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... cause financial difficulty for the corporation. Policies are taken out on such persons as key executives, valuable researchers, and/or anyone who has a particular skill that makes him or her a valuable asset to the firm. Anyone who is a chief source of the firm's credit is also a candidate for this coverage. The policy serves several purposes: 1) Provides indemnity in case of loss. The insurance proceeds place the firm in a better position to finance replacement of the key person. 2) Accumulates an emergency cash fund (if a permanent Life policy is used) . The firm can borrow emergency funds needed (without publicity) from the policy's cash values. 3) Strengthens the firm's credit. Creditors are assured that debts will be paid despite the loss of the key person. Pension Maximization: Americans due to receive a pension when they retire will have a big decision to make in choosing how to get their benefits. Option 1 is to take the full amount of the pension (usually about 50% of earnings while employed) . When the retiree dies, the pension payments stop. Option 2 is known as joint-and-survivorship. When the retiree dies, pension benefits continue to be paid to the retiree's spouse. However, this option will cost about 30% of the Option 1 benefit. Pension maximization is a simple concept that proposes that the retiree have a Life insurance policy that ensures payment to the spouse in case of the retiree's death. With this policy, the first option for pension payment can be chosen without fear of leaving the spouse without an income. And ...

... cause financial difficulty for the corporation. Policies are taken out on such persons as key executives, valuable researchers, and/or anyone who has a particular skill that makes him or her a valuable asset to the firm. Anyone who is a chief source of the firm's credit is also a candidate for this coverage. The policy serves several purposes: 1) Provides indemnity in case of loss. The insurance proceeds place the firm in a better position to finance replacement of the key person. 2) Accumulates an emergency cash fund (if a permanent Life policy is used) . The firm can borrow emergency funds needed (without publicity) from the policy's cash values. 3) Strengthens the firm's credit. Creditors are assured that debts will be paid despite the loss of the key person. Pension Maximization: Americans due to receive a pension when they retire will have a big decision to make in choosing how to get their benefits. Option 1 is to take the full amount of the pension (usually about 50% of earnings while employed) . When the retiree dies, the pension payments stop. Option 2 is known as joint-and-survivorship. When the retiree dies, pension benefits continue to be paid to the retiree's spouse. However, this option will cost about 30% of the Option 1 benefit. Pension maximization is a simple concept that proposes that the retiree have a Life insurance policy that ensures payment to the spouse in case of the retiree's death. With this policy, the first option for pension payment can be chosen without fear of leaving the spouse without an income. And ...

... such as investments, tax planning, retirement planning, and money management. Each of these niches is important in good times and bad, and each undergoes changes frequently enough that ongoing expertise is important. Just as important, the client can readily see why these niches are important and can appreciate the need for help. And each of these niches will be permanent needs which will survive any changes which might come in the insurance distribution systems. Further, I believe it will be difficult or impossible for computers to replace personal expertise in these three categories, with the possible exception of employee benefits. Even that will be a long time off because of the need for personal explanations and enrollers. To illustrate, look at a few recent news items. One headline, Thousands of U.S. Employers Eliminate Pension Plans, Making Retirement Difficult For Baby Boomers, ' appeared in the American Academy of Actuaries, June 1992. You don't have to be a niche marketer to identify this pool of prospects; they're everywhere, and you can reach them handily. The article relates that more than 30,000 U.S. employers have terminated their defined benefit pension plans since January 1990, and 39% of these employers have not provided their employees with new pension plans, leaving thousands of American workers without employer-provided pensions. Those people need help in planning and funding their retirement! Another headline, Americans Growing Old And Poor: Unprepared Retirement Picture Bleak, ' appeared in Life Association News, Aug. 1992. Quoting a recent survey by Merrill Lynch, the article reports that the savings crisis is far worse than ...

...orkers without employer-provided pensions. Those people need help in planning ...

... #4 : Stock Market Fluctuations. Because it's practically impossible to forecast what will happen to stocks, many retirees fall prey to major stock market losses. One major stock market downturn, and your nest egg could disappear in the blink of an eye. How to deal with it: First of all, the SOA says retirees and older workers should limit their stock market exposure. If you do invest in the stock market, be sure to diversify your stocks and spread your money among different investment classes and individual securities. This will greatly decrease your risk. You might also consider investing in financial products that invest in stocks, but guarantee against the loss of principal, such as mutual funds. Risk #5 : Disappearing Retirement Funds. If your employer declares bankruptcy, what happens to your pension? If your annuity insurer becomes insolvent, where does that leave you? Many terrible things can happen to your retirement funds but there are ways to manage these risks. How to deal with it: Before you invest your money do your homework. Find out your employer's credit rating to determine if they might be at risk for bankruptcy. Look into your insurance company's claims-paying ability rating. Of course, you are already protected from many of these risks. If your employer does go out of business, the Pension Benefit Guaranty Corp. will insure your defined-benefit pension plan (up to certain limits.) Annuity companies are covered by state insurance guaranty funds up to specified limits which means if the insurer becomes insolvent, the claims will still be paid. Login or Register (for FREE) ...

... producer (usually with some sort of bonus or deferred commission added) . 35% to 40% is a normal range. One shot life insurance is always higher in my experience, in the 70% range. Deferred commissions may be part of the commission package. They can give a producer a form of equity in the agency, but will be deductible by the agency when the producer leaves. They can provide an incentive to production. They also can give the producer an incentive not to pirate the accounts when he leaves, but rather to keep them on the books. The right to future commissions might be conditioned on achieving a level of new production or total production, and might vest over a period of time, often from 5 to 10 years. The application of the federal Pension Reform Act or ERISA to deferred commission arrangements is not totally clear. If deferred commissions are viewed as a plan to provide retirement income to employees, or..[which] results in a deferral of income by employees for periods extending to the termination of covered employment or beyond.., then they fall within the definition of a pension plan' under ERISA. ERISA 3(2 ) . The case law, however, seems to make ERISA inapplicable. The case law has held that ERISA excludes employment contract deferred compensation arrangements. Rocky Mountain Motor Tariff Bureau, Inc. v. Leonard (DColo 1987) 652 F.Supp. 1473. ERISA also excludes plans for owners. Kennedy v. Allied Mut. Ins. Co. (CA9 1991) 952 F.2d 262. It excludes true independent contractors ...

... once the purchaser has died. An annuity is the systematic liquidation of an estate; Life insurance creates an estate. The basic principle behind annuities is simple: The purchaser pays the insurance company a premium, either all at once or in installments, and in return for that premium expects the insurer to pay him or her a periodic income for Life, beginning at a specified period of time. The amount of the income received is determined by a number of factors, including total premiums paid, age when benefits begin, type of contract purchased, and sometimes health or sex. Annuities are most commonly used for retirement purposes-to provide a tax-deferred buildup of assets that will result in a steady income to the annuitant. Annuities are generally not sold for short-term purposes. They are often involved in corporate pension and profit-sharing plans; these are group annuities. For the sake of clarity, this sales campaign will deal with the sale of annuities to individuals. As with other forms of Life insurance and financial services, the annuity principle has been expanded upon over the years, with insurers coming out with innovative products to meet client needs. Today, there are a vast array of annuities from which to choose. Classifying them all is a difficult task, but there are some basic areas that can be explained. Every annuity will have features that fall into these five areas: method of paying premiums, date benefits begin, determination of benefit, method of benefit payout, and method of accumulating interest. Method of Paying Premiums Annuities can be purchased with a single premium or through a series of scheduled ...

... employer harmless from any fiduciary liability claims launched by employees or beneficiaries, but the federal Employee Retirement Income Security Act of 1974 (ERISA) reinstated the employer as a culpable party. After all, employees trust their employers to choose capable financial managers and monitor their investment decisions. ERISA gives them several grounds for fiduciary liability claims, including plan discrimination, improper advice, and mismanagement of funds. Under ERISA, a fiduciary is anyone who administers, manages, or exercises discretionary control over the benefits plan. These parties named in the plan must follow the plan's rules, which are intended to protect all of its participants. More stringently, a fiduciary's decisions must place the participant's interests ahead of any self-interests. Within the realm of benefits plans governed by ERISA are sick pay, deferred compensation, retirement pension, and health plans (any benefits plan, whether it is formally documented or not) . As a fiduciary, an employer may suffer federal and statutory penalties and pay attorney costs for plan losses resulting from breach of fiduciary duty (for example, the duty of fair dealing) . Employers can protect themselves and their employees by carefully selecting competent, licensed administrators and purchasing Fiduciary Liability insurance. This policy shelters a profit or nonprofit organization's employees who are active in the benefits plan, company owners, partners, and trustees from costly judgments involving employer-sponsored plans, including retirement, pension, and health plans. Call us for details on Fiduciary Liability insurance. Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for ...

... need to be stated in a precise manner. If a joint venture is involved, further complications exist. Identification of joint and several liabilities, prior and ongoing hold harmless arrangements or even the dissolution provisions are important. A conglomerate may establish new corporations which share responsibility with ongoing or phased-out operations. The most important aspect of this complex change in structure is its effect on the liability and responsibility of individual entities over time. Financial transactions and business are not point' occurrences but occur over a period of time and place, often with a change or shift in players. The holding company, in its efforts to move aggressively into more promising areas, may be involved in: new states new operations untried areas contractual efforts involving new laws non-financial problems activities with new partners or joint ventures changes in pension plans and overall employee benefits areas the merging of workers compensation programs. The historical liability exposures, attitudes, and protections available will not be equivalent or applicable to new situations. The following situations should illustrate the potential complexity of this area. Situation 1 A conglomerate purchases and subsequently sells a construction company which has been involved in building municipal stadiums and arenas. After the sale by the conglomerate, a defect is discovered at a prior location-the construction of which occurred before the purchase of the company by the conglomerate. The replacement costs resulting from necessary repairs as a result of the defect will run upwards of $10 million. The risk manager should consider the following questions in trying to evaluate the liability of the conglomerate and the ways in which its insurance program, over time, may or may ...

... producer (usually with some sort of bonus or deferred commission added) . 35% to 40% is a normal range. One shot life insurance is always higher in my experience, in the 70% range. Deferred commissions may be part of the commission package. They can give a producer a form of equity in the agency, but will be deductible by the agency when the producer leaves. They can provide an incentive to production. They also can give the producer an incentive not to pirate the accounts when he leaves, but rather to keep them on the books. The right to future commissions might be conditioned on achieving a level of new production or total production, and might vest over a period of time, often from 5 to 10 years. The application of the federal Pension Reform Act or ERISA to deferred commission arrangements is not totally clear. If deferred commissions are viewed as a plan to provide retirement income to employees, or..[which] results in a deferral of income by employees for periods extending to the termination of covered employment or beyond.., then they fall within the definition of a pension plan' under ERISA. ERISA 3(2 ) . The case law, however, seems to make ERISA inapplicable. The case law has held that ERISA excludes employment contract deferred compensation arrangements. Rocky Mountain Motor Tariff Bureau, Inc. v. Leonard (DColo 1987) 652 F.Supp. 1473. ERISA also excludes plans for owners. Kennedy v. Allied Mut. Ins. Co. (CA9 1991) 952 F.2d 262. It excludes true independent contractors ...