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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 ...

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

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... #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) ...

... x No Thanks Loading.. Pitfalls And Rewards Of Life Production 4/30/2013 by CompleteMarkets Editor , david goodwin This content has not been rated yet. Situation: I am a P/C agency principal and I have been pursuing Life and group business for the past few years. The results have been good so far, but I'm getting nervous about liability exposure. First I read about Kentucky agents who are being held liable for unpaid claims written in an insolvent multiple employer welfare arrangement (MEWA) . Then I read that employees and retirees whose pension and 401(k ) funds were placed in annuities and guaranteed investment contracts (GICs) could sue their employers if the carrier defaults. The possibility exists here, too, that employers could sue their agents. Some of my friends have written for companies that went bust, which carried A or A+ ratings. Am I being overly concerned about my liability exposure in Life and Group business? Solution: You're right to be concerned, as anyone should be about liability exposure in any activity. Whether you are being overly concerned is another matter. You raise two different matters: MEWAs and pension and 401(k ) plans. MEWAs are a form of self-insurance created by pooling funds from two or more employers. Many insurance commissioners have issued strong warnings- even prohibitions- against their sale. The majority of agents won't handle them. Agents who choose to write MEWA business presumably do so after weighing the risks, or perhaps under pressure from clients. They'd be wise to obtain strong disclaimers from clients. In any ...

... 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 ...

... 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 ...

... the event of the death of either spouse is critical. Over $25,000 salary. If a family's income is more than $25,000, an effective Life insurance fact-find (see Action Step 4: The Qualifying Interview' for a fact-find you can use) is in order. Gainfully employed. When someone brings a significant income to the family, that person's loss could cause financial difficulty unless Life insurance has been provided in the proper amounts. Commercial Lines Business has identifiable individual owners. These people are prospects for buy-sell agreements involving Life insurance. Business has key employees. Key-Person insurance is vital. More than three employees. Any firm with more than three employees is generally a prospect for Group insurance and/or a payroll deduction program. Business has/does not have a pension plan. If the firm doesn't have a pension plan in place, it's your opportunity to discuss one. If it does, you can review it and suggest ways to maximize the individual pensions of owners. Business has/does not have a Disability Income plan in place. This is an excellent employee benefit your prospect can offer. Major stockholders are 55 years of age and over. These individuals are thinking about retirement and may want to defer some of the present compensation for their later years. In business five years or more. This indicates financial stability. Most businesses that start fail within the first 15 to 24 months if they're going to fail. Once you have determined that a candidate fits into one of the above categories for Personal and Commercial Lines, you know you have a ...

... 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 ...

... ways to maximize the individual pensions of owners. Business has/does n...