Small business benefits packages close risk gaps for executives and owners
Insurance brokers specializing in group employee benefits, including required benefits like DBL, TDB, and PFML, are missing opportunities if they don’t speak to their clients about individual disability income insurance.
You may recognize The DBL Center as the leading authority for paid family and medical leave (PFML), DBL in NY, and TDB in New Jersey. Helping clients achieve compliance is important as states expand these mandatory programs.
Brokers who position themselves as trusted advisors also want to help their clients close risk gaps across the board. Continuing the conversation beyond compliance leads to revenue growth for your brokerage and peace-of-mind for your clients.
“These benefits are not often talked about, but can address some of the most important risks to a business, its owners, and higher earning employees,” said John Byrne, group benefits sales representative for The DBL Center.
The Coverage Gap Your Clients Don’t See
State-mandated PFML coverage and group disability benefits build the foundation for a robust employee benefits package beyond just healthcare. But they rarely deliver the full coverage workers need.
High-earning key personnel, c-suite executives, and business owners often need disability benefits beyond the state-mandated and standard group disability maximums to maintain their lifestyle if they can’t earn an income.
Groups might have the option of tapping into investments to pay the bills, but that often comes with tax consequences and other considerations.
High earners need other ways to fill income gaps should they become ill or injured on or off the job.
Where Voluntary Disability Insurance Fits in a Benefits Plan
Individual disability insurance or guaranteed standard issue insurance can supplement state mandated and group disability coverage, with reasonable premiums that can be funded by the employer or employee through payroll deductions. This type of insurance provides additional income protection that follows the insured, even if they change employers.
Even though these policies are portable, they can still serve as a powerful retention tool by giving key employees peace-of-mind. If a key employee or even the business owner becomes injured or ill, not having to worry about finances boosts mental health, which can lead to better physical health outcomes and a faster, seamless return to work.
“On a group level these benefits are just as important for executive/partner retention as ancillary benefits are for your other employees,” Byrne said.
Guaranteed standard and individual disability policies can be tailored to:
- Cover a higher percentage of income
- Account for bonuses or variable compensation
- Provide longer benefit periods
- Offer true “own-occupation” coverage
Coverage Choices
Business owners have choices in disability benefits beyond the basics. It’s important for brokers to understand the options to convey them to clients.
GSI IDI vs. Individual Disability Insurance (IDI)
“GSI, or Group Standard Issue, is an individual contract offered on a group basis,” Byrne explained. “It spreads risk for the insurance carrier, so it often costs less for the client than true individual disability coverage. As long as we are looking at enough covered lives, we can offer coverage with simplified or even no medical underwriting”
Along with lower group rates, GSI also tends to offer gender-neutral premiums and may have higher coverage levels.
Individual disability income insurance, sometimes called income protection insurance, may be written through the employer, but is an individual policy.
It’s also available for self-employed individuals, gig workers and freelancers who need to generate income even if they become ill or injured.
“Individual Disability protects the insured’s income should they no longer be able to earn for themselves and their families,” Byrne said.
Cross-selling Strategies That Make Income Protection Insurance a Logical Choice
Individual benefits can get complicated. They also span other options, including long-term care insurance (LTC).
Raising awareness and starting the conversation with your client is the first step. “Make it a part of renewal conversations to differentiate yourself as your client’s well-rounded, trusted advisor,” Byrne suggested. “It comes down to knowing your client, because these products may not be feasible for every company.”
The DBL Center is here as your white-label, white-glove back-office staff to guide you through the best options for your clients. We leverage our carrier relationships to shop the policies on your behalf for the best premium rates and highest coverage levels.
Are You Protected?
As an insurance industry professional, you may think you have all the coverage you need. But it’s important to evaluate your own policies periodically, as well.
Disability insurance for business owners and key employees is more than an add-on—it’s a core strategy for protecting income, strengthening client relationships, and growing your book of business.
Let The DBL Center guide you toward the right coverage options.
FAQs
What is individual disability insurance?
Individual disability insurance (also known as disability income insurance or income protection insurance) provides income replacement if an employee or business owner is unable to work due to illness or injury. Unlike group coverage, it’s portable and can be customized to cover a higher percentage of income, “own-occupation” protection, and potentially lower premium rates.
Who should consider individual disability insurance?
Business owners, self-employed professionals, and high-income employees should consider individual disability insurance, since group benefits or required paid family and medical leave insurance programs in some states may not offer enough coverage.
What is the difference between individual disability insurance and guaranteed standard issue disability insurance?
Individual disability insurance is fully underwritten and may require a medical exam. Coverage, pricing, and eligibility are based on the applicant’s health, income, and risk profile. Guaranteed standard issue disability insurance is written on a group basis for individual employees. Speak to a trusted benefits broker to determine what’s right for your situation or the key employees in your company.
