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Group Term Life Insurance AD


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Group Term Life Insurance AD

  1. 1. Group Term Life Insurance AD&D Disability Income Insurance Dental Insurance Voluntary Disability, Life and Dental Presented by: Todd Boyd, MBA – Atlanta Sales Manager Venessa Collins- Dental Network Manager Assurant Employee Benefits May 24, 2006 GAHU Group Insurance 101
  2. 2. The information provided in this presentation are examples of options available in the industry. Plan designs and options vary by carrier.
  4. 4. Schedules <ul><li>Times earnings plan 1x or 2x earnings most common </li></ul><ul><li>Flat Amount plan $10,000, $25,000, $50,000 most common </li></ul><ul><li>Maximums range from $150,000 - $ 500,000 </li></ul><ul><li>Can vary by classes of employee within groups, e.g. Officers and Managers receive 2x earnings to a max of $ 200,000, and all other employees receive a flat $25,000. </li></ul>
  5. 5. <ul><li>Non-Contributory Groups </li></ul><ul><li>Contributory Groups </li></ul><ul><li>GI amounts may vary for employees older than age 70 </li></ul>Non-medical maximum limits
  6. 6. Participation Requirements <ul><li>Contributory (Partially Employee Paid) Coverages </li></ul><ul><ul><li>Usually 75% or higher - many states require at least 75% </li></ul></ul><ul><li>Non-contributory (Employer Paid) Coverages </li></ul><ul><ul><li>100% participation required </li></ul></ul>
  7. 7. Beneficiaries <ul><li>Employee can name anyone as a beneficiary, other than the employer </li></ul><ul><li>If a beneficiary is not designated by employee, proceeds may be payable at the insurer’s option to surviving relatives, or to the executor or administrator of the deceased’s estate. </li></ul>
  8. 8. Limitations and Exclusions <ul><li>Life Policies and AD & D policies may have separate sets of limitations and exclusions </li></ul><ul><li>Common items not payable: </li></ul><ul><ul><li>Suicide - for contributory plans </li></ul></ul><ul><ul><li>War </li></ul></ul><ul><ul><li>Commission of a felony </li></ul></ul><ul><ul><li>Death resulting from intoxication or unprescribed drug use </li></ul></ul>
  9. 9. Waiver of Premium <ul><li>Many carriers will waive the premium for the group term life insurance if an insured is disabled from any gainful occupation - some offer an own occupation definition as well </li></ul><ul><li>Duration of disability waiver can vary, from 1 or 3 years, to age 65. </li></ul><ul><li>Can also be integrated with LTD coverage - waiver automatically approved if approved for LTD benefits (with same carrier) </li></ul>
  10. 10. <ul><li>Provides an additional benefit if the death results from an injury within a particular time frame - usually 180 days to 1 year. </li></ul><ul><li>Benefit is normally the same as the life insurance benefit - allowing for a double payment if the death occurs from an injury </li></ul>Accidental Death & Dismemberment
  11. 11. <ul><li>Automobile Accident rider (Seat Belt required) </li></ul><ul><li>Higher Education benefit </li></ul><ul><li>Repatriation </li></ul><ul><li>Travel Assistance </li></ul>AD & D Additional Benefits
  12. 12. <ul><li>Supplemental Life (Optional Life) </li></ul><ul><ul><li>Employee is able to purchase amount over and above coverage provided by employer </li></ul></ul><ul><li>Stand Alone Voluntary Coverage </li></ul><ul><ul><li>Optional coverage purchased by employee </li></ul></ul><ul><ul><li>Employer provides opportunity to purchase and plan administration </li></ul></ul>Employee Paid Plan Options
  13. 13. Additional Options <ul><li>Survivor Financial Counseling </li></ul><ul><li>Accelerated Death Benefit </li></ul><ul><li>Conversion </li></ul><ul><li>Interest bearing account for benefit proceeds </li></ul><ul><li>Waiver of premium on AD & D </li></ul>
  15. 15. <ul><li>A 30-year-old female has a 56.6% chance of becoming disabled before age 65 compared to only a 16.2% chance of dying. </li></ul>Probability of Disability Guardian Life Study, quoted in Disability Income Insurance, Conning and Company Report, 2002
  16. 16. <ul><li>1 in 7 people will become disabled for five years or more before they reach age 65 1 </li></ul><ul><li>1 in 88 people will use homeowners insurance 1 </li></ul><ul><li>1 in 47 people will use auto insurance 1 </li></ul><ul><li>18.7% of the working-age population (age 18-64) report a disability 2 </li></ul>Probability of Disability 1 Disability Management Source Book, 1999 2 2000 Bureau of Labor Statistics
  17. 17. Definitions of Disability <ul><li>“OR” Dual Definition </li></ul><ul><ul><li>Occupation Test </li></ul></ul><ul><ul><li>Earnings Test </li></ul></ul><ul><li>“AND/Maximum Capacity” Definition </li></ul>
  18. 18. Definitions of Disability (cont.) <ul><li>Occupation Test </li></ul><ul><ul><li>Material Duties </li></ul></ul><ul><ul><li>Own Occupation </li></ul></ul><ul><ul><li>Any Gainful Occupation </li></ul></ul><ul><ul><li>Regular Job Definition </li></ul></ul><ul><li>Earnings Test </li></ul><ul><ul><li>Flat amount, i.e. 7.5% </li></ul></ul><ul><ul><li>Lesser of flat amount or CPI-W (10% or 3%) </li></ul></ul>
  19. 19. Waiting Period <ul><li>Time period claimant must be disabled before they are eligible to receive benefits </li></ul><ul><li>Other names are: elimination period, qualifying period </li></ul><ul><li>Common waiting periods are: </li></ul><ul><ul><li>1 month </li></ul></ul><ul><ul><li>90 days </li></ul></ul><ul><ul><li>180 days </li></ul></ul>
  20. 20. Benefit Schedules <ul><li>Benefit Rates (% of pre-disability earnings) </li></ul><ul><ul><li>50% </li></ul></ul><ul><ul><li>60% (most common) </li></ul></ul><ul><ul><li>66 2/3% </li></ul></ul><ul><ul><li>70% (very rare) </li></ul></ul><ul><li>Benefit Maximums </li></ul><ul><ul><li>$ 6,000 </li></ul></ul><ul><ul><li>$ 5,000 </li></ul></ul><ul><ul><li>$ 10,000 </li></ul></ul>
  21. 21. Maximum Benefit Duration <ul><li>To SSNRA (Social Security Normal Retirement Age) </li></ul><ul><li>To Age 65 </li></ul><ul><li>5 year </li></ul><ul><li>2 year </li></ul>
  22. 22. Pre-Existing Condition Limitation <ul><li>3/12 or 6/24 </li></ul><ul><li>“prudent person” language </li></ul><ul><li>treatment-free period - 3/3/12 or 6/6/24 </li></ul>
  23. 23. Indexing of Earnings Test <ul><li>7.5% </li></ul><ul><li>Lesser of 10% or CPI-W </li></ul><ul><li>Lesser of 3% or CPI-W </li></ul><ul><li>No Indexing </li></ul>
  24. 24. Return-to-Work Earnings <ul><li>100% return-to-work offset (usually for 12 months) </li></ul><ul><li>Indexed benefit - adjusted loss of salary ratio calculation </li></ul><ul><li>50% direct offset </li></ul><ul><li>70% indirect or All Sources offset </li></ul>
  25. 25. Offset with Social Security <ul><li>Full Family Direct </li></ul><ul><li>Full Family Monthly Payment Limit </li></ul><ul><li>Primary Direct Only </li></ul><ul><li>Primary + 1/2 Dependent </li></ul>
  26. 26. Value Options <ul><li>Cost of living adjustment </li></ul><ul><li>Activities of daily living benefit </li></ul><ul><li>Retirement savings benefit or pension supplement </li></ul><ul><li>Medical premium payment supplement </li></ul><ul><li>Critical illness </li></ul><ul><li>Employee Assistance Program </li></ul>
  27. 27. Cost Containment Features <ul><li>Managed rehabilitation program </li></ul><ul><li>Limitations for certain diagnoses, ex. certain mental impairments, conditions with extremely subjective symptoms, etc. </li></ul>
  29. 29. Why offer Short Term Disability? <ul><li>Provide income for employees suffering short duration illnesses or injuries to recover and return to work with the policyholder </li></ul><ul><li>Can increase employee satisfaction </li></ul><ul><li>Assist in retaining valuable employees </li></ul>
  30. 30. <ul><li>Salary continuation (sick leave) plans </li></ul><ul><li>Self insured with advice to pay services </li></ul><ul><li>Fully insured </li></ul><ul><li>Non-occupational only, or integrated with worker’s comp </li></ul>Types of STD Plans
  31. 31. Benefit Schedules <ul><li>Benefit rates </li></ul><ul><ul><li>50% </li></ul></ul><ul><ul><li>60% </li></ul></ul><ul><ul><li>66 2/3% </li></ul></ul><ul><li>Benefit maximums (weekly) </li></ul><ul><ul><li>$ 500 </li></ul></ul><ul><ul><li>$ 1000 </li></ul></ul><ul><ul><li>$ 1352 (similar to $ 6000 LTD monthly max) </li></ul></ul>
  32. 32. Waiting Periods and Benefit Durations <ul><li>Waiting periods </li></ul><ul><ul><li>1 day accident/7 day sickness </li></ul></ul><ul><ul><li>1 d hospital, 7 d accident, 15 d sickness </li></ul></ul><ul><ul><li>30 day accident/sickness </li></ul></ul><ul><li>Benefit durations </li></ul><ul><ul><li>13 weeks </li></ul></ul><ul><ul><li>26 weeks </li></ul></ul><ul><ul><li>Usually matches LTD waiting period if group has both coverages </li></ul></ul>
  33. 33. Group Dental Insurance GAHU Group Insurance 101
  34. 34. Working Americans are absent some 32 million days every year and children miss an estimated 52 million hours of school annually due to dental emergencies. Source: American Dental Association The Problem
  35. 35. Did you know... <ul><li>One of out every two people in the United States has some form of periodontal (gum) disease? 1 </li></ul><ul><li>Growing evidence indicates that the presence of gum disease can be linked to coronary heart disease and strokes? 2 </li></ul><ul><li>Oral cancer now accounts for 3% of all cancer deaths in the US - a number which exceeds that of melanoma and cervical cancer </li></ul><ul><li>70.1 Billion dollars spent on dental services in 2002 (31.0B on Stroke and 61.2B Coronary Heart Disease) </li></ul>Source: 1 Web MD Health 2 Mouth Body Connection, 2001 3 American Heart Association. Heart Disease and Stroke Statistics—2003 Update. Dallas, Tex.: American Heart Association; 2002.
  36. 36. Employees Want Dental Coverage !
  37. 37. Common Procedures,Plan Designs, and Options
  38. 38. Deductibles, Maximums <ul><li>Deductible </li></ul><ul><ul><li>$0, $25, $50, $75 </li></ul></ul><ul><ul><li>Per Individual or Family max of 3 X $150 </li></ul></ul><ul><ul><li>Applies to all Type II and III Procedures </li></ul></ul><ul><ul><li>May Waive or Combined on Type I Procedures </li></ul></ul><ul><li>Annual Maximums </li></ul><ul><ul><li>$750, $1000, $1500, $2000 </li></ul></ul><ul><ul><li>Some states may vary between in and out of network </li></ul></ul><ul><ul><li>Ortho is usually a lifetime max </li></ul></ul>
  39. 39. Most Common Preventive Services 100% Coinsurance Level <ul><li>100% Coverage encourages good dental health </li></ul><ul><li>Oral Examinations </li></ul><ul><ul><li>Complete intraoral x-rays/Panoramic film </li></ul></ul><ul><ul><li>4 Bitewing x-rays </li></ul></ul><ul><ul><li>Routine Cleanings </li></ul></ul><ul><ul><li>Fluoride Treatment </li></ul></ul><ul><ul><li>Sealants </li></ul></ul>
  40. 40. Most Common Basic Services 80% Coinsurance Level <ul><li>Returns tooth to natural function </li></ul><ul><ul><li>Emergency oral exam </li></ul></ul><ul><ul><li>Intraoral Periapical x-rays </li></ul></ul><ul><ul><li>Amalgam and composite restorations </li></ul></ul><ul><ul><li>Periodontal including Periodontal maintenance </li></ul></ul><ul><ul><li>Endodontics </li></ul></ul><ul><ul><li>Simple Extractions </li></ul></ul><ul><ul><li>Oral Surgery </li></ul></ul>
  41. 41. Most Common Major Services 50% Coinsurance Level <ul><li>High Dollar Lower Utilized Procedures </li></ul><ul><ul><li>Crowns, Inlays and Onlays </li></ul></ul><ul><ul><li>Full and partial dentures </li></ul></ul><ul><ul><li>Fixed bridges </li></ul></ul><ul><ul><li>Denture adjustments </li></ul></ul><ul><ul><li>Non-surgical TMJ </li></ul></ul><ul><ul><li>Stainless steel crowns </li></ul></ul><ul><ul><li>General anesthesia and IV sedation </li></ul></ul><ul><ul><li>Space maintainers </li></ul></ul>
  42. 42. Dental Plan Differentiators <ul><li>Non Surgical TMJ </li></ul><ul><ul><li>More than 15% of all Americans Suffer from chronic facial pain-ADA </li></ul></ul><ul><li>Implants </li></ul><ul><ul><li>Placements of Implants increased 49% in a 5 year period from 1995 to 2000-ADA </li></ul></ul><ul><li>Plan Stability </li></ul><ul><ul><li>Stable Dental plans should avg.. trend or less increases (especially Voluntary) </li></ul></ul>
  43. 43. <ul><li>Endo/Perio/Oral Surgery must be in basic! </li></ul><ul><ul><li>90% of all dental procedures rendered fall in Preventive or Basic Services. 1 </li></ul></ul><ul><ul><li>About 4% of submitted claims are Endo, Perio, Oral Surgery </li></ul></ul><ul><li>$1000 dollar maximum is not enough </li></ul><ul><ul><li>5.8% of Employees met their maximum of $1000 in 2003 1 </li></ul></ul><ul><ul><li>3.2% employees met their maximum of $1500 1 </li></ul></ul><ul><ul><li>Increasing the Max increases the rate 3 to 7 % </li></ul></ul>Dental Plan Myths
  44. 44. What’s in a PPO? <ul><li>National network </li></ul><ul><li>Discounts on non-covered services </li></ul><ul><li>Freedom to choose any provider </li></ul><ul><li>At least 25% overall claims savings </li></ul><ul><li>Can you Identify Active, Passive, and MAC Plans? </li></ul><ul><li>No Charge Services </li></ul>
  45. 45. What is Prepaid Dental All About? <ul><li>No waiting periods </li></ul><ul><li>No deductibles for routine services </li></ul><ul><li>No referral required </li></ul><ul><li>Each family member may choose a different plan dentist </li></ul><ul><li>No claims to file </li></ul><ul><li>Covers pre-existing conditions </li></ul>
  46. 46. Insurance Company Reimbursement Claim Forms Co-Insurance & Balance Billing Insured Premium s Dental Insurance
  47. 47. PREPAID DENTAL PLANS Prepaid Dental Capitation Claim Forms Copayments Subscriber Premiums Prepaid Dental Plans
  48. 48. What is prepaid Dental all about? <ul><li>“ Shared Risk” partnership with the Dentist </li></ul><ul><li>Dentist is “wellness motivated” </li></ul><ul><li>Affordable dental benefits </li></ul><ul><li>Linked to the sales process </li></ul><ul><li>Monitored by regulatory bodies </li></ul><ul><li>Self-monitored through rigorous quality standards </li></ul>
  49. 49. Voluntary Group Benefits Voluntary Group Term Life, Long Term Disability, Short Term Disability, and Dental Insurance
  50. 50. Voluntary - The Three Phase Sale Broker Sale Employer Sale Employee Sale
  51. 51. Why Voluntary Coverage for the employer and Employee? <ul><li>With the rising cost of medical insurance, many employers are looking for ways to cut costs and still offer employees a comprehensive benefits package. </li></ul><ul><li>Employees’ basic needs for core insurance are not met in the individual marketplace. </li></ul>
  52. 52. Why Voluntary Coverage for the employer and Employee? (cont.) <ul><li>Coverage is available to employees at group rates. </li></ul><ul><li>Coverage is 100% employee paid, therefore there is no additional cost to the employer (other than plan administration costs). </li></ul><ul><li>Employees are able to tailor coverage to their own individual needs. </li></ul>
  53. 53. Why Voluntary Coverage for the employer and Employee? (cont.) <ul><ul><li>Employees benefit from the role their employer plays in evaluating insurance options. </li></ul></ul><ul><ul><li>Employees appreciate the convenience of payroll deduction and the advantages of group rates and underwriting. </li></ul></ul>
  54. 54. Why Voluntary Coverage for the Broker? <ul><ul><li>If you don’t provide benefits solutions that meet the needs of your clients and their employees, someone else will. In fact, voluntary product sales have shown double-digit increases over the past several years. </li></ul></ul><ul><ul><li>Voluntary benefits products provide additional revenue potential without the time and expense of prospecting for new clients. </li></ul></ul><ul><ul><li>Voluntary benefits products can improve persistency and client retention. </li></ul></ul>
  55. 55. What makes a Successful Voluntary program is the products and process! <ul><li>Products </li></ul><ul><li>Process </li></ul>
  56. 56. Product Characteristics <ul><ul><li>Employee Choices </li></ul></ul><ul><ul><li>Competitive group pricing </li></ul></ul><ul><ul><li>low participation requirements (normally 20% - 40%) </li></ul></ul><ul><ul><li>Payroll Deduction pre or post tax depending on product </li></ul></ul>
  57. 57. Process Characteristics <ul><li>Pre-Communication Strategies </li></ul><ul><ul><li>Employers Commitment </li></ul></ul><ul><ul><li>Mandatory Group Meetings </li></ul></ul><ul><ul><li>Payroll Stuffers </li></ul></ul><ul><ul><li>Announcement Letters </li></ul></ul><ul><ul><li>Posters </li></ul></ul><ul><ul><li>Promotional Items </li></ul></ul><ul><li>Ease of Enrollment </li></ul><ul><ul><li>Carrier Enrollment Assisstance </li></ul></ul><ul><ul><li>Personalized or Customized employee enrollment cards </li></ul></ul><ul><ul><li>Payroll Grids </li></ul></ul><ul><ul><li>Product Brochures </li></ul></ul>
  59. 59. Product Characteristics Voluntary Life/AD&D <ul><li>Election Amounts </li></ul><ul><ul><li>Coverage for employees usually up to $500,000 or 5 times their salary </li></ul></ul><ul><ul><li>Coverage for spouses usually up to 50% of the employee election amount </li></ul></ul><ul><ul><li>Coverage for children up to 50% of the employee election amount not to exceed $10,000 </li></ul></ul><ul><li>Age banded rates </li></ul>
  60. 60. Product Characteristics Voluntary Life/AD&D (Cont.) <ul><li>Schedule Amounts </li></ul><ul><ul><li>Increments of $10,000 </li></ul></ul><ul><ul><li>Times Salary Plans </li></ul></ul><ul><li>Guarantee Issue Coverage (No medical questions) </li></ul><ul><ul><li>depending on the size of the group it can range from $10,000 to $150,000 </li></ul></ul><ul><ul><li>Different Guarantee issue amounts for employee, spouse, and children </li></ul></ul>
  61. 61. Product Characteristics Voluntary Life/AD&D (Cont.) <ul><li>Option to change benefits at annual enrollment </li></ul><ul><li>Portability </li></ul><ul><li>Conversion </li></ul><ul><li>Waiver of Premium </li></ul><ul><li>Accelerated Death benefit (ADB) </li></ul><ul><li>AD&D option usually matches life election </li></ul>
  62. 62. Voluntary LONG-TERM DISABILITY (LTD)
  63. 63. Product Characteristics Voluntary LTD <ul><li>Types of Plans </li></ul><ul><ul><li>Employee option in $100 monthly increments </li></ul></ul><ul><ul><li>Employee option to elect 60% of their salary </li></ul></ul><ul><li>Election Amounts </li></ul><ul><ul><li>Coverage for employees usually up to 60% of their salary not to exceed $5,000 of monthly benefit </li></ul></ul><ul><li>24 hour coverage </li></ul>
  64. 64. Product Characteristics Voluntary LTD (Cont.) <ul><li>Guarantee Issue Coverage (No medical questions) </li></ul><ul><ul><li>A Pre-existing Condition limitation may apply </li></ul></ul><ul><li>Option to change benefits at annual enrollment </li></ul><ul><li>Portability </li></ul><ul><li>Conversion </li></ul>
  65. 65. Product Characteristics Voluntary LTD (Cont.) <ul><li>Waiver of Premium </li></ul><ul><li>Survivor Benefit </li></ul><ul><li>Age banded rates </li></ul><ul><ul><li>Benefit Rates </li></ul></ul><ul><ul><li>Payroll rates </li></ul></ul>
  66. 66. Voluntary SHORT-TERM DISABILITY (STD)
  67. 67. Product Characteristics Voluntary STD <ul><li>Types of Plans </li></ul><ul><ul><li>Employee option in $50 weekly increments </li></ul></ul><ul><ul><li>Employee option to elect 60% of their salary </li></ul></ul><ul><li>Election Amounts </li></ul><ul><ul><li>Coverage for employees usually up to 60% of their salary not to exceed $600 per week benefit </li></ul></ul><ul><li>Non-occupational coverage only </li></ul>
  68. 68. Product Characteristics Voluntary STD (Cont.) <ul><li>Guarantee Issue Coverage (No medical questions) </li></ul><ul><ul><li>A Pre-existing Condition limitation may apply </li></ul></ul><ul><li>Option to change benefits at annual enrollment </li></ul><ul><li>Age banded rates </li></ul><ul><ul><li>Benefit Rates </li></ul></ul>
  69. 69. Voluntary Dental and Pre-paid
  70. 70. Double-digit renewal increases may apply Voluntary Dental Product Designs Should Drive Rate Stability and Participation Average renewal Increases Advancing CO Insurance on Major Procedures Waiting periods Endo and Perio covered as Major procedures
  71. 71. Product Characteristics Voluntary Dental <ul><li>Types of Product </li></ul><ul><ul><li>Indemnity </li></ul></ul><ul><ul><li>PPO </li></ul></ul><ul><ul><li>Pre-paid </li></ul></ul><ul><ul><li>Schedule </li></ul></ul>
  72. 72. Product Characteristics Voluntary Dental (Cont.) <ul><li>Types of Plans </li></ul><ul><ul><li>Basic plans with no major coverage </li></ul></ul><ul><ul><li>Comprehensive coverage that offers incremental benefits through wither waiting periods or increasing co-insurance </li></ul></ul><ul><ul><li>Schedule plans with set re-imbursements so insureds will always know exactly what their out-of-pocket costs are when visiting their dentist </li></ul></ul>
  73. 73. Product Characteristics Voluntary Dental (Cont.) <ul><li>Types of Plans (Cont.) </li></ul><ul><ul><li>Pre-paid plans offered through participating dentists </li></ul></ul><ul><ul><li>High Low </li></ul></ul><ul><ul><li>Dual Choice </li></ul></ul><ul><ul><li>Triple Choice </li></ul></ul>
  74. 74. Product Characteristics Voluntary Dental (Cont.) <ul><li>Election Amounts </li></ul><ul><ul><li>Coverage for employees </li></ul></ul><ul><ul><li>Coverage for spouses </li></ul></ul><ul><ul><li>Coverage for children </li></ul></ul><ul><li>Rating Structures </li></ul><ul><ul><li>Four Tier (ee, ee/sp, ee/ch, family) </li></ul></ul><ul><ul><li>Three Tier (ee, ee+1, ee+2 or more) </li></ul></ul><ul><ul><li>Composit (ee, family) </li></ul></ul><ul><ul><li>Per Child (ee, ee/sp, ee+1child, ee+2children) </li></ul></ul>
  75. 75. Product Characteristics Voluntary Dental (Cont.) <ul><li>Option to change benefits at annual enrollment </li></ul><ul><li>Waiting periods </li></ul><ul><ul><li>Graduated benefits through co-insurance </li></ul></ul><ul><ul><li>Waiting periods on co-insurance </li></ul></ul>
  76. 76. All policies offered by any carrier have limitations, exclusions, and restrictions. Please review any policy carefully, and direct questions to the respective carrier.
  77. 77. QUESTIONS???
  78. 78. THANK YOU