Financial Protection with Insurance, Part 1 Table of Contents
Chapter 1: Creating Retirement Protection	1
Covid-19 Creates Difficult Economic Times	1
Inflation Affects Retirement Vehicles	2
Inflation Affects Every Financial Vehicle on Earth	3
Utilizing Insurance Products for Growth	4
Insufficient Planning Haunts Retirees	5
Insurance and Longevity	6
Retiring with Insufficient Retirement Funding	8
Creating Income During Retirement	10
Rising COVID Medical Costs & the Effects on Insurance	11
COVID-19 Appears in 2020 Creating Additional Costs	11
High Medical Costs in Normal Times	13
Long-Term Care Insurance Policies	18
Selecting the Appropriate Insurance Policy	20
Preserving Retirement Plans	21
Debt Can Affect the Purchase of Insurance	23
Debt Affects Insurance Rates	25
Saving for the Future	26
An Aging Nation Impacts Insurance & Governments	29
Buying the Right Insurance Products	33
Compounding Power is Important	35
Retirement Income	35
Social Security Benefits/Age of Collection	36
Supplementing Income with Annuities & Personal Savings	37
Women Live Poorer in Retirement than Men	37
Primary Insurance Amount (PIA)	39
PIA Definition	39
PIA Formula Bend Points	39
Benefit Based on PIA and Age	39
Average Indexed Monthly Earnings	39
Summary	40
Monthly Benefit Amounts	40
Old Computing Methods	41
Average Indexed Monthly Earnings	41
Indexing Yearly Income	41
Computation	41
Supplementing Employer Pension Benefits	42
Tax Deferred Retirement Benefits	43
Individual Savings	43
Managing Income in Retirement	44
Pre-Retirement Income	44
Retirement Shortfalls	45
Getting a Return on Savings	47
Receiving Income from Investment Vehicles	49
Taxation on IRA’s, Annuities and More	49
Withdrawals Prior to Age 59 ½	50
The Age 55 Penalty Exception	50
The Five-Year Rule for 72(t) Payments	51
Chapter 2: Why does the SECURE Act Apply to Insurance Producers?	52
SECURE Act of 2019	54
Public Law 116-124	54
H.R. 1994 AN ACT	56
SEC 1 Short Title, Etc.	56
Title I: Expanding Retirement Savings	57
SEC 101 Multiple Employer Plans	57
SEC 102 Increase In 10% Cap	65
SEC 103 Rules Relating to Election	65
SEC 104 Increase in Credit Limitation	67
SEC 105 Small Employer Auto Enroll Credit	67
SEC 45T Auto-Enroll Option	67
SEC 106 Taxable Non-Tuition Fellowship	68
SEC 107 Repeal of Maximum Age for IRA	68
SEC 108 Qualified Employer Plans	69
SEC 109 Portability of Lifetime Income Options	69
SEC 110 Treatment of Custodial Accounts	72
SEC 111 Clarification of Retirement Income	73
SEC 112 Qualified Cash or Deferred	73
SEC 113 Penalty-Free Withdrawals	75
SEC 114 Increase in Age for Distributions	77
Editor’s Note	77
SEC 115 Special Rules for Minimum Funding Standards	78
SEC 116 Treating Excluded Difficulty of Care Payment	82
Title II: Administrative Improvements	84
SEC 201 Filing Due Date for Year	84
SEC 202 Combined Annual Report	84
SEC 203 Disclosure Regarding Lifetime Income	85
SEC 204 Fiduciary Safe Harbor	87
SEC 205 Modification of Rules	90
SEC 206 Modification of PBGC Premiums	97
Title III: Other Benefits	98
SEC 301 Benefits for some 1^st Responders	98
SEC 302 Expansion of Section 529 Plans	98
Title IV: Revenue Provisions	99
SEC 401 Modification of Distribution Rules	99
SEC 402 Increase in Penalty for Failure to File	103
SEC 403 Increase in Penalties for Failure to File Retirement Plan Returns	103
SEC 404 Increase Information Sharing	104
Title V: Tax Relief for Certain Children	105
SEC 501 Modification of Rules	105
Editor’s Note	105
Chapter 3: Life Insurance	107
Policy Provisions	108
Defining the Contract	108
Policy Application	109
Policy Ownership	110
Preventing Money Laundering Activities	110
Terrorism Produces Insurer Risk	110
Financial Action Task Force (FATF)	111
Legal Requirements Adopted	112
The USA Patriot Act	112
Broker-Dealer Requirements	114
AML Program Requirements	115
Know Your Customer (KYC)	118
Compliance	118
Suspicious Activity Reports Filing Requirements	118
A Change in Thinking	119
A Global Problem	120
Covered Products	122
Nine Identified Money Laundering (ML) Methods	123
1. Single Premium Life Insurance Contracts	123
2. Early Policy Redemption	124
3. Claim Fraud	124
4. Cash Premium Payments	124
5. “Free Look” Periods	124
Example	125
6. Collusion	125
7. Third-Party Premium Payments	125
8. Risks Involved in International Transactions	125
9. Fraudulent Customers	126
Money Laundering Indicators Not Unique to Insurance Products	126
1. Large One-Off Cash Transactions	126
2. Use of False Addresses	126
3. Overseas Business from Higher Risk Area	127
Policyholder Characteristics and Behaviors	127
A Known Criminal or Criminal Associate or Relative	129
Erratic or Abnormal Use of Policies	129
High Premiums Compared to Verifiable Income	129
Lack of Concern for Charges or Costs	130
Undue Interest in Payout Options	130
Change of Beneficiary	130
Insurance on Assets Inconsistent with Income	130
Early of Suspicions Claims	131
Product Characteristics and Maintenance	132
1. Policy Payments from Third Parties	133
2. Multiple Sources of Funds to Pay Premiums	133
3. Significant Premium Top-Ups to a Policy	133
4. Overpayment of Premium	133
5. Using an Insurer like a Bank	133
6. Early Redemption	134
7. Unusually High Commission Charges	134
Customer Due Diligence (CDD)	134
Policy Features and Provisions	136
Premiums	137
Policy Options	137
Nonforfeiture Options	137
Dividend Options	138
Settlement Options	138
State Required Provisions	140
Incontestability	141
Misstatements in the Application	141
Deferment Clause	142
Nonforfeiture	142
Loan Values	142
Grace Periods and Reinstatement	143
Allowed Policy Provisions	144
Suicide	144
Aviation	144
War	144
General Provisions	145
Deduction of Indebtedness	145
Change of Beneficiary	145
Assignment	146
Beneficiary Designation	146
Policy Payments	148
Cash Values	148
Dividends	149
Proceeds	149
Special Clauses	150
Contract Use	152
Group Insurance Principles	152
Eligible Groups	152
Single-Employer Groups	152
Multiple Employer Trusts (METS)	152
Unions, Association, and Other Groups	153
Creditor-Debtor Groups	153
Underwriting Advantages	154
Keeping Current with Business Needs	155
The Informed Consumer	156
Providing a Quote	156
The Contract Participants	158
The Insurer	158
The Insured	158
Insurance Contract	159
Underwriting and Rating	159
Finance	160
A Public Interest	160
Key Person Insurance	161
Buy-and-Sell Agreements	162
The Key Person Principle	163
Insurable Interest for Life Insurance	163
Example	164
Disability Insurance on Key Employees	165
Example	165
The Small Company’s Exposure	167
Loss of the Small Business Owner	167
Planning Ahead for Death or Disability	171
Insuring Entities	171
Private and Government Insurance	171
Private Insurers	171
Life Insurance	172
Property and Liability Insurance	173
Government Insurance	173
Voluntary Government Insurance	173
Compulsory Government Insurance	174
Mutual Companies	174
Assessment Mutuals	175
Non-assessable Mutuals	177
Conversions	177
Reciprocal or Inter-Insurer Associations	178
Stock and Mutual Underwriting	179
Factory Mutuals	180
Superior Agents and Brokers	181

United Insurance Educators, Inc.

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