Here’s What You Should Know about Workers’ Compensation

Workers Compensation insurance is complex and confusing, especially for those who’ve just started their own businesses or are hiring employees for the first time.
Use these questions to determine if you need workers’ compensation insurance and to figure out how to obtain the best quotes:

Do you have employees?

If so, most states require you to obtain workers’ compensation insurance. workers’ compensation pays if a worker is injured on the job. Failure to comply may result in costly fines or lawsuits. Although requirements vary from state to state, once you hire your first employee, a business is required to obtain the insurance.

Do you conduct business across state lines?

While most states require Workers’ Compensation insurance for even one employee, other states allow up to five employees before requiring a small-business owner to obtain coverage. If you do business across state lines, you must comply with each state’s legal mandate.

Here are a few other facts to keep in mind:

•    Independent contractors are exempt – usually.

•    Married couples and family members might qualify. Unless a company is held in both names, hiring a family member often counts toward the number of employees.

•    The type of industry might matter. Some states have different rules for different types of industries, such as contractors and construction workers.

•    Keep an eye on subcontractors. Your business is ultimately responsible for any accidents or injuries that may take place on your property. Always verify that subcontractors are current on their own insurance coverage to avoid unwanted risk.

•    One of the best ways to keep Workers’ Compensation rates low is to stay safe and implement a written safety policy. By keeping claims low, it is possible to reduce premiums.

Coverage to Protect Your Business on the Rainiest of Days

Accidents happen – so savvy small-business owners plan for the unexpected by purchasing business umbrella insurance.

A business umbrella policy provides additional protection above and beyond the basics.
It’s different from a standard business liability policy that protects you up to a given amount.

For example, if your current liability policy provides $1 million of protection but you were successfully sued for more, the umbrella policy would cover the additional amount up to the policy limit.

Business umbrella policies are an excellent way to provide protection against costly lawsuits resulting from a wide variety of potential threats. Those threats can include things such as:

•    Driving accidents that result in multiple claims or extensive types of damage
•    Professional service errors resulting in inadvertent destruction or corruption of data
•    Unknown defects in workmanship or other errors that result in multiple lawsuits or claims
•    Other unanticipated events leading to a loss of life, property damage or other injuries

Many factors are involved in deciding on the appropriate level of business umbrella insurance to purchase, including the amount of existing coverage, industry, profitability and personal assets at stake.

Contact your agent to discuss options and obtain a quote for various coverage amounts.

How Much Should You Invest in an Annuity?

Funding your retirement dreams requires you to look at all the available investment options and structure a portfolio that provides regular income for as long as you need it.

Typically, that will involve a mix of stocks (so your assets can keep pace with inflation) and bonds (so you’ll have a steady income stream). You’ll probably also want to have some cash on hand. But annuities can also play an important role in a retirement portfolio.

An annuity is a contract between you and an insurance company. Essentially, you give a sum of money to the insurance company, and in exchange, it provides you with monthly payments for life.

How do you know how much to allocate to stocks, bonds, cash and annuities?

You may want to look at an annuity as a part of your bond allocation. That’s because allocating some of your nest egg to an immediate annuity creates a stream of income you can’t outlive, and that, in turn, will help you overcome “longevity risk,” which is the risk that you’ll run out of money before you die.

But deciding exactly how much of your nest egg to allocate to an annuity can be a real challenge. To do so, you’ll have to assess the long-term trend of the stock market, your tolerance for investment risk and the probability that you’ll burn through your assets earlier than you wish.

A significant allocation to an immediate annuity might be a good option when:
•    The stock market appears to be peaking or in the early stages of a decline;
•    Your tolerance for investment risk is low; or
•    The probability of exhausting your assets earlier than you wish is high.

Of course, how much you allocate to any asset, including an annuity, depends on your individual financial circumstances, which only you and your financial advisor know. We recommend that you contact him or her for more information.

Why Investors Are Looking at Immediate Annuities Right Now

Today’s volatile market environment has made immediate annuities an even better option for many investors – because they act like bonds but offer additional benefits.
An immediate annuity is a contract between you and an insurance company. Essentially, you give a sum of money to the insurance company, and in exchange, it provides you with monthly payments for life (or longer, depending on the specifics of your contract).  That’s similar to a bond, with some additional benefits.

Because immediate annuities are insurance products and only pay you income as long as you live, their yields are usually higher than comparable bonds. (For example, a 55-year-old Illinois woman who deposits $100,000 in an immediate annuity will receive $554 a month for life. That equates to a 6.6% yield.1 ) Additionally, you can pay an extra fee (or accept a lower monthly income) in exchange for annual inflation-indexed raises in income.

Immediate annuities are suitable for many retirees, because retirees generally have fixed, recurring expenses and want to avoid volatility in their investments. You probably want to avoid them if you’re under age 55 (because payouts are based on life expectancies – the younger you are, the less you get) or need your money to grow significantly.

Contact your financial advisor for information specific to your individual financial circumstances.

1Source:, as of 6/25/09. This is not intended as an investment recommendation.

What You Need to Know about Fire Insurance

Although most homeowners have fire insurance, few actually understand how it works. Fire insurance covers four basic areas.


This is the main structure or actual home or dwelling. In the event of a loss due to fire, the actual cash value minus deductibles would be covered. It is possible to purchase additional coverage for other hazards as well as replacement value and updates required to restore the home to the former value due to code or ordinance changes.


Other structures commonly included in a fire policy include a shed, a detached garage or even a greenhouse.

Personal Property

Personal property may or may not be covered, depending upon the type of fire policy purchased. In most cases, owner-occupied residential real estate would include some portion of personal property, whereas investment or rental dwellings would not.

Loss of Use

Loss of use assists homeowners in securing safe housing while the property is being restored or repaired after a covered loss. Remember, even if you are unable to live in the home, you will still be required to make mortgage payments; loss of use helps you avoid the possibility of making double payments for rent and mortgage in the event you are unable to occupy the dwelling. Investment properties may be eligible for additional protection that provides a replacement income in the event of a major loss or extensive repairs.

Additional Coverage

Remember, fire insurance may not cover all known perils, such as flood, earthquake or hurricane-related damages. If you live in an area prone to natural disasters, it is a good idea to speak with your agent about additional coverage options that provide complete protection. Otherwise, fire insurance is often an affordable policy choice, especially for those with second homes, investment properties or other structures that require basic coverage without a high price.

Just Bought a Car? Protect Yourself with Gap Insurance

Have you recently purchased a new or used vehicle, or have you recently refinanced a car loan? If so, the value of the loan may be higher than the actual cash value of the vehicle.

Gap insurance can provide the additional coverage required to pay the loan off in full should a total loss take place. Learn how to protect your financial future by answering a few questions and then speaking with your insurance agent to obtain a quote.

Have you recently purchased or refinanced a car, or are you within the first two years of a five-to-six-year car loan? If so, you might owe more than the car is worth. Gap insurance may prove to be a good way to protect your investment and allow you to make a fresh start in the event of a major accident or other covered loss.

Are you able to pay the difference between the current loan and actual cash value of the car – plus deductibles and co-payments – out of pocket? If not, gap insurance might be a good investment. For a fraction of the cost required to set aside funds required to pay off the balance of a car loan plus other out-of-pocket expenses, auto gap insurance reduces the risk associated with rapid depreciation.

What is the actual cash value of your auto? Ask your agent what the maximum amount of payoff would be in the event of a total loss for your car, then compare it to the current outstanding balance. Most people find gap insurance an essential yet affordable part of their financial planning.

How Short-Term Insurance Fills Gaps in Your Coverage

Whether you are between jobs, in the midst of relocating or waiting for coverage to begin at the workplace, short-term health insurance provides protection at a price you can afford.

Short-term health insurance typically provides coverage for 30-day increments, up to a total of three to six months maximum. Most preexisting conditions are excluded unless otherwise specified, but coverage can begin almost immediately. Each policy contains limits and exclusions, so check carefully to determine which one provides the coverage required. Some policies provide basic catastrophic coverage while others include benefits similar to those of a regular policy.

Short-term health insurance is a valuable tool for those who are between jobs, employees newly hired and awaiting benefits to begin, college students awaiting enrollment periods and others who need health insurance for a short period of time. Even those eligible for COBRA coverage often find short-term insurance coverage more affordable, especially if they are in relatively good health.

Purchasing a short-term health insurance policy is as simple as contacting your agent to fill out a brief questionnaire. Be prepared to provide your Social Security number, medical history and evidence of any preexisting conditions. Because short-term health insurance may have limits on the number of renewals, it is often wise to purchase a policy longer in duration than anticipated. You can always cancel and request a refund if needed.

Tips to Help You Choose Life Insurance

When it comes to life insurance, opinions tend to take precedence over the facts; term life insurance is viewed as affordable, while whole life insurance is considered secure.
Unfortunately, like most things in life, the actual situation is somewhat more complex.
Discover the truth about whole life insurance and whether or not it is the right move for your portfolio, based on these facts.

Permanent Coverage

Unlike term life insurance, whole life policies are permanent.

Once the initial term is completed, term life coverage might actually become more expensive, whereas whole life tends to become more competitively priced over the long run.

All or Nothing

Whole life insurance offers a death benefit just like term life but also provides additional protection in the form of “cash value.” Unlike a term life policy that pays nothing unless you die, whole life policies allow you to recapture or “cash in” a portion of what you invested over the years.

Additional Savings

Another attractive feature of whole life insurance is the ability to borrow from the policy in the event you need a loan. Because a portion of the money is set aside into a savings account, whole life policies are able to provide additional funds in the event of an emergency or even serious illness.

Bottom Line

Most experts agree, if you are short on cash or need a policy for less than 10 years, term life insurance is typically the most affordable route. For those who require more than 10 years of coverage or are able to invest a larger portion of their income up front, whole life often provides valuable protection over the long term. Ask your agent for a comparative price quote demonstrating the long-term cost as well as the benefit of each policy option; you might be surprised to learn how affordable whole life insurance is when used as a financial planning tool.

Keep Your Company Running with Business Insurance

One of the most frightening aspects of running your own business is the loss of income should the unexpected happen. Fortunately, small-business owners may be able to reduce the risk of financial hardship by purchasing business income insurance.

Business income insurance helps cover the cost of putting your business back together during a major interruption due to property destruction, interruption of sales or other production issues resulting from a covered loss.

Depending upon your type of business and the level of loss sustained, business income insurance may provide the cash you need to remain in operation or get back on your feet without breaking the bank. Combined with extra expense insurance, it may even be possible to cover both your normal routine operating costs and additional expenses, including investments required to keep your business in the black.

To purchase business income insurance, it’s a good idea to schedule an appointment with your insurance agent. Explain your desired level of coverage, including cash or other liquid reserves that could be used in the event of an emergency. Don’t forget to consider deductibles and other fees that must be paid in the event of a claim; it’s always better to have a little extra cash on hand than too little, especially during uncertain economic times.

Finally, keep in mind that business income insurance provides protection for needs related to the business itself – not individual living expenditures. If you don’t have at least six to twelve months of cash on hand for your personal reserves, be sure to ask your agent about coverage designed to help pay your monthly bills.

How to Save Money on Liability Coverage

An ounce of prevention is worth a pound of cure – especially when it comes to reducing the expense of business liability coverage.

With a little planning and preparation, it’s not as difficult as you might imagine. Simply follow these steps to start saving and minimizing the ever-rising rate increases associated with insuring your business.

1.    Put it into Writing: Make sure that every employee knows and understands what is expected and the proper protocol when dealing with equipment, injuries or other situations. Implement a chain of command and actually adhere to it.  Research shows few small business owners have written safety policies and even fewer put them into action. Update it frequently and keep a signed copy showing that each employee has read the policy upon being hired.

2.    Carefully Screen Applicants: The first step in maintaining a safe workplace is to hire safe employees. Employees with a history of substance abuse have been associated with everything from increased risk of injury to increased risk of driving accidents; worse, they typically have higher rates of tardiness and unemployment. Drug screening and testing may play an important role in minimizing the cost of liability insurance for your company. Ask your agent how much you can save by performing routine drug screening prior to hiring and/or testing for drugs in the event of an accident or injury during work hours.

3.    Comparison Shop: It’s always wise to comparison shop in order to obtain the best rates, but remember that rates alone aren’t enough if the company isn’t responsive to your needs. Take the time to compare price, service and satisfaction ratings by other business owners before making a final decision. It’s a good idea to review your policy at least once each year or more frequently should you encounter a major change in staffing or other business operations.

Are Annuities Safe in Today’s Market Environment?

Annuities are usually considered relatively safe investments – but in today’s environment, investors can’t help but wonder if that’s still true.

With an immediate annuity, you make a lump-sum payment to an insurance company. In exchange, the insurance company starts making a series of payments to you immediately. In regard to an annuity’s safety, there are two factors to consider:

The Safety of your Income Stream: Immediate annuities can be fixed or variable. With a fixed annuity, your money earns interest at rates set by the insurance company – which means that your income stream is safe in a volatile market environment. With a variable annuity, the insurance company puts your premiums into a “separate account,” and you decide how the company will invest those premiums – which could result in losses when times are bad. That’s why it’s important to consult an advisor about how the money in your variable annuity is invested.

The Safety of Your Insurance Company: With many financial companies failing, it’s understandable if you’re concerned about the health of your insurance company. The good news is, there’s probably little to worry about.

Your annuity is protected by a “legal reserve,” which means that your insurance company must maintain a reserve of money that equals the withdrawal value of every annuity account. If your insurance company fails and you have a fixed annuity, the payments will likely continue – though it’s possible for a court to determine that the initial interest rate is too high and lower it, which would reduce your payments. If you have a variable annuity, the payments will continue without modification, since the assets underlying your contract are separated out from the general assets of the insurance company.

So, we’d recommend that you not worry, as it’s improbable that your existing annuity will experience problems. Going forward, however, we recommend that you research the strength of any insurance company from which you’re considering buying an annuity. Your advisor can help you do so.

Retirement Planning: How Much Should You Invest in an Annuity?

Purchasing an annuity involves navigating a complex maze of information – including the question of how much you should invest.

An annuity is a contract with an insurance company. You make a lump-sum payment or a series of payments to the insurance company. Your money grows tax-deferred while it is in the annuity. Then, either immediately or at some point in the future, the insurance company starts making a series of payments to you at regular intervals.

There are many types of annuities. For example, with a fixed annuity, your money earns interest at rates set by the insurance company. With a variable annuity, the insurance company puts your premiums into a “separate account,” and you decide how the company will invest those premiums depending on how much risk you want to take.

How much you should invest in an annuity is primarily a product of how much you want the annuity to pay you. And that payout – also called a settlement option – depends on many factors.

For example, if you want a stream of income for life, you will have to estimate your life expectancy in order to determine how much to invest.

You will also have to estimate the expected returns from the annuity, which can be difficult if it is a variable annuity.

In fact, analyzing all these variables can be complicated. It’s wise to consult an advisor when considering how much to invest in an annuity.

Between Jobs? Get a Short-Term Health Policy

If you are in between jobs, one of the most important decisions you can make is how to obtain short-term insurance.

Many people make the mistake of thinking they can skip health insurance for a few months until landing another position. Unfortunately, it often makes a bad situation worse. Accidents, illness and other emergencies tend to crop up when you least expect them.

Fortunately, short-term health insurance options are available if you know where to look.

Compare Individual Coverage with COBRA: If you had health insurance through your employer, chances are you qualify for COBRA coverage. However, many people are surprised to find short-term health insurance for individuals to be more cost effective than COBRA, especially if they are in relatively good health without major pre-existing conditions. Don’t delay. Put in a call to your agent right away to determine the most cost-effective policy for your needs.

Select a Term: Short-term health insurance is typically sold in one-, three- and six-month increments , but there may be a limit on how many times you can renew the policy. It’s often a good idea to purchase for a longer period of time just to be on the safe side. You can always cancel the remainder of the policy if desired.

HAS: Depending upon your situation, it may also benefit you to consider a HSA, or Health Savings Account policy. Although not specifically short-term health insurance, these high-deductible policies are often quite affordable. They tend to benefit those in relatively good health who are able to afford the large out-of-pocket deductibles, as well as those with chronic health conditions who would normally experience large annual co-payments.

Additional Coverage: Don’t neglect add-on coverage just because you are in between jobs.

In fact, it might be more important than ever to make sure that you are covered against accidents or have available vision, dental and prescription drug benefits to rely upon.

Why Life Insurance Equals Love for Newlyweds

While it might not seem like the most romantic part of planning a future life of matrimonial bliss, it could be one of the most important. Life insurance is an essential part of creating a future together and making sure the one you love is provided for in any situation.

The first step in purchasing life insurance is to decide on the type of policy. There are essentially two primary types: whole life and term. Whole-life insurance tends to be more expensive but has a cash value that can offset a portion of the cost of the policy. Term life insurance is more affordable but has little to no cash value at the end of the term. Most term life insurance can be purchased for one to 45 years’ duration.

Young, healthy and Non-Smoking People Get the Best Rates. Lock in the best prices while you are able. As with most insurance policies, the time to buy is when you least expect to need it.

Buy a Policy for Everyone. Even if only one person is working while the other is in college or remains home with children, it’s important to plan ahead. Consider the cost of replacing the help the other person contributes. Don’t forget to purchase enough to replace the lost income over a lifetime, not just the current level of expenditures or earnings.

Understand Taxes and other Obligations. Life insurance provided by an employer is good, but a self-purchased policy is often better. Not only does it remain in effect if you switch jobs, but it’s not taxable in the event of a settlement.

How Careful Driving Pays Off with Lower Insurance Rates

Age has its advantages, especially when it comes to purchasing auto insurance. Understand the “how” and “why” of obtaining better value when buying auto insurance with this checklist.

Maturity Matters: Auto insurance is based upon statistical data derived from millions of policyholders. In general, drivers above the age of 25 tend to have fewer accidents and get fewer tickets than do younger drivers. If you recently reached 25, be sure to ask your agent about possible discounts.

Duration of Driving: Experience consists of the actual number of years on the road – especially accident-free periods of time. You typically require a consistent driving record of at least five to seven years without tickets or other infractions to qualify for better rates.

Drivers Education: It’s never too late to learn more about good driving habits, especially if you are younger or planning to purchase a motorcycle, ATV or other form of transportation. Demonstrate your level of dedication and preparation by investing in a driver’s education course to qualify for better rates.

Safe Drivers: Of course, safety pays, especially when it comes to obtaining the best auto insurance rates. With the cost of tickets higher than ever, allow yourself plenty of time to reach your destination and keep an eye on the little things like changing lanes and coming to a complete stop at all intersections. Not only will it reduce the risk of accidents or injury, but it will help keep your insurance rates low.

How Best to Insure Your Kids at College

Keeping your children safe has always been a top priority, so it should come as no surprise that things don’t change just because they are leaving home for the first time. Whether they move across town or across the nation, it’s important to perform an insurance checkup to weigh all available options. Ask your agent which is the best policy for your family.

Add-on. Typically the easiest solution is to extend your own homeowners policy to cover your children’s belongings. Keep in mind, however, that not every policy will provide full coverage, especially if they live in dorm rooms or other shared accommodations. Ask about riders or extended coverage policies that provide full protection.

Independent Coverage. While it may seem less affordable, independent coverage for your college student often is more cost effective than initially meets the eye. It only makes sense: your student owns less and often requires minimal coverage. Depending on the student’s assets, renters insurance may be all they need.

Umbrella Policy. Parents and students with a high net worth should explore adding an affordable umbrella policy to protect against liability claims. Since parents often assume legal responsibility for their college-aged children, it’s important to base the policy limits upon the assets of the parents – not the child – unless the child has significant assets in his or her own name, at which point a policy may become an imperative for both parties.

Extras. Don’t forget to review the limitations and restrictions. For example, it’s not uncommon to find that homeowners policies do not cover belongings in transit. You may need to purchase additional short-term insurance while your child is moving or a rider for expensive items such as electronics.

Tally the Total. Before making a final decision, take the time to obtain estimates for both scenarios. First ask your agent to quote adding coverage to your existing policy and then evaluate a comprehensive insurance package including liability coverage for your student while away from home. Remember, there are pros and cons to each, so research as much as you can.