Case Study for Guaranteed Issue Term and Key Person Disability

Here’s one you can feel good about..

A benefits broker approached us with an opportunity.?

The company had to build something to retain key people, and needed to mitigate the individual and company risk of loss of the employee due to their death or disability.

The company provides auto maintenance services in a number of locations.?The key people are what you would usually see – the President/CEO, CFO, and other key people in the “head shed”.??

Their store managers are also mission critical, because each of the store managers handle about 5 to 10 subordinates at their location.?They’re in charge of training, hiring and firing, logistics, and managing the workload every day.?The total population was 12 people with incomes ranging from $75,000 to about $150,000. ?This is what we did:

• Set up a plan where if the individual became disabled in their occupation or if they died while working, the company would continue to pay them or their beneficiary for a period of 12 months.
• We then placed $600,000 / life of term insurance, and $200,000 per life of key person disability insurance, all guaranteed issue. ?
• Company keeps some benefits for key person loss, and the employee gets the rest of it.

Total premium – about $50,000.?The company has about 70 full time employees, and this benefit program for the key employees protects them if they suffer an illness, get hurt, or die.???

We’re all excited about watching them grow, and other persistency and production bonuses that come to the agency over time.

Call to action:

According to LIMRA, in Q1 2023, about $31mm of business disability insurance was sold out of $506mm of premium. Business market represents less than 7% of all premium placed. We can do better (and easier) for our business clients.

If an employer wants to buy insurance for a few, check in to see if you can make the group larger – guaranteed issue life starts at 10 higher wage earners or more, disability usually at 5 lives or more.

Underwriters will accept title, tenure, age, and income to define eligibility.??As an example – we have generated underwriting offers that exclude individuals age 60+ to reduce the cost of the plan.?

What do we need?

• Census data, ideally with title, tenure, income, and home of record.

In about 15 minutes of conversation with a business owner, 
you and I can usually discover 2 to 5 things that they want to work on 
(retention, retirement, income protection).           

Ask us how, and sign up for my semi-weekly newsletter to learn more.