Help your Clients Safeguard their Retirement Income
Posted by DAI Life Brokerage Services on May 8, 2012 · Comments Off on Help your Clients Safeguard their Retirement Income
MetLife can help you provide your clients with the right protection for their unique needs. Retirement Savings Disability Income Insurance (RSDII) can help your clients further protect their retirement income in the event of a disability.
Help Your Clients Create Their Own Personal Safety Net
When it comes to helping your clients plan for the future, you’re the expert. By leveraging the experience and financial strength of MetLife, an industry leader, you can provide your clients with high quality, high value protection products to help take some of the uncertainty out of their future.
How RSDII Insurance from MetLife Works
RSDII differs from MetLife’s other income protection products in one major respect—what is being covered. Instead of protecting the insured’s monthly income, this product is designed to cover only the loss of their retirement contributions, in the event of a disability. These contributions could cease if an insured becomes disabled.
RSDII covers the loss of these contributions, helping to ensure that your client still has the means to save for his or her retirement.1
Application for coverage
To begin, your client will complete MetLife’s application for individual disability income insurance, the RSDII supplemental application, and sign the trust document agreement and disclosure statement. On the supplemental application, he or she will provide details of his/her normal retirement contributions, e.g., 401(k). If approved, the policy is issued with a monthly benefit in the amount of the monthly retirement contribution, provided that amount does not exceed the limits detailed in the Underwriting and Business Rules section (see next page).
What to expect at time of claim
At the time of claim MetLife will pay the benefits of the policy to a trust 2 according to the trust agreement between the insured and the outside trust company. MetLife is not responsible for the administration of the trust or the investment of the trust assets. The benefits will be invested by the trustee according to the insured’s choices from the trustee’s investment portfolio. Upon the latter of your client retiring or turning age 65, or meeting other terms of the trust agreement, 3 the assets of the trust will be distributed to him or her. Hardship rules will allow for early distribution of trust assets under specified circumstances (see trust agreement for details).
The trustee will charge the insured a fee for services. For more information about fees, ask your MetLife Individual Disability Income Sales Representative.
- New or existing clients without disability coverage that replaces lost retirement savings.
- Individuals/business owners currently contributing to a qualified retirement plan (see next page).
- Your clients who may already have the maximum individual disability income insurance coverage from MetLife or another carrier (based on MetLife’s I&P Limits) and who contribute to a qualified retirement plan.
Objections from your clients can make it easier for you to explain why RSDII from MetLife is key to sound financial planning. Here are just two examples:
Objection “Why can’t I just use some of my individual disability benefit to contribute to my own private retirement fund if I become disabled?”
Response “Since your individual disability benefit is only a portion of your take home pay, you will probably need every bit of that money to cover your ongoing monthly bills, such as auto and mortgage payments, utilities, food and clothing, tuition payments, and the like. Isn’t it better to put a plan in place specifically to cover your retirement savings in the event of a disability?”
Objection: “Why can’t I just buy an individual disability policy with a larger benefit? That way I can contribute the additional benefit to my own retirement investments. And I’ll have more control over how my money is invested.”
Response: “If you’re comfortable with managing your own retirement assets, that may be a good idea, but there may be two problems. First, based on your income and what you’re eligible for by way of benefit, you may not be able to purchase a large enough benefit to cover your monthly income as well as what you’re currently contributing to a qualified retirement plan. Even if you’ve purchased the maximum disability income benefit available, you can still purchase RSDII from MetLife to help protect your retirement income.
The second problem has less to do with limits on how much benefit you can purchase and more to do with your state of mind during a disability. If you become disabled, managing your retirement assets is probably one of the last things you’ll want to think about. RSDII from MetLife means that you can have the confidence of knowing that you’re still saving for retirement, and you can concentrate on what’s most important—getting better.”
Underwriting & Business Rules
- Available for occupational classes 3A to 6S.
- MetLife will cover 100% of employee contributions up to the underwriting maximum, on a nontaxable basis (post-tax premium payments).
- MetLife will cover up to 133% of the contributions, on a taxable basis (pre-tax premium payments). The monthly benefit issued will not exceed the maximum issue limit.
- If client is already over-insured under MetLife’s Issue and Participation Limits, the benefit available under this policy will be reduced by the amount of over-insurance.
- Coverage will be coordinated with other existing disability retirement plans at the time of underwriting.
- RSDII will not be available if the client has any individual disability income insurance policies with lifetime coverage.
Government Employee Guidelines
Federal, State, County and Municipal employees are generally covered by retirement plans not eligible for RSDII coverage. However, RSDII coverage may be available to government employees contributing to a 403(b) plan under the following guidelines. Only government employees who are contributing to a 403(b) plan will be eligible for RSDII. The RSDII application must specifically indicate that 403(b) contributions are made and include the amount of contribution. While RSDII coverage is typically issued in excess of
MetLife’s normal issue limits, for government employees who are contributing to a 403(b) plan, RSDII coverage will be included within the coverage maximums available to government employees based on income and years of service as detailed in our current Government Guidelines.
- As with all RSDII policies, the minimum benefit amount is $300 per month.
- Government employees are eligible for RSDII Advantage or RSDII Essential (Select is not available).
- The maximum issue age for government employees is 50.
- The available Elimination Periods are 180 days and 365 days.
- Government employees with 10 years of service or less can apply for a 5 year or to age 65 Benefit Period.
- Government employees with over 10 years of service can apply for a 5 year benefit period.
1 Retirement Savings Disability Income Insurance replaces only the insured’s
retirement contributions and any employer match, not the investment returns on
those contributions. Neither the Retirement Savings Disability Income Insurance
policy nor the trust established at the time of issue is a tax-qualified plan and is
not a substitute for an employer-sponsored retirement plan or other
tax-qualified arrangement. Benefits payable under the policy paid into
the trust are not entitled to the tax advantages or legal protections that are
available for tax-qualified pension products such as IRAs or 401(k) plans.
2 The trust is created through an agreement between the insured and the trust
company. Although MetLife will provide the trust agreement and information
to the applicant, MetLife has no authority over the trust or the investment of
the benefits paid to the trust and is not responsible for the performance of any
3 The principal and income accumulated in the trust will be paid to the insured
or the insured’s estate when the trust terminates upon: (a) the latter of the date:
(i) the insured reaches age sixty-five (65); (ii) disability benefits are no longer
payable under the IDI insurance policy; or (iii) when the insured retires; or
(b) the insured’s death.