Agents are missing a huge sales opportunity with group term life insurance. Most of you think that you actually sell group term life insurance - but you are 100% wrong! You may take orders for group term, but when was the last time that you encouraged an employer to offer group term life where none existed before? Or you initiated a conversation with an employer about voluntary group term life insurance?
The two most common objections to initiating this conversation that I hear from agents are: 1) The employer cannot afford another benefit. 2) There is no money in group term life.
The employer cannot afford to not provide group term life insurance. And from the agent's perspective, I can tell you that group term life, whether employer-paid or voluntary, can be the launch pad to a significant increase in per enrollment revenue. Life insurance is one of the top three most important benefits in the eyes of most employees. As might be expected, a group major medical plan is No. 1 and dental is No. 2 in terms of employee priorities. What is most surprising is that group term life is one of the lowest cost benefits, and yet is perceived as one of the highest value benefits. When coupled with a voluntary group term life program, employers can get a huge bump in employee satisfaction.
According to a June 2010 survey done by Colonial Life for the Society of Human Resource Management, 82% of employees said that life insurance will be important, very important or extremely important to them within five years.
Yet Bureau of Labor Statistics data show only 62% of full-time employees have life insurance as a benefit. Specifically, 56% of groups with fewer than 49 employees do not offer group term life and 43% of groups with 50 to 99 employees do not offer it. (See chart)
* 56% of married couples with children younger than 18 believe that they need more life insurance;
* Less than 30% of single parents own any life insurance;
* 75% of married couples want life insurance as a replacement for lost income or final expenses;
* 59% of employees consider the presence of life insurance benefits to be extremely important to their loyalty;
* a Businessinsurance.com study shows that only 23% of companies offer voluntary group term life insurance.
Low cost - high perceived value
The beauty of group term life insurance is that it is an incredibly low-cost benefit. A $10,000 life insurance benefit should cost an employer less than $5.00 per employee, per month, depending on the ages of the employees.
It is coverage that an employee can buy regardless of health. As a general rule the more eligible employees, the greater the amount of guarantee issue.
Voluntary term advantage
The dual option voluntary term offering combines traditional group term life with an opportunity for employees to purchase an individual life policy. By offering it, the employer gives employees an opportunity to design a life insurance program that is right for their lifestyle.
The voluntary group term life product can be a great value for the employees. For the money, no other option can compare with the rates for a true group voluntary life insurance program. A sample rate per thousand dollars of coverage on a voluntary group life plan for a 35 year old can be around 8 cents per month.
Despite its advantages, however, there are two huge drawbacks to voluntary group term life. The first drawback is a lack of policy portability. While some plans offer the employee the possibility of keeping the plan after termination of employment, it is generally predicated upon the group keeping the master contract in place.
The second drawback to the true group voluntary is a significant decrease in coverage at age 65 or later with a simultaneous increase in premiums. Therefore, as a second option an individual policy is offered to employees. Personally, I use term to age 100 since it is low cost and ignites less resistance from the employer.
Offering a voluntary, dual-option group term life plan will be seen as a huge benefit by employees and your participation will be extraordinarily high. Most important of course is the fact that you are providing needed life insurance protection while simultaneously increasing your group revenue significantly.
Reach Schlesinger at (336) 777-3938.
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