You’ve heard of Guaranteed Standard Issue (GSI), but have you ever seen it used to underwrite key person disability insurance policies? Here’s how it works – and how it could be a life saver for the businesses you serve.
The Advantage of GSI
When getting a disability insurance policy, it may be necessary to go through a medical underwriting process that can include answering a series of questions and undergoing a medical exam. This may deter some people from pursuing coverage, either because they don’t want the hassle – or because they know their medical conditions could disqualify them for coverage.
When it comes to employee groups, GSI disability insurance can provide a simple solution. Everyone in an eligible employee group – typically a group with five or more employees – can receive a policy with no medical underwriting needed. There are some drawbacks, including shorter benefit periods and set benefit limits, but GSI gives people with pre-existing conditions a way to secure coverage. It can also help insurance agents overcome barriers caused by people who simply don’t want to deal with a long application process. Learn more about GSI disability insurance.
The Need for Key Person Disability Insurance
Every business depends on people. If key people are suddenly unable to work, the business can be put in jeopardy – along with the jobs of everyone who still works there. Key person insurance provides protection against this possibility.
You may be familiar with key person life insurance, but key person disability insurance also provides important and sometimes overlooked coverage. Many illnesses and injuries don’t result in death, but they do render a person unable to work. Key person disability insurance provides a payout that can be used to keep the business running until the worker can return to work or be replaced. Policies typically provide benefit periods that last between 12 and 24 months, and the money can be used to make up for lost revenue or cover the expenses involved in hiring and training a replacement worker. Learn more about key person disability insurance.
GSI and Key Person DI: A Great Match
Using GSI to underwrite key person insurance won’t always be appropriate, but in the right situation, GSI and key person policies can be a great match. Specifically, GSI key person disability insurance can be an ideal solution for larger businesses.
Imagine a business that has five workers who are critical to operations. They work in different departments – one is a software programmer, two are client managers, and two are executives – but all of them play a critical role in the company’s success. One of the client managers has to take time off from work due to cancer, and even though the worker makes a quick recovery, the impact on the company’s revenues is noticeable. To avoid future disruptions, the company wants to take out key person disability insurance on all five workers. However, getting approved will be difficult due to the recent cancer diagnosis. One of the other workers has heart problems, and one has diabetes. It looks like key person disability insurance might be unattainable – until the company learns about GSI key person disability insurance.
With GSI, all key workers are covered, even if they have pre-existing conditions – and without the hassle of having everyone go through medical underwriting.
Is GSI Key Person Disability Insurance Right for Your Clients?
When you’re helping your clients secure key person disability insurance, ask the following questions to determine whether a GSI option makes sense:
- Does the company have at least five workers to insure? Key person disability insurance can cover one or more people who are essential to the company. If a business only needs coverage for a couple of individuals, GSI won’t be an option. This may be the case in a lot of smaller businesses. However, if a company needs coverage for multiple individuals, GSI can be very attractive.
- Do some of the workers have pre-existing conditions? If all of the workers are young and healthy, it may make more sense to go through the medical underwriting process to get better terms and rates. However, if some of the workers have pre-existing medical conditions that would make that difficult, GSI coverage may be the way to go. Keep in mind that some employees may have health conditions their employers don’t know about! GSI coverage can help companies avoid surprises in the underwriting process if they’re not certain about pre-existing conditions.
Disability is a serious threat to both workers and the businesses that depend on them. For many businesses, GSI key person insurance is the perfect way to control the financial impact of an unexpected disability.
This is exactly what one large accounting firm in Dallas discovered. This company needed key person disability insurance for eight partners, as well as any future partners, and the first-ever GSI key person disability insurance policy made it possible.
Want to learn more? Download the case study to see key person GSI in action.
