Competing in the Healthcare Professional Disability Market is About Strength of Coverage
By James Crook 10:32 am MDT 9/16/2020
A group disability insurance (DI) sales strategy that focuses primarily on price leads down a slippery slope towards zero profitability.
Why? There will always be brokers offering a lower price in an effort to take your business. Consistently using price as a primary differentiator is a difficult way to make a living.
But, if you can differentiate yourself by offering a group disability plan that acts like gold-standard Individual Disability Insurance (IDI)-a product that healthcare professionals trust-you position yourself as an expert who understands the income-protection needs of healthcare professionals better than other brokers. In a recent interview we conducted with Bill Buchholz, a group benefits broker with 53 years of sales experience specializing in the healthcare professional DI market, he said:
“I can remember one particular situation with a group of about 500 physicians where they accepted a renewal with an increase of a million dollars. That’s compared to other companies that were willing to come in and offer it at a lower cost. And it was based on the fact that they did not want to change the quality of the benefits.”
“A group of about 500 physicians where they accepted a renewal with an increase of a million dollars. And it was based on the fact that they did not want to change the quality of the benefits.”
Clearly, if a group of healthcare professionals understand why their contract is more valuable than a (significantly) less expensive contract, they are willing to protect their income in exchange for a higher premium.
Using the strength of the contract as your selling point will allow you to gain the trust of your healthcare professional clients by showing them you understand their profession and specialized income protection needs.
This is a win-win, as you provide your clients with the right type and right amount of coverage and insulate yourself from cut-rate competition in this competitive industry.
Here are key factors to highlight when focusing on the strength of the coverage with group disability insurance:
Show a group IDI supplement coverage option instead of a typical group plan.
A good way to start this conversation is to first compare your solution to coverage your clients already value-IDI Most healthcare professionals come out of medical school with an IDI policy rich in features and tailored to their specific needs.
What they often need is more coverage and increased benefits. But this typically involves individual underwriting, higher premiums, and is often not available in amounts that meet the client’s needs.
You can reframe the conversation by positioning group long-term disability (LTD) as an IDI supplement, an employee benefit that acts like IDI while preserving the many advantages of group benefits.
You’re then in a position to explain that typical group LTD coverage is fine for most clients. However, healthcare professionals have specialized income-protection needs best addressed with a specialized group LTD product-group IDI supplement for healthcare professionals.
Group disability insurance built using an IDI supplement chassis includes strong IDI-like provisions while eliminating harmful provisions that healthcare professionals don’t want.
Pay attention to these key provisions in disability contracts:
How are pre-disability earnings defined?
Defining pre-disability income for healthcare professionals is complex. Healthcare professionals typically earn additional income beyond their base salary-where many traditional group LTD policies have narrow definitions of income.
Standard pre-disability earnings don’t account about bonuses, ownership profits, and other sources of income. For a benefit to meet expectations, it needs to consider each income source of the healthcare professional.
How is disability defined?
Typical group LTD plans define disability according to broad specialties; meaning benefits are based on what OTHER healthcare professionals in the national economy belonging to the same specialty do; not the individual healthcare professional applying for benefits.
The definition of disability for healthcare professionals should mirror their IDI policy language: narrow and specific, rather than broad and subjective.
How are partial disability benefits calculated?
Many group DI contracts use either a 50% offset or proportionate loss formula to determine partial benefits.
Typically, lower-earning healthcare professionals’ benefit from the 50% offset while higher-earning healthcare professionals benefit from the proportionate loss formula.
Find a contract that gives your clients the higher of both options depending on their situation.
What offsets are included in the contract?
Ownership income received by the claimant while disabled can drive a dollar-for-dollar reduction of the disability benefit in many typical group LTD policies.
You don’t want your disabled client to experience a reduced benefit simply because they are a partner in their practice.
You must differentiate yourself from other benefits brokers in this competitive market. Demonstrate your expertise by becoming a DI expert.
Originally published at https://brokeradvisor.mgis.com.