4 Biggest Broker Mistakes When Offering Clients Supplemental Disability Insurance

Published: May 5, 2022

1. Leading With Sky-high Benefit Amounts

Some brokers focus on presenting their clients with impressive benefit amounts, relying on what the client thinks they want, versus what they actually need. This may ultimately leave them with a solution that’s not sustainable (and potentially damage your reputation). High benefits may not be necessary for the majority of the eligible population. In some cases, the majority of the population will not qualify as their income levels simply won’t demand that much coverage. And benefits like these may come at a hidden price; they are often only available for 5-7 years, leaving the client to face rate and term changes if they decide to renew. In turn, this could result in the client losing trust in your ability to provide them with the right guidance and perhaps impact your reputation within the market.

Best Practices:

Exercise meaningful marketing centered around the client’s needs before all else. Focus on average need, rather than the monthly benefit amount, and make sure to offer benefit periods that suit the eligible population.
Work smarter, not harder. Often, clients will be best served with a benefit that extends all the way to retirement age, making for less work for the firm (and yourself!) while fully protecting the eligible population. The duration and nature of LTD claims can vary with different classes of insureds, age and occupation. Make sure you account for these factors when you tailor benefits.
Play the long game – Long-term business in the future can be worth far more than short term-business now.

2. Not spending enough time planning implementation.

Brokers can become too focused on marketing the product itself, neglecting the service component that is critical to the overall client experience. The importance of developing an easy yet engaging enrollment and administrative experience should not be overlooked.

The ongoing administration that follows implementation extends far longer than the plan design process, and therefore requires at least as much forethought as the plan. Eligibles are a priority, but commonly overlooked stakeholders include the plan administrators essential to the plan’s effective execution. You can lighten their burden by working together in conjunction with a firm that will create an enrollment and communications program that aligns with the eligible population and is positioned to meet agreed-upon enrollment objectives.

Understanding the dynamics of the eligible population will help you to recognize and ease challenges during administration and lead to optimal results – including participation.

Best Practices:

Keep an eye on ROI. Spend time understanding the makeup of the eligible population. Identify their communication and enrollment needs and incorporate them into the plan. The ability to target the specific needs of various eligible groups is important.
Spend time on the design and management of the enrollment and administration process in collaboration with the firm’s plan administrators. Understand your customers, anticipate their needs, and make it easy for them to implement and manage the plan on an on-going basis.
Remember that the service experience is essential. The product is only half the battle; what happens after the sale is just as important as crafting the right product solution.

3. One-Size-Fits-All Underwriting

Underwriting is complex, and not doing your research can deter clients before you even get to the details of your plan. By assuming a one-size-fits-all approach to the underwriting of the plan, you disregard the two most important decision making factors:

1.) the coverage needs of the eligible population

2.) the cost to the company

A blanket plan design may not suit all groups within the eligible population. And designing a program with unneeded components will be useless if it doesn’t align with the firm’s practical capabilities.

Instead, assess the population and balance their needs with the priorities of the plan sponsors. Pose these questions:

How much employer support is reasonably available within the firm?
Are there certain groups which might benefit from a different solution?

Answering these questions will guide the proposal and plan design options you present to the decision makers, whether it be a multi-dimensional hybrid program, majority firm-paid, majority employee paid, or another combination.

Best Practices:

Break down the eligible population. Eligible groups within a firm will almost always differ in compensation level, not to mention compensation components. By taking this approach, you’ll see that not each group needs the same ratio of employer to eligible paid benefit.
Gauge employer support to better understand the desires of the firm sponsors for plan design – whether it be majority employer-paid, or employee-paid.
Balance expectations. Help your clients understand the differences from an underwriting perspective. Don’t be afraid to discuss enrollment objectives – particularly if there is a potentially voluntary component to the plan. Having this discussion early avoids surprises and questions down the road.

4. Sleeping on Post Enrollment Care

An underemphasized component of supplemental DI is post-enrollment after care and claims experience. Similar to the enrollment process, clients want to ensure they’ll receive the best care available, making on-going administration a vital part of the program discovery process.

When it comes to claims support, the client should feel secure knowing a team of experts stand by to assist when needed – especially when policyholders are in a vulnerable place. Plan administrators want the same team involved in enrollment and implementation to personally handle their employee’s claims experience: not a third party administrator with no understanding of the relationship. They want the claims process to be easy, personalized, and expeditious.

Best Practices:

The devil is in the details – make sure the firm whose product you are offering to the client prioritizes terms and definitions so no inconsistencies crop up at the time of claim, potentially impacting timely receipt of benefits or a denial in benefits altogether.
Do your due diligence when vetting the firm to work with. Ask about their claims services and track record. If possible, ask for references from other firms that have experienced the process.
Emphasize post-enrollment and claims care during the sale process. Assure your client that if a claims incident should befall them, they can rely on that team of experts to advocate on their behalf and position them and their employees for the best possible outcome.

For more information, please contact info@westportgp.com