INDIVIDUAL EXECUTIVE BENEFITS

Many organizations strive to offer competitive executive benefit programs but find it difficult to address the complex issues surrounding executive corporate benefits.

Senior executives are often provided with inadequate insurance coverage from group life and long-term disability programs. Often, they are subject to benefit limits and restrictive contractual provisions that do not recognize the level and structure for items, such as bonuses or incentive income. 

LMB Insurance provides a thorough analysis of your group benefits plan and helps identify areas where there may be unfunded benefits or even liabilities as committed to in an employment agreement. 

We will assist you in creating an executive benefits plan that will help clients recruit, reward, and retain your key employees. If our analysis shows that it is necessary, we will design a plan to replace, wrap around, or service the existing plan to bring your total program up to current expectations.

How would your organization respond to a disabled senior executive whose benefit entitlement was significantly limited due to the group insurer’s inability to accommodate their intended coverage?

• The Canadian group insurance market has provided very limited increases in benefit levels over the last decade and typically insures only a portion of an executive’s total compensation;
• Insurers limit the coverage for executives who have either high incomes and/or derive a large portion of their income from performance-based earnings (i.e. bonuses, other incentive compensation arrangements, and commissions); and
• As a result, many of these programs are not able to provide the organization’s most senior employees with the intended benefit levels offered to all other employees.

Organizations commonly take one of two approaches when providing supplemental coverage to their group insurance programs:

• To make their executives “whole” with other employees by implementing coverage based on the benefit formula to which all other employees are entitled; or
• To deliver a more comprehensive benefit program that recognizes executive      compensation structure and seniority within the organization.

LMB will work closely with your senior human resources staff to understand your company’s philosophy, provide guidance on industry trends, and give feedback on the competitive position of your life and disability program.

LMB Insurance will review your:

• Plan design;
• Contractual benefit limits;
• Contractual provisions and definitions; and
• Unfunded employer liabilities in which benefit entitlements have been stipulated in employment agreements.

LMB Insurance offers solutions that meet the benefit objectives for your organization’s senior executives by:
1) Creating more innovative executive benefits as part of an overall benefit plan; and

2) Helping to protect, reward and retain your senior executives
 

DISABILITY INCOME REPLACEMENT RATIOS
The following example illustrates the impact of a group plan’s maximum LTD limit on an executive’s income protection.

Disability program structures

1) Structure for one executive: top-up supplemental policy

• Personally owned, non-taxable coverage; and
• Employer reimburses executive for premium.

2) Structure for two or more executives: wage loss replacement program (WLRP) tax structure

• Tax-deductible premiums available to the employer rather than the executive);
• Premium discounts up to 25 percent; and
• Premiums provided to all eligible executives of a defined class.

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3) Structure for larger executive groups: guaranteed issue coverage

• Benefits for groups of 10 or more with only two qualifying questions;
• Premium discounts up to 25 percent;
• Monthly benefits up to $25,000 (based on the number of insureds); and
• Individual claims do not impact Group LTD claims (insulates program eligibility from high claims experience).

Executive life insurance

• Group plan formula considers executive earnings in maximum benefit coverage;
• Earnings definition excludes bonus/incentive income;
• Requires medical underwriting;
• Offers minimum guaranteed terms of 10 years, enhanced contractual provisions, full portability;
• Overall premium rate reductions over past 20 years; and
• Costs equal to/below group optional life programs.

LMB’s experience in the executive benefits marketplace spans hundreds of clients across dozens of professional industries. Our approach is to bring strategies and practical solutions to our clients’ needs.

For more information on executive benefit options, please contact LMB Insurance today.