The market for supplemental disability income insurance is relatively untapped. Indeed, more than 80% percent of U.S. workers either have no long-term disability coverage or coverage they feel is inadequate, according to a recent study from the Consumer Federation of America and the American Council of Life Insurers.And, a 1997 study by the Life Insurance Marketing and Research Association (LIMRA) concludes that less than half of small-business employers (10 to 49 employees) offer any kind of disability income insurance to their workers.

Sensing an opportunity to increase its sale of disability insurance, executives from Massachusetts Mutual Life Insurance Company (MassMutual) last year began researching the market. Ranked by a 2000 LIMRA international survey as the second-largest seller of individual disability income insurance, the Springfield, Mass.-based company reported $39 million in direct written premium for disability insurance in 2001.

Extensive focus-group research identified two real challenges to MassMutual's goal of marketing and selling more disability insurance to a broader geographic and income client base, says Lawrence Hazzard, assistant vice president of marketing and strategic planning.

"The research showed we first had to educate consumers on individual disability income insurance and how it relates to their long-term disability insurance group plans at work," Hazzard explains. "We also had to explain how supplemental disability policies can be customized to meet individual consumer needs."

A Web Solution

To address those challenges, MassMutual in January launched e-Worksite Solutions, an Internet-based interactive marketing tool.

Comprising two distinct but similar Web sites, the program enables human resource professionals and employee benefits administrators to offer streamlined application and administration of employee supplemental disability income insurance. It also enables employees to buy individual disability insurance based on their personal income requirements.

Sixteen companies have signed up for the program this year, and MassMutual executives expect 10% to 14% of new sales volume will be generated through e-Worksite Solutions by the end of 2002, Hazzard says. However, he declined to provide an estimate on total premiums the site will generate this year.

Online assistance

MassMutual worked with Mintz and Hoke, an advertising agency based in Avon, Conn., to design e-Worksite Solution's interactive Web sites for both employers and employees. The project took one year to develop.

Employee benefits administrators who log onto the site can submit information about their company's long-term benefit plan. By selecting models for low, middle, and high-income employees, program managers can determine the expense shortfalls these individuals would face should they become disabled. MassMutual producers can then offer the most appropriate products for the employees.

If employers choose to offer the program to their workforce, they supply personal census data for each employee. Employees are then notified via e-mail and issued a personal password for security and privacy. During the established enrollment period (30, 60, or 90 days), workers can log on to the site at the office or in their homes any day and time during that period.

Once they're enrolled in the program, employees can use two interactive tools to help them calculate how much supplemental disability insurance they personally need, Sheffield explains. The "needs calculator" and the "savings evaluator" determine how much income they would need to live on in case of a disability and compare how the company's long-term disability coverage and their own personal savings would meet those financial needs versus using a supplemental disability income insurance policy.

SeeING THE gap

It's a common misperception that group long term-disability plans will cover 100% of an employee's salary, says MassMutual's Hazzard. On average, the real figure is 60%.

"The needs calculator enables employees to see the real gap between their major living expenses, such as food and mortgage, and the income provided by his company's long term disability plan," Hazzard explains.

After employees see the shortfall between what their group plan provides versus what income they will actually need to live on, they can choose appropriate supplemental coverage. They can then learn about the cost of that coverage, the payment method required (such as payroll deduction) and submit an application online.

"With our e-signature capabilities, the processing is streamlined and links automatically to MassMutual's backend system, which means a policy can be generated in less than 24 hours," Hazzard explains.

Employees who don't want to apply online can call a toll-free number to receive a paper application from MassMutual directly.

For employers, the e-Worksite Solutions' online billing capabilities allow them to quickly and easily promote, monitor and expand policy benefits with little administration, less paperwork and no added cost.

Two "test-drive" information Web sites, for employers, and for employees, enable site visitors to receive an online demonstration, use of the needs calculator, and information on how to contact MassMutual.

To help acquaint producers with e-Worksite Solutions, MassMutual established a training and marketing program that includes hands-on Web site training, help with lead generation, and presentation programs to employers. "We focus on extensive support and training because we recognize that e-Worksite Solutions is a pretty dramatic paradigm shift for our producers," Hazzard says.

Producer benefits

Traditionally, disability income insurance has been sold as an executive "carve-out" business only offered to a company's high-income earners because it can be a time-consuming process for producers. The e-Worksite Solutions program streamlines the application and sales processes, so producers find it cost-effective to market to middle- and low-income workers as well, Hazzard explains.

To date, more than 1,000 producers have been trained to use the system nationwide.

Brion Collins with Integrated Financial Solutions in Oconomowac, Wis., was the first producer in the country to use e-Worksite Solutions.

"Using this program, companies can provide their employees with a cost-effective, value-added benefit of individual disability insurance without spending extra time and money," Collins says.

"At the same time, this tool also allows producers to differentiate themselves from their competitors and gain access to a company to sell other financial products as well," he says.

When introducing the program at the worksite, Hazzard says producers are encouraged to work with employers to understand the particular needs of their employees and adjust their presentations accordingly.

For example, a producer may have to conduct smaller group or individual sessions with employees if they are uncomfortable or unsure of using the Web site alone.

"To be most successful, our producers must slice and dice a group up front and identify what would be the most effective way to have high participation," he says.

MassMutual currently uses e-Worksite Solutions to target business service industries whose employees use technology on a daily basis to service their accounts. Other businesses such as financial institutions are on the horizon as well. Hazzard says the target market can be expanded because the Web site program will continue to be a part of an integrated approach to marketing within an organization.

"The challenge for our producers is to study a company's dynamics and communication methods and determine the most effective way to educate and reach individuals within that organization," he concludes.

Tina Tapas is a freelance writer based in Prospect Heights, Ill.

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