insurance trust News

What is a life insurance trust?

Please remember that this answer is provided in the spirit of public education, not as legal advice. If you require legal advice for a particular situation, you should consult an attorney.

A life insurance trust is a trust that is set up for the purpose of owning a life insurance policy. If the insured is the owner of the policy, the proceeds of the policy will be subject to estate tax when he dies. But if he transfers ownership to a life insurance trust, the proceeds will be completely free of estate tax. (The proceeds will be exempt from income tax either way.)

Given the current estate tax rate of 35%, a life insurance trust can save hundreds of thousands of dollars in estate taxes. However, there are several drawbacks to such an arrangement:

1. You can't change the beneficiary of the policy.

The insured must give up the right to change the beneficiary of the policy (the trust itself will be the beneficiary). The trustee alone has that right, and the insured cannot serve as trustee of his own life insurance trust. Of course, the insured will designate the beneficiaries of the trust (for example, his children). But because this designation cannot be changed after the life insurance trust has been set up, the insured will lack the flexibility to deal with changed family circumstances with this particular policy.

2. You can't borrow from the policy.

The insured can no longer borrow against the policy. If the trust allows him to borrow against the policy, he will be deemed to be an owner of the policy for estate tax purposes.

3. You can't transfer an existing policy to the trust -- unless you live for at least 3 more years.

If the insured transfers an existing policy to a life insurance trust and dies within the next three years, he will be treated as the owner of the policy and it will be taxed in his estate. Even if he survives another three years, he will have made a taxable gift in the amount of the cash value of the policy (of course, this is usually preferable to having the entire face value subjected to estate taxes). If the life insurance trust takes out a new policy on the insured's life, however, the insured will never be deemed to own the policy. Furthermore, no cash value will have built up yet, so no taxable gift will be made.

4. The life insurance trust must be irrevocable.

Once you set up and fund the trust, you cannot get the policy back. If you become uninsurable, you will be committed to this trust as your only life insurance.

5. Premium payments may use up your estate tax exemption.

If the policy has not yet endowed, you must find a way to pay the premiums without using up your estate and gift tax exemption. If you transfer securities to the trust so that the trustee will have income with which to pay the premiums, the full value of the securities will be a taxable gift. If you transfer cash to the trust each year to pay the premiums, each transfer will be a taxable gift. However, you may be able to exempt these premium payments from gift or estate taxes by setting the life insurance trust up as a Crummey Trust (see the FAQ on Crummey Trusts). Then each premium payment can be sheltered by your annual gift tax exclusion, which is $13,000 (indexed for inflation) per trust beneficiary.

6. You must find or hire a trustee.

The insured cannot serve as trustee of the life insurance trust. That means that he will have to find or hire a third party trustee. However, many banks and trust companies offer reduced fees for life insurance trusts because they involve essentially no investing decisions.

Despite these drawbacks, many people find that the tax saving potential of a life insurance trust is worth the cost and hassle. It allows you to remove from your estate a significant asset that you are unlikely to want access to during your life. And it ensures that the life insurance proceeds go 100% to the beneficiaries, not the federal government.

A partnership long term care insurance program

Partnership long term care insurance program

This program allows individuals who have purchased an LTCi policy and have exhausted the policy benefits, to protect some of their assets from Medicaid/Medical spend down requirements (i.e., the requirement that Medicaid recipients be legally destitute before receiving benefits).

The states are using the program to encourage the sale of private Long Term Care insurance in order to decrease the pressure on state Medicaid budgets. The program hoped to attract lower- to middle-income earners since they are most likely to turn to Medicaid but surprisingly it attracted higher-income Americans as well.

Originally the program was pilot in 4 states - California, Connecticut, Indiana and New York. However, given the high success of the program in the initial four states, as part of the Deficit Reduction Act of 2005 (DRA) the program was expanded. Now, ALL states are allowed to provide Partnership policies through The Deficit Reduction Act of 2005. DRA 05 also directed the U.S. Department of Health and Human Services (HHS) to draft a reciprocity agreement, which is optional for states. This reciprocity agreement allows claimants to use their policies in other Partnership states.

There are two significant differences between Partnership and non-partnership policies.

• Partnership policies carry an endorsement from the state that they meet minimum standards in terms of policy benefits.
• Partnership policies include a feature known as Medicaid Asset Protection. Protected assets will be disregarded for the purposes of determining financial eligibility for Medicaid, if an individual needs to apply for Medicaid to help pay their long-term care bills. Only Partnership policies provide Medicaid Asset Protection.

Total Insurance and Technology System

Technology and Total Insurance System
All TIS modules derive their information from a single instance database and business rule repository.  The application supports the entire spectrum of core insurance related functions including client administration, underwriting, policy and endorsement generation, claims management, Co-insurance/Reinsurance handling, billing and collection of payments, cash receipts and disbursements, agency and commission management, production processing and management reports - all combined within a multi-company, multi-currency and multi-lingual system.

Our Total Insurance System includes a comprehensive solution that:

(a)      enables identified users such as local and remote insurer's employees, agents, underwriters, claims adjusters or service providers, to process and complete transactions through the Internet, and;

(b)      provides Point of Sale Self Service for Policies and Quotations for unidentified users (the broad public of Internet users) enabling them to enter information through the Internet, receive quotations and even bind and procure actual policy coverage.  Full customer disclosure and transparency reduce service costs and improve service levels.

Flexibility is a key benefit of TIS as its table-driven structure, through user-administered tables, provides the capabilities to tailor operations to suit the unique needs of individual clients - to incorporate their business logic, define their particular dialog with their customers, and even alter and modify the system's GUI visual design - all this without re-programming.

Fundamentally, the ability to tailor the system enables TIS to support virtually all Personal, Commercial, and Health lines of business on the same common platform.

TIS complementing products include modules such as:

·         Document management and imaging

·         Self Service and agent portals

·         Printout Design & Routing

·         Reports & Statistics

Our Total Insurance System can optionally be integrated with Content Manager (or similar products) for document management and archiving. The combination of Total Insurance System and products like Content Manager enables the incorporation of archiving, retrieval and viewing of documents, pictures and forms throughout the policy, claims and collection processes.

TIS integrated modules are available as a complete comprehensive enterprise solution or may be deployed as functional components according to the client's business needs.

American Family Insurance Company News

The American Family Insurance Company

The Company was founded in 1927, originally as the Farmers Mutual Insurance Company. At that time the company was started to provide auto insurance to farmers. Over the years, the company has expanded its product line to incorporate a family of insurance products including Life Insurance. Since 1963, Farmers Mutual Insurance Company has been known as the American Family Mutual Insurance Company to reflect the selling of Life Insurance and other insurance products to a wider clientele. The Company is headquartered in Madison, Wisconsin and operates in 19 other states nationwide. Last reported earnings for December 2007 in terms of Gross Revenue were: $6.867 billion. As its name implies the American Family Insurance Company is dedicated to family values. It offers a line of life insurance products that can help growing families build a secure future.

To meet these needs, the company offers a variety of Term and Permanent Life Insurance options including, Universal Life, and Whole Life. American Family's Term Life Insurance policies are among the most affordable in the country and are available from for 5, 10, 20 or 30 year terms. Permanent Life Insurance policies from American Family are more expensive, but build cash value, and remain in effect for the entire lifetime of the policyholder. American Family offers both Whole Life and Universal Life insurance polices, both are Permanent Life Insurance, but Universal Life affords the policy holder the ability to change premium and death benefit amounts over the life of the policy.

Education Claims Adjusters and Working Conditions

Education Claims Adjusters

Most Colleges have not yet recognized the need for a major specifically for those who wish to become Claims Adjusters, however there are some professional designations that have become prevalent among higher achievers in the field. For example, The American Institute for Chartered Property Casualty Underwriters awards the Chartered Property and Casualty Underwriter (CPCU) designation to experienced underwriters. Some Adjusters find that gaining these types of designations have been very advantageous to their careers. Many insurance companies prefer their claims adjusters to have a 4-year college degree preferably in business related fields, however having a degree in liberal arts is acceptable as well. There are times in which a person with a high school education will become a claims adjuster usually by promotion from within the claims department while serving as a customer service representative. Since there are no college majors for claims adjusters, many states require a state certification in order to practice as an adjuster. States also require that a certain number of continuing education credits for claims adjusters are earned each year in order to maintain their license. This continuing education is achieved by attending seminars and online training from different claim adjuster educational resources. One brief example of an educational seminar is where a group of claims adjusters will meet and discuss how to distinguish a false claim from a true claim.

Florida is one of the few states in the United States that has created specific designations for the licensing of insurance claims adjusters. The Accredited Claims Adjuster Designation, created by statute in coordination with Polk State College in 2002, allows an individual to obtain the Florida All Lines Independent or Company license, without taking the state licensing exam.

In some instances, such as with collapse insurance, courts have been involved in order to predicate a reasonable understanding of the guidelines of the policy in question. The meaning of terms such as "collapse" have undergone rigorous constitutional assessment. This leads to some ambiguity between what the law says and what is enforceable by modern mandates. The idea of "Structural Integrity" may not always be a universally understood term, but several articles have been published on the topic which suggests the field is evolving toward a continuity in terminology. For those interested in the claims adjustment field, in-depth study of legal principle is a necessity.

Most states require licensed adjusters to continue their education through a 'continuing education' requirement. Florida requires 24 hours of CE every two years. Texas Department of Insurance,Continuing Education

Working Conditions

Claims adjusters work long hours including work nights and weekends. Their work is appointment based and must revolve around the needs of clients.

Staff adjusters are those who work for a specific insurance company and usually have a company provided office from which to work. Independent and public claims adjusters often work from home. They receive their work assignments daily by fax machine, email, or by checking in to a designated website. Staff adjusters receive their assignments when they arrive at the office first thing in the morning. In the case of a severe natural disaster such as floods or tornadoes, or other catastrophe, independent and public adjusters travel to the area to supplement local adjusters. Often this requires the incoming adjuster's presence in the field for days to weeks at a time.

Catastrophe adjusters may spend days to weeks in a hotel or RV near the field of operations. Husband and wife teams often enjoy this type of work as it allows them to work and travel together to different parts of the country. Adjusters should become familiar with the reimbursement rules for each company with whom they work and track all expenses used in the line of work. Keep your receipts for everything as virtually all expenses, while deployed in the field, are tax deductible (confer with a qualified tax specialist for specific advice on what is and isn't deductible as an expense). A good software program or bookkeeping system is recommended.

Computer skills are essential, including keyboard skills. Most insurance companies store all documentation digitally. A digital camera is highly useful in documenting claims visually. Estimates, including auto and property losses, are prepared on computers connected to a corporate network. Laptop computers, pad, and other technologies make claims adjusting easier and consume less time. However, claims adjusting also requires a level of physical strength and stamina.

Property adjusters, for example, are often required to operate a 50-pound ladder and must stand, walk, kneel, crawl, and perform other physical demands as they investigate damaged property.

Education and training-Insurance Agents

 

Insurance sales agents- Education and training

For insurance sales agent jobs, most companies and independent agencies prefer to hire college graduates-especially those who have majored in business or economics. High school graduates are occasionally hired if they have proven sales ability or have been successful in other types of work. In fact, many entrants to insurance sales agent jobs transfer from other occupations. In selling commercial insurance, technical experience in a particular field can help sell policies to those in the same profession. As a result, new agents tend to be older than entrants in many other occupations.

College training may help agents grasp the technical aspects of insurance policies and the fundamentals and procedures of selling insurance. Many colleges and universities offer courses in insurance, and a few schools offer a bachelor’s degree in the field. College courses in finance, mathematics, accounting, economics, business law, marketing, and business administration enable insurance sales agents to understand how social and economic conditions relate to the insurance industry. Courses in psychology, sociology, and public speaking can prove useful in improving sales techniques. In addition, because computers provide instantaneous information on a wide variety of financial products and greatly improve agents’ efficiency, familiarity with computers and popular software packages has become very important.

Insurance sales agents must obtain a license in the States where they plan to do their selling. Separate licenses are required for agents to sell life and health insurance and property and casualty insurance. In most States, licenses are issued only to applicants who complete specified prelicensing courses and who pass State examinations covering insurance fundamentals and State insurance laws. As a result of the Gramm-Leach-Bliley Act of 1999, the industry is increasingly moving toward uniform State licensing standards and reciprocal licensing, allowing agents who earn a license in one State to become licensed in other States upon passing the appropriate courses and examination.

A number of organizations offer professional designation programs that certify one’s expertise in specialties such as life, health, and property and casualty insurance, as well as financial consulting. Although voluntary, such programs assure clients and employers that an agent has a thorough understanding of the relevant specialty. Agents are usually required to complete a specified number of hours of continuing education to retain their designation.
Employers also are placing greater emphasis on continuing professional education as the diversity of financial products sold by insurance agents increases. It is important for insurance agents to keep up to date on issues concerning clients. Changes in tax laws, government benefits programs, and other State and Federal regulations can affect the insurance needs of clients and the way in which agents conduct business. Agents can enhance their selling skills and broaden their knowledge of insurance and other financial services by taking courses at colleges and universities and by attending institutes, conferences, and seminars sponsored by insurance organizations. Most State licensing authorities also have mandatory continuing education requirements focusing on insurance laws, consumer protection, and the technical details of various insurance policies.

As the demand for financial products and financial planning increases, many insurance agents are choosing to gain the proper licensing and certification to sell securities and other financial products. Doing so, however, requires substantial study and passing an additional examination—either the Series 6 or Series 7 licensing exam, both of which are administered by the National Association of Securities Dealers (NASD). The Series 6 exam is for individuals who wish to sell only mutual funds and variable annuities, whereas the Series 7 exam is the main NASD series license that qualifies agents as general securities sales representatives. In addition, to further demonstrate competency in the area of financial planning, many agents find it worthwhile to earn the designation “Certified Financial Planner” or “Chartered Financial Consultant.”

Insurance sales agents should be flexible, enthusiastic, confident, disciplined, hard working, and willing to solve problems. They should communicate effectively and inspire customer confidence. Because they usually work without supervision, sales agents must be able to plan their time well and have the initiative to locate new clients.

An insurance sales agent who shows ability and leadership may become a sales manager in a local office. A few advance to agency superintendent or executive positions. However, many who have built up a good clientele prefer to remain in sales work. Some—particularly in the property and casualty field–establish their own independent agencies or brokerage firms.

How much Life Insurance agent Commission

A Life Insurance Agent Earn How Much Commission

To understand the commission structure, first it is good to know a little about the different types of life insurance. Term life insurance and cash-value life insurance policies (whole and universal life) are two of the basic types of life insurance policies. The main difference between these types is that term life insurance lasts for a certain term, such as 10, 20, or 30 years and whole life insurance lasts your entire life often with a cash value building up with it (your money is invested to build the cash value but the investments are not profitable and there are usually many hidden fees). Yes, to most the second option sounds much better but it is much more expensive and for this reason and the fact that most people don't need life insurance when they are elderly, for most people term life insurance is sufficient.

So, depending on the type of insurance you choose, the commissions can vary. Although every company is different, on average life insurance agents make about a 30-70% commission on term life insurance and around 90-105% commission on whole life products. Keep in mind that this is the first year commission on the premium and subsequent year commissions are much lower with an average of 6% per year for whole life products and 4% per year on term life insurance products. Some life insurance agents may also get a one time fee commission on top of the above commission just for starting a new life insurance policy.

Let's take a look at a real life example: Beth is married, 33, a non-smoker, and would like to purchase life insurance since she has 2 children. She has received quotes for a term and whole life insurance policy with both of them valued at $250,000. The term insurance policy is for 30 years and has a premium of $26.00 per month. Her whole life premium quote is $160 per month. So, the insurance agent would make $7.80-$13.00 per month for the first year of the term insurance and about $1.04 per month for the remaining 29 years. On the whole life policy the agent would make $144-$152 per month for the first year of the policy and about $9.60 per month for the remainder of the policy.

It is easy to see why insurance agents would rather sell whole life policies instead of term life policies. Since Beth only needs life insurance while her children are dependent on her, then 30 years is more than enough time for a life insurance policy. If Beth still wanted a usable cash value at the end of her insurance term, it would still be better for her to purchase the term life insurance policy and invest in mutual funds any remaining amount she would have paid for a whole life policy. Every situation is different and every life insurance company is different so it is good to do the research and talk with your life insurance agent about what is best for your situation.