Category Archives: Insurance

Are You Actually Covered? It’s Time to Evaluate Your Group Disability Insurance

If your company provides Employee Benefits, there’s a good chance you’re enrolled in a Group Disability Insurance plan. At CorpStrat, we’ve been in business for over three decades and have designed benefit programs for numerous companies from every industry under the sun. We’ve observed a common trend: many Group Disability programs are neglected and outdated. Many are auto-renew year over year without anyone taking a closer look. What many employers don’t realize is failing to regularly review and update your plan can leave your employees unprotected and put your company at risk of financial exposure.

Here’s why it’s crucial to reassess your plan:

1. Adaptation to Changing State Disability Limits

State disability limits have evolved over time, and it’s essential for companies with small group disability programs, particularly Short Term Disability (STD), to adjust accordingly. Failing to do so can result in over or underpayment of benefits, putting both employees and employers at risk. Regular reviews and updates ensure alignment with current regulations and prevent any financial discrepancies.

2. Addressing High-Income Individuals:

Most Group Disability plans come with limitations that may not adequately cover individuals earning $150,000 or more annually. If you’re a high-income earner who assumes you’re adequately insured, think again. Many plans cap out, leaving affluent employees vulnerable in the event of disability. Employers need to explore options to ensure comprehensive coverage for all employees, regardless of income level. This will help mitigate financial risks and provide peace of mind.

3. Reviewing Changes in Rates and Providers:

Rates for Group Disability plans fluctuate over time. These rates are influenced by various factors such as economic conditions and insurance provider policies. It’s imperative for companies with plans under providers like Unum, Principal, Provident, or others to periodically reassess their rates and coverage options. Failing to do so may result in missed opportunities for cost savings or better coverage. Regular reviews enable businesses to stay informed about changes in the market and make informed decisions to optimize their Group Disability insurance benefits.

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In conclusion, Group Disability insurance is a critical component of Employee Benefits, second only to medical insurance. Neglecting to review and update your plan can leave your employees vulnerable and expose your company to financial risks. By staying proactive and regularly assessing your Group Disability insurance, you can ensure comprehensive coverage that meets the evolving needs of your workforce.

At CorpStrat, we want to guide you through this process to help you secure the best possible protection for your employees and your business. Don’t overlook this vital aspect of your benefits package—reach out to us today for expert assistance.

The Crucial Role of Long-Term Care Insurance and Disability Insurance in Your Financial Plan

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In today’s ever-evolving job market, employers are beginning to recognize the value of offering long-term care insurance benefits to their employees. It’s not just about enticing and retaining top talent; it’s also about helping employees plan for their financial future with confidence. However, the concepts of long-term care insurance and disability insurance can sometimes be muddled, creating confusion in the minds of many.

Both of these benefits play indispensable roles in an individual’s comprehensive financial strategy. Long-term care insurance and disability insurance share some commonalities:

Group Coverage Accessibility: These benefits might be accessible to employees with limited or no health underwriting if offered through their workplace.
Health Underwriting for Individual Coverage: When opting for more comprehensive benefits as individual policies, both long-term care and disability insurance typically require health underwriting.
Integral Components of Financial Planning: Both these insurance types are integral components of a well-rounded financial plan, and their importance cannot be overstated.

Long-Term Care Insurance Helps Preserve Peace of Mind

Long-term care insurance stands as a safeguard against the financial strain incurred by those requiring assistance with daily activities due to chronic illness, disability, or aging. This type of insurance covers the costs associated with the care required, allowing policyholders to protect their assets and income. But why should someone invest in long-term care insurance?

Choice and Control: It provides individuals with the autonomy to choose the type, quality, and location of care – be it at home, in a facility, or within a community.
Relieving Loved Ones: It alleviates the burden on family members or friends who might otherwise need to provide caregiving, a task that can be emotionally draining for both parties.
Financial Security: Long-term care insurance helps avoid impoverishment or reliance on public programs like Medicaid, which often come with limited coverage and strict eligibility criteria.
Tax Benefits: Some policies offer tax incentives, providing additional motivation to invest in long-term care coverage.
Strategic Planning: It helps in strategic financial planning to ensure adequate resources and support are in place to meet long-term care needs.

Disability Insurance Helps Safeguard Your Livelihood

On the other hand, disability insurance steps in to protect individuals against a loss of income if they are unable to work due to a disability. This disability could result from an illness or injury that hampers the ability to perform essential work functions. Disability insurance typically replaces a portion of the policyholder’s base salary, usually ranging from 40% to 70%, up to a specific limit.

Why should one consider disability insurance?

Financial Protection: It offers financial security and peace of mind for those who depend on their income to support themselves and their families.
High Risk of Disability: The risk of a prolonged disability is more significant than most people realize. According to the Social Security Administration, over one in four 20-year-olds will experience a disability lasting 90 days or more before reaching 67.
Consequences of a Loss of Income: Without disability insurance, a loss of income due to a disability can have far-reaching consequences, including difficulty paying bills, saving for retirement, or maintaining a standard of living.

Both disability insurance and long-term care insurance are indispensable components of a comprehensive financial plan. While disability insurance ensures a continuation of income in the event of a covered condition that prevents work, long-term care insurance covers the costs of services like nursing home care, assisted living, or home health care – expenses typically not covered by health insurance or disability insurance.

For employers, offering both types of insurance can be a game-changer. It demonstrates a commitment to helping their teams prepare for various scenarios that could potentially lead to significant financial challenges down the road. By providing these vital insurance options, employers not only protect their workforce but also foster a more secure and productive work environment.

To explore how these insurance options can strengthen your financial planning or to discuss other strategies for a more financially secure future, don’t hesitate to reach out. Let’s start the conversation today. Your financial peace of mind is our priority.

Top 5 Benefits of Buy/Sell Agreements

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An often overlooked but important aspect of Executive Planning is the Buy/Sell Agreement. No one wants to think about the death of one of their business partners, it’s painful on both a personal and financial level. But it’s important to plan for the worst so that if that day comes, both their family members and your business remain protected and secure.

What is a Buy/Sell Agreement?

A Buy/Sell Agreement is basically a business prenup: it’s a legally binding contract that stipulates how a partner’s share of a business may be reassigned if that partner dies, divorces, or faces bankruptcy. Often the agreement stipulates that, in the event of a business partner’s death, their shares be sold to the remaining partners or to the partnership. As part of the agreement, business partners can buy life insurance policies on each of the owners. This way, if one of the owners dies, the remaining owners can use the payout from the life insurance policy to buy the deceased owner’s share of the business and make sure the deceased’s families are taken care of.

Top 5 Benefits of Setting up a Buy/Sell Agreement:

1. Peace of Mind

A Buy/Sell Agreement is great because it’s a simple way to secure the future of your business. It protects all partners in a business, whether they decide to leave the business or can no longer partake in the business.

2. An Easier Transition

In addition to offering business owners and partners peace of mind, a Buy/Sell Agreement also assures continuity for customers, creditors, and employees. Loosing a partner can be difficult enough, the last thing you want is to lose customers or assets in the transition process.

3. Promotes Equitable and Orderly Transfer of Wealth and Ownership

Having an effective Buy/Sell Agreement will help your company avoid messy inheritance issues or having an unexpected family member become a partner. It also guarantees the family a buyer for the assets which really help ensure the family is taken care in paying estate debts, expenses, and taxes.

4. Inexpensive Way to Protect your Company

Setting up a Buy-Sell Agreement is affordable and simple. Even if everything goes great and there are no unexpected deaths, you’re not losing money by setting one up and it can even offer tax advantages. However, if the worst does happens, having one can save everyone involved a great deal of time, money, and emotional heartache. To us, it’s a no-brainer to set one up.

5. Easy to Do When All Partners Are Healthy

Since a Buy/Sell Agreement involves taking out life insurance plans, the younger and healthier every partner is, the easier it will be to get an affordable life insurance policy. If you try to procure a plan after one of your partners is diagnosed with a terminal illness, you may not be able to get a plan at all.

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Need help setting up a Buy/Sell Agreement? We can help you with that. Contact us at marketing@corpstrat.com today!

Importance of Insurance Premiums During COVID-19

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During these unprecedented times, business owners and professionals are becoming increasingly concerned about cash flow. No entity or individual is immune to the economic disruption caused by the COVID-19 crisis. Today we bring you some of our thoughts on what’s happening on the insurance side of this pandemic.

Current State of Health Insurance

To date, we haven’t seen much from insurance companies in terms of extending payments and/or granting relief. Some carriers like Kaiser have announced their offering of extended grace periods for employer groups. Then there are some life insurers who have issued no-lapse statements while Blue Shield has agreed to grant employers some relief on their April premiums. There are also many carriers who haven’t released any statements to address this issue.

Insurance companies depend on premium revenues to support their actuarial assumptions and reserves. They don’t have systems in place to accommodate a mass change in premiums – even if such programs existed, they aren’t anticipated to abate any premiums, but rather simply extend them.

With this in mind, it is now more critical than ever to have some level of coverage in place for your health insurance, life insurance, and/or disability insurance.

We realize this is easier said than done for many. Employers are currently looking at their April billing and wondering to themselves, “Where is the relief for this payment? What do I do?”

From our experience, insurance companies are not likely to forgive any payments. Deferring only adds a larger amount to any subsequent obligation to pay future premiums.

While auto and equipment leasing are extending payments, some landlords providing flexibility on rent, and some utility companies are granting relief on tenants’ payments, insurance companies generally lag when it comes to consumer-centric thinking.

What Business Owners Should Do

CorpStrat believes in taking a pragmatic approach, in that the essence of insurance is that it must be in good standing in times like this when one’s coverage is needed the most.

If you are a business owner, make sure to explore the SBA loan resources and apply for opportunities that will best help you preserve your benefits packages.

Some other tips from CorpStrat:

Try your best to keep all insurance payments as current as possible
Work with your broker to ask if your carrier has any “unpublished” considerations and contact us for guidance on any issue

We hope you found this helpful during these challenging, uncertain times. Contact the CorpStrat team if you need guidance on organizing your insurance premiums.

The Secret Behind Disneyland

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Life Insurance Policy

Want to know the secret of how Walt Disney started Disneyland? After being turned down by his bank for a basic business loan, Disney turned to life insurance to finance his dream of opening a theme park. The proceeds from his life insurance policy were used to open Disneyland, “The Happiest Place on Earth.”

But how did this work? His life insurance policy basically accumulated cash value and he was able to withdraw this money as a policy loan. This accumulated value was tax-free and was used by Disney to create a tax-free income.

So, what exactly was this asset Disney used?

In today’s term, this asset is called the Indexed Universal Life Insurance (IUL). An IUL is a type of cash value life insurance policy that has both death benefits and an accumulation element. Rather than placing investments in the market where it could be lost, investments in an IUL are put into a strategy that mirrors an index like the S&P 500, allowing the participant to realize most of the gains in the market. These gains are then locked in to protect against potential losses.

Basically, this allows for people to invest in the market without taking losses, which makes IULs appealing to professionals and business owners. Another benefit is that it allows cash value within the policy to grow tax-free. Since IULs are funded with post-tax dollars, clients can withdraw money tax-free and, essentially, have a tax-free income at a future date.

Compared to IRA or a 401(k), IULs are more flexible. There is no limit on how much money can be added annually, as long as the added cash doesn’t create a Modified Endowment Contract (MEC), which is taxable. There are also no restrictions on when the money can be taken out, unlike the IRA.

As a life insurance policy, IULs provide financial security to the family in the event of death of disability. In an event of the policyholder’s death, the death benefits are received tax-free in a lump sum by the beneficiary.

IULs are perfect for those who want to experience the gains of the market without facing the losses. They are perfect comprehensive and flexible wealth building options that can be tailored to each person’s financial plan.

Want to know more about IULs and other life insurance policies? Contact CorpStrat to learn more about how our 21^st Century strategies can revolutionize your life and business.