U.S. Insurance Regulators Issue Consumer Alert on Death Benefits

From Bloomberg.com:

State insurance regulators, under pressure to improve disclosure of death-benefit payment options, issued a consumer alert about the industry practice of retaining funds rather than paying them in a lump sum.

“You may be able to earn a higher rate of interest on the life insurance proceeds if you select a different payout option,” the National Association of Insurance Commissioners said in the alert. “While the documents you receive might look like a checkbook, it might actually be drafts, which are similar to checks, but different in some ways.”

The alert was issued after an NAIC panel met yesterday in Seattle to review retained-asset accounts. The regulators created the panel after Bloomberg Markets magazine reported in July that insurers profit by holding and investing $28 billion owed to 1 million beneficiaries.

“Disclosure is paramount,” said Thomas R. Sullivan, co- chair of the working group, at its first meeting yesterday. “That seems to be the central issue.”

Retained-asset accounts let insurers keep proceeds of a life insurance policy in their general corporate accounts, earning investment income, while providing the beneficiary with a checkbook-like account that’s not insured by the Federal Deposit Insurance Corp. The NAIC heard testimony from Peter Gallanis of the National Organization of Life & Health Insurance Guaranty Associations that the accounts are covered by state insurance backstops. While beneficiaries can draw drafts on the funds, they don’t always clear as easily as checks.

5 Tips on Obtaining Insurance for your Franchise Business

Earlier in the week, FranchiseBusinessReview.com posted another guest blog from the Roni Deutch Tax Center. This month’s guest blog explains five tips on finding the best insurance policy for a franchised business. You can check out a few of the tips below, or read the full article at FranchiseBusinessReview.com.

Compare Quotes

Never sign up for the first insurance quote you get. Most franchisors will recommend an insurance agent to use, but you should still seek out at least two or three additional quotes before making a final decision. Also, be sure to compare more than just the fees. You should decide on an insurer based on the quality of their coverage, not who has the lowest monthly fee.

Look For Package Deals

Most insurers have bundle packages that give you a discount for having them handle all of your insurance needs. If you already have insurance for your car or home, you should try calling your insurance company to see if they offer a discount for adding business insurance to your package.

Be 100% Honest

Never provide false or misleading information to an insurance agent with the hope of lowering your premiums. You could end up with the wrong type of insurance which could cost you thousands in the long run.

Lookout For Overlaps

Avoid duplicate or overlaps in your insurance policy. You want to make sure you are only paying for what you need, and not paying for coverage you already have.

Democrats' Tax Bill Moves Toward Vote In US Senate

The Senate is scheduled to vote on the new tax bill designed to extend unemployment insurance tomorrow. In order for the bill to pass, 60 of the 100 Senators will need to vote in favor of the legislation. Many Republicans and fiscally conservative Democrats are still weary of the bills price tag, and some bloggers are predicting the bill will not pass. Read more from this Reuters.com story below.

According to Reuters.com, Majority Leader Harry Reid moved toward an initial vote on the $126 billion earlier this week.

Under Senate rules, the vote on whether to limit debate on the legislation will likely occur Wednesday. Sixty votes are needed out of the 100-member Senate.

Complaints by fiscally conservative Democrats about the plan's price tag and opposition by some Democrats to the investment fund manager tax has stalled the proposal.

According to several lobbyists, the majority Democrats remain shy of the 60 votes necessary. They need to attract as least one Republican plus keep all of the 59 votes they generally hold in the chamber.

Over the next 10 years, the Senate proposal would increase direct spending by $126 billion and add $22 billion in funding to prevent a 21 percent payment cut to doctors in the Medicare program, the Congressional Budget Office estimated.

Continue reading at Reuters.com…

U.S. Insurers Urge Swift Adoption of Legislation to Reduce Unfair Tax Advantages

From Market Watch:

The Coalition For A Domestic Insurance Industry, a group of 14 major U.S.-based insurance groups, applauds the introduction of a bill by Rep. Richard Neal (D – Mass.) to level the playing field and close the current loophole that provides foreign-based insurers a competitive advantage over domestic insurers in underwriting U.S. risks. This unfair tax advantage arises because foreign insurance groups operating in the U.S. are presently allowed to strip the bulk of their profits out of the U.S. merely by reinsuring risks to affiliates located in tax havens, and thus avoid paying billions of dollars in U.S. taxes. The tax treatment of these transactions undermines the ability of domestic companies to compete and ultimately threatens the future of our domestic insurance industry.

"The tax advantage, which originated in practice around 20 years ago, has already caused significant migration of insurance capital abroad," explained William R. Berkley, chairman and chief executive officer of W. R. Berkley Corporation and spokesman for the Coalition For A Domestic Insurance Industry.

Growth in related-party reinsurance written to foreign affiliates has been dramatic. In 2007, $58.4 billion of U.S. premiums went to foreign insurance companies, with nearly 60 percent ($33.8 billion) of those premiums going to related foreign reinsurance companies. Since 1996, U.S. premiums going to affiliated foreign reinsurers have increased at a compound annual growth rate of 21.4 percent.

"With the stroke of a pen, foreign-based groups can shift their profits overseas to affiliates in tax-advantaged locations. The principal incentive for this increased related-party reinsurance activity has been the avoidance of U.S. income tax," Mr. Berkley concluded.

Top 6 Types of Life Insurance

Here is an article that explains in depth different types of Life Insurance. The article also has links to a directory of different companies offering life insurance and more information about each type listed above.



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Health Care Changes Could Raise Taxes

The White House recently announced their plan for improving the country’s health insurance coverage which included a proposal to make health insurance costs tax deductible. The plan will allow a $15,000.00 tax deduction for families, and $7,500.00 tax deduction for individuals. However, for those individuals who receive employer provided health insurance that costs more than $15,000.00 would face a tax hike, as their health insurance premiums would be counted as taxable income. Early estimates suggest that the plan will increase taxes for as many as 30 million taxpayers. For more information check out Reuters.com.