Gap insurance could be your key to get through the employers door and sell voluntary.
As deductibles continue to increase with the rising cost of health care and the enforcement of Affordable Care Act regulations, some experts say gap insurance interest is on the rise. Gap insurance is a supplement to group medical insurance that covers some out-of-pocket costs for those plans with increasingly high deductibles.
Dan McNeill is a gap insurance and voluntary expert currently serving in business development at The Beazley Group, a Lloyds of London carrier. He says gap insurance should be a foot-in-the-door tool for brokers who are skeptical about how to sell voluntary.
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What gap insurance for me has done is its allowed me to go to brokers who are not that big into voluntary benefits and tell them how they can free up money for their employers with gap, he explains. If we raise the out-of-pocket on major medical and bring in reinsurance with 8% to 12%, we return some money to the employees and the employer. Then, we can fund a dental to go from employer-paid to voluntary because the employees will still be saving money on their monthly premiums.
He gives another example: Gap insurance provides first-dollar benefits, so if I go into a family and I save them $40 a month, they can keep $20 for their gas tank and spend $20 on a nice little voluntary accident plan.
In other words, he says, he frees up space with gap insurance for brokers to sell voluntary and still save the employee money on their premiums, while saving the employer money in switching some benefits like dental in the first scenario to voluntary.
This could be a way to pull more group benefit advisers into voluntary sales. Vinnie Daboul, vice president of national accounts at Employee Family Protection Inc. in Glastonbury, Conn., says that right now the brokerage and consulting community just do not understand the power of a really strong voluntary plan. He says that despite hype in the industry about the increasing number of voluntary sales, theres still resistance on the part of many brokers not including voluntary in plan designs.
