Disability insurance update

Article Abstract:

Disability insurance premiums are starting to rise even though they have become more restrictive in terms of definition of disability and payments. It is essential that underwriters review policies to make sure there is no limit to the benefit payment period. Because many plans cover only a small portion of regular income and are loaded with restrictions it may be wise to use a wraparound plan that would incorporate cost-of-living increases and extend the benefits of the regular policy. Combination disability programs offer many of the same advantages but are more limited in terms of coverage length and criteria.

Analysis, Work environment, AIDS patients, AIDS (Disease), Insurance, Disability insurance, AIDS (Disease) in the workplace

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Estate planning update

Article Abstract:

Two estate planning techniques to avoid prohibitive tax liabilities involve stock purchased through stock options and perpetuity trusts. Stock option purchases generally have low bases and so substantially impact income tax liability but, if the stock is jointly held and then sold at the death of the executive or spouse, the tax consequences are halved because the stock receives a step-up in basis for 1/2 the stock's value. Perpetuity trusts can avoid inheritance taxes by keeping the money in a trust but allowing the beneficiary to become the trustee and therefore have complete access.

Methods, Management, Taxation, Stock options, Estate planning, Perpetuities, Rule against perpetuities

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A discussion of Risk Based Capital

Article Abstract:

The National Assn of Insurance Commissioners adopted a Risk Based Capital standard for rating life insurance companies' financial viability which compares the amount of capital and the risk level of investments. This rating is confidential but companies may use their rating to promote their stability in advertising. Each state must approve the standard before it will be applied to the state-based companies but acceptance is expected. States will be responsible for the regulation of companies not meeting the capital standard but few companies are expected to rank lower than 1.00.

Standards, Insurance industry, National Association of Insurance Commissioners

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