For The Business
The business purpose of group disability insurance is to offload employees from the payroll without firing them, when the underlying cause of underperformance is poor health. Without it, the business may have to terminate an employee who is already facing a trying time, possibly inviting litigation over wrongful termination.
Group disability insurance also serves recruiting and retention objectives by meeting employee expectations for a standard employee benefits package.
For Employees
For employees, the purpose of group disability insurance is to protect earnings. A standard benefit amount is 60% of basic earnings, minus adjustments permitted by formula.
The value-added over individual alternatives is two-fold: (1) it's easier to acquire, due to the absence of underwriting and (2) the cost is lower, due mostly to the absence of certain guarantees and features.
Information Needed For Proposals
Part 1 of 2
Business Information
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Legal name of the group
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Legal form (LLC, S-Corp, etc)
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Date Established (if legal form has changed, use date of original legal form)
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Registered address (should match state records, and is not necessarily the same as the administrative address)
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Tax ID#
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SIC Code, if known
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Website address
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Target effective date (optional)
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Other key dates, if any. This might include a due by date or a question deadline.
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Scope of Coverage (Long Term, Short Term, Life, AD&D, Accident, Dental, etc.). By default, all lines will be requested but a narrower scope simplifies things.
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Eligibility criteria. Who do you want to cover?
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Number of eligible members and number of total members
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Technology vendor, if integration is important (e.g., Ease, ADP, PlanSource, Flock, Employee Navigator, Gusto, etc.)
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Administrative requirements, if any. This is typically for experienced buyers and may relate to claims processing, account management, billing integration and reporting standards
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Other minimal requirements for the terms of coverage, if any. For example, definitions and limitations.
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Employer paid or voluntary?
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Current carrier, if any, and reason replacement is contemplated. Attach booklet.
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Is Supplemental Individual Disability Income currently in place?
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Please describe the priorities and known challenges. This is optional for now, and can be left for discussion.
Part 2 of 2
Demographic Information
Pricing will require demographic information for each member, including:
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Class, if selective eligibility or tiered benefits are to be considered (optional)
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Ownership % of the business
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Date of Birth
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Gender
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State of Residence
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Work Zip Code
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Date of Hire
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Occupation
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Hours worked per week
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Hourly wage
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Base salary projected for this year (gross pay)
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Bonus paid in the prior year
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Commissions paid in the prior year
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RSU's paid in the prior year
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Ownership Distributions paid in the prior year
The type of pay is extremely important.
Compensation must be broken out by type (e.g., base, bonus, etc).
If you're with a small organization, you might compile this data with this starter spreadsheet which has the field names prepared.
If you're with a large organization, feel free to output from your database in any format that is convenient for you.
Names are left off for privacy reasons.
Submission instructions will come after a dialog is established.
Group Disability Insurance Companies
Group Disability insurance companies (offering both Short Term and Long Term) include MetLife, Principal, Standard, Hartford, Guardian, Mutual of Omaha, Prudential, Lincoln Financial, and Unum.
For individual coverage, refer to Individual Disability Income Insurance Companies.
Proposals generally include mutliple lines, including Short Term Disability, Long Term Disability, life, accident, critical illness, and dental. Lines are selected for adoption on an a-la-carte basis (i.e. unbundled).
Enrollment Methods
You can choose how you want members to be enrolled. The options are:
1) Individual Concierge
Appropriate for executives and small professional groups, this method involves individual attention, which is broker-driven. This is a convenience for members that have a genuine interest in what their employer is doing for them but would rather not be corralled into group meeting. It greatly enhances appreciation and is the easiest way to maintain simplicity any time there is choice. It helps members make better decisions regarding their buy-up options, designating beneficiaries, and extracting the highest possible value out of the opportunity. HR plays only a small role, chiefly by making introductions. Enrollment can be handled by the broker if desired.
Concierge generally supplements some other main method on an as-needed basis.
2) Direct-to-Carrier Web Enrollment
HR personnel can directly enter employee enrollment on the carrier's enrollment site. With direct enrollment, HR can do everything without cooperation from anyone. This method offers the most control. To address those one-off situations, concierge can be called on selectively.
3) Technology Provider or Third Party Administrator
For large groups, compatibility with third party administrators and technology providers such as ADP, Ease, Workday, Employee Navigator, and so on can be a prerequisite. If your group falls into this category, the RFP will ensure that only carriers compatible with your existing system qualify for consideration.