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How to negotiate for better insurance during tough budget times

The truth is your organization’s LTD Insurance policy probably contains “administrative claims guidelines,” which will never appear in the policy contract. An example of these guidelines is the six-week payout for a routine pregnancy claim. It takes an experienced professional to negotiate exceptions to these guidelines: most employers (and brokers) miss this important aspect because they consider LTD Insurance an ancillary, rather than a core employee benefit.

Some insurance companies are sneaking in new “cost containment” language at renewal time, for instance, special limits on back and neck conditions or even language that requires mandatory surgery in order to continue disability payments! How to protect yourself: ask your agent or broker to obtain a letter from the insurance company, agreeing to disclose such changes prior to their implementation.

Don’t forget:
Long-term Disability only insures your paycheck. In order to also extend coverage to your savings and retirement, you should consider Long-term Care Insurance.

Do some of your participants have more than 20 years of service in your retirement system? Does LTD Insurance still pay? Some advocate dropping it altogether after 20 or more years of service.

Comments: In the early years following date of hire, Long-Term Disability payments are most valuable and may pay 67% of earnings or more. Yet these contracts contain an offset clause, which reduces claim payments by the amount of potential monthly retirement benefits. In fact, many LTD Insurance contracts require a mandatory retirement application, following just a few months of disability. At least one Bay Area employer has moved ahead of the pack, and has started to offer Long-Term Disability with multiple plan options, allowing older employees to scale back LTD coverage and put the premium savings into valuable LTC (long-term care) coverage. After 20 years, many experts consider LTC coverage more valuable than LTD Insurance.

There are real advantages to converting your LTD Insurance program to a dual-choice long-term disability plan (or triple-choice with LTC). This benefit enhancement costs nothing to the employer. To talk with one of our consultants contact us below.

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About the Author

Marc Derendinger, Insurance Broker, A. Francois Derendinger Insurance Agency, Inc.
1133 Saratoga Avenue
San Jose, CA 95129

If you would like to re-print this article, please contact the author.
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