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Employee Benefits
"Employee Benefits" typically refers to employer sponsored Group Insurance
and or Group Pension and Group Registered Retirement Savings plans.
Assumption
Purchasing Group Insurance and or establishing a Group RRSP is a seemingly
simple process. There are many vendors, therefore the price and benefit
offerings must be competitive right? Wrong!!
Unless you have a competent broker consultant working for you, buying
Group Insurance is often akin to choosing a Cable TV package: you're
forced to accept things you don't want in order to get what you need.
Get Help
A good broker consultant is worth much more than most employers realize.
Unless you know exactly what you're doing, avoid dealing directly with
insurance companies. You wouldn't want the fox guarding the chicken coup
would you? In fact, most insurers will advise you to use a licensed
intermediary (broker consultant) as they are not licensed to transact a
sale directly.
Choose a Good Broker Consultant
Sadly, most employers don't know how to determine if a broker consultant
is truly competent, up-to-date and honest. Many unwittingly entrust their
benefits plan to a slick salesperson with plenty of people skills but
little substantive knowledge. Doing so can attract significant legal
liability especially when large claims are rejected and employees turn to
the employer for financial remedy.
A big name brokerage firm is only as good as the account representative
servicing your account. Don't be fooled. Most are profit and results
driven, relegating your best interests to secondary status.
Who is Your Broker Consultant?
In British Columbia, anyone with a Life Insurance license can sell Group
Insurance and proclaim to be an employee benefits expert.
Also, just because someone has held a Life Insurance license for many
years doesn't mean that he or she is up-to-date or sufficiently knowledgeable
or is working in the client's best interest. Many so called "experts" are
jacks of all trades selling a myriad of individual insurance products.
Some may be motivated to keep your premiums high simply to maximize
commissions.
The guy that takes you to lunch, buys you gifts, and gives you NHL tickets
might simply be a slick salesman bent on retaining your confidence and
keeping you in the dark.
When was the last time you checked your group insurance broker's detailed
resume? Were you given a copy? Did you ask for one? Why not?
Your Best Defense
Knowledge is your best defense. It empowers you to determine whether a
broker is competent, honest and working in your best interest or whether
the insurance company is being allowed to take advantage of your
organization.
If you don't know how to calculate Dental, Extended Health Care, and Short
Term Disability insurance rates, you're at a definite disadvantage. The
truth is many self-proclaimed brokers or consultants can't calculate these
rates either. They're simply happy to relay the insurance company's
explanation without question or pause.
Get to know CITT
CITT is an acronym for the following 4 things you must know about how
Dental, Extended Health Care and Short Term Disability benefit rates
should be determined:
- Credibility Factor
- IBNR (Incurred by not reported) claims
- Target Loss Ratio
- Trend Factor
If you don't know what the above terms mean, and precisely how they impact
your rates, you've been kept in the dark. Your broker is either
disinterested, unable or unwilling to help you obtain a basic
understanding of the principals of insurance.
Due Diligence
Get a Second Opinion, in Writing. It can't hurt. If anything, it will
demonstrate to your employer that you've done due diligence.
Get my opinion here |
