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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.

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Presentation on theme: "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."— Presentation transcript:

1 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.

2 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

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

4 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company What is an FPO Rider? The FPO Rider is available with all the products in The Protector Series SM : The Protector+ SM and The Protector SM individual disability income insurance, The Business Protector SM individual disability business overhead expense insurance, and The Business Equity Protector SM 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.

5 14507PPT(8/09) How to view your customers’ in force FPOs

6 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company 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 and selecting the link labeled Log In to Secure Services.

7 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company How to view your customers’ in force FPO FPO Rider information is located under Benefit and Rider Detail. Select this link to see the details of the FPO.

8 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company How to view your customers’ in force FPO A popup window displays with the rider description

9 14507PPT(8/09) Opportunities to exercise FPOs

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

11 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company 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 from Marketing Materials.form ADIY1425BDIYwww.standard.com/di

12 14507PPT(8/09) Working with your customers to exercise their FPOs

13 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company 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 A member of The Standard’s In force Policy Service team will assist you. You may also request an illustration by ing

14 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company 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 The form is accessible at Select the Find Forms link at the right. Form Forms

15 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Working with your customers to exercise their FPO 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?

16 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Working with your customers to exercise their FPO A member of The Standard’s In force Policy Service team will you: A cover letter addressed to the policyowner. The illustration Summary page with benefit amounts and riders The illustration Policy Provisions pages

17 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Working with your customers to exercise their FPO This is a sample cover letter addressed to the policyowner which includes when the FPO requirements are due at The Standard. JOHN SMITH 123 MAIN ST TOWN OR John Smith, JOHN SMITH

18 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company 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 SMITH 123 MAIN ST TOWN OR John Smith, JOHN SMITH JOHN SMITH

19 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Illustration Policy provision information is also part of the illustration.

20 14507PPT(8/09) The FPO Application Paperwork

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

22 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork When you select Find Forms, this popup window will display. Click on the down icon next to New Business Forms.

23 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork 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.

24 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork 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.

25 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork The 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.

26 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork The 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.

27 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork The 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

28 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork The Producer Information Report This form must be completed and signed by the producer, and then submitted with the application.

29 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork Disclosure 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.

30 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork Application 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

31 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork Application to exercise Policy Increase Option Question 11 is often overlooked. Please answer completely and include The Standard policy with the FPO Rider being exercised.

32 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company The FPO Application Paperwork Receipt 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.

33 14507PPT(8/09) Income Documentation

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

35 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Income documentation You can find it by navigating to The Standard’s financial professionals IDI webpage at Click on Find Marketing Materials.

36 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Income documentation 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.

37 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Income documentation 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.14162

38 Future Purchase Options 14507PPT (8/09) ©Standard Insurance Company Income documentation The reference table in Form 14162, Understanding Income Documentation for IDI, is shown on the right

39 14507PPT(8/09) Underwriting Decision and Policy Issue

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

41 14507PPT(8/09) Summary

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

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

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

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


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