HomeMy WebLinkAbout5.E.2. Employee Life and Long-Term Disability Insurance
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City of Shako pee COtJSENT
MEMORANDUM
TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Kris Wilson, Assistant City Administrato~0
SUBJECT: Employee Life and Long-Term Disability Insurance
DATE: October 29,2009
Introduction
The Council is asked to authorize the continuation oflife and long-term disability (LTD)
insurance for benefits-eligible employees.
Background
The City currently provides all benefits-eligible employees with life insurance and long-term
disability insurance. The base policies are paid for by the City and include the following
benefits:
. Life Insurance: $25,000 in life plus an additional $25,000 in accidental death and
dismemberment (AD&D) coverage for the employee.
. LTD: pays two-thirds of the employee's base salary after they have been unable to work
for a period of 180 days.
Employees then have the option to purchase additional life insurance and/or to pay extra to have
their disability insurance take effect after being offwork only 30 days.
After many years with the same life and L TD insurance, we opted to seek bids on these
insurance lines for 2010. After reviewing the five proposals received, staff recommends
purchasing life and L TD insurance from Madison Life. Our current provider is Lafayette Life
Insurance Company, but they are exiting the market for these particular types of insurance
products and their business is being taken over by Madison Life. If our contract had not been up
with Lafayette, Madison Life would have taken over our policies at the same rates we have been
paying to Lafayette. However, since our contract is up at the end ofthis year, Madison Life
submitted a proposal along with the other competing companies. They initially offered a 9%
reduction in premiums, but then agreed to match the best price received from all of our bids,
which equals a 22% decrease in our life insurance premiums and a 30% decrease in our LTD
premiums. Additionally, they will guarantee these prices for 2010 and 2011.
Budget Impact
Currently, the City's annual costs are approximately $8,100 for life insurance and $25,500 for
long-term disability insurance. By accepting Madison Life's offer for 2010 and 2011, the City
will save approximately $9,500 ayear.
Relationship to Vision
Providing competitive benefits to our employees helps the City attract and retain qualified
people, thereby contributing to a vital, resilient and stable City (Goal D).
Request Action
If it concurs, Council should offer a motion to authorize the appropriate officials to enter into an
agreement with Madison Life for the provision of life and long-term disability insurance for
benefits-eligible City employees for calendar years 2010 and 2011.