14507ppt(8/09) what they are and how to exercise them at the standard future purchase options for...

14507PPT(8/09)

What they are and how to exercise them at The Standard

Future Purchase Options

For producer use only. Not for use with consumers.

Future Purchase Options 14507PPT (8/09)©Standard Insurance Company

Table of Contents

• Future Purchase Options (FPOs): What they are • How to view your customers’ in force FPOs• Opportunities to exercise FPOs• Working with your customers to exercise their FPOs• The FPO paperwork• Income documentation• Underwriting Decision and policy issue• Summary Checklist


What is a Future Purchase Option*?

•The Future Purchase Option (FPO) Rider allows for the purchase of benefit increases on scheduled individual disability insurance (IDI) policy anniversary dates ― known as option dates ― subject only to financial underwriting and policy change requirements.

•Depending on the rider version and type of IDI product, the option date could be on each policy anniversary; every two years after the policy effective date or every three years.

*You may also see this referred to as a Future Increase Option, Benefit Increase Option, Future Buy-Out Expense Option, Future Increase Protection Agreement, Additional Monthly Income Option Agreement and Guaranteed Future Insurability Agreement.


What is an FPO Rider?

The FPO Rider is available with all the products in The Protector SeriesSM: The Protector+SM and The ProtectorSM individual disability income insurance, The Business ProtectorSM individual disability business overhead expense insurance, and The Business Equity ProtectorSM individual disability buy/sell funding insurance.

The rider is a valuable benefit that may be exercised at different times during the life of a policy and allows policyowners to increase their benefit amounts to keep pace with income and disability insurance needs. No medical underwriting is necessary to exercise a Future Purchase Option.

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How to view your customers’ in force FPOs


How to view your customers’ in force FPO

Log on to Policy Inquiry to find out more details of your customers’ coverage. If they have an FPO in force, the information will be recorded here. You can access

Policy Inquiry via The Standard’s financial professionals IDI webpages at www.standard.com/di and selecting the link labeled Log In to Secure Services.



FPO Rider information is located under Benefit and Rider Detail.

Select this link to see the details of the FPO.



A popup window displays with the rider description

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Opportunities to exercise FPOs


Opportunities to exercise the FPO

The Standard mails a letter to the policyowner 60 days before the policy anniversary date.

The letter may include estimated available benefit amounts and premiums.

The Standard also sends a copy of the letter to the MGA or SMP who can assist the insurance representative.

Successful insurance representatives also keep tickler files that let them know when customers’ FPOs come due.


Opportunities to exercise the FPO

The Standard also offers an FPO card, form14525, and Do-It-Yourself stuffers, forms 1425ADIY and 1425BDIY for the purpose of reminding your customers. You can order or download copies at www.standard.com/di from Marketing Materials.

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Working with your customers to exercise their FPOs


Before you contact your customers about exercising their FPO

Contact your MGA, SMP or The Standard’s home office to confirm that the policy is paid to a current date and that your customer has not missed the due date for exercising the FPO.

Obtain an illustration An essential part of the FPO exercise process is an illustration for your customer so it is clear what potential additional monthly benefit amount and new premium might be. Contact your MGA or SMP to obtain an illustration. If you need additional assistance, please call 800.247.6888. A member of The Standard’s In force Policy Service team will assist you.

You may also request an illustration by emailing [email protected].


Working with your customers to exercise their FPO

If you are not the original writing agent, MGA or SMP, please obtain a signed Servicing Agent Change Letter from the policyowner so The Standard can update the policy with the new information.

Or your customer may complete the Policy Change Request, Form 2240. The form is accessible at www.standard.com/di. Select the Find Forms link at the right.



Information you need for FPO illustrations• Policy number and name of the insured.• Annual income. If the customer is a business owner, please provide net

income (personal annual earned income after business expenses).• Amount of in force individual disability insurance with The Standard and

with other carriers.• Amount of group LTD in force. Include income replacement percentage

(e.g., 60%) and the group cap amount.• Who is paying for the existing in force coverage? Is it employer-paid or

employee-paid.• Will the additional coverage being applied for be employer-paid or

employee-paid?



A member of The Standard’s In force Policy Service team will email you:• A cover letter addressed to the policyowner. • The illustration Summary page with benefit amounts and riders• The illustration Policy Provisions pages



This is a sample cover letter addressed to the policyowner which includes when the FPO requirements are due at The Standard.

JOHN SMITH123 MAIN STTOWN OR 12345

John Smith,

001234567JOHN SMITH


The FPO Illustration

This is a sample FPO illustration. It includes the IDI product, The Protector+ in this example, the policyowner’s name, monthly benefit amounts, riders and premium.

JOHN SMITH123 MAIN STTOWN OR 12345

John Smith,

001234567JOHN SMITH

00123456789.

JOHN SMITH


The FPO Illustration

Policy provision information is also part of the illustration.

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The FPO Application Paperwork



After you have reviewed the IDI illustration with your customer, the next step is to complete a state-specific application with your customer.

You can find and print the application by selecting the Find Forms link at www.standard.com/di.



When you select Find Forms, this popup window will display.

Click on the down icon next to New Business Forms.



When you select the down icon, choose either the state in which the policy was issued

or the current state of residence for the insured to download the currently approved application.

Please note

The producer must be licensed in the same state as that chosen for the application.



Select the Increase Option Application Packet, form 11357, to view or download to your computer.

This packet is used for FPO exercises for all products in The Protector Series.


The FPO Application PaperworkThe Business Protector

In addition to printing the Increase Option Application Packet , form 11357, The Business Protector Application Supplement, form 2967, must be completed for The Business Protector.


The FPO Application PaperworkThe Business Equity Protector

In addition to printing the Increase Option Application Packet, form 11357, The Business Equity Protector Supplemental Application Packet, form 7202, must be completed for The Business Equity Protector.


The FPO Application PaperworkThe Policy Increase Option Application Packet

The state-specific Policy Increase Option Application Packet contains:• A Producer Information Report• A Non Medical Disclosure Notice• An Application• A Receipt for Payment


The FPO Application PaperworkThe Producer Information Report

This form must be completed and signed by the producer, and then submitted with the application.


The FPO Application PaperworkDisclosure Notice (Non Medical)

Please take a moment to review this with the proposed insured and provide a copy of the form to them when you take the application.


The FPO Application PaperworkApplication to exercise Policy Increase Option

While the Increase Option Packet has several pages, the application itself comprises two pages.

• Answer all questions completely and legibly

• Obtain all required signatures and dates

• Ask the applicant to initial and date changes or corrections

• Do not use any correction tapes or fluids


The FPO Application PaperworkApplication to exercise Policy Increase Option

• Question 11 is often overlooked.

• Please answer completely and include The Standard policy with the FPO Rider being exercised.


The FPO Application PaperworkReceipt for Payment

• This form is completed and submitted to The Standard if a premium check is included with the application.

• A Premium check is not required with the application.

• Please review the content of the form with your customer as well as the instructions at the bottom of the form.

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Income Documentation


Income documentation

• The type of underwriting used for the FPO exercise process is financial underwriting only.

• This means that Income Documentation is another requirement of the future increase option increase exercise process and must be submitted with the application.

• The flyer titled, Understanding Income Documentation for IDI will assist you in determining which financial documentation you need to obtain from your customers.

• The FPO application will be processed only if it contains complete and appropriate income documentation.



• You can find it by navigating to The Standard’s financial professionals IDI webpage at www.standard.com/di.

• Click on Find Marketing Materials.



Then select Form 14162, from the Marketing Materials list.

When you move your cursor over any part of a description a thumbnail and description appears on the upper left.



Form 14162, Understanding Income Documentation, can also be located by selecting Choose your area of interest at the top of the marketing materials listing and then Producer Tools/Reference, Training and Sales Aids.



The reference table in Form 14162, Understanding Income Documentation for IDI, is shown on the right.

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Underwriting Decision and Policy Issue


Underwriting Decision and Policy Issue

• A member of the Inforce Team will communicate the decision to the MGA, SMP, producer or advisor.

• Issuance of the additional monthly benefit amount under the FPO Rider is completed by either of the following actions:• A new policy is issued with the approved monthly benefit amount. The policy is

mailed to the MGA or SMP. The Inforce Team will include instructions for you regarding the outstanding items that need to be obtained when you meet with your customer to deliver the policy.• The approved monthly benefit amount is added to the base policy. A letter policy

endorsement is mailed to the policyowner with a copy mailed to the MGA or SMP

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Summary


Summary Checklist (slide one of two)

Here is a summary checklist of what to keep in mind as you assist your customers with their FPO exercise:

• Confirm your customer is eligible for the increase based on financials.• Confirm the policy premium is paid and up-to-date• Contact your MGA/SMP or The Standard’s home office to obtain an

illustration• Confirm the due date for the FPO requirements with The Standard’s

home office• Confirm you are licensed in the same state as the state in which the

application will be taken.


Summary Checklist (slide two of two)

• Download and print the Increase Option Application Packet for the appropriate state

• Download and print supplemental forms if the FPO is for one of the business products (The Business Protector or The Business Equity Protector)

• Answer all questions on the application• Obtain all required signatures and accurate dates• Changes or corrections are initialed by the applicant• You have not used correction tapes or fluids on any form• Direct FPO status inquiries to your MGA or SMP


Questions?

We hope the information contained in this presentation was helpful to you and we are looking forward to working with you.

If you have any questions, about exercising an FPO, please contact your MGA or SMP

or The Standard at [email protected], 800.992.4446.

14507ppt(8/09) what they are and how to exercise them at the standard future purchase options for...

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