned and
fully portable. To help bolster partici-
pation and plan understanding, DI@
Work is supported by state-of-the-art
enrollment services including educa-
tional tools that enable employees to
calculate appropriate coverage.
Employees have the flexibility to
customize their supplemental dis-
ability coverage based on their needs
and whatever they can afford, which
is unique to the marketplace. “We ac-
tually can offer three levels of benefits

2. ©2011 SourceMedia Inc. and Employee Benefit Adviser. All rights reserved. SourceMedia, One State Street Plaza, New York, N.Y. 10004 (800) 367-3989
to a given individual on the initial
enrollment,” Mercer explains. “For
example,wetakealow,mediumand
high GSI options with $2,000, $5,000
and $10,000 coverage.”
Another distinguishing charac-
teristic is that policyholders can
increase their benefits coverage on
an annual re-enrollment up to the
$10,000 maximum of whatever they
qualify for with no questions about
their medical history. Those who are
offered the benefit on a voluntary
basisanddecidenottotakecoverage
the first year, for whatever reason,
have the option of two additional
annual re-enrollments.
Courting professionals
The target market for DI@Work
is professional groups in the legal,
medical, accounting, architectural
and engineering fields, the high-
tech sector, biotechnology firms and
pharmaceutical companies. Others
include executive and managerial
personnelwhoworkinamanufacturing
or service-industry setting. With
about 70% of DI@Work policies sold
on an employer-paid basis, Mercer
believes they’re being used largely
as a recruitment and retention tool
for senior management.
This all bodes well for producers.
Mercer says there’s a higher com-
pensation schedule for multi-life
insurance and individual-platform
products than a typical group only
plan, which features more of a level-
graded schedule based on premium
size. “In the face of the uncertainty
around how health care reform will
impact benefits program dynamics
and brokers’ roles, a supplemental
disability insurance plan can be a
valuable addition to a producer’s
tool box and a lucrative source of
compensation.”
The Guardian Life Insurance Company of America
7 Hanover Square
H-26-E
New York, NY 10004
212/598-8000
www.guardianlife.com