Key Talent BenefitsSupplemental BenefitsTrends

Attract Key Talent with Supplemental Benefits

By September 1, 2019 October 15th, 2019 No Comments

As a way to add contemporary appeal to executive total reward programs, many companies have opted to bolster traditional group life and disability policies with supplemental carve-out benefits. Basic benefits are often capped at limits which are not proportionately meaningful to overall compensation for highly compensated executives. They fall well shy of adequate wage replacement or survivorship income and may run counter to a company’s philosophy of equity with respect to risk oriented benefits for employees.

The benefit disparity is easily identified using Gap Analysis modeling; illustrating benefit shortfalls for the executive population, as compared to both a company’s intended coverage levels as well as competitive peer benchmarking. The good news is carriers have recently starting pricing premiums more competitively and underwriters are offering higher guaranteed issue limits (i.e., the amount of benefit they will accept without medical underwriting requirements). It makes this a great time to creativity explore ways to remedy benefit disparity for executive-level employees.

Executive Supplemental Disability

While basic group LTD plans may only cover a fraction of an executive’s total compensation, Executive Supplemental Disability extends an additional layer of coverage to more appropriately insure the full earnings picture – base salary plus bonus and other variable income. When offered as an employer-sponsored program, the company is able to take advantage of both guaranteed issue underwriting and premium savings as much as 25-40% off retail rates.

Supplemental Executive Life

Similar to group disability plans, basic group life plans often do not provide a meaningful level of coverage. Employers use creative Executive Supplemental Life programs to provide much higher limits or cover higher salary multiples. In some instances, the plan is combined with products that allow for tax-advantaged cash value accumulation that may provide an attractive supplemental retirement planning income source for the participants. Supplemental Executive Life programs also provide benefit portability so executives may keep continue the policy if they separate service.

Summary

Staying up to date on competitive offerings in this segment of the compensation market is critically important in today’s job market. As a part of an overarching employee benefits strategy, the creative application of a supplemental executive carve-out benefit program provides a much needed tool and contemporary approach to attract, retain and reward key talent.

Insurance services provided through Rouse & Company. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Rouse & Company. This site is published for residents of the United States only. Registered Representatives of Kestra Investment Services, LLC and Investment Advisor Representatives of Kestra Advisory Services, LLC, may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. Neither Kestra IS or Kestra AS provides legal or tax advice. For additional information, please contact our Compliance department at 844-5-KESTRA (844-553-7872). Check the background of this firm on FINRA’s BrokerCheck.