Designing Our Future

Table of Contents

Chapter 1: The Future is Nearer than You Think

5

 

      Knowledgeable Agents

5

 

      Acquiring Assets

6

 

      Estate Planning

7

 

      Wasted Dollars

9

 

      Wishing our Way Into Retirement

10

 

      Goal Setting

11

 

      Accurate Information Required

13

 

           Wealth Distribution

15

 

           Estate Control

15

 

      All Estates Need a Will

18

 

      Determining an Asset’s Value

22

 

           Income Capitalization

24

 

           Reproduction-Cost-Minus-Depreciation

24

 

           Comparative Sales

24

 

      Determining the Dollar Amount

24

 

Chapter 2: Will You Outlive Your Assets?

27

 

      Buying Power

27

 

      The Federal Reserve

28

 

      Permanent and Variable Portfolios

30

 

Chapter 3: Using Financial Tools

36

 

      The First Step: Record Keeping

37

 

      Establishing a Budget

38

 

      What Records and Where?

39

 

      Wills

44

 

Chapter 4: Trusts

47

 

      Defining a Trust

48

 

      Irrevocable and Revocable Trusts

50

 

           Irrevocable Trusts

50

 

           Revocable Trusts

52

 

           Present Interest Trusts

57

 

           Crummey Trusts

58

 

           Totten Trusts

59

 

           Life Insurance Trusts

59

 

           Grantor Retained Annuity Trusts (GRAT)

61

 

      Money Management Tool

62

 

           Probate Considerations

62

 

      Trust Language

70

 

           Trust Creator & Trust Types

71

 

           Trust Distribution for Minors

72

 

      Selecting Trustees

73

 

      Probate Protection

74

 

           Proper Trust Use

74

 

      Not Everyone Needs A trust

76

 

      Taxation

87

 

           Estate Taxes & Inheritance Taxes

88

 

           Bankruptcy Protection

89

 

           Medicaid Qualification

89

 

      Avoiding Probate Proceedings

90

 

           Estate Privacy

90

 

           Generation Skipping

91

 

           Asset Management, Conservation, and Distribution

92

 

      In Conclusion

95

 

Chapter 5: Life Insurance

96

 

      How Much is Enough?

97

 

      The Life Insurance Trust

102

 

      Term or Cash Value?

103

 

           Term Insurance

104

 

           Cash Value Insurance

106

 

           Whole Life Policies

107

 

           Universal Life Policies

109

 

           Variable Life Policies

109

 

           Endowment Life Policies

110

 

           Survivorship Life Policies

111

 

           Single Premium Whole Life Policies

111

 

      Policy Options

112

 

           Nonforfeiture Options & Disability Waivers

113

 

           Cash Values

114

 

      Insuring the Life of a Child

114

 

      The Agent’s Role

115

 

Chapter 6: Annuities

117

 

      Retirement Risks

117

 

      A Payment of Money

118

 

      Annuity History

120

 

      Do Annuities Make Sense?

124

 

           Commission Surrender Periods

126

 

      An Estate and Retirement Planning Tool

127

 

      Annuity Facts

128

 

      Tax Deferred Status

130

 

           Time is Money

131

 

      Periodic Withdrawals

132

 

      Annuitization Options

134

 

      Annuity Models

137

 

           Accumulation Deferred Annuities

137

 

           Single Pay Immediate Annuities

137

 

           Variable Annuities

137

 

      Investment and Insurance Component

138

 

      The Variable Annuity’s Introduction

140

 

           Wrap-Around Annuities

140

 

           CD-Like Annuities

141

 

      Retirement Advantages

141

 

      Estate Advantages

142

 

      Competition

146

 

      Investment Expenses and Loads

150

 

      Similarities

153

 

Chapter 7: Retirement Funding

157

 

      Pension Plan Players

158

 

      How Much Money Will You Need?

162

 

      Inflation

165

 

      Company Sponsored Pension Plans

167

 

      Defined Benefit Plans

169

 

      Defined Contribution Plans

172

 

      401(k) Plans

175

 

      Collecting Pension Funds

176

 

      At Retirement

183

 

Chapter 8: Other Financial Options

188

 

      Individual Retirement Accounts (IRA)

188

 

      Keogh Plans

189

 

      Simplified Employees Pension Plan

190

 

      Incorporation

191

 

      S-Corporations

196

 

      Estate Planning Tools

197

 

      When Death Occurs

200

 

Chapter 9: Ethics and Other Myths

209

 

      Industry Knowledge

212

 

      Due Diligence

216

 

           Competency

216

 

           Understanding the Products

217

 

           Catastrophic Loss on a Large Scale

219

 

      Insurer Rating Companies

221

 

           Business Profile

223

 

           Financial Profile

223

 

           Operating Environment

224

 

           Market Brand & Position

225

 

      Lines in Business as a Risk Factor

226

 

      Insurer Assets

226

 

      Gross Underwriting Leverage

228

 

      Financial Flexibility

229

 

      Corporate Governance

231

 

      Special Rating Situations

231

 

      Insurers & Climate Change

232

 

      Continuing Education Requirements

235

 

Agents Personal Responsibility

236

 

Professional Representation

239

 

                Appointments

239

 

    Getting in the Door

241

 

            Making the Sale (Or Not)

243

 

                Product Over Commission

244

 

    Organization

245

 

    Full Disclosure      

246

 

    Product Replacement

246

 

    Policy Application

247

 

    Product Delivery

248

 

Yearly Reviews

249

 

Revisiting The Sale

250

 

     Does the Product Still Meet Their Goals

250

 

Errors & Omissions Insurance                

251

 

     Agent Liability Risk

251

 

Giving Our Clients What Is Due Them

255

 

     Criteria

257

 

                 Claims-Made Policies & Occurrence Policies

258

 

 Unfair Trade Practices Act

261

 

    Legislative History

261

 

Insurance Activities Other than Sales

265

 

Financial Activities Other than Insurance

266

 

Nondiscrimination

267

 

           Limitation & Developing Legislations

267

 

           Legislation

268

 

                    Key Points

270

 

Is it Still Relevant?

272

 

                    Redlining & Blacklists

275

 

                    Reverse Redlining

276

 

           Section 5. Favored Agent or Insurer, Coercion of Debtor

277

 

           Section 7. Defined and Undefined Practices

278

 

Section 8. Cease and Desist and Penalty Orders

279

 

           Section 9. Judicial Review of Order

280

 

Section 11. Penalty for Violation of Cease-and-Desist       

280

 

           Section 12. Regulations

280

 

         Defining Unfair Trade Practices

281

 

Section 4: G. Unfair Discrimination

283

 

Rebates

287

 

Marketing & Performance Records

288

 

Failure to Maintain Complaint Procedures

288

 

Misrepresentation on Insurance Applications

289

 

Unfair Financial Planning Practices

289

 

Failure to File or Certify LTC Sales

291

 

Failure to Provide Claims History

291

 

Favored Agent or Insurer

292

 

 

 

 

United Insurance Educators, Inc.

8213 – 352nd Street East

Eatonville, Washington 98328-8638

(253) 846-1155