Group Life & Long-Term Disability
- How group life is priced and built
- How an LTD contract actually pays
- What to say when a client asks
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Group life, in one line
- Coverage for a whole population of employees
- Claims are infrequent, so cost per life stays low
- Everyone in the class is in — healthy and not
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Yearly renewable term
- Rates are guaranteed one year at a time
- Reviewed at every policy anniversary
- Employee must be actively at work
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
What drives the risk
- Average age
- Volume distribution
- Occupation
- Area
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Average age
- Older group = more death claims
- Average age 55 vs 35 is roughly 1.75x the risk
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Volume, occupation, area
- A few very large certificates concentrate risk
- Hands-on work carries more exposure
- Costs move with where people work
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Experience information
- Past claims tell you what to expect
- Ask for it before you quote
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Coverage levels
- Flat amount, multiple of salary, or by class
- Plan maximum caps the benefit
- The cap is where surprises happen
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Premium & participation
- Employer-paid plans cover everyone
- Employee-paid plans need participation minimums
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Guaranteed issue & EOI
- Up to the guaranteed issue amount: no questions
- Above it: medical evidence of insurability
- No EOI form, no extra coverage
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Waiver of premium
- Coverage continues while totally disabled
- Premium payments pause
- Approval is required, not automatic
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Age reduction schedule
- Benefits shrink as employees get older
- Check the age, then the math
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Conversion & portability
- Living care pays part of the benefit early
- Conversion moves coverage to an individual policy
- Portability keeps the group rate after leaving
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Retirees & takeover
- Retiree coverage is usually a separate class
- Grandfathered amounts follow the old plan
- Takeover protects people already out on claim
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
What LTD does
- Replaces income when illness or injury stops work
- Pays a percentage of monthly earnings
- Starts after the elimination period
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Am I eligible?
- In an eligible class, working the required hours
- Past the waiting period
- Actively at work on the effective date
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Pre-existing conditions
- Look back a few months before coverage started
- Treated then, disabled soon after: likely denied
- The contract in force at disability governs
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
How disabled is disabled?
- Own occupation first, any occupation later
- Earnings tests decide, not job titles
- A CEO is not expected to flip burgers
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Total, residual, waiting
- Total: cannot work at all
- Residual: working less, earning less
- Elimination period: unpaid wait before benefits
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
How much is paid?
- A percentage of pre-disability earnings
- Up to the monthly maximum
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Back to work
- Part-time work can continue with benefits
- Formulas protect income while earnings return
- Working again rarely means losing everything
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
Offsets & minimums
- Other income reduces the benefit
- Social Security is the most common offset
- A minimum benefit still applies
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
How long does it pay?
- Usually to retirement age
- Shorter limits for some conditions
- Benefits end when disability ends
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
What to remember
- Life: age, volume, occupation, area drive the price
- LTD: eligibility, definition, amount, duration
- Read the plan maximum and the fine print
For producer education only. Benefits are subject to the policy, eligibility, exclusions, limitations, and claim review.
24 slides