Now that we have that out of the way, just a few housekeeping notes. In the upper right-hand corner, you'll find some handouts. If you have any questions, please type them into the chat or the Q&A section. We’ll make sure to address them as we go.

I’m excited to have Rocco here with us today. He’s an Employee Benefits Representative with Mutual of Omaha and is joining us again—this is either his second or third session with us. Next week might be his third. Today, we’ll be covering an introduction to Life Insurance for two CE credits. So thank you again for joining us, and I’ll hand it over to Rocco.

Thank you, Elise. Hello, everyone. Great turnout—looks like we have 51 people with us. Again, my name is Rocco, and I’m with Mutual of Omaha. We partner with URL and many other brokers in the employee benefits space, offering group products such as life insurance, short- and long-term disability, dental, vision, accident, critical illness, and hospital indemnity.

As Elise mentioned, today’s course is an introduction to group life insurance. It qualifies for two CE credits, which technically means it's a two-hour course. However, I don’t anticipate this taking a full two hours. It likely won’t even last an hour.

That said, in order to receive your CE credits, you must complete a sign-in sheet, including your name, producer number, the date, and both the start and end times. Even though we’ll likely finish early, please enter an 11:00 AM start time and a 1:00 PM end time so the full two hours are reflected on the form. This is very important, as it’s how your credits are processed.

Today’s presentation will cover general information about life insurance—how risk is assessed, key definitions, and the basics of underwriting and actuarial concepts. It will likely serve as a refresher for many of you, but it’s essential knowledge for understanding how life insurance works and how to explain it to your clients.

To begin, group life insurance is typically offered to groups of employees where the likelihood of a claim is relatively low. Claims are only paid out upon an individual’s death, which, statistically, doesn’t happen frequently in large employee populations.

For example, in a group of 50 employees, we can offer life insurance at a relatively low cost because the risk is spread across all of them.

In this session, we’ll review definitions, risk assessment, experience information (which applies to groups of 500+ employees), different coverage levels, plan maximums, and premiums.

Group life insurance is typically offered with a standard two-year rate guarantee. That means rates and coverage levels remain fixed for two years. Occasionally, you might see a three-year guarantee, which is a valuable feature to present to groups, but two years is the industry standard.

We’ll also discuss the “Actively at Work” provision, which becomes relevant when a group switches from one insurance carrier to another. It’s critical to understand how this applies to employees who are or are not actively working on the new carrier's effective date.

Also, if anyone has questions during the presentation, feel free to type them in the chat. I’ll do my best to address them as we go, so you don’t have to wait until the end.

 
[Interruption]
Elise: Hey, Rocco? Could you upload the sign-in sheet? I only have the one from last time, and it has the wrong title.
Rocco: Sure, I can do that. Would you like me to upload it now or send it to you after?
Elise: You can send it after. At the end of the call, I’ll get the list from Marketing and send out a blast with the correct attachment.
Rocco: Perfect. That works. If you'd like, I can also walk you through how to upload it after the call.
Elise: That sounds good. Thanks.
Rocco: No problem.

 
Back to assessing risk. Life insurance pricing is based on several factors—what I like to call the "ingredients" that go into baking the cake, which is the final rate or cost of coverage.

Key variables include the industry the employees work in, the specific occupations, and even the geographic location. Believe it or not, risk can vary not just by state but down to specific cities or even ZIP codes.

Of course, age is one of the most significant factors in assessing life insurance risk, and gender plays a role as well.

[Interruption]
Elise: Sorry, Rocco, someone just raised their hand—Elizabeth. Let me see if I can unmute her... Hmm, it’s not letting me. Oh, never mind, she lowered her hand. If she types something, I’ll let you know.
Rocco: No problem. All good.

 
So, back to risk factors. Let’s say we’re looking at a 50-person group. If the average age is 55, the claim risk is naturally higher than a group where the average age is 35.

Volume distribution also matters—the amount of coverage across the employee population. If older employees have higher coverage amounts, the risk increases. Compare that to younger employees with lower coverage levels, which present lower risk.

Occupations play a huge role too. A trucking or logging company has a much higher mortality risk than an office-based business. Socioeconomic factors can also influence risk. For example, if a group is located in a region where people tend to live healthier lifestyles—like in Vermont, where diets might lean toward health-conscious options—you’ll likely see better overall mortality than in areas where fast food is more common.

Yes, even ZIP codes can make a difference in how carriers assess mortality risk.

 
Now, let’s talk about experience information. This becomes relevant for groups that are considered credible—specifically, those with 500 or more employees. In life insurance, “credible” means there’s enough data and claims history to make reasonably confident predictions about future claims.

Because life insurance claims are so infrequent compared to other benefits like short-term disability, it takes a much larger group to accumulate enough data to be credible. In contrast, short-term disability groups might become credible with far fewer members because claims happen much more often.

So, once a life insurance group has at least 500 employees, we can look at their past one to three years of claim history and start making accurate projections for future claims.

For groups that are considered credible—those with 500 or more employees—the key pieces of information we need include the total paid premium over the last three to five years, ideally broken down by year, and the total paid claims over that same time period, also broken down annually. We also need to know the current commission level, as that factors into the overall expense calculation, and how many lives have been covered under the plan during those years.

Credibility is based on what we call “life years.” So, if a group has 500 employees and we have three years of data, that equals 1,500 life years. The more life years a group has, the more credible the case becomes, and the more confidence we have in projecting future claims. Life insurance becomes fully credible—meaning the rates are based entirely on the group’s experience data—at around 26,000 to 27,000 life years.

Now, moving on to coverage levels. Employers often split coverage levels by different job classifications. For example, executives might receive a larger benefit than other employees. One class, such as salaried employees, might have 1.5 times their annual salary up to $150,000, while hourly employees might receive a flat $50,000 benefit.

An old standard guideline states there shouldn’t be more than a 1.5 times annual earnings difference between classes, but that’s not necessarily how underwriters approach it today. This presentation is dated and can’t be changed because it's filed with the state, but I can clarify the current approach. At Mutual of Omaha—and really across most carriers—we’re more concerned about plan balance.

If you have a group of 50 employees and three of them are executives with $500,000 in coverage each, that’s $1.5 million across just those three people. If the remaining 47 employees only have a $25,000 benefit each, it creates an imbalance. Too much of the total coverage is concentrated among too few individuals. This type of plan design raises red flags. You can certainly have differences in coverage by class, but it needs to be reasonably balanced across the population.

When we talk about plan maximums, group life insurance benefits typically come in two forms—either a flat benefit or a multiple of salary. The standard maximum benefit you’ll see is either $250,000 or $500,000 per individual. While it’s possible to go higher, that’s uncommon. The maximum benefit a group can offer is closely tied to the size of the group.

For instance, a 15-life group will rarely be approved for $500,000 in coverage per employee. That’s because the insurer doesn’t collect enough premium to offset the risk. A single claim could mean a $500,000 payout, despite relatively low premium coming in. Larger groups, on the other hand, can support higher benefit amounts because the risk is spread across more individuals.

Now, onto premiums. We’ve been focusing mainly on employer-paid group life insurance, also known as non-contributory coverage. In this scenario, the employer pays 100% of the premium. There are other models, of course—voluntary life insurance, which is 100% employee-paid, and contributory plans, where both the employer and employee share the cost.

The contribution split in a contributory plan can be structured however the employer wants—50/50, 70/30, 75/25, etc. If a plan is contributory, we typically require at least 75% participation from eligible employees to ensure proper risk distribution.

Now let’s talk about guarantee issue limits. This is particularly relevant for voluntary coverage. A guarantee issue amount is the amount of coverage an employee can elect without needing to provide medical evidence. No health questions, no exams—just check the box, sign, and they’re covered.

A standard plan design might allow employees to choose anywhere from $10,000 to $500,000 in voluntary life insurance, with the first $100,000 guaranteed issue. So during a true open enrollment, if an employee chooses $100,000, they’re automatically approved. If they apply for $500,000, they’ll need to complete evidence of insurability. If they’re approved, they receive the full $500,000. If they’re declined, they still get the guaranteed $100,000—because that amount cannot be denied.

It’s also important to highlight the increase options many voluntary plans offer. Employees who initially enroll in some amount of coverage during open enrollment can often increase their coverage annually—typically in $10,000 increments—without medical underwriting. That’s a key advantage. It encourages participation and allows employees to gradually build coverage. However, if someone waives coverage altogether during their initial eligibility, they will have to go through medical underwriting for any future amount, even as little as $10,000.

Now, one of the most asked-about provisions in group life insurance is waiver of premium. This provision allows an employee who becomes totally disabled before age 60 to continue their life insurance without having to pay the premium. In most plans—about 95%—the disability onset age limit is 60, and coverage can continue until age 65 if the employee remains disabled.

Usually, the elimination period for waiver of premium is nine months. Once that period is satisfied, and if the employee is still totally disabled, their life insurance continues at no cost. If it’s employer-paid, the employer no longer pays premiums. If it’s voluntary, the employee doesn’t pay either. When they reach age 65, the benefit ends, but the employee may have the option to convert it to an individual whole life policy.

It’s important to understand that the carrier in force at the time of disability retains responsibility for that individual’s coverage, even if the group switches carriers later. So, let’s say a group is moving to a new carrier on January 1, 2025, but an employee became totally disabled back in July 2024 and is on waiver of premium. The original carrier—Carrier A—remains responsible for that individual. Carrier B, the new insurer, will not assume coverage for that person. That’s why proper communication and understanding during carrier transitions is critical.

Another common provision is the age reduction schedule. Although this presentation references a version with several reductions, most modern plans include just two: a reduction to 65% of coverage at age 65, and a further reduction to 50% at age 70. While this schedule is customizable, it's very rare for a group life policy to offer no reduction at all. These reductions are actuarially justified and help insurers manage risk as employees age, since older employees present a higher likelihood of claims. That risk impacts the overall group rate, so these reductions help maintain affordability.

One question that often comes up during enrollment meetings is, “This is term life insurance—what’s the term?” For group life insurance, the term is simply: as long as the employee remains actively employed. It’s not like a 10- or 20-year individual term policy. Coverage continues with employment.

The Age Discrimination in Employment Act prohibits employers from terminating life insurance benefits solely based on age, but reductions in coverage—like the ones we discussed—are allowed because they’re actuarially supported.

Now, let’s touch on one final provision: the Living Care Benefit, also known as the Accelerated Death Benefit. This allows an employee diagnosed with a terminal illness—expected to pass away within 12 months—to access a portion of their life insurance benefit while still alive. Typically, up to 75% of the death benefit can be withdrawn and used for any purpose.

For example, if someone has $100,000 in life insurance, they could choose to access $75,000 while living. They can use it for medical bills, travel, or any other expenses. The remaining $25,000 would be paid out to their beneficiary upon death.

Of course, taking advantage of the Living Care Benefit does reduce the life insurance benefit. So, if someone has $100,000 in coverage and they use $75,000 through the Living Care option, their remaining death benefit will be reduced to $25,000. They don’t get to keep the original $100,000 once they pass—it's reduced by whatever amount was accessed while living.

Now, let’s talk about conversion. All group insurance carriers are required by law to offer conversion in their life insurance policies—regardless of whether the premiums are paid by the employer, the employee, or split between the two. Conversion is a legal right that allows employees who leave the company for any reason to take their life insurance coverage with them by converting it into an individual whole life policy.

The premiums will change because the employee is no longer part of the group plan. They’re now paying for an individual policy, which is typically more expensive. But the benefit here is that they’re guaranteed that coverage. There’s no medical underwriting, no physical exams, and they cannot be denied. They retain that coverage—it’s just that the cost increases.

Portability is another option for employees to bring their coverage with them when they leave an employer. Now, unlike conversion, portability is not required by law. It’s not always included with employer-paid life insurance policies, though it can be. We typically see about 40% of employer-paid plans include portability. At Mutual of Omaha, we always include portability for voluntary life insurance plans. That’s where we see it most commonly used.

The difference with portability is that the employee continues coverage under a different group “ported” policy, which helps keep costs lower than full conversion. Again, no medical underwriting is required. The employee already had coverage—they’re just continuing it. The cost does go up, but not as much as it would under conversion.

There are some eligibility criteria for portability. For example, the employee must port the coverage before age 70. Once the policy is ported, coverage will remain in place until the employee reaches age 70, regardless of what happens with the employer’s plan. Not all carriers handle this the same way. Some may cancel the ported policy if the employer switches carriers after the employee has ported out. That’s not ideal, and it’s something to watch out for.

At Mutual of Omaha, we do it differently. If an employee ports their coverage before turning 70, they keep it—even if the employer changes insurance carriers later on. They just have to continue paying the premiums, and the policy stays in force until they reach age 70. At that point, it ends.

But here’s another important point: once the ported policy ends at age 70, the employee still has the option to convert it to an individual whole life policy. So choosing portability doesn't eliminate the ability to convert later—it simply gives the employee a lower-cost option for continuing their coverage in the meantime.

Now let’s talk about retirees. This isn’t super common, but some groups may offer a small amount of life insurance coverage to retirees. There are some actuarial guidelines around this. Generally, retiree coverage can’t exceed about 10% of the total group. So if a group has 100 active employees, they might be able to cover about five retirees. You can’t have, for example, 100 active employees and 50 retirees with coverage. It just doesn’t work from a risk perspective.

The coverage amount for retirees is typically very low—usually around $5,000 or $10,000 as a flat benefit. This coverage is meant more as a gesture or added benefit than as a core part of the plan. Group life insurance is designed to provide affordable, broad coverage for actively working employees, but retiree coverage is an option that some employers choose to include.

Finally, let’s touch on takeover one more time. This refers to when a group switches from one insurance carrier to another. One of the most important things to understand during a takeover is the actively at work requirement.

Employees must be actively working on the effective date of the new policy in order to be covered under it. If they’re not actively working—due to disability or another reason—it becomes a little more complicated. If those employees are not totally disabled, the new carrier may still agree to cover them. But if they are totally disabled, it’s essential to make sure a waiver of premium claim has been submitted and approved by the prior carrier before the transition occurs.

This is a critical step. If it’s missed, that employee could be left without coverage, even though they were previously covered. That’s why we work closely with clients during implementation—especially during transitions—to make sure employees who aren’t actively at work are properly handled. Whether that means we agree to pick them up or advise on keeping them with the prior carrier, the goal is to ensure no one loses their life insurance coverage.

And that brings us to the end.

Easy enough, right? That’s two CE credits done in 36 minutes. Elise, let me know—well, anyone can feel free to drop questions in the chat, of course—but Elise, if you want to just email me the forms, that works too. I’ve already got a draft started to send out to everyone who registered. Once attendees fill it out and return it to me, I’ll get everything over to you for credit.

I’m not sure how to upload the form—definitely not my area of expertise—but I’ll make sure you all get it. I know there’s some chatter in the chat now, so if you want to jump in, go ahead. And Phyllis, I’ll send you the sign-in sheet shortly.

Now, we had a question come in. Someone mentioned that an individual had been on disability for about four years and received a letter from their employer stating that, three years into the disability, they were no longer eligible to remain on the policy. The question is: what might have caused them to lose eligibility?

There are a few possible explanations. If the employee was on waiver of premium due to total disability, the most common reason for termination is reaching the age limit. Usually, waiver of premium ends at age 65—though some carriers extend it to age 70 or to Social Security Normal Retirement Age. But most commonly, it ends at 65.

Another possibility is that the employee was reviewed and deemed no longer totally disabled according to the insurance carrier’s definition. In that case, the waiver of premium would end as well. So those are the two most likely scenarios: either they aged out, or they no longer met the disability criteria.

Now, in this specific case, we were told the individual passed away at age 54. So age wouldn’t have been the issue. Unfortunately, without more details, it's hard to say exactly why their coverage ended. It could have been due to a change in the carrier. For example, if they were on a ported policy and the employer switched to a different insurance carrier, that could have resulted in cancellation—depending on how the new carrier handles ported coverage. Some carriers terminate ported coverage in that situation; not all do.

There are just too many variables to provide a definitive answer, and I’m truly sorry that happened. I wish I could give a more direct explanation.

One last reminder: you don’t need to print and sign the sign-in sheets. You can fill them out digitally—no problem at all.

And with that, it looks like we’re wrapped up. Rocco, thank you so much for doing this. And to everyone here, Rocco will be back with us next Thursday, just for an hour. So maybe next time he’ll knock it out in five minutes!

In the meantime, enjoy the extra hour and a half in your day. Maybe take a longer lunch, catch up on something else, or just enjoy the time. Thanks again, Rocco—we really appreciate you. It’s great to be getting back into offering these types of CE courses for our agent partners. It’s a win all around.

Thanks again, everyone. Be sure to note your session times on the sign-in sheet—11:00 AM for Part 1 and 1:00 PM for Part 2—and we’ll make sure everything is submitted for your credit.

Take care!