Advisor Q&A: How do you handle an aging group?

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In Advisor Q&A, one of our editors asks experienced advisors for their thoughts on a topical question related to the small group benefit and pension industry.

This week's question is: Your client is hiring more seniors than before; as a result the average age of the group is going up. How would you manage this with the potential renewal rate increase for the benefit plan?

  • "I would get together with the client and explain to him the situation, be honest and let him know the facts that an "age" increase could increase renewal rates. In my experience if the client knows and understands the reason to a potential renewal increase it usually wouldn't be an issue at renewal time."
    Sam Bruno, life insurance and employee benefits specialist, Underwriters Insurance Brokers
  • "This really depends on the group. One of the items I always discuss with my clients is what the group benefits are priced based on: age of employees, the benefit design selected and the experience of the group. So clients are aware of the effect of age from the start. If the company is very price-sensitive, we would discuss plan design changes to keep costs level."
    Heather Freed, group benefits, insurance, estate and financial planning, Freed.ca

  • "The potential rate increase can be mitigated by having an internal policy that makes sure if someone is already covered by a spouse's plan then they waive coverage. The greatest risk factor would be the higher potential usage on the health and drug benefit. To mitigate this potential large increase in claims, the plan design should be structured so that the benefits are not unlimited. Having a drug maximum would be a very good start, and also ensure that people who are over 65 are taking advantage of the Ontario Drug Benefit Plan available to seniors."
    Michael Horne, partner, Carleton Financial Group

  • "During our quarterly experience update meeting, I would make sure the client understood that demographic changes are a factor in determining the pooled rates at renewal. I would explain that the increasing average age of the group may affect Life, AD&D, and LTD rates."
    Herb Goedecke, president & CEO, AERO Corporate Benefits

  • "The key is education in advance of the change. If employers are aware of the effect demographics play with rates then it comes as no surprise. We would highlight the increased need and claims that drives this cost as well as the value proposition that the benefits provide to these often key staff."
    Dave Patriarche, Mainstay Insurance Brokerage Inc.

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