A candle company recently released it’s 2020 scent of the year. The packaging for the candle is unique and it appropriately depicts this memorable year:

Just as individuals are experiencing changes, businesses are also changing and moving with opportunities. In January of this year we were asked by a financial institution to review their CEO’s insurance benefit package. We met with the CEO in his office and he pulled out the policy which the company provided as an executive benefit. He had a whopping amount of coverage to the tune of $200,000. His comment was that he felt like that was plenty and he just wanted to make sure his wife was taken care of if something happened. My wife says I don’t hide my feelings very well with my facial expressions. Apparently, this was one of those moments and I did not reserve my thoughts well enough. The CEO quickly added that he had another $150,000 in group benefit life coverage. The way that he said it was like he was adding frosting to the cake, but I’m pretty sure my expression didn’t change. I’ve got to work on that.

What happened next was pretty unique. He simply asked, “how much insurance do I need?” I suddenly felt like this test of how I would respond. Was he going to have me calculate the number right there in front of him, or was he waiting for me to toss out the casual guestimate rounded to the nearest million? For this approach I tried something different. I asked to come around to his computer and to open a web browser to lifehappens.org. From there we went to the life insurance needs calculator and walked through his own numbers. It only took a couple minutes, but he determined that his life insurance need was just over $2,200,000. That was his number and not mine. He was amazed that such a tool existed and didn’t know there was a way to find out how much he actually needed. He made a joke about not telling his wife about this number until new coverage was in place, and then after that he would sleep with one eye open.

The conversation then turned in a different direction. He asked if his employees could use this tool as well to make sure their families were protected. He said they have a group life plan provided by the institution, but he wasn’t sure if the employees were taking advantage of it or had the right amount of coverage. I then asked him if we could review this group plan and we might be able to make some improvements for all the employees. He gave us the green light and we moved ahead.

It took a while to gather the data but once we had it, I called Bart Spencer “The DI Nut” for backup. Some advisors might not know this, but we have a great resource for group benefits at Allegis. We quickly made a summary of their benefits for each coverage option and then broke down the pricing. We found out that we could make some serious improvements to their coverage. For example, we were able to increase their long-term disability benefits from $5000/mo per employee to $6,000. We also carved out the executive team and increased their long-term disability benefits from $5,000 to $12,000/mo. We increased their short-term coverage in similar fashion. Short term disability was a hot button as this is the benefit that will pay if any of the employees contracted COVID. In all benefits were increased across the board within their group plan. In fact, we also reduced their premium by over $7,000/year.

When this was presented back to the CEO, he gave us the green light to replace all their group benefits with the changes we had suggested. The case was submitted to Principal and the ball started to roll. We were happy with the annual savings and increased benefits, but the CEO had another idea. He said reporting this to the board was going to be easy and the changes would be implemented, but he would like to do something with those dollars saved. He was concerned about some of his key employees and wanted to incentivize them or at least provide them with a perk that helped protect their families. We discussed a simple 162 bonus plan which used part of those savings to purchase life insurance on those key individuals. In total 5 new cases were submitted through the VIVE app and were issued. The board then came back and wanted a keyman policy on the CEO as well. A total of 6 new life cases were written. Lastly, the bank wanted a key person disability policy on the CEO which we combined for a premium discount using their group coverage. That policy pays the bank $25k/mo for a year and then a lump sum of $150,000 at the end. All of this was for $500 more a year than what they were currently paying. Total annual premium came to just over $90,000/year. Benefits were increased substantially, but out of pocket expenses increased by only $500.

If you know a business owner, think about reviewing these plans. Every business that has a keyman, single owner, partnership, or debt should be reviewing their insurance coverages. Whether it is for death, disability, or group coverages those plans should be updated and secured. We talk about triggering events that should initiate a review of coverages. Everyone in the world has just had a triggering event. Businesses are on the front lines which includes owners, employees, and their families. Every business owner is a potential individual client and vice versa.

We have great resources readily available to help your practice at Allegis. Give us a call if you want to brainstorm ideas or need help reviewing a possible case.