Group Short and Long Term Disability Insurance 2-9 Lives

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Group Short and Long Term Disability Insurance

2-9 Lives

small em ploy e r i n c o m e protec ti o n pla n

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1 in 3

Workers over age 30 will

become disabled for at least 3

months during their career

5

Why Small Employers

Do Not

Offer

Disability Coverage ....

Why Small Employers

Need To

Offer

Disability Coverage ....

1 in 5

People are likely to suffer a

serious disability between

the ages of 35 and 65

4

77%

Cost of coverage is

too expensive

1

58%

Disability is not likely

in our line of business

2

$206

Average annual cost per employee for

LTD coverage

3

Protect Your Greatest

Assets

Disability income insurance helps to protect one of our greatest assets, “our ability to earn a living.” The risk of becoming disabled is far too great for employees to overlook, and the fi nancial implications can be devastating. Small employers need group disability income coverage like any other employer. Employers will benefi t from providing coverage for their employees, in addition to realizing improved recruiting, retention, employee morale and performance. The need for income protection is clear and Custom Disability Solutions (CDS) offers a Small

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Plan Description

STD and LTD

Employer Eligibility

Participation Requirements

• Firms in business more than two years • Firms participating in Social Security

• No employees residing on employer’s premises are eligible

The following minimum participation requirements must be met:

• 2 - 5 eligible employees – all must be insured

• 6 - 9 eligible employees – all but one must be insured

To be considered disabled means that as a result of injury or sickness:

1) During the elimination period and fi rst 36 months of disability benefi ts:

• Regular (Own) Occupation defi nition (includes reasonable employment option); and

• Earning less than or equal to 80% of pre-disability earnings.

2) After the fi rst 36 months of disability benefi ts:

• Any Occupation defi nition

• Earning less than or equal to 60% of pre-disability earnings

Defi nition of Disability - LTD

Group Policy Effective Date

• The effective date is the fi rst of the month following receipt and approval of all application submission materials

Employee Eligibility

• Eligible employees are those actively working full time for a minimum of 30 hours per week year round, who have satisfi ed the employer’s minimum service requirement

To be considered disabled means that as a result of injury or sickness:

• Employees are prevented from performing the material and substantial duties of their own job (includes reasonable employment option); and • Earning less than or equal to 80% of

pre-disability earnings.

Defi nition of Disability - STD

Contribution Levels

• Provided all participant requirements are met, employees may contribute up to 100% of premium

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Plan Features: STD

1 . 6 6 . 7 % a n d 7 0 % o p t i o n s a r e o n l y a v a i l a b l e f o r P r e f e r r e d R i s k E m p l o y e e s .

Group Size 2 - 9 Employees (available in most states)

Monthly Benefi t 50%, 60%, 66.7%, or 70%1_{of basic weekly earnings to a $1,000 weekly}

maximum benefi t, less other income benefi ts. Flat amounts of coverage for all (not to exceed 70% of weekly earnings), less other income benefi ts

Guarantee Issue Coverage is available without evidence of insurability for all eligible employees who enroll within 31 days of eligibility

Elimination Period Zero days for injury or seven days of injury/seven days of sickness

Benefi ts Commence First day of injury or eighth day of injury/eighth day of sickness

Benefi t Period Choice of 13 or 26 weeks

Pre-Existing Conditions Limitation

Three months prior/6 months after

(Pre-Existing Conditions Limitations may vary by state)

Coverage Type Non-occupational

Maternity Benefi ts Paid as any other illness

Recurrent Disability 14-day return-to-work period

Contributions Employers can pay all, part of, or none of the premium

Carve Outs Permitted for two or more eligible employees within a class. Carve outs cannot exclude preferred risk employees

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Plan Features: LTD

Group Size 2 - 9 Employees (available in most states)

Maximum Monthly Benefi t 50% or 60% of basic monthly earnings1 _{with a choice of $3,000, $5,000}

or $6,000 monthly maximum benefi t, less other income benefi ts

Minimum Monthly Benefi t 11% of the insured’s pre-disability earnings

Guarantee Issue Coverage is available for all eligible employees who enroll within 31 days of eligibility

Elimination Period Choice of 60, 90 or 180 days

Benefi t Period Preferred Risk Employees2_{- to age 65 for injury/sickness}

Standard Risk Employees - to age 65 for injury/the lesser of fi ve years or to age 65 for sickness

Pre-Existing Conditions Limitation

12 months prior/12 months after3

Survivor Benefi t Three times the last net monthly benefi t amount payable in a lump sum

Mental Illness and Substance Abuse Limitation

Up to 24 months of benefi ts per lifetime

Integration Full family Social Security

Premium Waiver No premium charged while the insured is receiving benefi ts under the policy

Contributions Employers can pay all, part of, or none of the premium

Carve Outs Permitted for two or more eligible employees within a class. Carve outs cannot exclude preferred risk employees

Rate Guarantee Initial rate guaranteed for 36 months

1. Defi nition of Earnings - basic salary exclusive of overtime, bonuses and other special forms of compensation. Commission earnings will be based on the average monthly commission earnings of the prior 24 months. K-1 earnings of owners included, where applicable.

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Benefit Highlights

T he following benefits are standard with our STD and LTD plans:

Rating & Pricing

Our LTD plan provides a limited benefi t for a disability from a pre-existing condition that occur within the fi rst 12 months of coverage.

It pays 30% of basic monthly earnings, to a maximum of $3,000 per month, less other income benefi ts for up to 12 months.

Our Rehabilitation Benefi t provides services to assist an employee with returning to active full-time or part-time employment. Available services include:

• Vocational testing and training

• Job modifi cations

• Job placement

• Other services as recommended to help the employee return to active full-time or part-time employment

Pre-Existing Limited Benefi t - LTD

Rehabilitation Benefi t

Pre-Existing Limited Benefi t - STD

Our STD plan provides a limited benefi t for a disability from a pre-exisiting condition that occurs during the fi rst six months of coverage.

It pays a limited benefi t equal to the lesser of 50% of the weekly benefi t, or $50 per week for a maximum of 5 weeks.

Web Accessible Rating

Fast, Easy and Accurate

All quoting and rating of our Small Group STD and LTD product is done online through a web accessible rater. The rater allows your fi eld offi ces and those with quoting authority to quickly and accurately generate Small Group STD and LTD quotes on potential new business. The site is secure. Users are provided with a username and password. Once users are logged in, they simply follow the step-by-step process to generate a quote.

Return-to-Work Incentive

Our STD and LTD plans include an incentive for the insured to return-to-work while disabled.

For the entire STD benefi t period and for the fi rst 12 months of LTD benefi ts, there is no offset for other income amounts, including work earnings, until the sum of the other income, work earnings, and the insured’s gross benefi t exceeds 100% of the insured’s pre-disability earnings.

Workplace Modifi cation Benefi t

This provision provides a benefi t to the employer to facilitate the employee’s return-to-work.

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Protecting

Small

Business

An insured owner, sole proprietor, partner, or shareholder who is responsible for payment of business overhead expenses may be eligible for this benefi t.

If he or she becomes totally disabled, we will pay his or her company a BOE benefi t while he or she remains totally disabled.

The BOE benefi t will be paid only to reimburse the company for the business overhead expenses for which the insured is responsible to make.

Business Overhead Expense (BOE)

What Is BOE?

BOE Benefits

This benefi t is the lesser of 15% of the insured’s pre-disability earnings or a maximum of $2,000, $3,000, or $5,000 for 12 or 24 months.

The benefi t will be paid to reimburse for the following business overhead expenses:

• Salaries

• Employment taxes

• Employment benefi t costs

• Rental payments for property and equipment

• Interest on mortgaged business property

• Utilities

• Accounting and legal fees

• Business insurance expenses including premiums for property and/or liability coverage

• Interest on business debts

• Property taxes

• General offi ce supplies

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600 Sable Oaks Drive, Suite 200 • South Portland, ME 04106 1-877-646-8708 • www.customdisability.com

2 - 0 6 0 2 - 0 9 Statistic Source List:

1. “Disability Income Insurance - Penetrating the Small Employer Market,” American Council of Life Insurers, March 2002 2. Ibid

3. Kaiser Family Foundation, Employee Health Benefi ts, LIMRA Surveys; NAIC website; Best’s Review, 2001-2003 4. “Life Insurers Fact Book,” American Council of Life Insurers, 2001

5. Disability Survey of Full-Time Employees, America’s Health Insurance Plans, August 2004