Stamping out the extra costs of life insurance

By Laine Lister

A bill to abolish stamp duty on life insurance products introduced into Queensland’s State Parliament recently has been applauded by the Investment and Financial Services Association (IFSA).

IFSA chief executive Richard Gilbert said the bill, which was introduced by Queensland Shadow Treasurer Dr Bruce Flegg, is essentially unfinished business, given that state ‘nuisance’ taxes and stamp duties were always intended to be progressively phased out after the passage of the Federal GST/New Tax System legislation.

“This is a matter that has affected our industry for years, we only ever hoped to get a uniform approach to this, but to have someone say, ‘let’s abolish duty’, this messy, inefficient tax, that is very gratifying,” he said.

The problem of state taxes on insurance products is not unique to Queensland and Gilbert said he hopes other states will follow suit in the push for more affordable life insurance.

“I’d be hopeful that this will send a strong signal and will act as a catalyst,” he said.

Gilbert said Australians, and Queenslanders in particular, are “woefully underinsured” and he pointed to TNS research that found only 4 per cent of average full-time workers in their mid 30s with dependants have the level of cover they need.

“Over 4,400 people with dependant children die in Australia each year and, for those without the financial support that life insurance provides, the burden is ultimately carried by other family members, social services, churches and other charitable organisations at a cost far outweighing the relatively minimal revenue collected,” he said.

“Certainly, we believe that Dr Flegg’s bill should be supported and the time has now come for each of the state and territory parliaments to draw up a timetable for the abolition of state taxes on these products so that life insurance is more affordable,” he said.

Choosing installment payments

As the life insurance policyholder, you can designate that your beneficiary is to be paid the death benefit a little at a time, over a period of years. You can decide whether you want to designate a specific time period for these payments or that a specific amount be paid in each payment until the total death benefit runs out. Any monies that haven’t yet been paid generate interest. In most instances, this income is not taxable to the beneficiary, although you and your beneficiary should certainly check with a tax advisor before making that assumption.

Keeping Secrets From Your Insurance Agent

Your insurance agent can only respond to the changes in your business that he or she knows about. Some agents are more proactive than others. The ultimate responsibility, however, is with you to let them know. Here are some issues to bring to your agent's attention:

--Changes to your operation such as new products or services, expansion to another state, new uses of current products, and international operations or travel.

--Joint ventures with other companies, mergers, and acquisitions.

--New locations, new buildings, additions to current buildings.

--Additional equipment or an increase in the inventory, stock and supplies held by you.

--Changes in the distribution of your product, which means greater values held in your warehouse or higher values being transported.

--New vehicles or temporary storage locations. New equipment purchases.

--Home offices or telecommuters.

--Change in fire protection equipment, addition of alarms or sprinkler systems. The addition of video surveillance equipment.

--New leases or other contracts that involve assumption of liability or indemnification.

Resolving a Coverage Conflict through a Declaratory Judgment Lawsuit

If you and your insurer disagree about whether the insurer has a duty to defend or indemnify you, either you or your insurer can file a "declaratory judgment" lawsuit. It is called a "declaratory judgment" because the plaintiff (the person filing the lawsuit) is seeking a "declaration" by the court that the plaintiff's interpretation of the insurance policy is correct.

The current law in Massachusetts is that if an insured wins a declaratory judgment lawsuit regarding the duty to defend, the insurer has to pay the attorney's fees incurred by the insured in the declaratory judgment lawsuit. This is true whether the insurer or the insured is the plaintiff in the lawsuit. Even if the insured wins a lawsuit regarding the duty to indemnify, however, the insurer is not obligated to pay the insured's attorney's fees.

There are a number of questions that remain unresolved about attorney's fees. For example, it is unclear what happens if a declaratory judgment lawsuit seeks a declaration about both the duty to defend and the duty to indemnify. In other contexts, where a party is entitled to an award of attorney's fees for some claims but not for others in the same lawsuit, the court will attempt to divide up the attorney's fees between the claims. That is always a difficult undertaking, but it would be particularly hard to divide the time spent by the attorney between the duty to defend and the duty to indemnify, because the two issues are so interrelated.

I will write more about the logistics of a declaratory judgment lawsuit in a later post.

Internet Insurance Exposures

Frankly, most people in the insurance industry are not yet comfortable with the exposures to loss presented by the internet. Most insurance companies are using exclusionary language for issues like intellectual property and cyber-theft. Work with your insurance advisor to identify your exposures to loss involving the internet. Watch your renewals for the addition of endorsements limiting coverage.

How can your business be impacted by:

-Loss of access to the internet?

-Loss of your website for an extended period of time?

-Hacking into your website and stealing information?

-Hacking into your website and changing the site?

-Hacking into your computer network, and accessing customer data?

-Hackers destroy data?

-Loss of computer data?

-A computer virus destroying data?

-Illicit employee use of your computers?

-Theft of data by loss of a laptop computer?

-Employee access / hacking of your computer system for revenge?

How vigilant are you over the following issues:

-Former employee access of computers?

-Contractor access of computers?

-Password security policies?

-Employee use of computer policies?

-Employee email policies?

-Adequacy of backup process, including regular testing?

-Virus protection policy and procedures?

-Software updates?

-Customer relations plan reacting to cyber-crime?

Business Insurance Dictionary - Credit Insurance

Credit Insurance

Insurance coverage against default by creditors. Insureds can protect all of their accounts receivable or specific creditors. Some credit insurance companies also provide credit watch and account receivable advisory services.

Sorting out the various kinds of annuities

A lot is said in the media today about annuities. Advertisers, proponents, critics and consumers discuss different aspects of these instruments, leading to great confusion. Here is some basic information about annuities.

In the dictionary, an annuity is a periodic payment. A life annuity is a contract issued only by a life-insurance company. It is sort of the reverse of a life-insurance policy. With life insurance, you make periodic payments (premiums) in order to get for beneficiaries a lump-sum payment (death benefit) when the Grim Reaper arrives. With a life annuity, you pay the insurer a lump sum and get in return a series of periodic payments which can be guaranteed for life or for two lives (joint annuity) or possibly longer.

One can also use an annuity to accumulate that lump sum for later lifetime payback. If one makes a series of payments into an annuity, it is called an "installment-premium deferred" annuity. If one puts in just a single lump sum and intends a future draw from it, it is referred to as a "single-premium deferred" annuity ("SPDA" in many ads). If a single payment creates an immediate lifetime payout, it is called a "single premium immediate" annuity.
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An annuity can be a "fixed" annuity, which means that the insurer guarantees the safety of the cash value in the policy as well as at least a minimum interest rate. A discussion of the alternative, the "variable" annuity, is beyond the scope of this article.

In recent years, the insurance industry has created the equity-indexed annuity. This is a fixed annuity that wants to be more. That is, while it does not invest in securities, it guarantees to credit interest linked to the performance of an equity index, usually the Standard and Poor's 500 Index. It guarantees the principal and at least a low annual return over a certain term. But it further guarantees to credit additional interest equivalent to at least part of the growth (or reflect the loss) of that equity index in each period, such as a year. Because of certain built-in limitations, the amount credited is usually not as great as the full growth of the index.

In some circumstances, the equity-indexed annuity is attractive. But all its moving parts require diligent inspection and full understanding before purchase.

J. Brendan Ryan is a Walnut Hills insurance agent.

Survivor Benefits: Q&A

By Tammy Flanagan
Last week's column on survivor benefits led to a series of questions and comments. This week, I'll try to address some of them.

Does there have to be at least a nominal monthly survivor benefit for the surviving spouse for that spouse to continue being covered under the retired spouse's federal health insurance benefit after that spouse dies? Is this the same whether the surviving spouse also was a federal employee?

If you are retiring or already retired and your spouse is dependent on you for health insurance, you need to consider choosing a spousal survivor annuity. That way, your nonfederal husband or wife can continue to be covered by the Federal Employee's Health Benefits Program in the event you die before them.

Under the Civil Service Retirement System, you have flexibility in choosing the size of the annuity -- it can be 55 percent of any amount from $1 up to your full retirement benefit. Under the Federal Employees Retirement System, you can choose a survivor benefit of either 50 percent or 25 percent of your basic retirement benefit. Your spouse is entitled to the maximum, so you must get your spouse's notarized consent to choose the partial benefit.

If your spouse is entitled to FEHBP coverage on the basis of his or her own federal employment, then a survivor annuity isn't necessary to continue coverage. If you die under self and family coverage, your spouse can continue coverage on the basis of their own federal employment.

If a retiree marries after retirement, the choice of a survivor benefit has to be made within two years of the marriage.

I am still working and don't yet qualify to retire. If I die before qualifying for retirement, does my wife only get to cash in the life insurance and my retirement contributions, or does she get a limited pension via survivor benefits?

Most employees don't want to ask this question, but it is an important one and the answer should provide you some peace of mind. Even though you've never chosen to provide a survivor benefit, there is a spousal survivor benefit payable upon the death of an employee. If you are covered by CSRS and have at least 18 months of service, your spouse is entitled to 55 percent of the retirement benefit you would receive if you were eligible to retire. If you're under FERS and have at least 10 years of service, your spouse is entitled to 50 percent of your basic retirement. The spouse also gets a lump-sum death benefit valued at 50 percent of your basic pay rate plus $28,093.53 (as of 2008).

In addition, your surviving spouse is eligible for other death benefits, including funds in your Thrift Savings Plan account, Federal Employees Group Life Insurance benefits and unpaid compensation.

Why are the charges deducted from a retiree's annuity to implement so-called full- and half- survivor annuities kept by the government when the designated survivor dies before the retiree? This seems to be a great inequity -- paying for a service that is never rendered -- that should be corrected by Congress at its earliest opportunity.

Think of it like life insurance. You have to pay premiums for such coverage, but if you are still alive when your policy runs out, you don't get the premiums back (if it was a term insurance policy). You simply stop paying the premiums. The premiums that you paid are used to pay someone else's death benefit. Insurance is usually something you really don't want to get your money's worth out of.

I will be retiring at 62 this December. I was considering keeping my basic life insurance coverage in lieu of the survivor benefit. It will cost $135 per month, which is $50 more per month than the survivor deduction, but my wife would get a lump sum of $63,000 instead of the $400 per month. From what I have read, that premium stays the same until I die. Has anyone else considered this option? Does it make sense?

Please show this to your spouse, since it will be her or his decision to waive the survivor annuity. From your example, it appears that you are under FERS and have a retirement benefit that is going to pay you around $850 per month. You are considering a reduced retirement of around $765 per month to provide a survivor benefit for your spouse. The benefit would be about $425 per month for the rest of your spouse's life (50 percent of your $850 benefit). The alternative you are suggesting is to choose no reduction of your basic Federal Employee's Group Life Insurance, which will cost you about $135 per month (until you turn 65, when it goes down by about $20 because the basic premium ends). The life insurance would pay a $63,000 lump sum.

Here are the reasons I would want the survivor benefit and not the insurance if I was your spouse:

• Suppose I receive $63,000 at age 70. If I'm able to invest it at 6 percent interest, and I want to make sure the money doesn't run out before I die (which could be in another 30 years), I could take out only about $200 per month.
• The survivor benefit is adjusted annually for inflation both before you die and after your spouse receives the benefit. But the insurance amount is not adjusted. After it is paid out, how the spouse invests the proceeds determines how long the money will last.
• The life insurance is more expensive than the survivor election.
• The survivor election reduces your taxable income. But you pay the life insurance premiums with after-tax dollars.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

Death Benefit Payment Options

Most people assume that when a person who has life insurance dies, the beneficiaries automatically get a check in the mail as payment on the insured person’s death benefit. Nothing can be further from the truth. The insurance company must be notified that one of its policyholders has died; usually, that notification must be in the form of certified copy of a legal death certificate with an embossed seal. Although executors of estates usually take care of these matters, that’s not always the case. So if your loved one dies and you know that he or she has an active insurance policy, be sure to follow up so that the beneficiary can receive the benefit. If you need to get official copies of the death certificate, you can usually get copies for a small charge from the funeral home or whomever handled the burial or cremation.

Life Insurance - The Basics in 5 Paragraphs

Most Americans just don't have enough life insurance.

Think of life insurance this way, it provides a lump of capital that can replace your income and allow your family to maintain their lifestyle after you die.

Term insurance is generally the best way to buy high coverage amounts.

If nobody depends on your income, you may not need life insurance.

If you need life insurance, start with 8x your income and build from there. Another way to figure out coverage amounts is to calculate your survivor's needs, then determine how much capital will be needed to generate that income through investments.

Earthquakes Not Covered

Missouri residents last week experienced a 5.2 magnitude earthquake that rattled windows and shook houses. Many are now trying to buy insurance but are finding that there's a waiting period for coverage. Several of the state's biggest earthquake insurers have imposed a 30-day moratorium on new policies - a not uncommon practice right after quake activity.

Most property insurance policies exclude damage by earthquake. Most homeowners, business owners and business property insurance policies can include the coverage for an additional premium. You have to buy it before the quake though.

Talk with your insurance advisor.

New SJC Decision Regarding PIP and Rental Car Companies

Mike Tracy over at Rudolph Friedmann LLP, http://www.rflawyers.com/, an excellent insurance coverage litigator and a mentor to me over the last five years, has sent me a decision handed down yesterday by the Supreme Judicial Court of Massachusetts, Enterprise Rent-A-Car Co. of Boston, Inc. v. Arbella Mut. Ins. Co. In that case Joseph Navis rented a car from Enterprise. He was in an accident in which three of his passengers were injured. Enterprise was self-insured and paid the passengers a total of $16,171.60 in Personal Injury Protection ("PIP") benefits. Enterprise then sought to recover that amount in subrogation from Navis' own insurer, Metropolitan.

At issue was whether a rental car agency (Enterprise) that made PIP payments to the renting driver's passengers can seek subrogation from the renting driver's own insurer (Metropolitan).

The SJC first held that the question of whether Enterprise was entitled to subrogation was not one that must be decided by an arbitrator. Although under the PIP statute insurers seeking subrogation from one another must arbitrate the issue of whose insured is at fault, fault was not at issue in this case. Rather, the case involved the interpretation of the PIP statute, which the courts were entitled to determine.

The SJC held that Enterprise was entitled to seek subrogation from Metropolitan. The SJC rejected the argument by Metropolitan that such a decision would relieve car rental companies from the obligation to provide PIP coverage to renting driver's passengers if the renting driver has insurance. The SJC stated that the argument overlooks the fact that a subrogation claim will only be successful if the renting driver was at fault, and that not all renting drivers have a Massachusetts insurance policy.

More background on PIP in a later post.

Property Insurance Screw Ups - Low Deductibles

Insurance isn't for the small events that are a part of life. Let the insurance company take care of the big claims while you manage the small, “normal” bumps in the road.

Consider a property deductible of $10,000 or more. Look at your auto policy’s collision insurance. Ask your agent what the premium savings will be for doubling your deductibles?

When your insurer must pay your loss

As I discussed in my last post, an insurer has two duties: the duty to defend and the duty to indemnify. The insurer may have a duty to defend but ultimately no duty to indemnify.

While the duty to defend is determined by what is alleged in the complaint, the duty to indemnify depends on the "true" facts as determined by a court. So, going back to the example in the last post, if you are insured for injuries caused by apples falling from your apple tree, your insurer will defend you if someone states in a complaint that he or she was injured by an apple falling from your apple tree.

The case eventually goes to trial. Maybe you win at trial altogether. Your attorney convinces the jury that the plaintiff was not injured; or was not injured by something falling out of your tree. The plaintiff does not appeal. You are all set. The insurance company has paid an attorney to represent you; no damages have been found against you; and the case is over. While you have been inconvenienced and undoubtedly stressed by the lawsuit, you have not suffered any monetary loss.

But if you lose at trial, the insurer, having reserved its rights at the beginning of the case, will make a decision about whether to pay your damages awarded by the court to the plaintiff or to deny coverage. If the facts at trial demonstrated that the plaintiff was hit by an apple that fell from your tree--the very thing that your insurance policy covers--the insurer will pay the damages.

If the facts at trial showed that the plaintiff was hit by a falling acorn, then the insurer will "disclaim coverage"--refuse to pay the claim. Unless you have other insurance that will cover the claim, you will be personally liable to pay the damages assessed.

If you disagree with the insurer's view of the facts, you can file a "declaratory judgment" lawsuit. I will discuss that in a future post.

Property Insurance Screw Ups - Specific Insurance

There are a great many ways to screw up your property insurance.

A common error is specific property coverage - having your policy list each location and coverage section separately. For example:

$1,000,000 coverage on your Main St building
$500,000 on the contents of Main St
$1,200,000 on your North St building
$750,000 on the contents of North St

The right way is to buy $3,450,000 of blanket coverage on all your locations - the total of all the values at all your locations.

In a loss under blanket insurance you'll have $3,450,000 of coverage to spend any way you want. Fewer limitations - broader coverage - better loss results.

Check your insurance policy. Talk with your agent. If you have specific insurance find out why you don't have broader coverage.

Give yourself the annual premium advantage

Khyati Dharamsi/ DNA MONEY
Have you ever wondered how much you can save by just choosing the right mode of premium payment on your life insurance policy?

Most life insurance companies add an extra cost to your premium if you pay in instalments rather than in one single shot during the year. So, the premium under the annual premium option in a policy would be less than those under semi-annual, quarterly or monthly options.

This is true for all life insurance policies other than unit linked insurance plans (ULIPs). All traditional insurance plans including term assurance, endowment, money back and whole life policies would charge a higher premium for the monthly mode and lower for a yearly mode.

Let us take the example of Life Insurance Corporation's endowment plan, Jeevan Anand. The yearly premium for the policy for a certain age profile and policy term turns out to be Rs 5,461.

However, if the same person opts for the semi-annual option, it is higher up at Rs 5,546 (Rs 2,773 x 2 payments in a year). As the frequency of payment reduces from yearly to monthly, the premium tends to increase.

Under the monthly mode, the policyholder would be paying 8.33% higher than what a yearly premium payer would pay for the same policy, even though he has opted for the same term and sum assured, and belongs to the same age group.

But, why do insurance companies make this differential charge? It is not because the insurance company will earn an interest on all the money that you have paid at the start of the policy year rather than in a small quantum throughout the year.

Rahul Aggarwal, chief executive officer of Optima Risk Management Services explains, "Every time the insurer receives premium, there is a banking cost and processing cost attached to it.

Hence, as the periodicity of payment decreases, premium increases slightly. Sum of three monthly payments is more than the quarterly payment; sum of two quarterly payments is more than the half-yearly payment; so on and so forth."

Moreover, insurance companies claim that they too can reduce costs involved in following up on customers who forget to pay their premium on time. The frequency of calls would increase in case of quarterly and monthly premium.

Some of them also issue letter reminders on premium payment due dates, which can be reduced if the premium paying frequency is yearly, rather than semi-annually, quarterly or monthly.

It has also been found that those who opt for the quarterly mode of premium are more prone to policy lapses than those who have a yearly mode of payment, according to a spokesperson of a private insurance company.

Chances of non-payment are less likely in the monthly mode as companies insist on electronic clearing service (ECS). Some companies even penalise policyholders who choose monthly mode of payment and do not opt for ECS, by levying extra charges.


It also saves you the pain of asking your agent to come home and collect the cheques each month or quarter and keeping track of the various due dates in the entire year and whether the cheques have actually been debited toward premium payment.

Do young, single women need life insurance?

Question: I am a single, 23 year-old college graduate who lives with my parents. Three months ago, I started my first job. A high-school friend contacted me recently. She suggested that I buy life insurance.

My immediate plans include buying a car and building a nest egg to pay for post-graduate studies. Should insurance form a part of those plans?

- BS, Kingston 6.


Answer: Members of your generation seem more grown-up than mine were at the same age.
This is the second question I have had about life assurance from a member of your age group in recent times. When the first policy was sold to me - a very long time ago - I was at the salesman's mercy! He was 'dressed to the nines' and drove a white, Oldsmobile Cutlass with white wall tyres.

At the time, I used 'Jolly-Joseph', the street name for public transport. Now, with the range of products on the market - traditional and alternative - from banks and other deposit-takers, consumers are fully in control and have choices that I never dreamed of.

Protection
Your friend's employer sent me lots of information about the product that she is trying to sell you after I contacted one of their executives. Included was a compact disc, specimen policies, premium and other details. I'll use them to answer your question - minus the sales pitch, of course.

Four types of illnesses cause most deaths in Jamaica: cancer, cerebrovascular diseases (strokes), heart disease, and hypertension.

Accidents are another big cause of deaths, especially for persons in your age bracket. These illnesses and accidents account for most of the deaths. Stripped of all the hype, life insurance provides money to pay funeral expenses, debts and provides income for family members if any of these events take place.

The plans that are being sold by your friend will provide you with some form of protection. They are: whole, straight or ordinary life, universal life and critical illness.

Coverage
Ordinary life, as I prefer to call it, pays a benefit on the death of the insured. Premiums can be paid monthly or quarterly. The plan includes a disablement benefit. If the insured is permanently disabled or loses a limb because of an injury he/she will be paid a preset part of the sum insured. Fifty per cent of the premium will be repaid if, after 20 years, no claims have been paid.

Universal life is a variation of ordinary life. Part of the premium provides life coverage while part is invested. Because of this, the sum insured does not remain fixed as it is with ordinary life.

The contract operates like a savings account with life insurance added.

The premium can also be adjusted. Two commercial banks, by the way, offer products like this.

The premium is payable annually. Claims will be settled on proof of death or on the very first diagnosis of cancer, a heart attack, coma, paralysis or major burns. A disablement benefit is also included.

Critical illness is defined in the third contract as cancer, a heart attack, coma, paralysis or major burns. This policy provides the least coverage.

The sums insured which are being offered have been set by the company. They are limited to a low of $250,000 and a high of $1 million. These amounts bear no relation to your income or financial needs. On the plus side, they would be better than nothing. Conversely, how will you to pay the premium when you are an unemployed graduate student?

In the final analysis, you will have to decide based on this and other information and the goals you have set whether life insurance should now form part of your plan or wait until you have finished graduate school - when you will be older and premiums are higher.

Cedric E. Stephens provides independent information and advice about risk and insurance. For free information or counsel, email Stephens: aegis@cwjamaica.com

Ownership of Insurance Policy

Your insurance policy is property, and you own it. The policy is real and has value, even if you have a term life insurance policy. That means that you have certain rights associated with ownership. Among these are

• The right to choose your beneficiaries: As owner of the insurance policy, you get to decide who is the beneficiary when you die. You can change the beneficiary, assuming that you face no other legal restrictions, such as divorce agreements in which your dependent children are specifically named as beneficiaries.
• The right to cancel your policy: If you choose, you can cancel your policy at any point, either through written notice or by ceasing to make premium payments. You should note, however, that with some cash-value policies, any surrender value goes toward paying the premium. In addition, you may be required to pay cancellation charges.
• The right to convert your policy, assuming you buy that right as a rider: If you buy a term life insurance policy but include a rider that allows you to convert to a cash-value policy at a later date without any additional qualifying, you can opt for this conversion at your discretion. Note: If you increase the death benefit or face value, the company may require you to undergo a new medical exam and requalify, which defeats the whole purpose of buying the conversion rider.
• The right to cash in your surrender value at any time: Just as you have the right to cancel your policy, you have the right to take out whatever cash value you accrue, minus any cancellation charges or administrative fees.
• The right to exercise any options that your policy includes: If you include any riders or options in your policy, you can mandate how and when these options are exercised. With death benefit payments, however, your best bet may be to leave as many options open for your survivors as possible so that they can use the death benefit to suit their needs.

When your insurer must defend you

In my last post I talked about "reservation of rights letters" and what they mean. You might be wondering why your insurer will agree to pay for an attorney to defend you in a lawsuit but will not agree to pay any judgment against you that will come at the end of the lawsuit.

A liability insurer has two duties: the "duty to defend" and "the duty to indemnify." The duty to defend is the duty to pay an attorney to defend you in a lawsuit that is brought against you. The duty to indemnify is the duty to pay a judgment against you.

Whether or not the insurer has a duty to defend is determined by the allegations of the complaint that the plaintiff files against you in court. The insurer reads the complaint and determines whether, regardless of whether everything (or anything) in the complaint is true, the facts stated in the complaint could be covered by the insurance policy. If so, the insurer has to defend you.

For example, let's say that you have an insurance policy that provides insurance only if a person is hurt by an apple falling from your apple tree. Someone sues you and says in the complaint that they were injured when they were hit by an apple that fell from your apple tree. Your insurance company will have to defend you in that lawsuit. It doesn't matter that the person is lying and was actually hit by a falling acorn--your insurer still must defend you.

In a later post I will discuss the insurer's duty to indemnify, and why an insure might have a duty to defend but not to indemnify.

Employment Practices In Work Comp By MEMIC

I have long been a fan of Maine Employers Mutual Insurance Company. They do a fine job with workers compensation.

Recently, the carrier announced the ability to add employment practices liability insurance to their work comp policies. Excellent!

At a premium of $32 per full time employee, the price is right for small employers. The coverage limit of $100,000 is a great start - though may be light for some companies.

Talk with your agent or insurance advisor about employment practices liability insurance. Frankly, all employers should consider the coverage. If you are insured with MEMIC, look into their innovative coverage offering.

Keys to comparing universal life insurance policies

Universal life insurance is similar to whole life; however, a number of differences make universal life policies more difficult to compare with each other.

• Premiums for universal life don’t necessarily remain constant for the entire policy (unlike whole life): Therefore, to compare costs and prices, you have to use the same premium.
• The death benefit in a universal life policy can either remain constant or increase as your cash value increases: Use the same death benefit option with each policy to compare costs and prices with other companies and policies.
• Insurance companies will show you both guaranteed and hopeful projected earnings: Take these hopeful projections with a grain of salt. Use the guaranteed earnings, and if you get more, consider it a bonus. On the other hand, you can also use the company’s historical payback to get an idea of whether the hopeful projections are pie-in-the-sky or reasonably accurate.
• Put extra stock into the insurance company’s rating: With universal and whole life, you’re buying into the company itself. If one company guarantees a little more but has a significantly lower rating, you may want to seriously consider the lower-yielding but better-rated company.
• Insurance is protection, not investment: Many other investments can give you a better return on your dollar than universal life insurance, including IRAs and 401(k)s, both of which offer the same tax-deferred benefit. You may be just as well off putting money in other tax-deferred investments and purchasing a lower-cost term insurance policy.

Ex-smokers face tests for life insurance

Smokers taking out a life insurance policy should be honest about their habits, a charity has stated.

The charity Action on Smoking and Health (ASH), reported that individuals could face tests when they are applying for a life insurance policy and maintaining openness about their habits is essential.

Amanda Sandford, research manager for Ash, highlighted current policies which have a reduced monthly premium for those who have quit smoking.

Some insurers are requesting tests that measure the carbon monoxide output to ensure the applicant has given up. The monoxide level in smokers is significantly higher than those who do not smoke.

"There are reasons for offering non-smokers better premiums. We do know that those people will live longer.

"There are easy ways of testing whether people really are smokers or ex-smokers," said Ms Sandford.
Recent research by moneysupermaket.com calculated that smokers pay twice as much in life insurance as compared to non-smokers.

U.S. woman sues for insurance over husband's shooting death

CBC News
An American woman who says she accidentally shot and killed her husband in central Newfoundland is now suing two life insurance companies.

Mark Harshbarger died near Buchans Junction in September 2006.

His wife, Mary Beth Harshbarger, is still under investigation by the RCMP.

The Harshbargers were hunting for black bears when he died. Mary Beth Harshbarger told police she mistook her husband for a bear.

Mark Harshbarger's family has always insisted that they believe the shooting may have been intentional.

The RCMP say they are still investigating.

Two insurance companies have policies on Mark Harshbarger for $550,000 in death benefits, and Mary Beth Harshbarger is the beneficiary.

However, a law in Pennsylvania says a person cannot benefit from an intentional wrongdoing.

Thus, the benefits have not been paid.

Harshbarger recently filed a lawsuit against the insurance companies.

Mark Harshbarger's father, Leonard, is not happy.

"I'm very upset by it because I hope that she never gets it," he said.

"In my mind, I'll never think anything different than it was murder. It's hard to prove but that's the only way that I personally can see it."

Robert Murphy, Mary Beth Harshbarger's lawyer, did not want to do a recorded interview with CBC News. However, he said there is no proof that what happened in Buchans Junction was not an accident.

As well, he said the insurance companies have to pay either way.

He said if a judge should rule that his client will not get the money, it will go into a trust fund for their two young children.

The judge will meet with both sides next month.

Life insurance: On the edge

Howard Ublansky had no idea how much the simple task of taking out an insurance policy would change his life. In 2002, the 37-year-old owner of a book distribution company purchased a house in Thornhill, Ont., north of Toronto. As the family’s main breadwinner, he applied for $500,000 in mortgage life insurance to protect his wife and three young children if anything should happen to him. In keeping with the standard insurance process, he underwent a medical exam and provided some blood samples. No problem—until Ublansky received a letter from the insurance company denying him coverage. It turned out he had diabetes. “I had no idea,” he says. “My wife was very upset. She was saying, ‘What am I going to do if you die? I’m going to be out on the street.’”
Paul Knapp got a similar shock early in 2007. The 41-year-old wanted half a million dollars in life insurance to supplement the group coverage he gets through his employer, a downtown Toronto law firm. Knapp has an 11-year-old daughter who has lifelong special needs and “I wanted to make sure that there were funds available in the future should I not be on the scene anymore,” he says. But Knapp flies planes for a hobby. “That had a dramatic effect on the premiums,” he says. His quotes were at least double the standard rates, and one was almost triple. Knapp was left debating whether he was willing to give up the flying hobby he loved to get the insurance he needed.
Such situations are more common than you may realize. About one in 10 people who apply for life insurance are deemed to be higher than normal risk because of a medical condition or lifestyle choice. What can you do if you find yourself—like Ublansky and Knapp— being declined for coverage or quoted rates you can’t afford?
It helps to learn how life insurance works. Unlike property insurers, who can always raise your rates after you file a claim or two, life insurers are locked into whatever rate they quote you when you take out a policy. If you develop cancer six months after signing up for a 20-year term policy, your premiums for the rest of the term don’t go up after the diagnosis. The insurer is on the hook—and thus the insurer tends to be very cautious when you first apply for a policy.
Life insurers begin by asking your age, your sex, and whether or not you smoke. They use this information as a first step to determining whether you qualify for standard insurance rates. You can do this yourself at websites such as Kanetix.com or Insurance Direct Canada. If you’re a 42-year-old female non-smoker who wants a 20-year term policy for $500,000, you’ll find that your standard rate is approximately $60 a month. If you smoke, you can double that.
To actually get a policy, you will have to answer many more questions about your health, your family medical history, your use of alcohol and tobacco, your financial status and any dangerous activities you’re involved in. For large policies, the insurance company will require a medical exam, including a blood test. An underwriter will then decide whether to offer you the standard rate. In 60% of cases, that’s exactly what the underwriter does. If you are exceptionally healthy and have no family history of serious illness, you may even qualify for preferred rates, which are lower than standard. That happens in about 30% of cases.
But not all people are so lucky. If the underwriter feels you’re more likely to die than others of your age and sex, you’ll either be denied coverage (this happens in about 3% to 6% of cases), or you’ll get a “rating” that leads to higher premiums. These are expressed as a percentage: if you get a 50% rating, you’ll pay 50% more than the standard rate, while a 100% rating means your premiums will double. “Usually the ratings are from 50% to 400% more than standard,” says Lorne Marr, an independent broker in Markham, Ont. In other words, being labelled high risk can lead to premiums four or five times higher than standard—sometimes even more.
Life insurers consider many factors before slapping a rating on you. Smoking is the biggest single risk factor, though alcohol is important as well. “If you drink three glasses of wine a day, as opposed to one, you might pay an extra premium,” says Marr. “If you’re an alcoholic, you won’t get coverage at all. If you’re a recovering alcoholic, you should be able to qualify at the standard rate after a certain amount of time—usually in three to five years.”
As Knapp discovered, recreational activities such as flying, skydiving, scuba diving and rock climbing can also make you a high-risk case. Whether this results in a rating depends on your level of involvement—how many hours you fly or where you do your climbing, for instance.
With medical conditions, it’s not as simple as saying high blood pressure equals a rating of so many percentage points. “Very few conditions are cut and dried,” says Brian Baxter, chief underwriter at Wawanesa Life in Winnipeg and chair of the Canadian Institute of Underwriters. While recently diagnosed cancer or heart disease results in automatic declines, other conditions—including diabetes, obesity, high blood pressure and high cholesterol—can result in a rating, but the ultimate effect depends on the severity of the condition. Ublansky was turned down for insurance because his blood sugar was three times normal, he was overweight and didn’t even know he had diabetes. However, a person within the normal weight range who can demonstrate that his condition is under control may receive no rating at all. “I’ve had all kinds of people with high blood pressure approved at standard rates,” Marr says.
Family history matters less than you may think. If one of your parents or a sibling died from cancer or heart disease, you will not get rated. (A few conditions, however, will set off the alarm bells. For instance, if you have immediate family members with Huntington’s disease, which has a very high hereditary component, you will likely be rated or declined coverage.) Your occupation isn’t usually a big factor either—even police officers and firefighters get standard rates, for example. The few jobs that may require higher premiums include bomb defuser, deep-sea diver and race car driver.
If you’re denied coverage or slapped with a rating, you may be tempted to go to another insurance broker or company and try again, this time leaving some choice information off the questionnaire. This strategy, alas, isn’t going to work. When you fill out an application, your signature authorizes the company to send your information to the Medical Information Bureau (MIB), whose membership includes hundreds of North American insurers. The insurance industry would rather you not know about MIB, but here’s how it works: if an underwriter discovers something worrisome in your questionnaire or medical exam results, he or she adds an alphanumeric code to your MIB file. This code might translate to “applicant’s doctor reported diabetes in 2006,” or “lab tests indicated cocaine use in 2005.”
If you apply for coverage with another company in the future, your underwriter can access this information, the same way your bank checks a credit bureau’s file when you apply for a loan. Your MIB file does not include the name of the company you applied with in the past, nor does it indicate whether you were declined or rated— although since it contains only red flags, the implication is obvious. An insurer is not permitted to decline or rate you based solely on information from MIB, but if something untoward turns up, the insurer will ask more questions and perhaps order more tests. (You can obtain a free copy of your MIB file by calling 1-866-692-6901 or visiting www.mib.com/html/request_your_record.html.)
So what should you do if you have been turned down or quoted exorbitant rates? You have several options:

• Find an independent broker. Some insurance companies employ agents who sell only that firm’s products, but high-risk applicants are better off finding an independent broker. Each insurer has its own underwriting protocols, and an experienced broker will have a feel for which insurance company is likely to offer the most favorable rating to a client with a particular risk factor. Ask your broker to submit applications to two or three carriers at the same time to stir up competition. Going this route does not mean that you will have to endure two or three medical exams: the broker can help arrange a single examination, and the competing insurance companies will split the cost.
• Get your health condition under control. Ublansky’s story has a happy ending. After getting declined, he devoted himself to improving his health. A self-described former couch potato, Ublansky went for nutritional counseling, started exercising and lost 35 kg in about a year. He took medication and watched his blood sugar levels drop back to normal. Then, with the help of Marr, the insurance broker, he pulled together all the medical documentation and reapplied. Not only was he approved for a whole-life policy worth $1.5 million, he’s paying standard rates.
• Ask for a temporary rating. If you are quoted higher premiums because of a medical condition that may improve in the coming years, ask whether the insurer will agree to a temporary rating, sometimes called a “flat extra.” For example, if you were successfully treated for cancer, but the insurance company is concerned about it recurring, they may agree to charge a higher premium only for a specified number of years. “There are forms of cancer that are treated quite well today, and if the person is free of it for five to 10 years, they may well qualify at standard rates after that,” Baxter explains.
• Accept the higher premium—for now. “I often recommend that if you get rated, take the policy, even if it’s for only a few months,” says Marr. “That becomes your worst-case scenario. A good example is diabetes: you may get rated at 75% or 100%, and if it improves, then we can apply to get that rating removed. But let’s say you don’t take the policy and then suddenly develop kidney problems. Diabetes plus kidney problems equals a decline.”
• Seek an exclusion. If your high-risk rating stems from a dangerous avocation, you can opt for a waiver, or exclusion, that releases the insurer from paying a benefit if you die while engaged in that activity. That’s the option Knapp settled on: he now pays standard rates, but if he were to die while piloting a plane, his beneficiaries would receive nothing. For Knapp it was a relatively easy decision, since he flies far less today than he once did. “If I was still going to be doing a lot of flying, I would have been more concerned.”
• Consider a guaranteed issue policy. We’ve all seen the commercials with the grinning seniors who just got life insurance with no medical exam. These ads are for “guaranteed issue policies,” which are available to anyone and require you only to fill out a brief questionnaire. Of course, there is a catch. The coverage is rarely more than $25,000, the policies usually don’t pay if you die within two years, and the premiums are sky high: for a 40-year-old male non-smoker, a paltry $25,000 policy costs about $56 a month. For that amount, a person of the same age who qualified at standard rates could buy a 20-year term policy with more than 15 times the coverage. “These policies are a last resort,” says Marr. But if you truly need insurance, they may be your only choice.

Life insurance profit growth falls

I-Net Bridge
Life insurance confidence remained strong in the first quarter of 2008, despite slowing business fundamentals, the latest Ernst & Young Insurance financial services index shows.

This strong confidence was measured despite sharply slower investment income growth, and rising growth in policy surrenders, Ernst & Young says.

This is the 19th quarterly survey conducted to measure confidence in the life insurance industry. Life insurance confidence is now the strongest of all financial services sectors, ahead of the banking industry (78 points), and investment management confidence (77 index points).

"The other sectors of the financial services sector are reporting significantly weaker confidence on the back of declining economic fundamentals.

"Although life insurers remain so confident in their outlook, we noticed that in the banking and investment management sectors, a few quarters of negative fundamentals typically precedes declining confidence," says Tim Rutherford, insurance industry spokesperson at Ernst & Young.

While premium income growth held up well in the first quarter, investment income turned sharply downwards in the first quarter of 2008. This had a direct impact on bottom line profitability.

"The last few years have been good for the life insurance market largely through rising equity markets, which have resulted in strong and growing levels of investment income.

"But global market turmoil, coupled with our own less favourable economic prospects locally, has brought an end to boom investment income earnings. In fact, investment income earnings turned negative in the quarter, implying contracting investment income earnings," says Rutherford.

Other findings illustrate that slightly slower premium income growth was accompanied by slowing new business premium growth.

"Whilst there was not a significant drop in premium income growth in the latest quarter, if we look at the levels of growth recorded in early 2007, and compare that with current growth levels, there is definitely a slowdown in the pace at which the industry is attracting premiums.

"For a while now, life insurers have seen investors switching their investments out of contractual savings into collective investments.

"That placed some pressure on premium growth, but the industry worked hard to offset these losses. 2007 was a particularly good year for premiums, but it now appears that general economic pressures on consumers are leading to premiums being squeezed once again.

"We also notice that lapse rates are declining, which should be a boost for life insurers. However, what we are seeing is that policyholders are surrendering policies to a greater extent than they were in the past.

"The reason for this is the agreement between National Treasury and the life insurance industry, (implemented in 2007). This makes it more worthwhile for policyholders to surrender a policy, rather than let it lapse, as they get a payment in exiting the policy, which was not necessarily the case in the past.

"If anything, declining lapses, coupled with rising surrenders leads to greater outflows for life insurers. This definitely affects the cost of doing business, and is not therefore a positive for the sector," Rutherford adds.

The survey also found that profits came under pressure in the first quarter of 2008, with growth in outflows considerably in excess of inflows.

"We notice that the first quarter of 2007 also saw a strong slump in profits growth, so there could be seasonal factors playing a role in such a sharp downturn in profit growth. But unlike the first quarter of 2007, there is a considerable fall-off in investment income growth, which looks likely to hold into the next few quarters, and thereby squeeze profits growth," Rutherford says.

"Although life insurance industry confidence remains strong, the underlying economic fundamentals and life insurance index indicators suggest that life insurers prospects may not be in sync with their confidence levels. We expect, as is the case with the banking and investment management sectors, that declining economic fundamentals will lead to lower confidence in the quarters ahead.

The life insurance sector lagged its other financial services peers in confidence levels for quite a while in 2004 to 2006, and we may simply be seeing an extension of this trend," he concludes.

Unprotected sex covered by disability insurance, court rules

Ian Mulgrew, Vancouver Sun
Man paralysed by herpes after risky activities with three women didn't act with 'reckless abandon,' appeal court finds
A 45-year-old man crippled as a result of herpes contracted from unprotected sex should be covered by his employee disability insurance, says the B.C. Court of Appeal.

The judges decided the sexually transmitted virus Randolph Charles Gibbens contracted from risky extracurricular activities with three women qualified as an injury suffered from "external, violent and accidental means."

In early 2003, the virus attacked his spine, according to unchallenged expert testimony, resulting in Gibbens suffering transverse myelitis and paralysis from the abdomen down.

The Fraser Valley painter claimed coverage under his union insurance plan that included a $200,000 payment "if the Plaintiff furnishes proof of paraplegia (total paralysis of both lower limbs) or loss of use of both legs."

Justice Mary Newbury, supported by Justice David Frankel, said: "Since what happened to Mr. Gibbens was unusual, if not 'unnatural or extreme,' I conclude that his paralysis qualifies as 'bodily [injury] occasioned solely through ... violent ... means' as well as 'accidental' and 'external' means, and is therefore covered by the policy."

Lawyers for the insurer said such reasoning leads to the conclusion that catching influenza after breathing air on a bus would qualify as an "accident."

But Justice Newbury noted it is doubtful any court would take such a view since the parties to an insurance policy would not have intended such a contingency be covered.

Moreover, the policy here would not provide coverage in that event because influenza is not among the "losses" listed in the policy.

Paraplegia, however, is.

Justice Newbury said it might be prudent for insurance companies to change the language of their policies if they had difficulty with the court's interpretation.

The court drew an analogy to a trail-blazing 2007 Ontario Court of Appeal decision.

In that decision, a worker who contracted West Nile virus from a mosquito bite was deemed covered by the accidental-death clause in his employee insurance policy.

He could have taken precautions, but the prospect of catching such a tropical disease in Toronto was considered so remote no one would reasonably expect such a thing.

At trial in this case, the B.C. Supreme Court justice applied what is known as the "expectation test" and concluded the paraplegia was caused by "accidental means" because Gibbens had not expected to become paralysed by having unprotected sex.

His decision to engage in unprotected sex, in the judges' view, did not involve the same degree of inordinate risk as playing Russian roulette.

It did not indicate a "reckless abandon and exposure to a known, and obvious danger" -- the risk of contracting the virus.

The insurer -- Cooperators Life Insurance Company -- appealed, arguing the expectation test is appropriate only where there is doubt as to whether the insured intended death or injury, not where the injury is due to a "disease" or other "natural" cause.

In the complicated arguments before the court of appeal, the firm said that of equal importance to the insured's expectations is whether the injury is "accidental" or due to "accident" in the ordinary meaning of the words.
"Accident" does not usually refer to an illness per se or an unexpected but totally "natural" event such as a heart attack. Normally some unexpected mishap or "external" factor is present.

The transverse myelitis, though, did not arise "naturally," but from an external factor or unlooked-for mishap -- the introduction of herpes virus. It could therefore be regarded as "accidental."

And Justice Mary Saunders, who wrote a concurring opinion, worried that we may see many similar lawsuits in the future.

"The world is populated with pathogens," she wrote. "I dare say no one intends to 'catch' one through regular activities of living and so it may be difficult to perceive a principled difference between the unintended and unexpected contraction of a common ailment from the events before this court. There are, further, uncommon conditions that may be seen as analogous to the situation in [the Ontario case], such as contraction of the hantavirus, which occurs in parts of British Columbia and is associated with deer mice, and Lyme disease associated with wood ticks."

Justice Newbury also considered the meaning of the words "external" and "violent" as used in the insurance policy, which has not been dealt with at length by Canadian courts.

The meaning of "external" and "violent" has been considered in England, but she said those judicial pronouncements were not particularly helpful.

In case law, "violent" seems to mean due to something other than disease or other natural cause, although one would not think this is its ordinary meaning.

The justice sidestepped the issue in the end and said it wasn't necessary for her to resolve the concern given her other findings.

imulgrew@png.canwest.com

Keys to comparing whole life insurance policies

Remember these seven keys:

• Premiums remain constant for the entire policy: To compare costs and prices, you must compare the mortality charges, cash values, dividends, and death benefits.
• Although one company may pay a dividend while another may not, the dividend-paying company is not necessarily the better buy: You can tell only after you get quotes.
• Take the projected cash-value earnings with a grain of salt: Companies often show you charts featuring high projected returns. Use the guaranteed return for your comparisons. Because earnings on whole life policies are tax-deferred, you must consider your after-tax return, not just the return itself when comparing the return on your policy to a return on a taxable investment. To calculate the aftertax return, you have to know your marginal tax rate (including your state income tax if applicable). If you’re in the 28 percent federal income tax bracket and the 7 percent state income tax bracket, that means that 28 + 7, or 35 percent of a taxable return on investment will be paid to the governments. By subtracting the total tax paid from the total return, you get your after-tax return. So a 10 percent taxable return actually is the same as a 6.5 percent untaxed return (35 percent of 10 is 3.5, which, when subtracted from 10, leaves 6.5).
• Put extra stock into the insurance company’s rating: With term insurance, you’re only concerned that the company remains solvent during the term you purchase, but with whole life, you’re buying into the company itself. A company with a significantly lower rating may guarantee a slightly higher return, but you may want to seriously consider the lower-yielding but higher-rated company for your own peace of mind.
• Insurance is protection, not investment: If you want to purchase a whole life policy because you think it’s a good investment, think again. Many other investments such as IRAs and 401(k)s can give you a better — and still tax-deferred — return on your dollar. You may be just as well off investing your money in another taxdeferred vehicle and purchasing a lower-cost term insurance policy.
• Find out what happens if you terminate your coverage: Some insurance companies have cancellation or termination charges, while others build in administrative charges up front. Include these charges into your comparisons.

Security Cameras

There are four broad areas where security cameras can help a business:

-Preventing Theft
-Convicting a Thief
-Documenting Accidents
-Proving An Accident Did Not Occur

No thief wants to get caught. Visible cameras in a business deter theft and make it easier to prove what was taken, by whom, and when. The current digital technology allow an item to be targeted and the computer moves to the exact moment when the target is moved. Imagine a purse that disappears. The system operator can go to an image that shows the purse on the counter, then tell the computer to go to the frame when the purse is moved. No need to watch hours of tape looking for an event.

A problem for many businesses is accidental injuries to employees and the public. Cameras can document exactly what happened to assist in preventing similar events in the future.

Unfortunately, not all allegations of injury are legitimate. One client tell the story of an employee who claimed an injury on the day after cameras were installed in the store. A review of the tape showed that no accident had occurred. She withdrew her work comp claim and resigned.

Another client received a letter from an attorney alleging a slip and fall injury. No fall could be found on any of the tapes for the weeks before or after the injury was to have occurred. My client relayed the information and never heard from the lawyer again.

Consider video surveillance as a loss control tool for your company.

What does that letter from your insurer mean?

You have been sued. You immediately notify your insurance carrier. An adjuster--an employee of the insurance company assigned to your claim--contacts you, asks you some questions, and says the insurer will get back to you.

A few weeks later you get a letter from the insurer that quotes a lot of gobbledygook from your insurance policy. Towards the end, the letter states that the insurer will "defend you" in the lawsuit, but is "reserving its rights to disclaim coverage." What does this mean and what should you do?

The insurer is telling you that it will pay for an attorney to defend you in the lawsuit. This is called defending the suit. However, at the end of the lawsuit, if you lose, the insurer may decide that it will not pay the judgment against you. This is called the insurer reserving its rights.

If you receive a reservation of rights letter you have some options.

* You can take the path of least resistance and hope for the best. The insurer will choose and pay for an attorney to defend you in the lawsuit. Maybe you will win, and if you lose maybe the insurer will pay the claim. (In a later post I will talk about when this may happen.)

* The insurer will probably not tell you this, but in most cases when you have received a reservation of rights letter you can insist that the insurer allow you to choose the attorney that will defend you and that the insurer pay that attorney's fees.

* You can agree to the attorney the insurer hires on your behalf, but you also hire and pay for your own attorney to monitor the lawsuit and make sure that your rights are being adequately protected.

Long Term Care Insurance

More and more Americans are realizing the importance of insurance that pays for a stay in a nursing home or home care after surgery.

Here is a white paper I put together on purchasing long term care insurance.

Credit Card Security

I will admit that I personally am not terribly worried about identity theft. I go about my life being prudent but not neurotic.

I am concerned about my client's exposure to loss by credit card data-breach. Every day we hear of another merchant security problem. Every business must work with their credit card processor to limit their exposure to a loss. The standards are set out in the Payment Card Industry Data Security Standard - a collaborative effort between Visa and MasterCard that has been endorsed by the other card companies.

In short, you must:

-Build and Maintain a Secure Network
-Protect Cardholder Data
-Maintain a Vulnerability Management Program
-Implement Strong Access Control Measures
-Regularly Monitor and Test Networks
-Maintain an Information Security Policy

Failure to follow the standards could result in fines from your card company and enormous liability for breaches.

Details of the security standards can be found at http://usa.visa.com/merchants/risk_management/cisp.html.

Call your card processor and ask, "What do I need to do to limit my liability for security breaches?" Follow their instructions and review at least quarterly.

Most insurance programs will not protect you from a data breach. Your best protection is to follow scrupulously the security programs put in place by the card companies.

Inland Marine Insurance Advice

Inland marine coverage is insurance for mobile equipment such as fork lifts, cranes, generators, backhoes and bulldozers. It can also be used to insure fine arts and property owned by others in your care - computers at a computer repair shop or property left with a dry cleaning company. Cargo insurance is also part of inland marine insurance.

Coverage Considerations:

How is the property valued? Most inland marine insurance policies provide coverage on a depreciated basis. Consider buying replacement cost coverage.

Consider high deductibles to control premium - $1,000 should be the minimum deductible for any business.

What are the perils (causes of loss) covered by the policy?

Some policies have exclusions for property used on or over rivers, lakes and the ocean.

Some policies have limitations for damage caused by exceeding weight restrictions on cranes and loaders.

If the equipment is vital to your operation and difficult to replace, consider coverage to pay for a temporary rental.

Beware of policies with penalties for failure to buy enough insurance - called coinsurance. Many policies require you to buy insurance equal to the full value of the equipment. Failure to do so could result in a substantial penalty at the time off a loss.

Theft of construction equipment is becoming almost an industry. How can you protect equipment on your job sites?

Loss caused by mechanical breakdown is usually excluded.

Many inland marine policies exclude property leased or loaned to others.

In cargo insurance beware of policies that exclude mechanical breakdown. Loss of a refrigeration unit can be devastating. Also watch for limitations on the types of cargo or the location of shipments.

Check Your Posters

Are your employment posters up to date? When was the last time you took a look at the notices posted on your employee bulletin board? Do you have your state's work comp, overtime, wage laws, VDT, Discrimination posters up?

Federal law employment posters can be found at http://www.dol.gov/elaws/posters.htm.

Check your state department of labor website to learn what posters you are required to post. Here's a list of state websites - http://www.dol.gov/esa/contacts/state_of.htm.

Risk Mitigation - Flu Fix

I know we are at the end of the flu season. However, this is a great time to make some observations and plan for next year.

First, the facts. Each year 36,000 Americans die from the flu. More than 200,000 of us are admitted to the hospital each year because of the flu. The flu costs businesses $16.3 billion each year in lost productivity.

Think about your own company. How many of your coworkers missed work this year by the flu or bad colds?

Here are two things you can do to lessen the impact. First, consider paying for flu shots for your employees. Have a health care provider come to your shop and inoculate any interested employee. If you can keep one employee in twenty from getting sick, you have paid for the program.

Second, encourage regular hand washing by your employees. Experts agree that hand washing is the single most important thing we can do to prevent the spread of colds and flu. Put dispensers of hand sanitizing liquid throughout your operation. Encourage their use. It's almost as good as hand washing and much simpler.

Risk Mitigation - Fire Extinguishers

Are your fire extinguishers properly placed? Do you have enough?

Are your people trained to use the equipment you have? Your extinguisher supply company can provide training. Some fire departments will put on training for a small donation.

OSHA requires annual training for all employees on most job sites. Here's OSHA's Regs.

Here's a video that can provide an intro to extinguisher use.

Low Cost Life Insurance? It's Online

(ARA) - Unless you're a carefree, 20-something single with no debt and no property, chances are you've at least thought about buying life insurance. Faced with the hassle of finding an agent, a carrier and a good deal (not to mention the health exam), you may even have considered making your purchase online.

It's a good idea for a number of reasons. First, by using online research tools - Web sites that allow you to compare rates from competing major companies - you improve your chance of getting a good deal. Second, online buying greatly reduces the time you will spend on the process.

"The traditional way of purchasing life insurance can take weeks from start to finish," notes MichaelRowell, CEO of Efinancial.com, a top shop-and-compare site for life insurance. "Online buying is typically much faster. For example, many of our clients can qualify for $300,000 in coverage almost instantly." Visit www.efinancial.com to compare policy quotes from major carriers such as AIG, Prudential and Transamerica.

The key to the quick turnaround and ease of purchase is that most Web sites are dealing with term life insurance policies. Term life insurance tends to be easier to qualify for and offers lower monthly premiums than other life insurance products. Many carriers offer term life products that don't even require a medical exam, although you will still have to complete (truthfully) a survey on your health status.

"Term life can be a great investment for a very wide range of consumer types," says Rowell. "Lower monthly premiums, ease of approval and the variety of products from top companies make term life appealing to many people. Plus, some companies now even offer a term life product that at the end of the term returns every penny of the premium you paid in over the life of the policy."

Applying online for life insurance also gives consumers greater flexibility in determining when they commit to a particular company or policy. While entering your information on some Web sites may result in endless phone calls or e-mails from marketers, Efinancial does not share applicant information. "You will only ever get a call from an Efinancial representative, and only after you've initiated the process by entering your information on our site," says Rowell. "We then act as facilitators to connect the consumer with an agent at the company of his or her choice."

The company uses a proprietary, patent-pending automation engine that speeds along the application process even faster than other online life insurance sites. By pairing applicants with an Efinancial representative who facilitates their application, the company combines the speed, convenience and flexibility of the Web with the personalized service traditionally provided by insurance agents.

To quickly compare quotes from top companies and secure speedy approval for your term life insurance application, visit www.efinancial.com.

Copyright © 2007, ARAnet, inc.

ARA Content

Keys to comparing term insurance policies

Remember these four keys:

• The premium for the first year does not necessarily reflect the total cost of the insurance: Many companies discount the initial premiums in order to get your business, but the total cost over a long period is higher than from other companies. If you plan to remain insured for 20 or 30 years, be sure to include the projected premiums for the next three or four terms (terms, not years).
• If the company offers dividends, find out the history of the dividends so that you can reasonably rely on the projections.
• Compare the same categories of risk: If one company quotes you a preferred rate while another company quotes you the standard rate, you’re not necessarily comparing the rates. On the other hand, if the companies will actually differ in the category of risk, using the quote they will actually offer is essential.
• Compare the term insurance costs with the cash-value insurance costs: If you think you may want to buy a cash-value policy in the future, you may get a better rate when converting with the same insurance company than buying a new policy.

Hitting A Deer

A friend had an accident the other night, hit a deer. She's OK.

Insurance can be strange sometimes (alright, more than sometimes).

The personal auto policy includes coverage for collision. There is also coverage for damage to the vehicle caused by "other than collision."

Hitting another car, a tree, a house, a street sign, a boat, or a plane are all collisions. Hitting an animal is not.

This becomes important when you consider the coverage you will buy to cover your car. Some people drop collision coverage when a car reaches 5 model years. Some people keep the less expensive "other than collision" coverage. Some drop both.

Other than collision provides protection for damage by hail, wind, glass breakage, theft, vandals, fire, lightning, falling objects, and contact with a bird or animal.

The word "contact" is important. Successfully swerving to avoid a deer which results in successfully hitting a tree is a collision (with the tree).

Class dismissed.

Property Insurance Penalty Hurts You

In most property insurance policies there is a penalty called coinsurance. Here is what you need to know about coinsurance - it never helps the insurance buyer.

Coinsurance = Bad

Ask your insurance advisor if there is a coinsurance clause in your property insurance policies (building, contents, inland marine, computer, business interruption insurance). If the answer is yes, ask if you can have the agreed amount endorsement added so that the coinsurance penalty is removed.

No Coinsurance = Good