Employee
Protection
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Why talk to business owners about disability insurance?
• Increase daytime
activity
• Broaden prospecting
opportunities
Businesses
with <100
employees
81,000
Businesses
with 100-500
employees
Total # of
employees
• Capitalize on
cross-selling
5.6 million
• Set yourself apart by
meeting different needs
Small Business Market in the US*
55 million
• Owners are typically aware of risks:
− Their business closing or failing
− Not being there to run their business
− Letting down the people who rely on them
* Statistics of U.S. Businesses; U.S., NAICS Sectors,
Small Employment Sizes Data: Number of Firms,
Number of Establishments, Employment, and Annual
Payroll by Small Enterprise, Release Date 10/2012.
http://www.census.gov/econ/susb/#.
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Employee benefits are key to small business success
11th Annual MetLife Study of Employee Benefits Trends, 2013
• The top benefits objective for small businesses is controlling health
and welfare costs, followed closely by retaining employees
• Life, dental and disability benefits are key drivers of employee loyalty
Satisfaction with benefits is connected to greater employee loyalty
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What kind of businesses are a good fit?
White collar/professional firms
• Engineering and Technical Firms
• CPAs
• Law Firms
• Physicians and Dentists
• Commercial Real Estate Firms
• Mortgage Brokers
• Surveyor Firms
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Types of disability protection for business owners
Business Protection
Business Overhead Expense & Buy-sell disability insurance
Reimburse covered business expenses when a business owner
becomes disabled. Provide funds for co-owners to purchase the
ownership interest of a disabled owner.
Personal Protection
Individual disability insurance
Protect business owners and their families by allowing them to
continue to receive a portion of their income if they become disabled.
Employee Protection
Salary Continuation Plan funded with disability insurance
Protect employees who become disabled without putting undue
burden on the business.
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When to focus on employee protection
• At least two employees
(three or more could qualify
for MultiLife discounts)
• Employees include family
members or friends
• Business owner relies on
key employees
• The owner wants to
provide for employees –
and protect the business
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Concerns about employee disability
• Keep the business running
• Provide more for select employees
• Have funds to pay a disabled
employee indefinitely and possibly
hire a replacement
• Avoid dipping into business
reserves or personal savings
• Factor in tax considerations (the
IRS may view any payment as a
settlement or gift, not as salary, and
it may not be tax-deductible)
Help clients discuss their concerns
Do you have family members or key
employees working for you?
Who would provide for your employees
and their families if they became disabled?
Would your business suffer without
them or a replacement?
How long can you afford to pay disabled
employees and their replacements?
Could you continue to take your salary
if you were disabled?
Where would you find the funds?
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Solution
Salary Continuation Plan
funded with disability insurance
A Salary Continuation Plan describes what your
business will do if an employee becomes disabled.
By funding the plan with disability insurance, the
business won’t bear the entire financial burden.
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Strategy
Determine which
employees the
business owner
wishes to cover and
how much he/she
wants to provide.
Set up a Salary
Continuation Plan. The
plan must be in writing,
formally adopted and
communicated to covered
employees before a
disability occurs.
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Purchase disability
insurance for
covered employees
to fund the plan and
take the burden of
paying a disabled
employee off the
business.
Why fund with DI?
Just having a plan in
place will help provide
for the employees &
protect the business
Without a Plan
But funding the plan with
DI provides more
certainty regarding
benefit payments
With a Plan
Self-Funded
Insured
Payments considered income
No
Yes
Yes
Tax-deductible payments
No
Yes
Yes*
Payment Amount
Unknown
Unknown
Fixed
Payment Duration
Unknown
Unknown
Fixed
Owner
Owner
Insurer
No
Yes
Yes
Who determines when a
disability has occurred
Employees assured of
receiving income
*Tax-deductible insurance premiums
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Let’s see the employee protection story at work
Meet Elaine
• Owns an architectural firm
• Has four employees, including
her son David
• Wants to provide for all her
employees and their families in
case of a disability – especially
David
• Looking for a way to help keep
her business going if she or an
employee can’t be there to
contribute
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Concern
Elaine example
Provide for a disabled employee – and help keep the
business going, while making sure her son and his family are
protected
• The IRS may view any payment as a settlement or gift to the
employee, not as salary, and Elaine may not have the option
to claim the amount as a tax-deductible business expense
• Employee morale and productivity could suffer if she can’t
afford a replacement to pick up the work load
• Her business’ finances and success could suffer if she
provides the funds out of business proceeds
For Producer Use Only. Not for Public Distribution.
Solution
Salary Continuation Plan funded with
MetLife disability insurance
• Allows Elaine to provide benefits for all
employees, plus carve out special
benefits for herself and her son
• Premiums can be included in monthly
budget and are usually tax-deductible
• At MetLife Elaine can qualify for a
MultiLife discount, saving up to 20% off
unisex premiums
• MetLife will handle policy administration,
taking more burden off Elaine
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Elaine example
Strategy
Elaine example
What would it cost Elaine to
protect herself, her son and
her employees with a Salary
Continuation Plan funded with
disability insurance?
Ask your client to consider
How does budgeting just over
$400 a month for her whole
company compare to possibly
self-funding just one employee’s
monthly benefit amount unexpectedly
and for an unknown length of time?
This example is hypothetical and for illustrative
purposes only. Actual results will vary.
Monthly
Benefits
Premiums
Annual
Monthly
Group 1: 60% of salary
Elaine
$7,500
$3,136
$271
David
$5,000
$985
$85
Group 2: 40% of salary
Employee #1
$3,350
$317
$27
Employee #2
$2,650
$213
$18
Employee #3
$1,650
$109
$9
$4,760
$410
Total cost to the business
SM
Assumptions for all: MetLife Income Guard with 20% MultiLife discount off
unisex rates. 6S Occupational Class. Non-smokers. 90-day elimination period.
Elaine: $150,000 salary. Age 56. To age 67 maximum benefit period.
David: $100,000 salary. Age 36. To age 67 maximum benefit period.
Employee #1: $100,000 salary. Age 44. Two-year maximum benefit period.
Employee #2: $80,000 salary. Age 40. Two-year maximum benefit period.
Employee #3: $50,000 salary. Age 32. Two-year maximum benefit period.
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Benefits to Elaine
Maintain reserves
This plan can help avoid dipping into personal income or
business funds
Confidence
She can feel good about providing for her employees,
especially her son and his family, and knowing that she will
also receive income if she is the one who is disabled
Plan in place
Elaine can avoid the uncertainty of how to handle a
disability
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Benefits to the employees
Recovery
Employees with adequate
coverage may return to work
faster*
Income Protection
DI benefits can help maintain their
lifestyle and provide for loved
ones
Morale
Knowing they have an employer
who will provide for them can
improve their workplace
experience
*2010 MetLife Study of the Emotional and Financial Impact of Disability
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Benefits to you
Get in the door
Clients may be glad to hear about a Salary Continuation
Plans, which could help relieve their uncertainty even if
they don’t purchase an insurance policy
Conversation starter
Discussing Salary Continuation Plans can lead to
conversations about business overhead expense
insurance, buy-sell insurance or individual disability
insurance for the owners
Future sales
Business owners have multiple needs, so the initial sale
can lead to multiple sales, plus referrals to employees or
family members
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Reach out to clients and prospects
Postcard
Letter
Grab attention through mail
Ads for local publications
Phone Script
Tips on messaging &
handling objections
For Producer Use Only. Not for Public Distribution.
Meet with clients & prospects
Client Brochure
In-depth story with hypothetical example
For Producer Use Only. Not for Public Distribution.
If this isn’t your client’s story
Profiling Tool
Handy guide to help you match
your clients’ concerns with the
right story for their needs.
For Producer Use Only. Not for Public Distribution.
Want to learn more?
Contact your Regional Sales Vice
President or call the Sales Desk.
For Producer Use Only. Not for Public Distribution.
Important information
The information contained in this document is not intended to (and cannot) be
used by anyone to avoid IRS penalties. This document supports the promotion
and marketing of insurance or other financial products and services. Clients
should seek advice based on their particular circumstances from an independent
tax advisor since any discussion of taxes is for general informational purposes
only and does not purport to be complete or cover every situation.
MetLife, its agents, and representatives may not give legal, tax or accounting advice and
this document should not be construed as such. Clients should confer with their qualified
legal, tax and accounting advisors as appropriate.
Disability insurance is issued by Metropolitan Life Insurance Company, New York, NY
10166. All policies, riders and provisions may not be available in all states, at all issue
ages and to all occupational classes. May 2014
BDDI24006 L0514374717[0515][All States][DC,PR]
© 2014 METLIFE, Inc. Peanuts © 2014 Peanuts Worldwide
For Producer Use Only. Not for Public Distribution.