When is the last time you bought a car? While the price was a big factor, you probably also considered fuel efficiency, safety ratings, upgrades, etc. Look at your group’s life insurance renewal in the same way. There are three important considerations when renewing your plan: policy and contract matching, premium drivers, and customer service!
When you receive your life insurance renewal, make sure that your employee contracts and policy are a match. A deviation in a definition or coverage amounts could leave your organization open to liabilities. Make sure that all employee salaries are covered, any benefit changes due to negotiations are included, and employees are provided continued life insurance during certain types of paid/unpaid leaves of absences (if applicable).
‘How much does this cost?’ is most likely your bottom line. And if you receive an increase on your renewal, you want to understand why.
The carrier looks at several things when pricing your life insurance plan – including but not limited to: loss ratio (experience), census demographics, plan design, location, and industry. Loss ratio is the ratio of total losses incurred in claims plus adjustment expenses divided by the total premiums earned. For example, if an insurance company pays $50 in claims for every $100 they collect in premium, then your organization’s loss ratio is 50%.
Open claims are also taken into account when it comes to deciding how much premium you need to pay. Employees who are currently disabled and out on Life Waiver of Premium1 are considered open claims by the insurance carrier. The carrier expects these claims to either close or pay out sooner rather than later.
Certain benefits or details within your policy may also be premium drivers. These include provisions such as having an Accidental Death and Dismemberment (AD&D) rider, covered retirees, or no age reductions2. You could reduce your overall premium by making tweaks to these benefits.
Good customer service can go a long way. Bad customer service is enough for some employers to consider changing insurance carriers even if they didn’t receive a premium increase on their life insurance. Think back to your latest interactions with your insurance carrier. Was it easy to get in touch with them? Did they quickly resolve the issue? How did your last claims experience go?
Your agent is a good resource to help you understand how your group is priced regarding your life insurance renewal. They can also act as a liaison for you if you’re having issues with your insurance carrier.
For questions, contact your NIS Representative.
1Most life insurance policies have a Waiver of Premium provision where employees who are out of work due to a disability can have their life insurance premium payments waived until they come back to work.
2Age reduction is when the life insurance amount benefit reduces according to a graduated schedule when the insured reaches certain age milestones, usually 65 or 70.