Estates larger than $650,000 (in 1999) may face some potential tax consequences. This applicable exclusion amount, as it’s called, is set to increase over the next several years.The first $650,000 can go to your beneficiaries tax-free, but your heirs (excluding your spouse) have to pay income taxes on anything over that amount. If you have a large estate, you may want to ensure that more of your estate goes into your beneficiary’s hands, rather than to the government.
Minor children as beneficiaries
You may not want to choose your children as your beneficiaries if they are still minors. Under the current law, children under the age of 18 can’t collect insurance benefits directly, even if they’re the rightful heirs. If you die and your children are the beneficiaries, the proceeds can only go to them in a trust fund, which an adult must manage. If you don’t select this adult (perhaps a lawyer or an accountant, or an organization such as a bank), the probate court selects someone or some organization to oversee the money. When your children reach the age of maturity, usually 18 years old, the funds automatically go to them.
Before that time, the trust fund administrator controls how the funds are invested and spent.
Before that time, the trust fund administrator controls how the funds are invested and spent.
Deciding your beneficiaries
When you purchase a life insurance policy, one of the first things you must do is decide who will be the recipient of the benefits — hence the term beneficiaries. Most people designate their spouse as the primary beneficiary, which means that the spouse gets the entire death benefit when the policyholder dies. If you’re single, your primary beneficiary is likely to be your children, if you have any.
However, your circumstances may give you reason to name more than one beneficiary, especially if your estate is sizable. Naming additional beneficiaries is extremely important in the event that the primary beneficiary dies at the same time you do or that person dies before you.
However, your circumstances may give you reason to name more than one beneficiary, especially if your estate is sizable. Naming additional beneficiaries is extremely important in the event that the primary beneficiary dies at the same time you do or that person dies before you.
Coinsurance Hole In Coverage
I've just started the review of a new client's coverage. There, on the first page was a glaring error - a coinsurance penalty. It may be the most common problem I see - aside from named insured issues...
Coinsurance is a penalty assessed at the time of a loss. It is the way insurers assure that insureds buy adequate limits of coverage.
The penalty takes away coverage by limiting a loss payout. For almost 30 years insurers have been removing the penalty by the use of the "agreed amount endorsement." It is exceedingly rare for insurers to refuse to eliminate the penalty. The only time I see it is when the insurer thinks that the amount of insurance is inadequate. The insured then negotiates with the insurer and the problem is solved.
A coinsurance clause on building or on personal property tells me an agent is not aggressive enough - either with the insurance company or with their client.
Coinsurance can also be eliminated on loss of business income protection. Same deal. Get the insurance company to agree that the coverage amount is correct and they can remove the penalty.
Some property insurance policies hide coinsurance. Its quite common on inland marine (equipment) coverage and computer hardware coverage sections. Removing the penalty in these two areas is more difficult, though not impossible. Sometimes it just takes the agent asking a few questions.
Coinsurance is a penalty assessed at the time of a loss. It is the way insurers assure that insureds buy adequate limits of coverage.
The penalty takes away coverage by limiting a loss payout. For almost 30 years insurers have been removing the penalty by the use of the "agreed amount endorsement." It is exceedingly rare for insurers to refuse to eliminate the penalty. The only time I see it is when the insurer thinks that the amount of insurance is inadequate. The insured then negotiates with the insurer and the problem is solved.
A coinsurance clause on building or on personal property tells me an agent is not aggressive enough - either with the insurance company or with their client.
Coinsurance can also be eliminated on loss of business income protection. Same deal. Get the insurance company to agree that the coverage amount is correct and they can remove the penalty.
Some property insurance policies hide coinsurance. Its quite common on inland marine (equipment) coverage and computer hardware coverage sections. Removing the penalty in these two areas is more difficult, though not impossible. Sometimes it just takes the agent asking a few questions.
Workers' Compensation Insurance Book
My new workers' compensation book is all set for publication. The proof copy was delivered today and the printer is ready to take orders. Until January 15 it is available for $25.00.
Filled with 200 pages of hints and information that will help work compensation buyers control their costs and losses.
More info at http://www.insurance-coveragelaw.com/SR3WC.html.
Filled with 200 pages of hints and information that will help work compensation buyers control their costs and losses.
More info at http://www.insurance-coveragelaw.com/SR3WC.html.
Plagiarists Run Rampant
Recently several people on a web-forum I frequent started talking about plagiarism and the discovery that articles they had posted had been copied. In some cases, whole websites had been stolen. This group, Alan's Forum, run by consulting guru Alan Weiss, includes some of the top consultants in the world.
I decided to run my own test. I picked 5 of the hundreds of articles and postings I have on line. Every one of them showed up without attribution on someone else's website. Angry cannot begin to describe my reaction. My hard work and intellectual property has been stolen. I'm contacting the offenders, several of whom have apologized while blaming the error on their web-developer.
For anyone unsure, plagiarism is theft. You cannot copy someone's work and call it your own. You cannot use someone's work without credit. Link to my pages – great. Quote me – fine. Use a paragraph from a posting of mine and attribute it to me – thank you for spreading the word. However, steal my work and I will hunt you down.
What can be done? Well, first I am adding stronger fair-use policies on my sites – just so it's clear what is right and wrong. I am also using a service to track the use of my stuff. Those that use my material without attribution who are members of associations or accreditation agencies will be reported to their ethics boards. Those who serve on the faculty of colleges and universities will be reported to the administration of the institutions. I will report copyright infringements to web hosting companies and ISPs. I will do everything I can to stop my intellectual property from being stolen.
I teach at a local community college. All instructors are required to provide students with a statement on plagiarism. I told my class that if I caught them cheating on a test or plagiarizing work that I would fail them and make it my life's mission to have them expelled. Stealing and cheating is wrong. The penalties for dishonesty should be severe. Our colleagues, clients, and the world must know that our standards are high.
I decided to run my own test. I picked 5 of the hundreds of articles and postings I have on line. Every one of them showed up without attribution on someone else's website. Angry cannot begin to describe my reaction. My hard work and intellectual property has been stolen. I'm contacting the offenders, several of whom have apologized while blaming the error on their web-developer.
For anyone unsure, plagiarism is theft. You cannot copy someone's work and call it your own. You cannot use someone's work without credit. Link to my pages – great. Quote me – fine. Use a paragraph from a posting of mine and attribute it to me – thank you for spreading the word. However, steal my work and I will hunt you down.
What can be done? Well, first I am adding stronger fair-use policies on my sites – just so it's clear what is right and wrong. I am also using a service to track the use of my stuff. Those that use my material without attribution who are members of associations or accreditation agencies will be reported to their ethics boards. Those who serve on the faculty of colleges and universities will be reported to the administration of the institutions. I will report copyright infringements to web hosting companies and ISPs. I will do everything I can to stop my intellectual property from being stolen.
I teach at a local community college. All instructors are required to provide students with a statement on plagiarism. I told my class that if I caught them cheating on a test or plagiarizing work that I would fail them and make it my life's mission to have them expelled. Stealing and cheating is wrong. The penalties for dishonesty should be severe. Our colleagues, clients, and the world must know that our standards are high.
Life Insurance in Estate planning
Although income protection for their survivors is clearly the main reason that most people buy life insurance, estate planning is a close second. The goal of estate planning is to ensure not only the smooth distribution of your wealth to your heirs, but also that the government doesn’t take too big a bite. And the wealthier you are, the bigger the tax bite. This chapter looks at the role that life insurance plays in planning for your retirement, including dividends, annuities, and tax consequences.
This section also focuses on how life insurance can help ensure a seamless transfer of your estate to your heirs.
This section also focuses on how life insurance can help ensure a seamless transfer of your estate to your heirs.
Understanding the Life Insurance Premium
The age at which you buy life insurance relates directly to the cost of your premium (the amount you must pay for the coverage). The younger you are, the cheaper the premium. A 38- year-old male buying a five-year, term life insurance policy with a death benefit of $100,000 may pay only about $175 per year, while a 48-year-old may have to pay about twice that amount for the same coverage.
If, however, that 38-year-male old wants to buy a cash-value life insurance policy — one that not only provides a death benefit when he dies but also builds some value that he can use when he retires (or that adds to the death benefit) — he may have to pay about $600 a year, about three-quarters of which goes into his cash-value account. When determining how much life insurance you need, you have to take into account how much life insurance you can afford. The cost of insurance goes up every year as you age because your life expectancy is lower and the insurance company knows it has fewer years before you are expected to die. Decide how much you can afford to pay per year and work with that amount to determine how much life insurance to buy.
One way to estimate how much your premiums will be in five or ten years is to find out what the premium would be now if you were five or ten years older. Doing so gives you the price in today’s dollars. You can add about 15 to 20 percent more for five years and about 40 to 50 percent more for ten years to account for inflation.
If, however, that 38-year-male old wants to buy a cash-value life insurance policy — one that not only provides a death benefit when he dies but also builds some value that he can use when he retires (or that adds to the death benefit) — he may have to pay about $600 a year, about three-quarters of which goes into his cash-value account. When determining how much life insurance you need, you have to take into account how much life insurance you can afford. The cost of insurance goes up every year as you age because your life expectancy is lower and the insurance company knows it has fewer years before you are expected to die. Decide how much you can afford to pay per year and work with that amount to determine how much life insurance to buy.
One way to estimate how much your premiums will be in five or ten years is to find out what the premium would be now if you were five or ten years older. Doing so gives you the price in today’s dollars. You can add about 15 to 20 percent more for five years and about 40 to 50 percent more for ten years to account for inflation.
NonOwned Auto Liability Insurance
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Your Life Expectancy and Life Insurance
The amount of insurance you purchase depends very much on your life circumstances, what your style of living is, how much your survivors need, and what lies ahead for your beneficiaries.If you are 30 years old and in good health, the chances are great that you will live another 50 years or more. As medical advancements continue, your life span may be even greater, assuming that you’re not hit by that proverbial truck.
Your life span affects your life insurance needs in these ways:
- The younger you are, the longer your survivors are going to need income replacement, the more dollars you need to put away for future expenses such as your children’s education, and the more likely it is that your living expenses are lower.
- The older you are, the less chance your spouse has to plan for his or her retirement, the less likely it is that your survivors will have to depend on you to fund a college education, and the more likely your spouse is to need medical, skilled-care assistance, or nursing home care.
Your Risk Analysis and Mitigation Calendar
For some time I have been considering the idea of a calendar of risk mitigation actions businesses should follow. The table below outlines a schedule of activities based on a "risk management year" based on the expiration date of the organization's insurance policies.
Month 1
-Your insurance renews
-Review binders
-Review auto id cards
-Review list of needed certificates
Month 2
-Review renewal policies for accuracy when delivered by agent
-Inspection looking for hazards, equipment, and safety issues
Month 3
-Test computer backup system
-Update contact info sheets - employees, customers, suppliers
Month 4
-Review / update disaster plan
-Inspection looking for hazards, equipment, and safety issues
Month 5
-Review open w/c losses - reserves adjusted for experience mod calculation
-Meet with agent - review coverage, losses, and future plans
Month 6
-Test computer backup system
-Review loses for trends and problems
-Inspection looking for hazards, equipment, and safety issues
-Update contact info sheets - employees, customers, suppliers
Month 7
-Review and update employment forms, procedures, and handbooks
-Audit files of new hires - handbook documentation? -Computer/ergonomic, harassment, and other training documentation?
Month 8
-Meet with agent to strategize renewal
-Decide whether a bid process is needed
-Inspection looking for hazards, equipment, and safety issues
-Risk Identification - Review a comprehensive listing of risk exposures to identify areas of need.
Month 9
-Review experience mod calculation from NCCI
-Test computer backup system
-If bidding, meet and select competing agents - provide info
Update contact info sheets - employees, customers, suppliers
Month 10
-Review / update disaster plan
-If not bidding renewal, review coverage limits with agent
-Manager training on employment law issues
-Walk through inspection looking for hazards, equipment, and safety issues
Month 11
-If bidding, obtain feedback from participating agents
-Review safety policies and audit compliance
-Review vendor relationships - their viability, sustainability, replacement relationships
Month 12
-If bidding, analyze bids
-Decide on renewal policy - agent, insurer, limits, and coverages
-Determine payment plan that best meets your cash-flow needs
-Test computer backup system
-Walk through inspection looking for hazards, equipment, and safety issues
-Update contact info sheets - employees, customers, suppliers
The key to exceptional performance is a system of "best practices." The above provides a framework for actions to manage risk in your operation. Who oversees this process for you?
Calculating future expenses of your survivor
When calculating the needs of your survivors, building in expenses that you know will occur is extremely important. These expenses are usually the largest factors in determining how much insurance to buy. One of the most obvious of these planned future expenses is the cost of attending college. Build in a cost of about $80,000 to $100,000 per child in today’s dollars. Of course, the actual amount your child needs will probably be considerably more later on, which is taken into account with the inflation factor
The amount of life insurance you buy now is the amount your survivors need if you die soon. If you’re worried about inflation eating into the death benefit, you can buy an insurance policy in which the death benefit increases in value. You can read more about these kinds of policies
You may be aware of other expenses that your family will incur, such as orthodontia, summer camps, special classes for your children, or special medical needs. You should build these expenses into the worksheets. Additionally, you can count on at least one or two of those
unexpected expenditures that come up, including a new roof for the house, a new car, and medical emergencies for which your health insurance doesn’t pay the entire cost. When you complete the budget worksheet, build in some “fudge factor” — about 10 percent of your annual income is good — to account for these unplanned costs.
The amount of life insurance you buy now is the amount your survivors need if you die soon. If you’re worried about inflation eating into the death benefit, you can buy an insurance policy in which the death benefit increases in value. You can read more about these kinds of policiesYou may be aware of other expenses that your family will incur, such as orthodontia, summer camps, special classes for your children, or special medical needs. You should build these expenses into the worksheets. Additionally, you can count on at least one or two of those
unexpected expenditures that come up, including a new roof for the house, a new car, and medical emergencies for which your health insurance doesn’t pay the entire cost. When you complete the budget worksheet, build in some “fudge factor” — about 10 percent of your annual income is good — to account for these unplanned costs.
The cost of dying
The cost of dying refers to the expenses of funerals, burials, and the disposal of your body. How much you pay for these expenses is more than likely up to your survivors. The cost of funerals varies enormously. But on average, burials cost between $5,000 and $10,000. Cremations cost considerably less, from $2,000 to $5,000. When determining the amount of life insurance to purchase, consider including an amount in the death benefit that can cover the cost of the funeral.
Talk with your spouse, if you have one, or to your parents if they are your survivors, or your children if they are old enough, about funeral expenses. This conversation may not be easy, but be persistent so that they can honor your wishes (and make theirs known) should you die. Many funeral homes won’t require payment directly from your survivors but will allow and will help you arrange to be paid directly from the life insurance proceeds.
Talk with your spouse, if you have one, or to your parents if they are your survivors, or your children if they are old enough, about funeral expenses. This conversation may not be easy, but be persistent so that they can honor your wishes (and make theirs known) should you die. Many funeral homes won’t require payment directly from your survivors but will allow and will help you arrange to be paid directly from the life insurance proceeds.
What is Probate?
Probate is the process by which your estate is accounted for, all debts and taxes are paid, and whatever is left over goes to the rightful heirs. At this point, your will is officially registered and the executor of your estate is given the legal right to dispose of your assets.
Many executors choose to get assistance from an attorney to handle the financial affairs (although doing so isn’t required). Depending on the size of the estate, an attorney may charge $2,000 to $3,000 to handle probate. You may want to increase your life insurance death benefit by that amount to take care of the probate expenses. Dealing with estates and probate can sometimes get fairly complicated. Speak to an attorney before handling them yourself.
Many executors choose to get assistance from an attorney to handle the financial affairs (although doing so isn’t required). Depending on the size of the estate, an attorney may charge $2,000 to $3,000 to handle probate. You may want to increase your life insurance death benefit by that amount to take care of the probate expenses. Dealing with estates and probate can sometimes get fairly complicated. Speak to an attorney before handling them yourself.
Examine your estate taxes
Depending on the size of your estate, the heirs may have to paying taxes on the sum they will inherit. If your entire estate go to your spouse, he or she faces no tax consequence, regardless of the size of the estate.
If, however, your estate goes to other beneficiaries and your area is more important than the amount allowed under tax law your heirs will have to pay taxes on those balances amounts. Although the figure of 1999 of $ 650,000 may seem quite large you, a lot of people who own homes have increased in value as equity in their home is above the limit permitted by federal law, the inheritance tax. In these types of the situations, the heirs may have to pay a substantial sum to tax.
Most likely, they will not have the cash or other liquid assets to pay estate taxes, especially if the inheritance is in a shape they can not easily converted into cash. In this case, they can either sell the property or pay the inheritance tax others
You can help your heirs pay inheritance taxes by purchasing a higher amount of life insurance (and therefore an increase in death provision). Be sure to include an amount to cover the mass tax when you complete the worksheet to determine the the amount of coverage you need.
If, however, your estate goes to other beneficiaries and your area is more important than the amount allowed under tax law your heirs will have to pay taxes on those balances amounts. Although the figure of 1999 of $ 650,000 may seem quite large you, a lot of people who own homes have increased in value as equity in their home is above the limit permitted by federal law, the inheritance tax. In these types of the situations, the heirs may have to pay a substantial sum to tax.
Most likely, they will not have the cash or other liquid assets to pay estate taxes, especially if the inheritance is in a shape they can not easily converted into cash. In this case, they can either sell the property or pay the inheritance tax others
You can help your heirs pay inheritance taxes by purchasing a higher amount of life insurance (and therefore an increase in death provision). Be sure to include an amount to cover the mass tax when you complete the worksheet to determine the the amount of coverage you need.
Examine your uninsured medical cost
Uninsured medical costs are one of the largest potentials expense on a family budget. Medical expense in your family budget is crucial because health insurance terms, profits and regulations change very quickly. In addition, medical protection is directly linked to your family health, by definition, you want to be sure that your survivors can pay for your medical expenses if you die. So after completion of the budget sheet, add a lump sum to the for paying unexpected and uninsured medical costs.
How much to add? Good question! The figure that you decide vary depending on the type of health insurance you now have. If you belong to an HMO, most of your medical expenses are covered. But if you have a private plan to pay 20 percent of costs, then your portion is likely to be much larger. Only you can really estimate this amount. However, most experts say that you should always keep about three months worth of living expenses available, try adding this amount down from the sheet of your emergency fund to cover those uninsured medical expenses.
How much to add? Good question! The figure that you decide vary depending on the type of health insurance you now have. If you belong to an HMO, most of your medical expenses are covered. But if you have a private plan to pay 20 percent of costs, then your portion is likely to be much larger. Only you can really estimate this amount. However, most experts say that you should always keep about three months worth of living expenses available, try adding this amount down from the sheet of your emergency fund to cover those uninsured medical expenses.
Examine your living cost
The economic value of your life is not just how much you revenues you earn, but also your living cost, that is how much money you need to live comfortably. The cost in life of you and your family is actually the amount of life insurance income protection that you to purchase. Furthermore, most people tend to spend a little more their revenue, this is the reason why living cost must be carefully examined before purchasing the life insurance.
In addition, a portion of your cost of living are more than likely go into some form of savings, which is to pay college expenses when your children are old enough, for your retirement, to finance your a big vacation, and so forth. You want to ensure that your survivors would be able to cover essential expenses (college expenses, for example). But clearly, saving for your retirement really not something that you have to feel concerned if you die.
When calculating your living cost, do note the rate of inflation and additional expenses that may appear. Living cost may also include debt that must be paid monthly, so make sure that your life insurance amount also able to cover monthly debt payment for your survivor, if you die in a productive age. This way, your survivors do not have to put extra expenses to pay for family debt.
In addition, a portion of your cost of living are more than likely go into some form of savings, which is to pay college expenses when your children are old enough, for your retirement, to finance your a big vacation, and so forth. You want to ensure that your survivors would be able to cover essential expenses (college expenses, for example). But clearly, saving for your retirement really not something that you have to feel concerned if you die.
When calculating your living cost, do note the rate of inflation and additional expenses that may appear. Living cost may also include debt that must be paid monthly, so make sure that your life insurance amount also able to cover monthly debt payment for your survivor, if you die in a productive age. This way, your survivors do not have to put extra expenses to pay for family debt.
Examine your income before taking life insurance
The value of your income is relatively easy to calculate: It’s the amount of money you earn, plus the amount of money you’d expect to earn if you hadn’t died prematurely. But this figure can be difficult to determine accurately. For one thing, many people have little idea of what they may be earning five years from now, especially younger people who may not have settled into a career yet. Secondly, more and more people change careers (not just jobs, but careers) numerous times in their lives. The average number of careers (again, not jobs) for people is now over five! How can anyone possibly say what his or her income will be in 15 years?
Your best bet when figuring the value of your income is to estimate how much your annual salary is likely to increase each year. When completing the worksheet in this chapter, use an increase of about 5 percent per year.
If you know your salary increases will be more than 5 percent per year, use the higher figure. If you know your increases will be less than 5 percent, use the lower number. You can round off later in the final formula when you determine how much life insurance you need.
Don’t forget that in five or ten years, you may quite possibly be working for a different organization or in a different job. If you underestimate your increases, you’re also underestimating the amount of income protection that your survivors need.
Your best bet when figuring the value of your income is to estimate how much your annual salary is likely to increase each year. When completing the worksheet in this chapter, use an increase of about 5 percent per year.
If you know your salary increases will be more than 5 percent per year, use the higher figure. If you know your increases will be less than 5 percent, use the lower number. You can round off later in the final formula when you determine how much life insurance you need.
Don’t forget that in five or ten years, you may quite possibly be working for a different organization or in a different job. If you underestimate your increases, you’re also underestimating the amount of income protection that your survivors need.
Testimonial!
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Brian Boudreau
Eastern Propane
Brian Boudreau
Eastern Propane
Life insurance as part of your estate planning
Apart from the fact that it may serve as a tax shelter for you and your families, life insurance can also be a good framework for the programming assets, and specifically deals with how to distribute your assets after you die, which will greatly benefit your children.
Currently, the federal tax law provides that the first $ 700000 in inheritance exempt from the federal tax. Most members allow similar amount and some have no inheritance tax. Realistically, most people need not worry much about taxes and the reduction of property assets. Moreover, most couples own their property and the property to the public, so that the surviving spouse or the owners do not have to pay inheritance taxes, even if the property is greater than the amount allowed under the law.
But if you are on the estate and is worth more than the law allows, we can ensure that the assets go to your survivors and not the government? This is the point at which life insurance and life insurance come into trusts
To do this type of estate planning, consult an expert who can both advise and implement appropriate vehicles. Briefly, here's how it works:
1. You have created an irrevocable life insurance trust, which contribute annually. Confidence is, essentially, a life insurance policy, which goes from your children or survivors taxfree. You can not withdraw money for any reason (hence the term irrevocable).
2. Your spouse and your children give each regardless of the law that allows the moment, so that the money is taxfree.
3. You will have the amount due to a special organization of your choice, which, by definition, be exempt from inheritance taxes. If you do not have the outstanding amount to a charitable organization, is considered part of your estate and your heirs will have to pay their taxes.
In this case, the IRS took this picture. Using a part of your domain, you can buy a tax-free life insurance policy so that your heirs get the same amount would first of all inheritance tax - the amount equivalent to the estate. Plus, you can devote a large part of your property to a charity rather than the government. The only party that loses is the IRS (and another party wins, the life insurance company, which charges a significant amount of that policy over a period of several years). , But nothing lose your heirs! It is not that the purpose of estate planning?
Do not try to run the complicated process for yourself. A qualified professional can help you sort through the small details and prevent you from making a costly mistake.
Currently, the federal tax law provides that the first $ 700000 in inheritance exempt from the federal tax. Most members allow similar amount and some have no inheritance tax. Realistically, most people need not worry much about taxes and the reduction of property assets. Moreover, most couples own their property and the property to the public, so that the surviving spouse or the owners do not have to pay inheritance taxes, even if the property is greater than the amount allowed under the law.
But if you are on the estate and is worth more than the law allows, we can ensure that the assets go to your survivors and not the government? This is the point at which life insurance and life insurance come into trusts
To do this type of estate planning, consult an expert who can both advise and implement appropriate vehicles. Briefly, here's how it works:
1. You have created an irrevocable life insurance trust, which contribute annually. Confidence is, essentially, a life insurance policy, which goes from your children or survivors taxfree. You can not withdraw money for any reason (hence the term irrevocable).
2. Your spouse and your children give each regardless of the law that allows the moment, so that the money is taxfree.
3. You will have the amount due to a special organization of your choice, which, by definition, be exempt from inheritance taxes. If you do not have the outstanding amount to a charitable organization, is considered part of your estate and your heirs will have to pay their taxes.
In this case, the IRS took this picture. Using a part of your domain, you can buy a tax-free life insurance policy so that your heirs get the same amount would first of all inheritance tax - the amount equivalent to the estate. Plus, you can devote a large part of your property to a charity rather than the government. The only party that loses is the IRS (and another party wins, the life insurance company, which charges a significant amount of that policy over a period of several years). , But nothing lose your heirs! It is not that the purpose of estate planning?
Do not try to run the complicated process for yourself. A qualified professional can help you sort through the small details and prevent you from making a costly mistake.
Wall St Journal Letter
From the letter to the editor by me published in today's WSJ, commenting on a prior article on the problems with Flood Insurance in Mississippi and Louisiana.
Well said Mr. Wilson. (Real Insurance Fraud 11/16/07)
Nationwide, only about 1 in 20 households have flood insurance. As Mr. Wilson pointed out, traditional property insurance does not cover flood. Business owners are exposed too. I estimate that about 1% of businesses I consult with have flood coverage. That percentage goes up after I blow the whistle on the possible losses.
According to the National Flood Insurance Plan, almost 25% of flood losses each year are to properties not in designated flood areas. Just because it hasn’t flooded before does not mean it won’t in the future.
Some who have never experienced flood waters think the cleanup is just a matter of drying things out. Wrong! Flood water is dirty, smelly, and contaminated by everything in its path – oil tanks, gas pumps, dead animals, sewerage… Cleanup is not done with mops and sponges. Shovels, backhoes, and decontamination suits are required.
Your insurance agent can provide a quote. You might be surprised how cheap the coverage is. Why risk a lot for a little?
Life Insurance's advantage as a tax-sheltered investment
Life insurance could have two roles as a tax-sheltered investment:
- The earnings on a cash-value policy are not taxed until you take them out.
- The proceeds of a death benefit settlement are not taxable to your survivors.
Death benefit is not taxable for your survivors, and using the same logic, you may compare the taxable versus the non-taxable gain: Let's assume that you currently earn $80,000 a year, and you buy a $200,000 life insurance policy to help your family pass two-and a half years without your income. If you die, your survivors get a full $200,000, and without tax.
Because the proceeds for death settlement and the earnings of a cash-value life insurance policy are both tax deferred, they serve as excellent tax shelters.
Because the proceeds for death settlement and the earnings of a cash-value life insurance policy are both tax deferred, they serve as excellent tax shelters.
Unique advantages of life insurance as an investment
Another advantage of having life insurance is to use it as part of your investment plan. Most financial advisors would encourage you to have balanced investments so that if one kind of investment goesdown (in the stock market, for example), another one will likely go up (such as bonds or real estate).
By using balanced portfolio and investments diversification, you can compensate loss in one area by having some assets in the other areas that is profitable.
Some life insurance policies are actually long-term investments, which you can contribute to and withdraw funds from before you die. The cash-value policies for whole life and universal life insurance are actually can be considered as savings accounts that will accrue cash value over time and also pay for your protection. Although these policies don’t provide highest interest rates available, they are untaxed earnings, so you get a higher return than simply putting your money in a savings account on which you must pay taxes.
This kind of life insurance should be your priority in choosing a life insurance plan.
By using balanced portfolio and investments diversification, you can compensate loss in one area by having some assets in the other areas that is profitable.
Some life insurance policies are actually long-term investments, which you can contribute to and withdraw funds from before you die. The cash-value policies for whole life and universal life insurance are actually can be considered as savings accounts that will accrue cash value over time and also pay for your protection. Although these policies don’t provide highest interest rates available, they are untaxed earnings, so you get a higher return than simply putting your money in a savings account on which you must pay taxes.
This kind of life insurance should be your priority in choosing a life insurance plan.
Life Insurance as the financial protection for beneficiaries
The need to protect your survivors also means to replace the income you bring in if you die prematurely. Perhaps, you spend large part of your earnings on the costs of bringing them up. If you die, the life insurance death benefit replaces those earnings so that they won’t have a better financial situation. If you have a mortgage on your house, a life insurance death benefit can support your family to stay in the home even if you die.
Life insurance can help solve the difficulty of the need to totally change your way of life because you lose half or more of your income.
Lastly, if you are part-owner in a business, the business may purchase a life insurance policy on you so that if you die, your partner can use that death benefit to buy out your share of the business from your heirs, which in turn would also benefit your survivors by bringing them much needed money.
Life insurance can help solve the difficulty of the need to totally change your way of life because you lose half or more of your income.
Lastly, if you are part-owner in a business, the business may purchase a life insurance policy on you so that if you die, your partner can use that death benefit to buy out your share of the business from your heirs, which in turn would also benefit your survivors by bringing them much needed money.
Life Insurance Myth #3: Life insurance is unnecessary for elderly
A few decades ago being older is meant "more than 50". But many people need life insurance at 50, 55, 60 or 65. Age is not always a reason to forgo life insurance. Even the so-called "old" people should, because they need income protection for their survivors if the head of household or primary caregivers die prematurely. People in their 50's and 60 (and sometimes into their 70s) are often in their peak earnings moments and have large family responsibilities.
You can give your family time to adjust to your death without having to change their usual standards. Today, many more people in their 50's and 60 are continue to support young children. If a woman has a child when she was 40 or 42, that the child will still in college when her mother is 60 years old. Or let's suppose you have a non-working spouses and you die at the age of 60 years, he or she may not be able to find a decent job that provides an income comparable to keep the same standard of living.
Many elderly people actually need more life insurance for a number of reasons:
Many elderly people actually need more life insurance for a number of reasons:
- You may have less time to compensate for the loss of revenue.
- You may find that inflation has cut into the value of police insurance.
- You have a greater need for estate planning that you are older because you have less time to carry out your plan.
- You have a greater need for tax planning as you age because you are very likely to earn more, and life insurance
- It can play a significant role in your tax planning.
Life Insurance Myth #2: Life insurance is a bad investment
Life insurance may not be the most profitable investment available, but it is rarely bad one either. If you measuring an investment only in the amount that you get in return, Life insurance may or may not be a good investment. When you are planning to buy a life insurance policy, understands that you will pay your survivors with the same money. If your family is guaranteed to get more than the money that you spend then , life insurance is a good investment. If your family will get less, it's not a good investment.
However, life insurance is much more than seeking for profitable return on investment. Life insurance also offers protection for your dependents and peace of mind that your family is better taken care of.
If you are looking for a pure return on capital, you will find many more lucrative investment, even tax-deferred or taxfree advantages. The primary function of life insurance is not as an investment but as a protection. No other investment cCan offer the same degree of protection for your family.
However, life insurance is much more than seeking for profitable return on investment. Life insurance also offers protection for your dependents and peace of mind that your family is better taken care of.
If you are looking for a pure return on capital, you will find many more lucrative investment, even tax-deferred or taxfree advantages. The primary function of life insurance is not as an investment but as a protection. No other investment cCan offer the same degree of protection for your family.
Life Insurance Myth #1: I only need life insurance if I have children
Most people think they need life insurance only if they have a family - to ensure that victims are not left without proper medical care, due to the lack of fund. Life insurance is important for several other reasons, which you can read in more detail later in this blog. A single person with ordinary lifestyle might still need life insurance coverage.
Voice Recognition Software
Today's Boston Globe featured my use of voice recognition software.
I've played with the tool for several years now. I finally found a version that works pretty well.
Testimonial!
"Having an unbiased insurance review was important to me and our Finance Committee. Your work was thorough. You got into issues I had never thought of. You explained the issues clearly and moved us to resolving the problems. I'm glad we went through the process. Thanks."
Karla McDougold
United Way Of Eastern Maine
Karla McDougold
United Way Of Eastern Maine
Work Comp Experience Mod Worksheet Explanation
I'm often asked to explain the workers' compensation experience modification worksheet provided to most employers who have more than $5,000 in worker's comp premium.
The modification factor can have a dramatic affect on your insurance costs. Understanding the worksheet will help you understand the impact your losses have on your premiums.
I thought a video would be the best medium. Pull out your worksheet (sent to you by NCCI) and watch the explanation - www.insurance-coveragelaw.com/wc_modsheetvideo.html.
Comments are welcome.
The modification factor can have a dramatic affect on your insurance costs. Understanding the worksheet will help you understand the impact your losses have on your premiums.
I thought a video would be the best medium. Pull out your worksheet (sent to you by NCCI) and watch the explanation - www.insurance-coveragelaw.com/wc_modsheetvideo.html.
Comments are welcome.
Insurance Issues for Law Firms Podcast
A few weeks ago Ed Poll of LawBiz Management interviewed me on insurance issues faced by lawy firms. Listen to the podcast here.
Hints For Reading Your Insurance Policies
The mere thought of reading an insurance policy can make your head hurt. Here are some hints to make it less painful.
Start with an Understanding of the Purpose of the Policy
An auto policy is designed to cover vehicle accidents. General liability insurance is purchased to protect the insured from liability arising out of bodily injury, property damage, personal injury, and advertising injury. Directors' and officers' insurance indemnifies the key people for errors in judgment and bad decisions. Professional liability is designed to pay for poor advice and doing your work improperly.
Read the Declarations Page
The declarations page is usually the first few pages of the policy. It will have information specific to the policy being reviewed, such as: policy effective and cancellation dates; name of insured; the subject of the insurance policy (list of vehicles, buildings, description of property, etc.); premiums charged; policy form numbers and edition dates.
Review the Definitions
In most insurance policies, words that are defined by the policy are in bold type or are within quotation marks. Find the definition section of the policy and browse the terms.
Read the Insuring Agreement
The insuring agreement is usually the first part of the actual policy wording. It will tell you what is covered by the policy. For property insurance, learn what causes of loss (perils) are insured. For a directors' and officers' insurance policy, look at the definition of "wrongful act."
Review the Exclusions
Exclusions tell you what is not covered by the policy. Most policies start with broad insuring agreements, then whittle away at the coverage with the use of exclusions. Broad exclusions are not necessarily bad. For example, a general liability policy will exclude auto accidents. No problem. That's why you buy an auto insurance policy.
While reviewing exclusions, look for exceptions to the exclusion. Look for wording like, "This exclusion does not apply to..." For example, the general liability policy excludes watercraft. There is an exception to the exclusion in most policies for watercraft less than 26 feet in length that you do not own.
Review the Endorsements
The endorsements are usually found at the end of the policy. They amend the standard policy language. It is not unusual to have more than ten endorsements to the policy. The title of the endorsement usually gives you a good idea of what is trying to be accomplished with the form. If an endorsement deletes a section of the policy, mark that section in the policy document for future reference.
Review Policy Conditions
The policy conditions will show you the general "rules of the road" for the contract. Issues like cancellation, arbitration, and claims reporting are usually covered in this section.
Read the Policy With A Pencil
I read insurance policies with a pencil in hand. I mark sections and summarize the contents of a particular clause in two or three words. It helps me find sections later and makes sure that I am not wasting time looking at a section that is amended by an exclusion.
Start with an Understanding of the Purpose of the Policy
An auto policy is designed to cover vehicle accidents. General liability insurance is purchased to protect the insured from liability arising out of bodily injury, property damage, personal injury, and advertising injury. Directors' and officers' insurance indemnifies the key people for errors in judgment and bad decisions. Professional liability is designed to pay for poor advice and doing your work improperly.
Read the Declarations Page
The declarations page is usually the first few pages of the policy. It will have information specific to the policy being reviewed, such as: policy effective and cancellation dates; name of insured; the subject of the insurance policy (list of vehicles, buildings, description of property, etc.); premiums charged; policy form numbers and edition dates.
Review the Definitions
In most insurance policies, words that are defined by the policy are in bold type or are within quotation marks. Find the definition section of the policy and browse the terms.
Read the Insuring Agreement
The insuring agreement is usually the first part of the actual policy wording. It will tell you what is covered by the policy. For property insurance, learn what causes of loss (perils) are insured. For a directors' and officers' insurance policy, look at the definition of "wrongful act."
Review the Exclusions
Exclusions tell you what is not covered by the policy. Most policies start with broad insuring agreements, then whittle away at the coverage with the use of exclusions. Broad exclusions are not necessarily bad. For example, a general liability policy will exclude auto accidents. No problem. That's why you buy an auto insurance policy.
While reviewing exclusions, look for exceptions to the exclusion. Look for wording like, "This exclusion does not apply to..." For example, the general liability policy excludes watercraft. There is an exception to the exclusion in most policies for watercraft less than 26 feet in length that you do not own.
Review the Endorsements
The endorsements are usually found at the end of the policy. They amend the standard policy language. It is not unusual to have more than ten endorsements to the policy. The title of the endorsement usually gives you a good idea of what is trying to be accomplished with the form. If an endorsement deletes a section of the policy, mark that section in the policy document for future reference.
Review Policy Conditions
The policy conditions will show you the general "rules of the road" for the contract. Issues like cancellation, arbitration, and claims reporting are usually covered in this section.
Read the Policy With A Pencil
I read insurance policies with a pencil in hand. I mark sections and summarize the contents of a particular clause in two or three words. It helps me find sections later and makes sure that I am not wasting time looking at a section that is amended by an exclusion.
Problems with Computer Insurance Coverage
In years past many business owners and their insurance agents added specific computer coverage to their insurance plans. That may have been the right path at the time - it may not be right now.
A separate coverage part means a separate limit of coverage that may or may not be correct. A company that has $575,000 of coverage for business personal property and $125,000 of computer equipment coverage could be under-insured in one area and over insured in another, leaving gaps at the time of a claim. This risk was outweighed by the coverage provided by computer insurance, namely, mechanical breakdown and power surges. Many insurers now provide these perils as part of property insurance - you may not need separate computer coverage to get the extra protection.
A separate coverage section also may mean two deductibles assessed at the time of a loss. There could also be coinsurance penalties.
A separate coverage part means a separate limit of coverage that may or may not be correct. A company that has $575,000 of coverage for business personal property and $125,000 of computer equipment coverage could be under-insured in one area and over insured in another, leaving gaps at the time of a claim. This risk was outweighed by the coverage provided by computer insurance, namely, mechanical breakdown and power surges. Many insurers now provide these perils as part of property insurance - you may not need separate computer coverage to get the extra protection.
A separate coverage section also may mean two deductibles assessed at the time of a loss. There could also be coinsurance penalties.
Insurance Newsletter - June - Work Comp Focus
June, 2007 Issue 85 - Since 2000
This Month, a Workers Compensation Focus!!!
Learn the Rating Plan of Your Work Comp Policy
Each insurance company has several workers' compensation plans. Many have three - Preferred, Standard, and Sub-Standard. Some insurers have only Standard and Preferred. The difference is in the rates. Preferred rates are, naturally, lower than standard. Find out what plan you're in. Find out what you have to do to get moved into a lower rated plan.
The current insurance marketplace is as competitive as any in 15 years. Push your insurer to provide you with the best rate.
Learn the Credit Structure of Your Work Comp Policy
Insurers include discretionary credits or debits in the pricing of your w/c policy - discretionary by the underwriter. These factors can increase or decrease your premiums by as much as 25%. They're used as competitive tools by insurers - reduce the premium to be more competitive - increase the premium when they can get it. The factors are loosely tied to loss control and management programs. In reality, they are entirely subjective.
Review your policy to learn if you've been debited or credited. Track your factors at renewal. Ask for a better rating to reward good loss experience.
Control Your Work Comp Costs - Get a Copy of Your Audit Worksheets
Ask your insurer to provide you with a copy of the Audit Worksheet prepared for your most recently expired policy. This document provides the details of how the insurance company determined your final premium. It lists employees, classifications and payrolls. Look for errors such as the inclusion of overtime and incorrect classification of employees.
Having an employee classified in a higher rate code could cost you big premium dollars.
Workers Comp Tool - Looking for Guinea Pigs
The experience modification is a big part of the final premium you pay for your workers' compensation. I've developed a simple tool that will evaluate the inner workings of your mod. I'm looking for a few employers to test this out on. I've used it with several clients. I'd like some outside feedback. Let me know if you're interested - Scott@insurance-coveragelaw.com. For helping me out, I'd be glad to spend some time with you on how you can improve your experience modification in the future.
Informative Insurance Teleseminars
I hold regular teleseminars to help insurance buyers with their insurance. My goal is to provide useful, easy-to-implement ideas. These are not sales presentations, but solid info you can use to make better insurance decisions.
Email me to register or for more information - Scott@insurance-coveragelaw.com.
June 20 - For BMW Dealers - Through special arrangement with BMW this is part of a special series of teleseminars for BMW dealers only.
June 28 - Simmonds on Bank Insurance - Property Insurance, General Liability, and Work Comp Issues for Banks
(These sessions are free to insurance buyers. Insurance people are welcome at a $75 fee.)
All sessions start at 10:00 am Eastern and last for 45 minutes. If you have a topic suggestion for future teleseminars, let me know.
Maine and Other Stuff
While spring may be here, it certainly isn't warm. We've had the heat on several times over the past two weeks. The fireplace has been in use often.
We graduated two kids from school in the past month. Christine from college, and Jarred from high school. Christine already has a teaching position lined up in Mexico, Maine (2 hours northwest from here).
Time To Brag... I have recently been recognized with "Board Approved" status by the Society for Advancement of Consulting, an organization accepting only the top 1% of consultants nationwide. I'm the fourteenth consultant to be so honored worldwide and the first in the insurance business.
Wildlife Report: Humming birds at the feeder all day long. the finches are everywhere. No bears this spring. Plenty of squirrels. Turkeys every so often.
Do You Have The Right Insurance?
Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Remember, I don't sell insurance so I'm unbiased.
Need A Speaker?
I'm pleased to speak to trade, business, or service associations about insurance topics. See my speaker's page.
Please Forward This Newsletter To Your Business Associates
Scott Simmonds, CPCU, ARM Insurance Consulting Phone 207-284-0085 Fax 802-992-4027 Scott@insurance-coveragelaw.comwww.insurance-coveragelaw.com
See My Insurance Blog - www.InsuranceBuzzer.com
Comments regarding insurance policies or products in this newsletter do not constitute an endorsement. I accept no fees of any kind from any company mentioned in this newsletter.
© 2007 Insurance Consultants of Maine, Inc. All Rights Reserved. We encourage sharing this newsletter if copyright and attribution (including my web address) are always included.
This Month, a Workers Compensation Focus!!!
Learn the Rating Plan of Your Work Comp Policy
Each insurance company has several workers' compensation plans. Many have three - Preferred, Standard, and Sub-Standard. Some insurers have only Standard and Preferred. The difference is in the rates. Preferred rates are, naturally, lower than standard. Find out what plan you're in. Find out what you have to do to get moved into a lower rated plan.
The current insurance marketplace is as competitive as any in 15 years. Push your insurer to provide you with the best rate.
Learn the Credit Structure of Your Work Comp Policy
Insurers include discretionary credits or debits in the pricing of your w/c policy - discretionary by the underwriter. These factors can increase or decrease your premiums by as much as 25%. They're used as competitive tools by insurers - reduce the premium to be more competitive - increase the premium when they can get it. The factors are loosely tied to loss control and management programs. In reality, they are entirely subjective.
Review your policy to learn if you've been debited or credited. Track your factors at renewal. Ask for a better rating to reward good loss experience.
Control Your Work Comp Costs - Get a Copy of Your Audit Worksheets
Ask your insurer to provide you with a copy of the Audit Worksheet prepared for your most recently expired policy. This document provides the details of how the insurance company determined your final premium. It lists employees, classifications and payrolls. Look for errors such as the inclusion of overtime and incorrect classification of employees.
Having an employee classified in a higher rate code could cost you big premium dollars.
Workers Comp Tool - Looking for Guinea Pigs
The experience modification is a big part of the final premium you pay for your workers' compensation. I've developed a simple tool that will evaluate the inner workings of your mod. I'm looking for a few employers to test this out on. I've used it with several clients. I'd like some outside feedback. Let me know if you're interested - Scott@insurance-coveragelaw.com. For helping me out, I'd be glad to spend some time with you on how you can improve your experience modification in the future.
Informative Insurance Teleseminars
I hold regular teleseminars to help insurance buyers with their insurance. My goal is to provide useful, easy-to-implement ideas. These are not sales presentations, but solid info you can use to make better insurance decisions.
Email me to register or for more information - Scott@insurance-coveragelaw.com.
June 20 - For BMW Dealers - Through special arrangement with BMW this is part of a special series of teleseminars for BMW dealers only.
June 28 - Simmonds on Bank Insurance - Property Insurance, General Liability, and Work Comp Issues for Banks
(These sessions are free to insurance buyers. Insurance people are welcome at a $75 fee.)
All sessions start at 10:00 am Eastern and last for 45 minutes. If you have a topic suggestion for future teleseminars, let me know.
Maine and Other Stuff
While spring may be here, it certainly isn't warm. We've had the heat on several times over the past two weeks. The fireplace has been in use often.
We graduated two kids from school in the past month. Christine from college, and Jarred from high school. Christine already has a teaching position lined up in Mexico, Maine (2 hours northwest from here).
Time To Brag... I have recently been recognized with "Board Approved" status by the Society for Advancement of Consulting, an organization accepting only the top 1% of consultants nationwide. I'm the fourteenth consultant to be so honored worldwide and the first in the insurance business.
Wildlife Report: Humming birds at the feeder all day long. the finches are everywhere. No bears this spring. Plenty of squirrels. Turkeys every so often.
Do You Have The Right Insurance?
Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Remember, I don't sell insurance so I'm unbiased.
Need A Speaker?
I'm pleased to speak to trade, business, or service associations about insurance topics. See my speaker's page.
Please Forward This Newsletter To Your Business Associates
Scott Simmonds, CPCU, ARM Insurance Consulting Phone 207-284-0085 Fax 802-992-4027 Scott@insurance-coveragelaw.comwww.insurance-coveragelaw.com
See My Insurance Blog - www.InsuranceBuzzer.com
Comments regarding insurance policies or products in this newsletter do not constitute an endorsement. I accept no fees of any kind from any company mentioned in this newsletter.
© 2007 Insurance Consultants of Maine, Inc. All Rights Reserved. We encourage sharing this newsletter if copyright and attribution (including my web address) are always included.
A reporter asked about product liability coverage. My reply:
Product liability lawsuits are a primary concern for thousands of US businesses. If McDonald's can be sued for hot coffee, what chance does a smaller business have?
-Beware of excluded products. Some insurers are gun-shy about certain products and industries - aircraft parts, gun manufacturing, auto parts, boat equipment... Even though you don't directly manufacture, if you make a part that goes in a widget, which goes in a plane, you may not have coverage.
-Watch your aggregate limits. Liability and umbrella insurance policies have a cap for the total payout under product liability - called a product aggregate limit. Once you use up the limit there is no coverage.
-Get a bigger umbrella. So called, umbrella liability insurance provides additional limits of liability. The current insurance marketplace may mean higher limits at lower price. Get quotes and measure the value of the increased coverage.
Product liability lawsuits are a primary concern for thousands of US businesses. If McDonald's can be sued for hot coffee, what chance does a smaller business have?
-Beware of excluded products. Some insurers are gun-shy about certain products and industries - aircraft parts, gun manufacturing, auto parts, boat equipment... Even though you don't directly manufacture, if you make a part that goes in a widget, which goes in a plane, you may not have coverage.
-Watch your aggregate limits. Liability and umbrella insurance policies have a cap for the total payout under product liability - called a product aggregate limit. Once you use up the limit there is no coverage.
-Get a bigger umbrella. So called, umbrella liability insurance provides additional limits of liability. The current insurance marketplace may mean higher limits at lower price. Get quotes and measure the value of the increased coverage.
Expanded Info on the 126 Questions to Ask Your Insurance Agent - Question 61
Question For Your Agent #61 - Am I covered for the loss of trade secrets if an employee goes to a competitor?
This question is designed to promote a conversation about risk management. Loss of trade secrets is not covered by most insurance policies. Even your employee dishonesty coverage excludes such, as the loss is not to tangible property.
While there are specialty (read, "expensive") programs out there with limited coverage for loss of trade secrets, your best bet is internal security and contractual protections. Speak with your employment law attorney about what can be done to prevent others from profiting from the work and the innovation you paid for.
Frankly, this is a tough area. Most states restrict impinging on a former employee's ability to work by use of noncompete agreements. Confidentiality and trade secret agreements may be an option. Insurance really isn't going to help you.
Talk with your attorney.
Download your free copy of 126 Questions To Ask Your Insurance Agent
This question is designed to promote a conversation about risk management. Loss of trade secrets is not covered by most insurance policies. Even your employee dishonesty coverage excludes such, as the loss is not to tangible property.
While there are specialty (read, "expensive") programs out there with limited coverage for loss of trade secrets, your best bet is internal security and contractual protections. Speak with your employment law attorney about what can be done to prevent others from profiting from the work and the innovation you paid for.
Frankly, this is a tough area. Most states restrict impinging on a former employee's ability to work by use of noncompete agreements. Confidentiality and trade secret agreements may be an option. Insurance really isn't going to help you.
Talk with your attorney.
Download your free copy of 126 Questions To Ask Your Insurance Agent
Expanded Info on the 126 Questions to Ask Your Insurance Agent - Question 16
Insurance buyers often tell me that they are too confused by insurance to even know what questions to ask. I have at least a partial solution in my white paper, 126 Questions to Ask Your Insurance Agent. Here is one of the questions and some background on what you get as an answer:
Question #16 - What's your biggest concern with our insurance program?
This is an open ended question designed to get your agent talking about his level of understanding and concern with aspects of your insurance. Even the simplest insurance plan has, within it, complex issues. There may be coverage questions that the agent has brought up in earlier meetings - perhaps years before. This is the agent's chance to bring them up again.
Agent: "Well Bob, last year we talked about employment related practices coverage. You decided not to buy the insurance. Perhaps that was the right decision. However, you still have the exposure of an employee or former employee accusing one of your managers of harassment or discrimination. I'm concerned with the money you would have to spend even on a groundless suit."
Underlying all the questions in my white paper is an analysis of the abilities and work your agent does for you. How comfortable are you with your agent? Is he paying attention to you and your needs? Are you comfortable with his efforts on your behalf? Is this agent the best agent for you?
Download your free copy of 126 Questions To Ask Your Insurance Agent
Question #16 - What's your biggest concern with our insurance program?
This is an open ended question designed to get your agent talking about his level of understanding and concern with aspects of your insurance. Even the simplest insurance plan has, within it, complex issues. There may be coverage questions that the agent has brought up in earlier meetings - perhaps years before. This is the agent's chance to bring them up again.
Agent: "Well Bob, last year we talked about employment related practices coverage. You decided not to buy the insurance. Perhaps that was the right decision. However, you still have the exposure of an employee or former employee accusing one of your managers of harassment or discrimination. I'm concerned with the money you would have to spend even on a groundless suit."
Underlying all the questions in my white paper is an analysis of the abilities and work your agent does for you. How comfortable are you with your agent? Is he paying attention to you and your needs? Are you comfortable with his efforts on your behalf? Is this agent the best agent for you?
Download your free copy of 126 Questions To Ask Your Insurance Agent
Employee Dishonesty Gap In Coverage
Employee dishonesty coverage is purchased to protect from (oh surprise) the dishonest acts of employees.
--The bookkeeper steals from petty cash.
--A stockroom employee steals and sells off inventory items.
Most policies don't cover the theft, by an employee, of customer property. So, if you run a cleaning service, your policy may not cover you if an employee steals jewelry from a client. Any company where employees are in a customer's office or home may have this gap in coverage.
Check with your agent.
--The bookkeeper steals from petty cash.
--A stockroom employee steals and sells off inventory items.
Most policies don't cover the theft, by an employee, of customer property. So, if you run a cleaning service, your policy may not cover you if an employee steals jewelry from a client. Any company where employees are in a customer's office or home may have this gap in coverage.
Check with your agent.
Product Recall Not Covered By Insurance
It was recently announced that ConAgra would have to spend up to $60 million to recall Peter Pan Peanut Butter due to the recent salmonella outbreak that affected almost 300 people.
Without commenting on ConAgra's insurance, this is a good time to point out that product recall expenses are not covered by 99.9% of all product liability insurance policies.
General liability insurance includes product liability (for most insurance buyers). The policy will pay for the liability resulting from bodily injury and property damage from contaminated products. The policy will not cover the expense of recalling suspected or actually tainted products.
Some insurance companies do offer recall coverage - either as an addition to the general liability policy or as a stand-alone policy. It is, however, a rarely purchased coverage.
Without commenting on ConAgra's insurance, this is a good time to point out that product recall expenses are not covered by 99.9% of all product liability insurance policies.
General liability insurance includes product liability (for most insurance buyers). The policy will pay for the liability resulting from bodily injury and property damage from contaminated products. The policy will not cover the expense of recalling suspected or actually tainted products.
Some insurance companies do offer recall coverage - either as an addition to the general liability policy or as a stand-alone policy. It is, however, a rarely purchased coverage.
126 Questions to Ask Your Insurance Agent
I frequently hear from insurance buyers that they don't understand insurance. "I don't even know what questions to ask!" is a common complaint.
I decided to put some of the questions I ask down on paper. I started trying to come up with 50. The list just kept on growing. I stopped at 126. I'm sure I could find more. I guess I just had to stop somewhere.
Here are 126 questions that will help insurance buyers determine if they have the right coverage.
To download the free white paper just go to: http://www.insurance-coveragelaw.com/questions.html.
I decided to put some of the questions I ask down on paper. I started trying to come up with 50. The list just kept on growing. I stopped at 126. I'm sure I could find more. I guess I just had to stop somewhere.
Here are 126 questions that will help insurance buyers determine if they have the right coverage.
To download the free white paper just go to: http://www.insurance-coveragelaw.com/questions.html.
New Risk Management Tool - Open Source Insurance Project
I just unveiled what I believe is the first open source insurance / risk management project, Scott's Risk List.
Go to http://scottsrisklist.blogspot.com/.
The idea is to build a tool that will help insurance agents, brokers and consultants uncover businesses exposures and concerns. Similar to what has been done in software, perhaps this can lead to an amazingly helpful resource in risk management.
Go to http://scottsrisklist.blogspot.com/.
The idea is to build a tool that will help insurance agents, brokers and consultants uncover businesses exposures and concerns. Similar to what has been done in software, perhaps this can lead to an amazingly helpful resource in risk management.
Market Solution To Health Insurance Mess
Here's my letter to the editor published in today's Portland (Maine) Press Herald:
It was announced recently that California Gov. Arnold Schwarzenegger has come up with a new health-insurance plan for his state that is as bad as any proposed so far.
It may be worse than the plan that our own Gov. Baldacci has been selling us.
The health-care payment problem in this country will not be solved by falling back on the failed policies of central control.
Mandated coverage, payment limitations and forced insurance purchases by employers will only lead to less competition, shortages, higher costs and poorer service -- just as all socialistic policies do.
The free marketplace that makes our economy great is the only hope for our health-care system. It's no accident that the most widely regulated part of our economy is also the quarter of most trouble.
Walk into any office of the Department of Motor Vehicles to see what health care under more government control or a single-payer system will be like.
It was announced recently that California Gov. Arnold Schwarzenegger has come up with a new health-insurance plan for his state that is as bad as any proposed so far.
It may be worse than the plan that our own Gov. Baldacci has been selling us.
The health-care payment problem in this country will not be solved by falling back on the failed policies of central control.
Mandated coverage, payment limitations and forced insurance purchases by employers will only lead to less competition, shortages, higher costs and poorer service -- just as all socialistic policies do.
The free marketplace that makes our economy great is the only hope for our health-care system. It's no accident that the most widely regulated part of our economy is also the quarter of most trouble.
Walk into any office of the Department of Motor Vehicles to see what health care under more government control or a single-payer system will be like.
Consumers Don't Trust Insurance Companies
This from CNN... "One in seven Americans or a member of their family have had trouble with an insurance claim within the past two years, according to a new survey by Money Magazine and market research firm ICR."
One third of survey respondents don't trust insurance companies to treat their customers fairly.
Whole Story Here
One third of survey respondents don't trust insurance companies to treat their customers fairly.
Whole Story Here
Testimonial!
"I have to admit, I was skeptical when we first hired you. I'm quite happy with the work you have done. Thanks for your help."
Al Monier
Executive Director
Rumford Group Homes, Inc.
Al Monier
Executive Director
Rumford Group Homes, Inc.
Flood Insurance
I got another call a few weeks ago from someone wondering if it is common for an insurance company to exclude damage by flood. Answer: yes, quite common. In fact, few property insurance policies cover flood damage. Coverage can be added if you ask your agent for it. Some insurers will add it right to your commercial property insurance. Others will require a separate policy.
Homes are never covered for flood under a homeowner's policy. You can only get flood insurance for your home or personal property through the National Flood Insurance Program.
If you have any questions about your exposure to flood or your flood coverage, talk with your insurance advisor.
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Homes are never covered for flood under a homeowner's policy. You can only get flood insurance for your home or personal property through the National Flood Insurance Program.
If you have any questions about your exposure to flood or your flood coverage, talk with your insurance advisor.
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Consider Your Insurance Renewal Dates Carefully
This is commercial insurance advice...
The most popular renewal date for business insurance programs is January 1. The first of July is also popular. The "quarter changes" of April and October first are also busy times for insurance companies. You don't want your insurance to renew anywhere near these dates. Underwriters and agents are scurrying around, trying to renew three or four times their normal workload. Unless you are spending $1,000,000 a year on your insurance, you won't get the attention you deserve. If you currently have one of the above policy dates, consider changing it to a date like February 17. Think about your cash flow. Select a month for renewal when you have money in the bank and time to spend with an agent.
One exception... rarely do I recommend changing policy dates on workers' compensation policies. The experience modification calculation does not respond well to changing policy periods.
The most popular renewal date for business insurance programs is January 1. The first of July is also popular. The "quarter changes" of April and October first are also busy times for insurance companies. You don't want your insurance to renew anywhere near these dates. Underwriters and agents are scurrying around, trying to renew three or four times their normal workload. Unless you are spending $1,000,000 a year on your insurance, you won't get the attention you deserve. If you currently have one of the above policy dates, consider changing it to a date like February 17. Think about your cash flow. Select a month for renewal when you have money in the bank and time to spend with an agent.
One exception... rarely do I recommend changing policy dates on workers' compensation policies. The experience modification calculation does not respond well to changing policy periods.
Tips For Choosing Your Auto Insurance Company
By Anthony S.
In case of car accident, it is nice to have a safety net. Of course it is standard that once you buy a car, you must also purchase auto insurance. But what if the company where you buy your auto insurance policy is taking too long to process your claim? And what if the company does not recognize your claim at all? You see, having an auto insurance policy is not enough, not to mention, useless if you disregard the possibility that the insurance company you have chosen is unreliable.
With this, it is only proper to discuss the factors that need to consider when choosing an auto insurance company.
The first thing you should do before signing up for a purchase is to know if the insurance company is reliable or not. Auto insurance company can be considered reliable if it is paying the correct claim with the correct amount at the fastest time possible. To know this, you can check on the website of your state's department of insurance. Posted in this website are the complaints of costumers with respect to the number of claims filed in a year.
One particular site that would certainly help you in selecting the best auto insurance is the J.D. Power and Associates website. This organization collects data from policyholders across the country. The J.D. Power and Associates also asks from these policyholders the grade-rating of their insurance company in terms of claims, handing, price, satisfaction with the representatives, coverage options, and the overall experience with the company.
The company's grade-rating from costumers are very important factor to consider since you will never know when you will have to file a claim at the same time, get a result as soon as possible. It does not mean though that once a company receives complain, you are already gambling your money if you decide to purchase an insurance policy from them. The thing is, all companies can get complaints once in a while but consider those with the least number of complaints and the highest rating from their costumers. Also, consider the insurance company that ranks the highest in all aspects.
Then, you need to know the financial strength of the auto insurance company. As a reference, take of the Standard & Poor's ratings and the A.M. Best. These two companies publish the financial strength rating of every insurance company in the United States. What is the importance of this? The financial strength of your possible auto insurance company determines if it has the capacity to settle or to pay for claims. Thus high financial strength rating means a wiser choice.
Consider also the price of the premium they offer and the choices of policy they have. Premiums matter much whether or not you are a frugal costumer.
The next thing you should consider in selecting your auto insurance company is the number of accredited body shops that is recommended by the particular company. Consider the distance of them from your place. This could be a minor consideration but once you are in the situation where you need your car to be repaired, then location is significant. Also, make sure that these body shops have the right equipment and expertise that will effectively answer any future need of your car.
Now that you know these things, you are ready to choose your auto insurance company.
In case of car accident, it is nice to have a safety net. Of course it is standard that once you buy a car, you must also purchase auto insurance. But what if the company where you buy your auto insurance policy is taking too long to process your claim? And what if the company does not recognize your claim at all? You see, having an auto insurance policy is not enough, not to mention, useless if you disregard the possibility that the insurance company you have chosen is unreliable.
With this, it is only proper to discuss the factors that need to consider when choosing an auto insurance company.
The first thing you should do before signing up for a purchase is to know if the insurance company is reliable or not. Auto insurance company can be considered reliable if it is paying the correct claim with the correct amount at the fastest time possible. To know this, you can check on the website of your state's department of insurance. Posted in this website are the complaints of costumers with respect to the number of claims filed in a year.
One particular site that would certainly help you in selecting the best auto insurance is the J.D. Power and Associates website. This organization collects data from policyholders across the country. The J.D. Power and Associates also asks from these policyholders the grade-rating of their insurance company in terms of claims, handing, price, satisfaction with the representatives, coverage options, and the overall experience with the company.
The company's grade-rating from costumers are very important factor to consider since you will never know when you will have to file a claim at the same time, get a result as soon as possible. It does not mean though that once a company receives complain, you are already gambling your money if you decide to purchase an insurance policy from them. The thing is, all companies can get complaints once in a while but consider those with the least number of complaints and the highest rating from their costumers. Also, consider the insurance company that ranks the highest in all aspects.
Then, you need to know the financial strength of the auto insurance company. As a reference, take of the Standard & Poor's ratings and the A.M. Best. These two companies publish the financial strength rating of every insurance company in the United States. What is the importance of this? The financial strength of your possible auto insurance company determines if it has the capacity to settle or to pay for claims. Thus high financial strength rating means a wiser choice.
Consider also the price of the premium they offer and the choices of policy they have. Premiums matter much whether or not you are a frugal costumer.
The next thing you should consider in selecting your auto insurance company is the number of accredited body shops that is recommended by the particular company. Consider the distance of them from your place. This could be a minor consideration but once you are in the situation where you need your car to be repaired, then location is significant. Also, make sure that these body shops have the right equipment and expertise that will effectively answer any future need of your car.
Now that you know these things, you are ready to choose your auto insurance company.
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