Fixed Annuities Cincinnati

Immediate and Deferred Annuities

An annuity may be an “immediate” annuity or a “deferred” annuity. In the case of an immediate annuity, a person deposits funds with an insurer and a payout option begins “immediately” (may take 30 to 45 days). With a deferred annuity, an individual deposits funds (in a lump sum or through contributions over time) and “defers” annuity benefits until a later date, such as retirement.

Deferred annuities have two phases, an “accumulation” stage and an “annuitization” stage. The first phase is the accumulation stage in which funds are built up inside the annuity. During this stage funds are added to the annuity by various means. Funds may be transferred from one annuity to another via a 1035 exchange. Interest earned on funds inside an annuity grow at on a tax deferred basis. Tax deferred generally means that no taxes are due on earnings until funds are withdrawn. During the annuitization stage (or payout stage), a variety of payout options are available.

At McCarthy Stevenot Agency, Inc., we have over 20 years of experience serving the needs of small business clients. We are particularly focused on small group health insurance, and we are the broker for hundreds of small businesses in the greater Cincinnati area.

Complete and return a Preliminary Group Health Insurance Quote Request Form – Click Here!

What makes us different from other brokers?

Often we hear prospective new clients say that all brokers “quote the same companies,” so what difference does it make which broker you use? Our answer by way of analogy is that though many contractors can shop at the same lumber yard, you’ll see substantial differences in the houses they build for their clients!

One thing that makes us different from our competition is our many years of experience in – and our focus on – small group health insurance. We have a familiarity with the carriers and the plans available in the greater Cincinnati area market that enables us to quickly engage and make impactful recommendations for clients than would otherwise be the case.

Further, our staff is made up of extremely experienced small group health insurance professionals.  Most of us have decades of experience working in the small group health insurance arena. We know the carriers. We know the product and the service channels at the carriers. And, importantly, the carriers know us. This makes our agency a formidable representative to have on your side.

Seeing a difference in customer service.

In contrast to less experienced competition, we are able to quickly resolve many service issues because we know where to call and who to call for help. We have dealt with most common small group health insurance service issues again and again over time. Therefore, we aren’t reinventing the wheel when a client calls us for help.  Because we have handled many similar service requests from other clients in the past, this helps shorten our service response times.

What type of group health insurance is right for your company?

Small group health insurance plans today take many forms. Currently, PPO Plans (Preferred Provider Organization Plans) and HSA Plans (Health Savings Account Plans) are the most popular options for small employers. In some cases, it may be possible to offer a dual option in which employees may select from multiple benefit options.

With a PPO plan, there is an opportunity to access both in an and out of network care. Network benefits are reimbursed at a higher level than non-network benefits. Most PPO plans today no longer require a referral from a primary care physician in order to see a specialist. A new trend in PPO plans is to offer a “split-copay.” Split copays provide a lower copay (i.e. $25) to see a primary care physician while the copay to see a specialist may be higher (i.e. $40). This simple option can lead to a favorable premium savings for groups and their employees.

PPO plans also work nicely with HRAs (Health Reimbursement Agreements). HRA plans can provide an employer-paid reimbursement for medical expenses that typically dovetails with a higher deductible health plan. In such case, the employer adds a layer of benefit reimbursement underneath a high deductible amount. Assuming claim utilization remains relatively low, it provides the employer the opportunity to achieve some premium savings.

Learn ways to lower your group health insurance premiums FAST!

We have a sign-up box for group administrators (see the upper right column on this page) that provides access to a free report (actually a five email series) on ways to lower group health premiums. Please feel free to sign up for this series! Many of the ideas discussed do not require switching health insurance carriers and, instead, involve simple structural changes to a group health plans that can make a big difference in health insurance premium savings. The split-copay idea discussed above is one such example.

The best way to get a closer look at how we approach group health insurance is to request preliminary quotes from our agency. Click on this link to access a Preliminary Group Health Insurance Quote Request Form. Complete and return the form by fax (513-891-3088) or mail (McCarthy Stevenot Agency, Inc. 10921 Reed Hartman Hwy, Ste. 310 Cincinnati, OH 45242).

Please call our office at 513-891-9888, if you have any questions.

At McCarthy Stevenot Agency, Inc., we have access to a variety of group term life insurance products.

Group term life insurance is usually purchased with a fixed face amount (death benefit amount) for all employees (i.e. $20,000 per employee), or as a multiple of earnings to a specified maximum (i.e. 1.5X earnings to a maximum of $50,000 per employee).  Plans can be customized to reflect a wide array of face amounts and plan maximums depending on the group and the industry.

Group term life insurance plans that specify a multiple of income will require you to list employee incomes for quotes.  In order to maintain confidentiality during quoting, you can provide employee ages and corresponding incomes, but not include the names of employees.  However, should you decide to formally apply, actual employee data will be required. 

Print out the folowing PDF form for more information on group term insurance products for your company:

• Group Life Insurance Quote Request Form – Click Here!

At McCarthy Stevenot Agency, Inc., we can help answer your questions about annuities, and provide you with access to a wide variety of fixed annuity products.

• An annuity is a financial device that pays an income stream to an “annuitant” or insured individual for a specified period of time.
• Payments may be for as long as an annuitant’s lifetime or for a shorter fixed period of time.
• Annuities are used in a variety of situations. Commonly annuities are used by retirees to establish a foundation of income during retirement.
• Annuities are also often used in legal cases that require structured settlements.

Please complete and submit the form below for more information on fixed annuities:

Note – your privacy is important to us! We will never sell your information or send you SPAM!

Learn More About Annuities

As stated above, an annuity is a financial device that pays an income stream to an “annuitant” or insured individual for a specified period of time. Payments may be for as long as an annuitant’s lifetime or for a shorter fixed period of time.

Annuities are used in a variety of situations. Commonly annuities are used by retirees to establish foundation of income during retirement. Annuities are also often used in legal cases that require structured settlements. A structured settlement can be required when an individual receives an funds from a lawsuit or legal settlement for the purpose of meeting long term financial obligations. For example, a court may award $1,000,000 to a plaintiff to cover medical expenses throughout the plaintiff’s lifetime. In such case, the defendant will not necessarily have to pay $1,000,000 at the settlement of the case. Instead, the defendant may be directed by the court to purchase an annuity that will provide the required income to the plaintiff over time, but at a much lower total cost to the defendant.

Another common use of annuities is in lotteries. People who buy lottery tickets choose the option of a “cash payout” or a “lifetime payout.” In either case, lottery winnings are expressed in terms of annuitized values. The moment a $20,000,000 lottery winner turns in his or her winning ticket, the winner doesn’t actually get a check for $20,000,000. Instead, the winner will either receive the $20,000,000 paid out over a fixed period of time (i.e. 20 years), or the winner will receive a reduced cash settlement that is (roughly) equal to what it would have cost the lottery commission to purchase an equivalent annuity.

How Annuities Work

The basic concept of an annuity is simple. Consider these two different scenarios to help understand how annuities work.

Scenario One:

Imagine a grandparent wants to provide $100 per year to a grandchild attending college to help the grandchild pay living expenses for each of four years of college. One option the grandparent has to fund this obligation is to go down to the bank and put four $100 bills in a safe deposit box. Each year, when the promised payment is due, the grandparent can go to the bank, open the safe deposit box, take out a $100 bill and hand it directly to the grandchild. At the end of four years, the grandparent will have paid out exactly $400 as promised, and the safe deposit box will be empty.

Scenario Two:

This example modifies the story above using some of the concepts of an annuity. This time, the same grandparent, instead of putting $400 in a safe deposit box, decides to put money into a savings account that pays 3% interest annually. By calculating the future impact of the 3% interest on the funds in the account, the grandparent will now only have to deposit $372.00 into the account in order to make the $100 in payments to the grandchild for each of the four years. After each $100 payment is made, the funds remaining in the account continue to earn interest and provide the additional funds necessary to make the complete payments. Just like the example above, $100 is paid out each of the four years and the ending balance is zero, but the initial investment required is $372 instead of $400.

As in the second scenario, fixed annuities apply a combination of principal and interest (and where possible tax advantages), in order to create a financial vehicle that can meet future and ongoing funding obligations. The goal of an annuity is to provide a fixed payment to a beneficiary for a specified period of time with a reduced upfront expense.

Taxation of Annuities

Annuities may contain a combination of pre-tax and after tax dollars depending on how they are funded. If an individual puts $10,000 of after tax dollars in an annuity and over time the annuity value grows to $20,000, the annuity now contains a combination of before tax and after tax dollars. Depending on the payout option selected, annuity beneficiaries may receive what is called an “exclusion ratio.” This ratio determines the ratio of pre-tax and after-tax dollars involved in the annuity payout.

Early Withdrawals

Annuities are intended for retirement funding, and individuals are not expected to withdraw funds from annuities before the age of 59 ½. If funds are withdrawn, there is a 10% penalty in addition to any regular income taxes that may otherwise be due on funds inside the annuity. If the annuity was purchased prior to 1982, the funds from the annuity will be taxed on a “FIFO” basis. FIFO means “first-in-first-out.” If the annuity was purchased after August 13, 1982, funds from the annuity will be taxed on a “LIFO” basis. LIFO means “last-in-first-out.”

Payout Options on Annuities

The second stage of a annuity, after the accumulation stage, is the payout or annuitization stage. Once a person reaches 59.5 years of age, he or she can begin withdrawing funds from an annuity. Funds can be withdrawn in a lump sum, on a fixed period basis, or on an annuitized basis. There are many structures for withdrawal of funds from an annuity.

Here are several possibilities:

Life Annuity Option

In this option an individual receives an annual benefit based on his or her age. This option generally provides the highest income option for an individual. Payments continue throughout the individual’s lifetime. This option protects a person from outliving his or her retirement funds because, as long as the individual is living, the funds keep coming. The downside of this option is that annuity payments will cease upon the death of the individual beneficiary. If an individual is married and both parties depend on income from the annuity, a life annuity can be a very risky option. This is because when the individual upon whose life the annuity is based dies, there are no additional funds made available to the surviving party.

Joint and Survivor Annuity Option

Also called a Joint Life Option, this annuity option structures payments at a lower level than a Life Annuity option, but it allows for payments to continue to a spouse upon the death of the primary annuitant. Payout benefits are lower than a Life Annuity because they take into account the life expectancy of both individuals involved.

Period Certain Annuity Option

With this option the annuity will pay out all of its value over a specified period of time. For example, if an individual selects a “ten year period certain” annuity, all benefits will be paid out over a ten year period. Even if the annuity recipient dies within the ten year time frame, the remaining benefits can be designated to a surviving beneficiary (or to the individual’s estate). The downside of a period certain annuity is in the risk of living too long. If a retiree lives beyond the ten year (or other specified) time frame, funds will be depleted.

Life with Guaranteed Period Annuity Option

This option gives an individual the ability to select a life option, so that an individual can be assured of income for the rest of his or her lifetime, but this option also includes a guaranteed payout provision, so that if the annuitant dies before the guarantee period has expired (say 10 years) , a guaranteed amount will still be paid to a beneficiary. Generally, this option will provide a lower benefit amount than would a standard Life Annuity.

Systematic Withdrawal Annuity Option

A systematic withdrawal annuity option is similar in some ways to a Period Certain Option. In this option a person can customize the number of payments received and when over a pre-set period of time.

Lump Sum Annuity Option

In a lump sum annuity option, an individual receives a “lump sum” check that cashes out the value of the annuity all at one time. If substantial funds are involved, this can create a higher tax liability as all of the income is received in one year. One benefit of longer term payout options is that they trickle out the annuity’s value over several years, thereby potentially lowering the annuity recipient’s tax liability.

Life Expectancy and Annuities

When insurers calculate the amounts they are willing to pay out for annuity benefits, many factors come into play. One of these factors is the life expectancy of the annuitant.

• Assuming two individuals with the same size annuity and the same age, a female annuitant will receive a lower yearly benefit amount due to the fact that women have a longer life expectancy than men.
• A 70 year old man who chooses a Life Annuity payout option will receive a higher benefit amount than a 60 year old man who has the same size annuity.

Other factors contributing to the amount of benefit paid out by an annuity are company expenses and investment returns. One insurance company’s investment portfolio may outperform (or underperform another company) thereby affecting payout amounts. Further, operating expenses can play a part in calculating benefit amounts. An insurer with higher operating expenses may yield lower benefit amounts to annuity beneficiaries.

Recently, many insurance companies have become exposed to other forms of adverse risk due to the types of investments they have made in the past. Many insurers are invested in mortgages, commercial real estate and other equities that have experienced compressed value in recent years. All of these factors combined can have an effect on the amount of benefit an insurer is willing to pay for a given annuity at a given starting date.

Immediate and Deferred Annuities

An annuity may be an “immediate” annuity or a “deferred” annuity. In the case of an immediate annuity, a person deposits funds with an insurer and a payout option begins “immediately” (may take 30 to 45 days). With a deferred annuity, an individual deposits funds (in a lump sum or through contributions over time) and “defers” annuity benefits until a later date, such as retirement.

Deferred annuities have two phases, an “accumulation” stage and an “annuitization” stage. The first phase is the accumulation stage in which funds are built up inside the annuity. During this stage funds are added to the annuity by various means. Funds may be transferred from one annuity to another via a 1035 exchange. Interest earned on funds inside an annuity grow at on a tax deferred basis. Tax deferred generally means that no taxes are due on earnings until funds are withdrawn. During the annuitization stage (or payout stage), a variety of payout options are available.

Dental Insurance Cincinnati

At McCarthy Stevenot we offer a variety of dental insurance and pre-paid dental plan options for groups and individuals.

Request Quotes and Information on dental plans in Cincinnati and northern Kentucky:

• Group Dental Insurance Quote Request Form (click here – print and return by fax 513-891-3088).

• Individual Dental Insurance Quote Request (Submit Information Below):

Note – your privacy is important to us! We promise never to sell your information or send you SPAM!

Learn More About Dental Insurance

Dental Insurance or other types of Dental Plans can be available for groups and individuals. There are five basic forms of dental insurances and /or dental plans.

Discount Plans

These types of dental plans are not technically a dental “insurance” per se as benefits are paid for directly by the subscriber (individual patient). Discount plans charge a fee that pays for the operation and administration of the plan itself. Dental providers agree to a fee schedule set by the discount plan and subscribers access those providers for care. Fees for services are billed to the subscriber at the discounted rates set forth in the dental discount plan.

Pre-Paid Dental Plans

A pre-paid dental plan more closely resembles a traditional dental insurance plan. Pre-paid dental plans contract with dental providers to perform services for plan subscribers. The plans reimburse dental providers for services provided and charge co-pays or coinsurance percentages to plan subscribers. Dental plans of this type are commonly “closed network” plans. A closed network plan is a plan that provides coverage only for services rendered from contracted providers. If a subscriber patient sees a dental care provider that is not listed in the plan network, there may be little or no coverage available. Referrals to specialists are typically not required.

Dental HMO Plans

Similar in nature to Pre-Paid Dental Plans, Dental HMO Plans (Dental Health Maintenance Organizations) operate under closed networks. Dental providers are selected by subscribers during enrollment and providers may paid a small fee per month/ per person subscribed. Basic fees are covered via this monthly per person (or capitated) fee. Additional services may be billed as fee for service. Usually referrals are required for specialist coverage.

Dental PPO Plans

A Dental PPO (Preferred Provider Organization) plan has “in” and “out” of network components. When subscribers access dental providers that are listed as “in network,” dental services are paid a higher rate of reimbursement than when a subscriber is treated from a non-contracted dental provider. Out of network treatment is still covered, but with higher co-pays and generally higher out of pocket maximum expenses. Referrals to specialists may or may not be required, depending on the plan selected.

Traditional Dental Plans

A Traditional Dental Plan has no network associated with the plan itself and subscribers may seek services from any dentist they choose. The plan reimburses the insured subscriber for care based on the usual customary and reasonable expenses stipulated in the dental plan contract. In the event a dental care provider charges a higher fee for services than the contract stipulates, the patient may be “balance billed” for the difference. Balance billing occurs commonly in traditional dental plans as well as on the out-of-network side of Dental PPO Plans.

Annual Plan Maximums

Most dental insurance plans will specify an annual maximum benefit for services provided under the plan. A typical annual maximum might be $1500 per calendar year. This maximum specifies the most the plan will pay in total benefits for a plan year. Some individual services may have a different annual or lifetime maximum per covered subscriber. For example, orthodontia may have a separate lifetime maximum benefit per covered subscriber.

Types of Services Covered

Dental plans typically reimburse at different rates for different types of service. Plans also define what types of services fit into each category. Basically there are three types or categories of dental plan services:

Preventive Services

Preventive services refer to basic oral exams, cleanings and /or screenings. Depending on the services offered, there may be extra charges for specific preventive services such as x-rays or fluoride treatments. Plans may have varying degrees of coverage for items such as tooth sealants to prevent tooth decay (especially in children). Most plans favor richer levels of benefits for preventive services because preventive dental care seems to head off many dental problems that would otherwise become more complicated 9and more expensive) if left untreated.

Basic Services

Basic dental services refers to basic restorative dental services. A simple filling or filing repair is an example of a basic service.

Major Services

Major dental services refers to major restorative dental care. Bridges, Crowns, Inlays and tooth implants are examples of major dental services.

Request more information on dental plan options for individuals or groups by submitting information at the top of this page.

Individuals can use the submittal form provided. Groups should download and print out a group dental request PDF form and fax to our agency at 513-891-3088.

Individual and Group Disability Insurance Cincinnati

Most people buy insurance to protect their individual assets such as a car, a house or jewelry, but many people stop short of insuring their most valuable asset – their ability to earn an income. Disability insurance helps replace a portion of a person’s income in the event he or she becomes disabled. If you depend on your income to meet your everyday expenses and the expenses of your family, you should have disability income insurance.

Are you protected in the event of a disability?

• Studies show that a 20-year-old worker has a 3-in-10 chance of becoming disabled before reaching retirement age. (SSA Publication No. 05-10029: www.ssa.gov/dibplan/index.htm)
• The average disability lasts for over two and a half years. (Commissioners Individual Disability Table A.)
• Roughly 80% of working Americans either do not have disability insurance, or do not have enough disability insurance. (National Underwriter Magazine, 2001.)
• Disabled or not, every day bills like groceries, utilities, rent, mortgage, etc. still keep coming.

Health insurance helps pay medical bills but does not replace lost income. Disability insurance helps replace a portion of a person’s income if he or she is unable to work due to sickness or injury. Disability insurance can help keep a person from becoming a heavy burden on others in the event of a serious long-term illness or debilitating injury.

• Request a Quote for Group Disability Insurance – Click Here!

• Individuals submit form below:

Note – your privacy is important to us! We promise never to sell your information or send you SPAM!

Disability Insurance Basics – Learn More!

Disability insurance pays benefits to an insured individual who becomes sick or injured. Benefits begin after a waiting period that starts from the first day of disability. For example, an individual disability insurance policy with a “90 day waiting period,” begins crediting benefits once the insured has been disabled for 90 days. Benefit payments typically begin 30 days after the end of the waiting period. So, an individual with a 90 day waiting period would receive his or her first benefit check 120 days from the first day of disability. Choosing the options you select in a disability insurance policy should take into account how long you think you could live without your income. The shorter the waiting period, however, the higher the premium.

Length of Disability Benefits

Disability insurance policies can be designed to replace anywhere from 50 to 70% of a person’s income up to a certain “cap” or maximum benefit. Disability insurance policies will pay benefits for a variety of time frames or “benefit periods” depending on the policy you select. A benefit period is the time during which benefits from the policy will be paid. Some sample benefit periods are:

• For a set time period such as 5 years, 10 years, etc.
• Until age 65.
• For the lifetime of the insured.

Short Term Disability Insurance

Short term disability policies pay benefits soon after a disability begins. A short term disability policy may have a waiting period expressed as, “one day, eight day.” In this example, “one day” refers to the waiting period for benefits to begin after the result of an accident or injury. “Eight day,” here, refers to the date benefits begin after the onset of a disabling sickness. Such waiting periods are usually characteristic of short term disability insurance plans. Short term disability insurance plans are usually a type of group insurance and are only available through employer groups.

Premiums for short term policies that are paid by employers generally result in taxable benefits. Short term disability policies frequently have a condensed benefit period such as 90 or 180 days. Short term disability insurance policies also commonly specify a cap for monthly benefits. For example, a policy might pay 66% of an employee’s income up to a cap of $2500 per month until the benefit period runs out. Premiums for short term disability insurance policies are generally much lower than longer term disability policies due to caps and limited benefit periods.

Taxation of Disability Insurance Benefits

In general, when an individual pays his or her own disability insurance premiums with after tax dollars, benefits are not subject to taxes. However, if an employer pays disability premiums on behalf of an employee using pre-tax dollars, generally benefits are taxable. Tax law is always changing, so you should consult your tax advisor for timely information regarding the tax consequences of disability insurance benefit payments.

If an employer pays the premium for an employee’s disability insurance and taxes are due on benefits received, the result will be a reduced benefit amount. To protect against this shortfall, individuals covered under employer groups may wish to purchase a supplemental individual disability insurance policy to make up for any potential shortfall in benefits.

Non-Cancelable and Guaranteed Renewable Disability Insurance Policies

One important provision of disability insurance policies is that they can be “non-cancelable” or “guaranteed renewable.”

When a disability insurance policy is non-cancelable, as long as premium payments are paid on time, it means that,

• The policy’s future premiums can never be raised above the amounts stated in policy.
• The policy’s benefit amounts can never be reduced below the amounts stated in the policy.

When a disability insurance policy is “guaranteed renewable,” as long as premium payments are paid on time, it means that,

• A person has the right to renew his or her policy without the benefits changing.
• However, the insurer has the right to increase policy premiums as long as the insurer increases the premiums for all other policyholders in the same policy class.

Premiums for guaranteed renewable policies may be lower initially than premiums for non-cancellable policies, but the premiums have the possibility of increasing over time! The least expensive disability insurance policies are neither non-cancelable nor guaranteed renewable.

Disability Insurance Riders

Disability insurance policies are frequently available with a variety of riders or supplemental policy enhancements. These riders are available for an additional premium and cover a variety of options.

Some examples are:

COLA Rider. COLA stands for “Cost Of Living Adjustment.” This rider adds a benefit to a disability insurance policy that increases the benefit amount of the policy in order to compensate for future increases in the cost of living. With some riders, once a person is disabled, benefits increase as measured against the CPI or Consumer Price Index. Other riders specify a fixed increase in benefit amounts annually.

SSI Rider. This rider pays additional benefit amounts in the event a disabled person is unable to qualify for Social Security Disability Insurance benefits.

Partial or Residual Benefit Rider: This rider pays a partial disability payment after the waiting period. If an individual loses a percentage of their income (for example, 20-30%) due to disability, this rider begins to pay a partial disability payment to the insured. Each policy specifies the required loss in income before payments are eligible.

Guaranteed Insurability or Future Purchase Benefit Rider. This rider guarantees the ability of the insured to purchase more monthly disability insurance benefit in the future regardless of his or her future insurability. If a person expects his or her income to increase substantially over time, this can be a very inexpensive and worthwhile rider to purchase at a young age. This rider allows the purchase of specified amounts (i.e. $1000/month additional benefit, or $2000/month additional benefit, etc.) in the future. Some policies specify when future increases may be purchased (i.e. once every two years for the next ten years). New premiums for any future purchases generally reflect the age of the insured at the time of election. Income eligibility guidelines apply.

Income Guidelines for Disability Insurance

Disability insurance policies generally allow no more than about 70% of an individual’s income to be replaced by a disability insurance policy. When applying for disability insurance, an individual will need to provide income information so that the maximum benefit amount can be established by underwriting guidelines. In some cases, benefit amounts may also be capped based on the occupation of the insured.

Employer Based Long Term Disability Insurance

Employers may wish to provide a group based long term disability insurance program for their employees. Like individual policies, these programs are flexible in terms of specified benefit periods. A common benefit period in a group long term disability insurance program is a five year benefit period, though longer benefit periods are available. Here again, if the employer pays the premium, generally, benefits paid to the employee will be taxable. Waiting periods for group long term disability policies are typically from 90 to 180 days, though other waiting period options are available.

Combining Disability Policies and Salary Continuation Agreements

Some employers purchase both short term and long-term disability insurance plans and have the policies work in conjunction to cover employees in the event of disability. In such case, most of the risk the employer has to continue the salary of a disabled employee is transferred to the disability insurance company. Some employers may wish to have an attorney draft what is called a “salary continuation agreement” in order to self-insure a portion of disability liability. With a salary continuation agreement, an employer specifies how much the company will pay an employee and for how long in the event of a disability.

In general, it is less expensive to transfer the risk of salary continuation to an outside insurer. However, there are many circumstances to consider including the age, health status, and income levels of the insured employees. Regardless of the degree an employer chooses to insure disability payments, salary continuation agreements are a good idea. One significant benefit to a salary continuation agreement is that it can help manage the tax consequences of paying salary to a disabled employee or business owner. Please contact our office at 513-891-9888 for more information on salary continuation agreements.

Social Security Disability

Relying on Social Security Disability alone may leave you much less than you need in the event that you become disabled. Social Security Disability requires,

• That an individual is expected to be disabled for at least 12 months.
• Expects that the disability is permanent.
• A five month waiting period for benefits.
• Benefits may be subject to federal tax.
• Defines disability as the inability to work in any occupation.

The Social Security Administration has very strict guidelines defining who qualifies for disability payments and when. Benefits may be reduced if income is received from other sources such as a reduced retirement benefit or other disability benefit.

Defining Disability

The definition of disability in disability insurance policies varies depending on the particular policy. Some definitions of disability are based on “own occupation.” This means that a person is disabled if he or she is unable to perform the principal duties of his or her actual occupation (i.e. say a singer loses his or her vocal ability and can no longer sing). Other definitions of disability are based on the ability to earn an income based on an individual’s “background, education and experience” (i.e. the singer can no longer sing, but can still make money writing and producing music). Still other definitions may stipulate an individual is disabled only if he or she is unable to be gainfully employed in any type of work.

Plans with a definition of disability based on “own occupation” are the most comprehensive. Individuals in specialized fields such as medicine, dentistry, or highly skilled technical professions will be suited toward “own occupation” policies. Some policies take a hybrid approach to defining disability by specifying different definitions over different time periods. For example, a policy might have an “own occupation” definition for the first two years. After that, the definition may revert to work that is in line with an individual’s “background, education and experience.”

Disability Overhead Expense Policies

A disability overhead expense policy is a disability insurance policy that insures a business owner or key employee. Rather than pay income to the individual insured, the policy is designed to pay the overhead expenses of the insured’s business in the event the insured becomes disabled. Disability overhead policies require underwriting to determine appropriate benefit amounts relating to the actual overhead expenses of the business involved. Disability overhead policies tend to have limited benefit periods such as 12 or 24 months.

To request information on individual disability insurance, use the submittal form above.

Employer groups can request quotes by printing and returning a Group Disability Insurance Quote Request Form – Click Here!

Help with Buying Life Insurance

Do you need life insurance to cover a loan, a buy-sell agreement between business partners or to protect your family? Whatever the reason, we have access to a wide variety of life insurance products to suit your needs.

Complete and submit the following preliminary information, and we’ll get back with you about life insurance that matches up with your particular concerns. No pushy salesman to worry about! We respect our customer’s ability to make decisions without all that old-school life insurance nonsense.

Complete and return this form for more information…

Note – your privacy is important to us! We promise never to sell your information or send you SPAM!

Learn More About Life Insurance

Life insurance in its purest terms is a contract between an insured and an insurer that, in exchange for valuable consideration (premiums), the insurer agrees to pay a specified amount to an insured’s beneficiary in the event the insured dies while the contact is in force. Life insurance rates are based on:

• the expenses necessary to run a life insurance company and market life insurance policies,
• the amount of claims paid by an insurer,
• funding required to meet responsible reserves as stipulated by insurance law,
• investment returns of an insurer.

Each insurer will experience different operational expenses and different investment returns that can make insurers more or less competitive over time. An insurer with particularly low expenses today may have higher expenses in the future. Evaluating the underlying financial stability of an insurer in broad terms is a good way to establish a comfort level with an insurer for the long haul. In situations with large death benefit requirements ($5,000,000 or more), using multiple insurers to meet funding requirements can be a way to help diversify risk.

Types of Life Insurance

Ultimately there are two basic types of life insurance. One is called “term” life insurance, the other “permanent” life insurance.

Term Life Insurance

Term life insurance is more temporary in nature. There are two common types of term insurance, “Annual Renewable Term Life Insurance” and “Level Premium Term Life Insurance.”

Annual Renewable Term Life Insurance

Annual renewable term life insurance policies cover an insured for an agreed to premium for one year. After each year, the contract renews with a new rate. Over time, annual term life insurance premiums begin to escalate substantially. This type of life insurance is typically referred to as “ART” (annual renewable term) or “YRT” (yearly renewable term). Both of these types of life insurance policies set rates to insure an individual on a yearly basis. As long as premiums are paid as stated in the life insurance contract, the coverage remains in force. ART and YRT policies tend to have very low initial premiums, but premiums escalate in the future. At later ages premiums increase rapidly and most policies of this type become discontinued. ART and YRT policies are a straight “premium in exchange for coverage” kind of life insurance and therefore have no cash value element.

Level Term Life Insurance

Level Term Life Insurance is one the most popular kinds of individual life insurance purchased today. Level term life insurance is also a “premium in exchange for coverage” contract, and policies build no cash value. Level term life insurance policies set a specific time period in which premiums will remain level such as 5, 10, 15 or 20 years. During this time period, insured’s pay a flat premium for coverage with no increases. After the set period is over, premiums escalate rapidly, but coverage is available and stays in force as long as premiums are paid.

Permanent Life Insurance

Permanent life insurance is the second major category of types of life insurance policy. Permanent life insurance policies use various funding arrangements to build policy reserves over time that enable the policies to remain in force for the entire lifetime of an insured. Various investment options are available for the cash value portion of a permanent life insurance policy. Some of these are:

• A “portfolio rate” is basically a rate of return based on the average rate of return of an insurance companies entire portfolio of investments. Traditional “whole life insurance policies” commonly set returns on cash values based on portfolio rates. Because of the diversification in investments, portfolio rate based policies tend to be viewed as lower risk.
• An “indexed rate” policy is a policy that invests cash values in some type of index in order to sustain the policy in the future. Different indexes relate to various types of financial instruments, as an example treasury bills. Universal life policies typically place cash values in index based investments. Universal life policies are more flexible than whole life policies because premiums and death benefits can vary according to contract. However, universal life policies put more risk on the insured and, depending on expenses and investment factors may require extra premiums in the future in order to maintain stated death benefit amounts.
• A “variable rate” life insurance policy is a policy that invests cash values in investment grade securities or equities. Variable life insurance policies are highly sensitive to investment risk. Our agency does not market variable rate policies.

Life Insurance “Riders”

Life insurance policy “riders” are add-on elements to life insurance policies that provide ancillary insurance benefits in exchange for premium. Two examples of life insurance policy riders are;

Disability waiver of premium. Disability waiver of premium on a life insurance policy is a provision that, for an agreed to additional premium, the insurer agrees to pay the life insurance premiums of an insured in the event that insured becomes disabled and can no longer pay policy premiums. Various contractual stipulations apply defining disability and when premiums will begin to be paid.

Policy indexing or “purchase of paid-up-additions.” These riders allow the face value of a policy to increase over time as a hedge against inflation. There is generally no future medical underwriting required relating to these indexed death benefit increases. Usually this rider is available on permanent types of life insurance policies.

Which type of life insurance is right for you?

Life insurance should cover a specific need. If your need is temporary, to cover a 10 year loan, for example, then a ten year term policy is probably the right option. If your need is more permanent; such as, to cover the transfer of a business from one generation to the next upon the death of a business owner, then permanent insurance may be the best option. We can work with you to find the right type of insurance based on your individual situation. In the majority of cases, some type of level term insurance policy generally suffices and is a very cost effective way of managing life insurance risk.

How much life insurance do you need?

As stated above, life insurance should cover a specific need. If you are purchasing life insurance to cover a $1,000,000 loan, then $1,000,000 is probably the right policy amount. If you are funding a buy-sell arrangement in a business valued at $500,000 that has two partners, then $250,000 is probably the right amount. In the case of an individual family, elaborate analysis can be done to determine a proper amount of life insurance. Most of these studies identify debts that must be retired, future income needs, future education expenses, etc. In our experience, these surveys generally lead to a recommendation of a death benefit in the range of seven to ten times an individual’s annual income. Each case has variables, and we can help guide you in the right direction.

If you haven’t done so yet, please complete and submit a request for information about life insurance using the online form above, or you are welcome to call our office at 513-891-9888 with any questions.

Thank you for considering McCarthy Stevenot Agency, Inc. for help with your life insurance needs!

Here is a link to the full 1018 page text of the House of Representatives version of the Health Care Reform Bill.

It’s purpose, as stated on page one:

“To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.”

House of Representatives Proposed Health Care Reform Bill

Note on page 19:

“Individual health insurance coverage that is not grandfathered health insurance coverage under subsection (a) may only be offered on or after the first day of Y1 as an Exchange-participating health benefits plan.”

Therefore, unless you keep your old individual health insurance plan forever, any plan you buy in the future you’ll have to buy through the government “exchange” system or no insurance will be available.

Note on page 167 a “shared responsibility” tax:

 ”TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE…”

 ”IN GENERAL.—The tax imposed under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the applicable national average premium for such taxable year….

Interesting that citizens who choose to go without coverage will now be subject to a hefty tax.  There seem to be many scenarios imagineable where an individual who had lost immediate income or had to use current income to pay creditors (i.e. someone who lost a business, for example) who might find himself or herself in a position with a significant taxable income - yet with no health insurance  – and no money to pay for health insurance or the new tax. 

More comments later…

For now, happy reading!

Health Insurance Cincinnati

Part Ten of a series of articles on health insurance in Cincinnati and Northern Kentucky.

“Ways to Lower Your Group Health Insurance Premiums FAST!”

Consider a Health Reimbursement Agreement or “HRA” plan. Companies can select a higher deductible plan, for example a $5000 deductible, and provide reimbursement for claims occuurring between $2500 and $5000. In this example, employees would only be responsible for the first $2500 in claims. There is a bit of a self-insurance risk, but if the actual claim experience falls the right way, your company can achieve some premium savings. Again, premiums are certain and claims are not (or, at least not as certain). If you think your group runs at a relatively low claim expense, an HRA plan might be just the ticket. There are a wide variety of ways that you can structure how much and at what levels your company reimburses employees for claims under the deductible.

HRA plans require plan documentation and plan administration which is available on fee basis.

Health Insurance Cincinnati

Part Nine of a series of articles on health insurance in Cincinnati and Northern Kentucky.

“Ways to Lower Your Group Health Insurance Premiums FAST!”

Husband and wife both full time employees of the company? Inquire whether it is permissable to list each of them separately as employees on your health plan. In general, dependants are more costly to insure than primary employees. If a husband and wife are both full time employees, listing them separately rather than as a two-party or family may provide some opportunity for savings.