I’m sure a cookie-cutter approach to benefits planning has its place; it certainly offers efficiencies. But, in my 37 years in the Individual Disability Insurance (IDI) industry, I’ve found that when advisors are helping employers develop income protection programs for executives, it’s best to step away from the cookie cutter. Why? It’s like shoving a square peg through a gingerbread-man-shaped hole.
To continue my baking analogy, I think it’s better to start from scratch. Spend time uncovering employers’ attitudes. Knowing where they stand regarding executive disability protection makes all the difference in finding the right solution.
Every day, I consult with advisors to help identify the right IDI solutions and benefit structures for their employer clients. Over the years, I’ve worked with thousands of different companies in a number of different industries, but regardless of their differences, I’ve found most employers fall into four distinct camps:
- Self-funding is the way to go. These employers feel a sense of responsibility toward their executives, but believe the risk of disability is low. They’re prepared to pay disability benefits out of their own cash flow if the problem ever arises.
- That’s what group coverage is for. These employers purchase group long-term disability (LTD) insurance and provide it to all or select groups of employees.
- A little bit of this, a little bit of that. These employers prefer something custom. They can blend multiple programs, including group LTD, individual disability income insurance and self-funding.
- It’s not our responsibility. These employers don’t feel it’s their responsibility to provide disability coverage to executives; it’s up to the executives to secure their own coverage.
Have you considered what attitudes and perceptions your employer clients have? In my next blog, I’ll explore each of these options and show how advisors can help.
Mark Kinback is Assistant Vice President of Disability Income Multi-Life Marketing at the Principal Financial Group®. He is a graduate of Bowdoin College and has been in the disability insurance industry since 1977.