Employer-Sponsored Multi-Life Plans (ESMPs) What they are, how to sell them and how to enroll participants

Marketing Opportunity

 There are more than 6.6 million companies in the United States.  More than 50% of those have less than four employees.  68% of all small businesses do not carry any DI coverage. ESMP Marketing Opportunity Source: US Census Bureau, 1998 Statistical Abstract of US.

Number of Employees % of Companies ProvidingEmployee Disability Coverage ESMP Marketing Opportunity Source: Response Analysis Corporation,1994

 Worksite sales for 2002 totaled an estimated $4.03 billion, a 15 percent increase over sales for  Companies are shifting away from employer-paid programs and moving toward voluntary, payroll deduction plans Source: Eastbridge Consulting Group’s U.S. Worksite Study, 2002 Trends in Worksite Sales

Why People Don’t Buy DI  Agents/brokers don’t ask! –Sales are being left on the table.

 Expensive  Financial documentation  Medical records  Too many choices for plan design Objections to Selling DI

 Multi-Life Plans offer discounted premiums  Guaranteed Issue program does not require financial documentation  Guaranteed Issue does not require medical underwriting  Plan design is done at group level Answering Objections

Selling ESMPs are a Win-Win-Win For Everyone Selling ESMPs are a Win-Win-Win For Everyone

 Guaranteed issue (larger qualifying groups)  No detailed underwriting process  Discounted premiums on unisex rates  Rapid turnaround of application  Higher income protection  Can be employer paid Insured Wins

  Create perks for key employees   Deductible business expense  List billing  Reduce LTD costs  Foster persistency and loyalty among key employees  Allow employer to add an additional benefit without incurring additional cost Employer Wins

  No detailed underwriting process; streamlined underwriting  Approach multiple insureds — cross-selling opportunities  Discounted premiums on unisex rates  One plan design for all  Multiple sales — more commission $$$ Agent Wins

Plan Specifics

 Guaranteed standard issue to those meeting eligibility requirements  Targeted at executive/professional occupational groups within single employer (generally 4A and above)  Minimum 15 participating lives for 100% employer- paid cases  Plan design at group level  Can be 100% employer-paid, partially employer-paid, or 100% employee-paid How Does The Product Work?

 Generally with LTD  Carve out  Wrapped around group  Reverse carve out  Own-occ-to-65/not working (marketplace definition)  Available riders  Residual/partial  SIS  Inflation  ADL  No drug/alcohol limitation (no DAMN rider) on employer-paid cases. Plan Design

 Minimum Participation – Employer Paid — 100% required; minimum of 15 participants – Voluntary — 30% target; minimum of 20 participants Plan Design

Employer-PaidVoluntary Min. Size Group 15 participants70 or more eligible participants* Min. Participation 100% required70+ eligible participants 30% Occ Class 5AP-3AP 3AP cannot be more than 15% of total lives N/A to medical occupations 5AP-3AP 3AP cannot be more than 15% of total lives N/A to medical occupations Discounts Discounts range from 20 to 30% off unisex rates depending on the case size. GI Max Issue Limits # of Issue Part. Max. GI Amt.** $100/life/month to max. of $ $8000 # of Eligible Max. GI Issue Participants Amount** $ $ $5000 Employer-Paid and Voluntary Plan Specifications *For cases with eligible lives, the Home Office will consider making an offer on a Guaranteed Issue basis. Such an offer is contingent on a minimum of 15 paid lives. If fewer than 15 paid lives are written, full underwriting will be required. Discounts and GI maximum Issue Limits are the same as for cases of eligible participants. **The maximum amount available can vary based on the characteristics of the group. Plan Design

 Guaranteed Issue Maximum I&P Limits for Employer-Paid Cases:  Specific plan design and maximum Guaranteed Issue amounts depend on group characteristics: - Industry - Turnover rate - Occupations - LTD experience - Financials - Age - Local economy  Each case is different. Plan Design

100%Voluntary GI Employer-Paid Eligible Participation Employees Discount 15 – – % 50 – – % % Note: Discounts for qualifying voluntary life cases are the same as for cases. Discount Structure

100% Employer-Paid Participation 15–49 50– Voluntary GI Eligible Employees 70– Noncan FYC 40% 35% 30% GR (ages 61-64) FYC 30% 25% 20% Renewal commissions are 10% in all years. Note: Commissions for qualifying life cases are the same as for cases. Commission and Schedule

 Paid in years 2-10  Up to 5%  Based on and applies only to GI premium  Varies each renewal year as follows:  Inforce premium of $25,000-$99,999 and persistency of at least 85% = 2% bonus  Inforce premium of $100,000+ and persistency of at least 85% = 5% bonus Bonus Schedule

How to Present A Case

 Few agents are talking about DI  Make a list of prospects  Look at your personal database, especially executives in firms - Without knowing it, many executives are being discriminated against with the Group Plans ProspectingProspecting Presenting a Case

 Employer offers 60% to $5,000 LTD benefit  Executive earns $120,000 Case Scenario Presenting a Case

 Example: Gross Monthly Income: $10,000 Net Monthly Income: $ 8,000 (Assuming 20% tax rate) Gross Group LTD Monthly Benefit: $ 5,000 Net Group LTD Monthly Benefit: $ 4,000 (Assuming 20% tax rate) This represents 50% of the monthly take home pay.  Multi-life helps close the gap Presenting a Case

  Send pre-approach letters to prospects and follow-up with a phone call.* Pre-approach Letters Presenting a Case *See ESMP Marketing Guide, UC 4362 for samples.

  Use the approach presentation with an employer to explain how Supplemental Disability Income Protection works.* Approach Presentation Presenting a Case tal coverage. Supplemental Disability Income Protection Plan Proposed for: Prepared by: Agent Address 1 Address 2 City, State Zip Phone, Fax Date UC 617 (12/03) Supplemental Disability Income Protection Program Proposed for: ABC Company Prepared By: Agent Address City, State, Zip Phone, Fax Date *See ESMP Marketing Guide, UC 4362 for samples.

  Use this as a fact-finder on the approach interview to gather information from your prospect and to request a proposal from the Home Office.* Proposal Request Form Presenting a Case tal coverage. Supplemental Disability Income Protection Plan Proposed for: Prepared by: Agent Address 1 Address 2 City, State Zip Phone, Fax Date UC 617 (12/03) *See ESMP Marketing Guide, UC 4362 for samples.

  Use the proposal to present your solution.*   Proposal includes: –Sample offer letter –Illustration showing the LTD benefit and eligible individual DI coverage –Examples of Enrollment Kits ProposalProposal Presenting a Case tal coverage. Supplemental Disability Income Protection Plan Proposed for: Prepared by: Agent Address 1 Address 2 City, State Zip Phone, Fax Date UC 617 (12/03) Supplemental Disability Income Protection Program Proposed for: ABC Company Prepared By: Agent Address City, State, Zip Phone, Fax Date *See ESMP Marketing Guide, UC 4362 for samples.

  Use this leave-behind brochure (UC 3135) with the employer along with the approach presentation and proposal. Marketing Materials Presenting a Case tal coverage. Supplemental Disability Income Protection Plan Proposed for: Prepared by: Agent Address 1 Address 2 City, State Zip Phone, Fax Date UC 617 (12/03)

  Cases approved for Guaranteed Issue use a short-form app (UC4348 –state specific). Short-Form App Presenting a Case tal coverage. Supplemental Disability Income Protection Plan Proposed for: *See ESMP Marketing Guide, UC 4362 for samples.

Enrollment Process

  To make your job easier in selling ESMPs, we’ve captured the best practices of experienced producers in this market.   Just follow the timeline and use the materials included in the ESMP Marketing Guide (UC4362) and before you know it, you will have completed and ESMP enrollment. Beginning Steps Enrollment Process Proposed for:

  Allow minimum of 30 days from the date the employer signs the offer letter and the date enrollment meetings are to begin.   Inform the employer you will be holding one or more 30-minute group meetings and/or one-on-one individual meetings. Timeline – Prior to Date of Enrollment Enrollment Process tal coverage. Supplemental Disability Income Protection Plan Proposed for:

  Forward to Kathy Hoff, at the Home Office, any updates to the census or any other information about any LTD plan or plan design so the pitch kits are accurate.   Assemble team of enrollers and schedule any necessary training.   Send first announcement letter (UC4419), on sponsoring company letterhead, two weeks before enrollment meetings. Timeline – Prior to Date of Enrollment (cont.) Enrollment Process tal coverage. Supplemental Disability Income Protection Plan Proposed for:

  Send second mailing, Q & As (UC4420) about the program, one week before enrollment meetings.   Once enrollment kits are received, prepare a file for each eligible participant with: –Pitch kit (UC4417 or UC4418) –Pre-printed short-form application (UC4348 – 2 state specific) –Blank long-form application (UC2550 – state specific) –Designing An Income Protection Plan brochure (UC861) –A case history sheet to take notes (UC4421) Enrollment Process tal coverage. Supplemental Disability Income Protection Plan Proposed for: Timeline – Prior to Date of Enrollment (cont.)

  Meet with enrollment team one week before enrollment is to begin.   Check with your contact at the sponsoring company that a private site has been arranged for your presentations. Enrollment Process Proposed for: Timeline – Prior to Date of Enrollment (cont.)

  Have company contact confirm each eligible employee will be attending his/her enrollment meeting.   Make notes on the DI Case History Report (UC4421) immediately after each meeting. Timeline – At Enrollment Site Enrollment Process Proposed for:

  Write a thank you note to each person who applies for coverage.   Create a spreadsheet of all applicants to track underwriting program. (Use UC4422)   Keep your company contact informed of progress. Timeline – After Enrollment Enrollment Process Proposed for:

 Keep each applicant informed of the progress on his/her case.   Send letter when case is approved. (UC4423) Timeline – After Enrollment (cont.) Enrollment Process tal coverage. Supplemental Disability Income Protection Plan Proposed for:

  Attempt to complete enrollment within two weeks.   Deliver all contracts.   Meet with employer to discuss ongoing administration. Points to Remember Enrollment Process tal coverage. Supplemental Disability Income Protection Plan Proposed for:

Congratulations. You are now prepared with all you need to sell an ESMP.