Saving You Money For Life

The insurance industry typically defines disability as the inability to work due to an illness or injury, though various policies all have differently-worded definitions.

Short-term disability insurance is actually required by some states. This type of insurance, carried by the employer for the employees, replaces a portion of the policyholder’s salary for-like the name indicates-a short time. Usually this is from three to six months after the disabling event. Of course, the actual percentage of income the policy will replace will vary between companies and policies.

Long-term disability insurance usually begins after the policyholder is disabled and unable to work for at least six weeks. The coverage period can extend for a certain number of years or until the person reaches 65, depending on the policy and the type of disability.

Though this type of policy can be costly, being unemployed for a long period of time is without question financially devastating. The U.S. Department of Education and the National Institute on Disability and Rehabilitation note the most common causes of long-term disability are heart disease, back injuries and cancer. Anxiety and depression also cause long-term absences from work.

Disability insurance is not workers’ compensation, which most states require employers to carry. Workers’ compensation covers employees who are injured on the job. Disability is a smart move for today’s workers, and will protect you for years to come.

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Don Bailey, CEO of Willis North America, testified before Congress on February 28 that allowing the Terrorism Risk Insurance Act (TRIA) to expire at the end of this year would be “economically devastating.” Bailey said that his company and the Council of Insurance Agents and Brokers are in favor of a permanent or long-term government backstop program.

Bailey said, “The most important issue for the broker community is maintaining access to coverage at a price the business consumer can afford.” He said that affordable terrorism coverage is not just limited to the country’s coasts or particular industries. Take-up rates are high across the country and industry-wide. Bailey said take-up rates are highest in the Northeast and Midwest, followed by the South and then the West.

Bailey also suggested adding risks posed by nuclear, biological chemical or radiation to the federal backstop program, saying that extending it will keep terrorism coverage available and the market and economy stable.

With the unpredictability of terrorist attacks, many industrial consumers are choosing this new option to protect their assets. The terrorism insurance market has stabilized, Bailey said, and coverage is expanding steadily and becoming more and more affordable.

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I found this really great explanation of the pros and cons of an irrevocable trust. I hope you check it out as there is some great information in it including the potential drawbacks of a trust, which include:

• Once the trust is set up, you can’t change its terms.
• Once you transfer a life insurance policy to the trust, you 1) give up control over that policy, 2) can’t make loans or withdrawals of the cash value of that policy, and 3) can’t change its beneficiaries.
• Trustees and legal advisors must carefully handle gifts made to the trust to prevent triggering gift taxes.
• Professional trustees usually charge annual administration fees and may not agree to manage smaller trusts.

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The Motley Fool has some interesting and educational articles. Since it’s still wedding season, I thought I’d share this article with you….

This article is part of Motley Fool’s Newlywed Financial Boot Camp series, designed to get new couples and their finances into shape.

Congratulations and good luck to everyone that has either gotten married in 2007 or will be doing so.

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The governor of Arizona, Janet Napolitano, has just signed updated Arizona’s captive insurance law with the new Captive Insurer Amendments. They go into effect 90 days after the adjournment of the legislative session. These new amendments include:

* Employee benefits provided through the establishment of branch captives.
* Definition of the “deductible reimbursement” business.
* Redefinition of “industry group captive insurer.”
* Except RRGs, group captives now cover controlled unaffiliated business.
* Elimination of restrictions against the writing of commercial motor vehicle business on a direct basis.
* Elimination of the requirement for an Arizona residency for captive managers.
* Reduction of the minimum capital requirement for a protected cell captive from $1 million to $500,000.
* Pure captives allowed to be formed as LLC.
* Group captives may have a minimum of three directors and no more directors than members.
* Audit reports are due for each captive within six months of the end of their fiscal year.
* All changes to captive business plans must be approved before implementation.

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Ask yourself, “What would happen to your company if something happened to you? Will the company survives the loss or will you put your family at financial risk?”

There are ways to protect yourself, your family and your business by using life insurnace. Two specific types of life insurance that can do this are keyy man insurance and a buy sell agreement.

1. The success or ongoing existence of a partnership is dependent on the abilities of one or more of the partners.

2. The business needs to secure a loan.

3. A salesperson generates a high percentage of total sales.
4. The business merges with another company, goes public or enters any type of financial/operational arrangement with another company.

What happens if a partner should die? Usually, the stock goes to the spouse of that deceased partner and the surviving partner then buys out the spouse – normally the below the actual cost of the company. A buy sell agreement states that the surviving partner will buy out the deceased partner’s half through the use of a life insurance policy.

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Scottsdale Insurance Company employs 1350 people and is one of Arizona’s largest private employers. They generate $2 billion in revenue in each year and are planning to expand. They currently provide insurance products to small businesses, cities, counties and other municipal entities.

Says Mike Miller, Scottsdale Insurance Company’s president and chief operating officer: “We feel we’ve been too much under the radar, historically. We’re trying to get our name out more.”

The low profile is due in part to the fact that Scottsdale Insurance provides “excess and surplus” products, niche policies not offered by larger, more well-known companies. In this area of insurance, advertising is restricted by industry regulators.

One of the niches filled by Scottsdale Insurance is pet insurance: it’s Veterinary Pet Insurance makes it one of the oldest home pet insurance providers in the country.

About what Scottsdale Insurance has to offer, Miller says: “We write insurance for those accounts that can’t be purchased from a standard company because of the risk profile. We can’t try to attract consumers . . . directly, but if Nationwide (or others) can’t write it, those people can come to us.”

Scottsdale Insurance is a subsidiary of Columbus, Ohio-based Nationwide.

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If you’re thinking about buying or have purchased term life insurance I commend you. However, there are certain things to keep in mind when buying term life insurance. When it comes to life insurance you only have one chance to get it right. If you purchase it today and you die tomorrow, you better make sure you have the right type of policy and right death benefit to meet your family’s needs. Here are some tips to consider when buying term life insurance:

1. Letting premiums define your decision – The amount you’ll have to pay for a premium shouldn’t be your only consideration. It’s also important to factor in the financial strength/integrity of the insurance companies quoted, as well as important product features such as renewability privileges, conversion rights, available riders and how long the rates are guaranteed.
2. Buying too little coverage – Term life insurance is so inexpensive these days. There is no reason why you shouldn’t have at least 8-10x’s the amount of your current income. Think about it…if you lived as long as you expected to live, how much income would you bring in until you retired? Is that amount eqaul to 8-10x’s your income? Then why would you even consider buying less than that?
3. Thinking that buying term life insurance is a one-time activity - Evaluating life insurance needs is an activity that must be conducted on an ongoing basis. At least every year or two re-examine your policies to be sure they are still doing the needed job. For example, your circumstances may have changed (marriage, divorce, or birth) and the amount of insurance may no longer be adequate.
4. Forgetting to change beneficiaries – Divorce, death, birth or other life circumstances may dictate a need to change beneficiaries. Imagine seeing the death benefits from a policy on your recently deceased spouse go to that person’s former spouse instead of you.

5. C

   anceling a policy when you don’t have a new one in force – Sometimes it is appropriate to switch companies, especially since term life insurance rates have dropped dramatically over the past 10 years. But before dropping a policy, make sure the new one is in force. You don’t want to find out after dropping your old policy that you can’t qualify for a new one due to new health conditions you weren’t aware of.

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Insurance stocks may not get the attention enjoyed by Google and others, but the past few years have shown steady returns for investors. Since the beginning of 2007, the S&P Insurance Index (IUX) has gained about 5 percent, continuing a steady rise since April 2003.

Wall Street isn’t impressed, however. Or if they are, they aren’t showing it financially. According to the 200 analyst ratings on insurance sector characteristics from Zacks, not even half register a ‘buy’ rating.

So which stocks are the best in the insurance sector? MetLife (MET) is at a high and steadily climbing. Says Jocelynn Drake at the Option Advisor: “Short interest for MET dropped by 15% to 16.5 million shares, rolling over from a multi-year high. Yet, the remaining short interest is 6.5 times the stock’s average aily trading volume. This accumulation of bearish bets represents ample sideline money that can fuel additional gains in the shares.”

Another good bet in insurance stocks? Aflac. It’s first quarter earnings beat Wall Street’s predictions by 4 percent. Says Drake: “Aflac is faced with overwhelming pessimism from options players despite its technical and fundamental strength. Short-term speculators have been more bearishly aligned against the security only 12 percent of the time during the past 12 months.”

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From time-to-time we have news that we’d like to share with our customers. For instance, we may want to inform them about the advantages of purchasing a “starter” life insurance policy for your child, or simply tell them about discounts and partnerships with restaurants, hotels and financial services that we have negotiated on their behalf.

There are many ways that we can do this, such as through email, phone or U.S. Mail. However, we know how busy day-to-day life can be, and a one size approach does not always work. So, we thought we’d ask the following question:

“How do you prefer to hear about new products or services from your insurance company? Via email,

We struggle with this for a couple of reasons:

• First, we know people are busy, but we want to provide our customers with valuable information to make them informed consumers.

• Second, we realize that different people like to be contacted in ways that are convenient for them.

So, tell us, what do you think is the best way to this? How would you want us to share this type of information with you?

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