Financial Protection with Insurance, Part 1 Table of Contents |
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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 |
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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 1st 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 |
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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 |
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United Insurance Educators, Inc.
PO BOX 1030
Eatonville, WA 98328