9 Things You Need to Know Before Presenting LTD Carriers to Your Clients

Illustrating group LTD coverage in a simple and straightforward manner remains a big challenge for most producers. The most common way to accomplish this is to develop a spreadsheet to compile a market survey and present to the client.

Most spreadsheets include information such as a basic overview of the proposed plan design, total number of insured employees, monthly covered payroll, rate per $100 of covered monthly earnings, rate guarantee period and the monthly premium. Some include the insurance companies' financial ratings and group LTD market share as well. These are important facts. But does it really show the customer what is important in choosing an LTD carrier?

Here are the important points to consider presenting to your clients before you get into plan design:

1. Number of years selling group LTD
   A long time in the business shows commitment to the product and expertise.
2. Location of LTD benefits/claims operation
   Usually, a smaller number of benefits/claims shops means more consistent claim decisions.
3. Number or percentage of employees dedicated to LTD claims management
   If a company has invested the time and money in dedicating a significant portion of its workforce to managing LTD claims it shows a real commitment to the product.
4. Total LTD claims paid in a given year
   This can give you an idea of the breadth of the company's LTD business.
5. Average LTD case load for a benefits/claims analyst
   Smaller case loads typically mean analysts have time and resources to make appropriate claims decisions.
6. Return-to-work expertise
   What kinds of resources and policy provisions are available to help disabled employees return to work, when possible?
7. Percentage of total earned premium generated by LTD
   This indicates whether LTD is the company's core business or not.
8. Benefit ratio/loss ratio
   Knowing what percentage of premium goes to pay claims can help you understand how well a carrier manages risk.
9. Policy lapse rate/customer retention rate
   This can be an indicator of how appropriately a carrier prices business beyond the rate guarantee period.

Gaining a better understanding of these points and how they relate will enable you to better determine the best choice for your client. LTD insurance is a product that has a long and often unpredictable tail. It is imperative that policyholders make an informed choice since the relationship between a disabled employee and the insurer may well last to age 65 – or beyond in some cases. Help your clients choose wisely and don't rely on price alone.