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April 2016

When Your Level Term Life Policy is Expiring

Remember when you bought that level term life policy back in your 30s or 40s? It’s hard to believe a decade or two has passed and now it’s time to assess your options. Here’s what you should do if you find yourself in this situation: Shutterstock_57416113

  1. Determine the state of your health. You’re more than likely going to have to go through underwriting to secure a new policy. Many term life policies will allow you to continue your current coverage at higher rates that often increase with your age (referred to as the “ultimate rate”). If your health has declined and you don’t believe you could pass underwriting again, your best bet may be to pay the ultimate rate. If you’re not sure if your health conditions would cause an issue, it’s worth a call to your insurance broker to ask.
  1. Assess how long you need coverage for. How many years are left on your mortgage? Will you be paying for student loans for yourself or your children? Depending on your age and health, applying for a new level term might be the best bet. Premiums on traditional life insurance policies (annual renewable term life) increase with your age and can be expensive to secure after a certain age. With level term life coverage, you pay the same amount annually over the life of the loan.
  1. Look into a 50+ or senior life policy that is specifically designed for people in your situation. Don’t be put off by the name. What matters is if the policy is a fit for what you need it to do…and that is to cover your liabilities for the amount of time you require.
  1. Call your broker. Life insurance can be pretty complicated and there are lots of different types of policies. It’s hard to find time to make that call, but ten minutes of your time could save you a substantial amount of money on your policy.

Looking for a Solution to Loss of Association Member Engagement?

Many associations that provide sponsored member insurance programs are being forced to take a hard look at the relevancy of the programs they currently offer. Is a low perceived value the cause of the lack of member engagement? Or is the lack of program participation due to the benefits not being communicated in effective ways, across multiple channels - including interactive mobile applications? If your current member benefits program still relies on direct mail as the primary marketing method, I have some buggy whips I want to sell you.   

When the last time your association-sponsored member benefits program was thoroughly evaluated?  Do you know if the current benefit portfolio provides benefits your members want and need at a cost they couldn’t get without association membership? Shutterstock_170532026

Conducting a formal “Request for Proposal” process can be time-consuming and may come with added consulting expenses. Some association executives may question why they should go through a bid process when they’ve had the same insurance carrier and/or broker/administrator for the last twenty years with no problems.

Today, associations are being forced to justify the cost of membership as retention and recruitment efforts are becoming more challenging. The ability to offer relevant benefits at costs that are below those offered in the broad market  go a long way towards ensuring continuity of your dues revenue base.

Too many association-sponsored insurance programs have been operating on “autopilot” for years. Often, these programs have failed to keep pace with new product innovation, marketing, and customer service technology. Improved mortality and morbidity trends have also had a positive impact on benefits and related cost. Are your members getting the best possible value with programs that haven’t been improved for many years?

In trying to decide whether it makes sense for your association to send your program out to bid, you should consider the following:

Association insurance carriers, and broker/administrators are operating in an extremely competitive market. We haven’t seen a program that has gone out to bid in the last two years that didn’t significantly improve the benefit/cost ratio of coverage. At the same time, association sponsorship royalties have increased.

Most association programs that go through a bid process, whether they change insurance carriers or not, will see improvements in the products being offered. These improvements may include benefit enhancements, rate reductions, or a combination of both.

Association programs that go through a bid process and elect to change insurance carriers may be able to receive large transfer payments.

Associations that regularly bid their programs are able to validate that their current benefit portfolio is relevant and current with competitive trends in the marketplace.

We feel any association that sponsors a member insurance program has a fiduciary responsibility to periodically shop the marketplace. The time and expense of conducting a bid process is easily offset, in the majority of cases, by the program improvements gained.

We, at USI Affinity, are happy to share with you our ideas on member benefits and how royalties might help you become less reliant on dues revenue to survive. With competition in the association insurance market at an all-time high, we believe the time is right to shop your business.

Call Dennis Mulligan for more information at 610-537-1385 or email Dennis.Mulligan@usiaffinity.com


Malpractice Insurance FAQs for Solo Practitioners

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There is no law that says attorneys have to obtain legal malpractice insurance. But a solo attorney’s potential exposure, given his practice area, will likely prompt him to consider what a malpractice lawsuit might potentially cost him in terms of damages and defense costs, and whether he wants to buy protection against that risk.

LPL FAQs for Solo Practitioners

Solo attorneys typically have a number of questions regarding lawyers professional liability (LPL) insurance coverage, including:

Are there practice areas that are generally riskier than others?

 Yes. Some of the higher risk areas may include transactions involving securities, intellectual property, trusts, estates, plaintiff’s personal injury cases, and loan modifications.

How much LPL coverage do I need?

This answer will be different for every lawyer and depends on the number and type of cases handled and the potential amount of damages and defense costs, should a claim arise. A solo practitioner should consider the nature and extent of both his business and personal assets, since if he is found liable for malpractice, his personal assets may potentially be subject to collection under a judgment.

What is a “retro date?”

The retro date is the date after which the allegedly negligent act must have occurred. This date should, if possible, extend back to the date you began practicing law, but at a minimum cover the entire time period of your work at your previous firm. However, if your prior firm dissolves or ceases carrying LPL coverage, you will no longer have coverage for your prior acts and you should consider purchasing Extended Reporting Coverage, also known as tail coverage.

Do LPL policies cover pro bono work?

If pro bono work is done under the purview of the named insured, it is most likely covered. Sometimes pro bono work is also covered under a policy purchased by the pro bono association (a volunteer lawyer society or a bar association).

What specific risk management issues do solo attorneys face?

The biggest risk might be the failure to know to avoid risks. Many attorneys who have worked in a firm setting for a long period of time have never had to concern themselves with risk management issues like trust accounting, fee sharing agreements, client development, advertising, and conflicts of interest, which were all likely taken care of by someone else.

A solo attorney should be extremely proactive in asking questions about the proper way to conduct their law practice, before issues arise.


The Four Part Disability Income Review for Attorneys

One of the exposures not often accounted for by small firms is the possibility of a key player suffering a disability. In a firm of 4 or 5, our experience tells us that one of you is likely to suffer a disability. If you’re ready to tackle this issue, we’ve outlined our Four Part Disability Income Review for Attorneys below:

  1. Determine the Scope of the Exposure:  Review your income, not simply for the past year, but determine a rolling average for the past three years, along with partner distributions or other sources which could be impacted by a disability.  In addition, for partners in the early stages of their career, thought should be given to anticipated increases in income in the future.  Considerations should also be given to retirement contributions the partner is making, which also would be impacted by a disability.
  1. Assess Existing Resources: Typically, individuals do not have enough savings to cover an extended disability.  However, a careful review of existing disability coverage along with social security can provide a benefit baseline and define the income protection gap which needs to be addressed. 
  1. Develop a Disability Protection Solution: Once the income protection gap is defined, there are a number of vehicles that can be utilized to solve the gap, including individual disability policies, association disability plans, even upgrading the existing employee group plan. Plus, if three or more partners are interested in securing disability protection at the same time, additional benefits can be obtained such as premium discounts or guaranteed benefit levels.  This phase also involves ensuring that there is an “own-occupation” definition of disability for which one receives benefits when they are unable to perform the duties of their occupation (as opposed to any occupation), and evaluating the scope of residual or partial benefits, COLA riders (which protect the purchasing power of your benefits), Future Purchase Options riders (which guarantee your insurability when you want to increase your benefits as your income increases), Retirement Contribution riders and other riders to maximize your protection. Shutterstock_270042584 
  1. Integrate your solution with the Partnership or Corporate agreements. An important step is to make sure that you understand how your firm’s agreements treat partner / principal disability.  In certain situations, it might be appropriate to evaluate Buy/Sell Disability protection which can assist the firm in buying out a partner’s interest in the case of a disability.

If you’d like help with this process, please fill out the form on this blog or call 1-855-874-0816.