Insurance Community University Voluntary Benefits Mainstream Market Voluntary Supplemental Benefits.

Insurance Community University

Voluntary BenefitsMainstream Market

Voluntary Supplemental Benefits


Welcome to your Insurance Community University

• All of you are currently on mute – Un-mute your own system– Telephone Option

• Select Telephone on your screen• Dial in the PIN number so that your number becomes active

– Microphone and/or Speaker Option• You can use this option if you have a headset that you use

with your computer

Audio

2


Participation & Chat Window

• You will receive information from the monitor via the ‘Chat’ window. – Please locate window in the control panel

• Q & A is welcomed during the presentation and at the end of the presentation

• You will find the question box on your control panel– Write your question in that box

and send it to the presenter/organizer

• The presenter will take those• questions in the order submitted

3


DOI Requirements

• When you see a slide with the hand up symbol, touch the “hand” icon on your control panel– Click ONCE only

• If you do not raise your hand, the monitor will be in contact with you in the chat box

• If you are in a group, the designated proctor is responsible to make certain you are all in attendance at all times

4

= Hand is down


Polling

• Throughout the class we will be conducting periodic polls

• We need 100% participation on the polls• The polls are intended to check

participation but also to create discussion topics throughout the presentation

5


Forms To Complete for CE

• After class ends– Return attendance form– Proctors – return your form to email

address

• Email address is in chat window or in email sent to you today

6


DOI Requirements

• We will file your hours with the DOI after the completion of this webinar and we have received the attendance form.

• You have 48 hours to return the form• You will be sent a Certificate of

Attendance/Completion by email. Please retain this for your records for five years.

7


Internet Disruption

• If the presenter looses internet connection STAY ON THE LINE

• The administrators will communicate with you


Internet Failure

• If the internet fails and all participants are kicked off line by Go To Training or other source then the seminar will be terminated

• You will receive instructions by email as to how we will proceed

• This is a precautionary notice, only

9


This class is being recorded

• Available in the University• This course is approved for CE in CA Only


DisclaimerInsurance forms and endorsements vary based on insurance company;

changes in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is

intended as a general guideline and any interpretations provided by the instructor or the creator(s) of this material do not modify or

revise insurance policy language. In providing these materials, the authors assume neither liability nor responsibility to any person or

business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials

provided. Copyright 2010 – 2013 All Rights Reserved

www.insurancecommunitycenter.com

11


Disclaimer:

• All of the following material is for educational purposes only. The Contractual Risk Management area of liability and coverage is in a constant state of change. What is current today can be outdated tomorrow.

• This information is to be understood from a risk management perspective only. It is not intended as a

• substitute for competent legal advice. You should check with your legal adviser to determine suitability, if any, to your specific circumstances.

12


Sponsored and Presented By:

Presented by:Joe Quintana

Voluntary Benefits Practice LeaderThe Guardian Life Insurance Company of America

The Guardian Life Insurance Company of America 7 Hanover Square, New York, NY 10004

FOR AGENT/BROKER USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC.

2013-11574


• Do you currently sell or are involved in the promotion of voluntary benefits to your clients?

• For those of you who typed, “Yes”, please type in your chat box the percentage of firms that actually purchased voluntary benefits (use percentage)

Polling Question #1


• Have you ever sold voluntary Benefits?

• For those of you who typed, “Yes”, please type in your chat box the percentage of firms that actually purchased voluntary benefits (use percentage)

Polling Question #2


• By the end of this session, you will understand:

– the viability of the VB marketplace– the buyers’ knowledge of VB plans– the trends in the VB marketplace– the advantages of VB to employers, employees, & brokers– the various VB delivery methods– why you need to be growing your revenue stream with VB– why you need to be involved with VB to protect your client

relationships

Session Description


• The brokers’ world looks a little different these days

• Brokers are looking for ways to increase revenue

• Employers are starting to hire again

• Voluntary Supplemental Benefits are a powerful solution

Current Situation


LIMRA Study, August 2011:

30% of US employers(10 +) said they are considering adding new voluntary options in the next 2 yrs.

57% of US employers offer voluntary benefits, & the rate rises as employer size increases

Cancer, Life Insurance, and Short Term Disability are the most commonly offered voluntary benefits

Almost 1/3rd of all employers are considering offering new voluntary benefits to replace existing employer-paid &contributory benefits

Current Situation


Current Consumers

Controlling Health Insurance Costs

Controlling Cost of Overall Benefits

Controlling Compensation Costs

Increasing Employee Productivity

Complying with Regulations

Top 5 Challenges Facing HR Representatives


Top Trends & Challenges in Post-Recession Recovery

Administrative demands Absence management and employee benefits data

Employees at riskHigh expense of illness or injury

Economic pressuresRising health care costs and slow economic recovery

Health care reformLegal mandates and tax implications

Employee engagementDecreased worker satisfaction/productivity


Voluntary Benefits Market HistoryEarly market elements• Employer-sponsored benefits• Insurance & investment products• Payroll deduction or salary savings plans• Employee-pay-all• Offered by individual brokers & agents

1950s

Marketplace changes• Broader product range• Worksite marketing• Payroll deduction• Offered by several group market carriers

1990s

New benefits trends● Financial crisis & economic environment• Escalating healthcare costs • Increasingly diverse workforce• Decision making & cost shifting to employee

Today


Market Trends

Worksite Market Trends

Rising Cost of Healthcare

Employer Disengage-

ment

Increased Consumerism

New Distribution

Outlets

Widening gap between upper

& middle income markets

Fewer Traditional Insurance

Agents

Low Personal Savings / Un-

met needs


These are NOT “expense-based” plans• Sometimes called gap or wrap plans• Coordinate with core health insurance• Reliant on claims adjudication process before payment is made

Indemnity-based plans• Indemnity benefits — what you see is what you get• Doesn’t coordinate with major medical or affect utilization• Rapid claims payment• Rate stability — less susceptible to trends

A Solution That Works In Today’s Marketplace


Source: Eastbridge U.S. Worksite/Voluntary Sales Report – Carrier Results for 2011 (April 2012)

Worksite Market Trends


Significant Growth Opportunities for Voluntary Benefits

To meet diverse needs and control costs, employers are turning to voluntary benefits.

1 “U.S. Worksite Sales Report Carrier Results for 2010,” Eastbridge Consulting Group, Inc., May 2011..

Ave

rag

e $

in b

illio

ns

25

20

15

10

5

0

Industry in force premium – worksite products1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$8.0

$17.2$18.2

$20.2 $21.8 $21.6

$11.7$13.2

$14.6$15.6

$9.4


Growth of Voluntary Market Continues

2011 showed good voluntary sales momentum

Heath care reform continued to influence VB growth

77% of employers (with 10+employees) now offer at least one voluntary benefit

5%

24%

21%

LIMRA’s Worksite Marketing of Voluntary Products, Quarterly U.S. Sales Survey, 3Q2011

YTD 3Q 2011 Industry Sales Growth


$1,396

$1,075

$738

$610

$409

$243

$231

$777Life/AD&D

Disability

Accident

Dental

Cancer

Critical Illness

Vision

Other

2011 Voluntary Sales by Product ($M)Accident market is larger than the Dental market!

Source: Eastbridge 2011 U.S. Worksite/Voluntary Sales Report

Needs for Voluntary Benefits

Fills Benefit Gaps

Increasing exposure to

Medical Costs

Non-Medical

Costs

Cost & Risk

Shifting

Broker Needs

Employer Needs

Employee Needs


Voluntary can help solve HR challenges

HR challenges Voluntary solutions

Unum, “Employee Education and Enrollment Survey,” January 2009.

Reducing administrative

costs

Helps employer subsidize core benefit education while communicating all benefits and services at one eventHelps offset the impact of medical insurance cost-sharing, which can increase employees’ deductibles, co-pays, premiums and co-insurance

Controlling healthcare costs

Helps to enrich benefit offering, improving workplace satisfaction, employee engagement and loyalty

Retaining critical skills

Helps to add valuable benefits for employees at little or no direct cost to the employer

Offering a fullrange of benefits


Value to Employer• Increase benefits with little or no cost to the employer

• Increased Tax Savings

• Less Administration

• One Bill

• Cost containment Strategies

• Reduce benefit Gaps

• Employee Attraction Retention

• Improved Morale

What’s in it for me?


Value To Broker/Agency

• Increased revenue

• Client solutions

• Client retention

• Enrollment options

• Reduced administration

• Isolate from competition

What’s in it for me?


Fills Gaps in Medical Coverage

– Covers expenses that aren’t usually covered by medical

– Pays benefits no matter what other coverage is in force

– Provides payments directly to the employee – and can be used in any manner the employee chooses

– Employee medical out-of-pocket (deductible, coinsurance, copays) expenses continue to increase – Accident and Cancer benefits can be used to pay these out-of-pocket expenses


How Do VB Plans Work?

Employee Out of Pocket Expenses

Expenses Covered by Medical Insurance

Helps pay Employee Out-of-Pocket Costs

• Co-Pays

• Deductibles

• Over-the-Counter

• Non-Medical

• Lost Wages


“Gap” Insurance


Coverage for Uninsured Expenses


Evolving Voluntary Portfolio


Voluntary Benefits

Accident, Cancer, and Critical Illness

Available to 16+ life groups

Complementary coverage that meets evolving demands for clients’ benefits offering

Offsets out-of-pocket costs from Medical Insurance and income gap with Disability Insurance

Flexibility to create multiple options so to properly address various employee needs and affordability

Benefits paid directly to the insured


Why should employers and employees be interested in accident and cancer products?

Fills Gaps in Medical Coverage

Flexible options for an employee to financially protect their family

Inability to purchase these benefits outside of the workplace

More competitive benefits package = happy workforce•


Cancer Insurance


Cancer – The Pocket Pains!


And Cancer Costs Are High

• Average out of pocket cost for cancer $1,266 per month*

• Overall cost of cancer in 2010 was $263.8 billion**

• 20% of people with health insurance still can’t afford cancer therapy. In fact, a year of treatment for blood cancers such as leukemia reached $1 million in 2008, which would max out the limits of most health insurance policies**

*American Journal of Medicine, 2009

**Duke University Medical Center, 2011

*** American Cancer Society and Kaiser Family Foundation study, 2008


Cancer Costs?

Time off for a spouse or family member to help out Travel to and from treatment centers Additional child care support Ongoing household bills on decreased income Can’t forget coinsurance, deductibles, Rx, etc

⅔ of the costs of cancer are not covered by medical

Over 1.6 million new cancer cases were expected to be diagnosed in 2011*

*American Cancer Society, Cancer Facts & Figures 2011

Over 1.6 million new cancer cases were expected to be diagnosed in 2011*

*American Cancer Society, Cancer Facts & Figures 2011


Cancer Insurance Working for You

• Lump sum benefits paid directly to you for Cancer treatment

• Helps with costs not covered by medical insurance such as:


Critical Illness Insurance


Critical Illness (CI)How it can protect

Lump sum benefit upon diagnosis of covered illness

Heart attack, stroke, major organ transplants, bypass surgery, kidney failure, with optional cancer & carcinoma in situ1 covered

Hospital Admission Benefit pays when admitted to the hospital for any reason besides the covered conditions

Product options Benefit range $5k-$50k Preventive care encouraged by

optional benefit for health screenings Available for spouse and children

1 Please see policy definitions for complete details about these covered conditions.

2 American Cancer Society, “Who Gets Cancer,” February 24, 2009.

Who’s at risk?2

The estimated probability of developing cancer during a lifetime

of men

of women

31 /

21 /


Critical Illness Case Study

Total Health Benefit Cost Per Active Employee,

1994-2004

The Situation

51 year old male

Light manufacturing company

Heart attack

PPO Medical Plan

The Solution

$20,000 Critical Illness policy

Lump sum payment provided to the employee upon diagnosis

Benefit can be used to help cover expenses that may not be covered by major medical insurance and replace lost or reduced income. Other possible uses:

• Mortgage or car payment

• Monthly bills

• Transportation

• Dependent care

• Household expenses

Total medical costs: $41,000

Expenses not covered by major medical plan:

Emergency care co-pay: $100 Deductible: $1,000Co-insurance: $2,000Specialist visit co-pay: $240

Lost wages: $1,540

Total out-of-pocket: $4,880


Life Cycle of An Accident


Provide Choice

Different Needs

Different People

Different Ages

Different Life Styles

Just Different


How Does It Work?


How Do Accident and Cancer Work?

AccidentAccident • Emergency treatment• Ambulance• Burns• Dislocations• Fractures• Hospital Confinement• Surgery• AD&D Benefits

• Early detection tests• Diagnosis (like CI)• Surgery• Radiation• Chemotherapy• Prosthesis• Hospital confinement

Pay scheduled amounts for covered items regardless of other medical insurance

4-Tier Rates One Yes/No question12/12 pre-xMinimum 5 enrolled (no %)Age-banded (offer both attained-age and

issue-age rates)Fully portableBenefit Waiting period on Initial Diagnosis

CancerCancer

4-Tier Rates – No Age bands No E of INo Pre-xMinimum 5 enrolled (no %)Fully portableOn-and-off Job or Off-Job onlyNo Benefit Waiting period


Levels of Coverage

Value…………Advantage…………Premier

– Both products will have three levels of coverage: Value, Advantage, or Premier

– Critical Illness has GI for groups 50+ lives (up to certain amounts)

– 3-5 health questions when applying for over the GI

– Employer can choose to offer one, two, or three levels of coverage

– Enrollment materials will display side by side


Underwriting

AccidentAccident• No Medical questions………ever• Some industry restrictions, similar to AD&D

CancerCancer• One conditional issue question on the enrollment form• “Yes” answer is an automatic decline, no further underwriting

performed• Late entrants must complete the conditional issue question• No full E of I form is used

Critical IllnessCritical Illness• GI available for groups 50+ lives• 3 – 5 health questions for amounts over GI


Available Accident Riders

AccidentAccident

• AD&D Benefits• Available on Employee, Spouse, & Child• Benefits include: Dismemberment, Common Carrier, Common Disaster, Seatbelt & Airbag,

Catastrophic Loss, Reasonable Accommodation• Benefit can be removed if quoting stand alone AD&D alongside Accident

• Wellness Benefit• Benefit applies to Employee, Spouse & Child• Options from $50 to $150 (in $25 increments) per year

Value Advantage Premier

$10,000 EE$ 5,000 SP & CH

$25,000 EE$12,500 SP$ 5,000 CH

$50,000 EE$25,000 SP$ 5,000 CH


Available Accident RidersAccidentAccident

• Disability Rider• Available on Employee and Spouse• Off Job only or On & Off Job• Sickness may be included• Employee Total definition of disability• Spouse ADL definition of disability• Pre-x applies

• Hospital Confinement Sickness• Available on Employee, Spouse & Child• Pre-x applies


$125/week up to 26 weeks, 30 day EP acc & sick

$250/week up to 26 weeks, 0 day EP acc/30 day EP sick

$350/week up to 52 weeks, 0 day EP acc/30 day EP sick


$50 per day up to 10 days, 3 day EP




Accident Insurance


Accident - Kids’ Organized Sports Kicker

All accident benefits otherwise paid for a child (age 18 and under) being injured playing organized sports – increased by 20%


Accident - Claim in Action

Procedure Benefit Additional Child Organized Sport benefit

Ambulance ride $150 $30

Emergency Room visit $175 $35

Hospital admission (his stay was over 20 hours)

$1,000 $200

MRI $150 $30

Concussion $75 $15

2 Follow up doctor visits $50 X 2 = $100 $20

TOTAL BENEFIT $1,650 $330

GRAND TOTAL$1,980

Annual premium for Full Family ≈ $600

Here’s the breakdown of what Jarrett’s claim would look like if his parents had the Advantage Accident plan with Guardian.


Available Cancer RidersCancer RidersCancer Riders

Initial Diagnosis Benefit

Cancer Screening Benefit • Benefit applies to Employee, Spouse & Child• Options from $50 to $150 (in $25 increments) per year

Pricing preliminary and subject to change.

– Initial Diagnosis Benefit– Lump sum benefit received upon diagnosis of Cancer– 30 day benefit waiting period– Benefit can be removed if quoting CI with Cancer alongside the stand alone

Cancer product– First ever while insured


No benefit $2,500 $5,000


Cancer Claim in Action

What Happened? Date & Benefit Benefit Amount

Kidney Cancer diagnosed 10/2008 Kidney Cancer Diagnosed $5,000

10/2008 Kidney Nephrectomy (simple)

$2,888 – including 25% extra for anesthesia

10/2008 Hospital Confinement $400/day X 7 days = $2,800

10/2008 Attending Doctor Visits $25/day x 7 days = $175

10/2008 MRI $200

11/2008 4 weeks of chemotherapy

$1000/week x4 = $4000

12/2008 4 weeks of radiation therapy

$600/week x 4 = $2400

Travel by train to NJ for radiation therapy, 60 miles each way

12/2008 Transportation Benefit for George and friend

$0.50/mile X 120 miles = $60$60 X 30 treatments = $1,800 x

2 people = $3600

11 & 12/2008 2 months of anti-nausea meds

$250/month x 2 = $500

Example of Diagnosed Kidney Cancer in October 2008. Treatment spans over two years since the cancer metastasized to the brain and required additional treatment. Below

breaks down how the claim would be handled under Guardian’s Cancer coverage.


Cancer Claim in Action - continued

Treatment Date & Benefit Benefit Amount

Cancer metastasized to the brain

2/2009 Ambulance to hospital $250

2/2009 MRI $200

2/2009 Brain – Excision brain tumor

$4813 including 25% extra for anesthesia

2/2009 Hospital Confinement $400/day X 12 days = $4,800

2/2009 Attending doctor visits $25 x 12 days = $300

3/2009 Extended Care Facility $150 day x 30 days = $4500

4/2009 Hospice Care $100 day x 20 days= $2000

Yearly Family Premium = $609

TOTAL = $38,426


Critical Illness

Lump sum payment of $2k- $50k upon the first ever or second ever diagnosis of each covered Critical Illness. $5,000 minimum lump sum for Voluntary plans. 16+ eligible lives.

* 150% lifetime limit. Schedule excluding Cancer coverage is available.


Complement to Other Coverages

Life Normally a benefit to a beneficiary (may feature an Accelerated Life benefit but person must be diagnosed with a terminal condition)

Accident and Cancer and CI

Help with medical and non-medical expenses when a serious illness strikes.

Medical Examples:•Deductibles•Out-of-network costs•Experimental treatments

Non-medical Examples:•Time off taken by spouse •Travel to treatment centers•Ongoing household bills on decreased income

Disability PlanReplacement of a portion of income

Medical Plan

Coverage for medical services, as defined by a company’s plan


Timing is Right for VB to Grow

“51% of brokers expect to make changes in the VB products they sell because of Health Care Reform. More than half expect to sell additional accident, critical illness, short term disability, cancer and term life VB benefits.”

– Eastbridge Consulting, Oct. 2010


Typical Benefit Plan Offerings

• Major Medical Plan

• Dental & Vision Plans

• Flexible Spending Accounts (FSA’s)

• Short and/or Long Term Disability Plans

• Employer Paid Life

• Section 125 Pre-Taxing of Premiums


Additional Benefits

• Long Term Care• Employee Credit Unions• Gym Memberships• 401(k) or 403(b) Retirement Plans• Safety Awards• Service Awards• Vacation• Holidays• Sick Days• Leaves of Absence• Uniform Program• Holiday Parties, Movie & Sports Event Tickets


VB Plans in the Market

• Individually Underwritten VB plans are:– Individually owned– Paid for by employee– Portable– Guaranteed Renewable– Usually no price increases – Usually no minimum participation requirements

• Some VB plans are Group plans– Master policy held by the employer– Many are portable or convertible– May offer levels of GI– May have minimum participation requirements– May offer simplified administration


Polling Question #3

Does major medical cover employee’s lost income during a disability?


Compare Two Employers

• Major Medical• Dental• Vision• Employer Paid Life

• Major Medical• Dental• Vision• Employer Paid Life • Short Term Disability• Accident Insurance• Cancer Insurance• Critical Illness Insurance • Hospital Indemnity Insurance• Term Life, Universal Life,

Whole Life Insurance• Flexible Spending Account

With VBWithout VB


Questions

• Which employer is more attractive to current employees?– Why?

• Which employer is more attractive to prospective employees?– Why?

• Which employer has a lower overall turnover rate?– Why?

• Which employer has a more expensive benefit plan offering?– Why?


Employee Benefits Choices Can Add Value

Unum, “Employee Education and Enrollment Survey,” January 2009.

55.8% Increase

11.3% Increase


VB Plan Carriers (partial list)

• Guardian• Colonial Life • Aflac• ING • Unum• Hartford• Lincoln• Worksite Benefits• Humana• Assurant• Cigna• Conseco• Jefferson Pilot

• Transamerica• SSI• Chimente• Boston Mutual• Combined Insurance• American Fidelity• American General• Reliance Standard• Allstate• Trustmark• Safeco• Provident Life• More….


How Do Employees Make Choices?

• Different methods, styles, processes, & requirements of enrollment

• Available methods:– One-on-One Meetings– Group Meetings– Co-Browsing– Telephone– Self Service– Printed Materials– Intranet HR Benefits Websites– Census


• Governed by the IRS

• Allows you to pre-tax qualified premiums such as medical, dental, disability, cancer, vision, FSA’s etc.

• No cost to you to use this plan

• Changes can only be made at re-enrollment time each year unless there is a family status change

Section 125 Cafeteria Plan Saves Taxes


Flexible Spending Accounts

What if you could buy your prescription and

OTC drugs at a discount(if prescribed

by a doctor?)


Flexible Spending Accounts

What if you could pay for dependent

care tax free?


Section 125 Cafeteria Plan Saves Taxes

$1,000 Taxable Gross Income

250 Taxes

750 After Taxes

100 Insurance premiums

$650 Net Spendable

$1,000 Taxable Gross Income

Flex dollars or

100 Insurance Premiums

900 New Taxable Income

225 Taxes

$675 Net Spendable

Employees can save 15% - 45% of employee-paid benefits!

After Tax Plan Pre-Tax Plan


Flexible Spending AccountsHealth Care Flexible Spending Account

You can use this money to be reimbursed for eligible medical expenses not covered by your major medical insurance plan

• Prescriptions and over-the-counter medications prescribed by a Doctor

• Deductibles, co-insurance and co-payments

• Eyeglasses, contact lenses or LASIK

• Dental and orthodontia expenses

Effective with next years, 1/1/2011 HCR rules disallow over-the-counter meds as reimbursable items unless prescribed by a Doctor.


Polling Question 4

Can employee FSA payroll deductions be managed inside an employer’s payroll system with a TPA (Third Party Administrator)?


How are we responding to Worksite?

Reactive Strategic Enrollment Revenue

How does Worksite fit into their business?

Prospecting: Where to Start


Are your clients well protected?


Effective Discovery


Employers need benefits to drive business recovery

• Benefits are a vital business strategy for attracting & retaining quality workers

• Even after companies have recovered, competition for quality employees will continue

• Robust & cost-effective benefit plans will continue to feed corporate strategies for maintaining a healthy company

• This means “Opportunity” for Brokers


Key Advantages to Employers

• Better management of their benefit costs

• Lower payroll taxes

• Time and money savings

• Employee satisfaction


Other Financial Incentives for Employers

• Lower Worker’s Comp premiums through reduced claims (can vary state-by-state depending upon the level of SDI and Worker’s Comp available to the employee)

• Drives down the experience mod over time

• Occurs because of the higher disability benefits available


Recap

• The marketplace has been ready for VB• Advantages of having VB in the plan design vs. not having them• Important to “properly educate & communicate”• Understand the different VB plans & how they work• Advantages of Section 125 pre-taxing of premiums


Please hold up your hand


Upcoming ClassesUpcoming University/Paid CE Classes

FREE to University Members$50.00/charge for non university members

10/17 Agricultural Equipment Breakdown

10/24 Homeowners Problems and Solutions

10/31 Earthquake and DIC Coverage

88

Upcoming Community Classes FREE to University Members$25.00/charge for non university members

10/22 Cyber Liability and the Personal Lines Account

Join the University TODAY. www.insurancecommunitycenter.comClick Join University at the top of the bar

Insurance Community University Voluntary Benefits Mainstream Market Voluntary Supplemental Benefits.

Documents

Transcript of Insurance Community University Voluntary Benefits Mainstream Market Voluntary Supplemental Benefits.