Insurance & Divorce

Table of Contents

 

Chapter 1

The Reality

Page 1

 

     American Statistics

1

 

     Plan, Plan, Plan

2

 

     Preserving the Creating Assets

               Financial planning steps for divorce

4

5

 

          Net Worth

6

 

          Chart: Net Worth

7

 

          Charts:  Cash Flow

9

 

          Chart:  Goals

13

Chapter 2

Many Professionals Involved

14

 

     Finding the Right People

14

 

     Insurance Agents

14

 

     Financial Planners

15

 

     Bankers

16

 

     Accountants

17

 

     Attorneys

               Divorce is a 3-step process

17

18

 

     Division of Assets

20

 

     Using Life Insurance to Guarantee Future Security

21

 

               QDRO

22

 

     Avoiding Financial Ruin

23

 

     Specialists Everywhere

24

Chapter 3

Insurance

25

 

     Insurance Consequences of Divorce

25

 

     Life Insurance

25

 

     Determining Life Insurance Requirements

26

 

     Determining Appropriate Life Insurance Amounts

     Determining Appropriate Type of Life Insurance

28

30

 

               Employee Life Insurance

30

 

               Teacher’s Life Insurance

31

 

               Term Life Insurance

31

 

               Ordinary or Traditional Whole Life

34

 

               Variable Life Insurance

37

 

               Limited Payment Life

37

 

               Endowment Insurance

38

 

               Universal Life Policies

38

 

     Insurance Riders

39

 

     Grace Periods – Reinstatement

39

 

     Incontestability

40

 

     Suicide

40

 

     Policy Ownership

40

 

     Finding the Right Company

41

 

     Changing Companies

41

 

     Life Insurance as an Investment

43

 

     Annuities in Divorce Settlements

45

 

               Deferred Annuities

45

 

                         How Long Will Your Money Last? (Chart)

46

 

               Variable Deferred Annuities

47

 

     Health Insurance

50

 

     Universal Health Care

51

 

     Dental Policies

54

 

     Medigap Policies and Medicare

55

 

     Defining Medicare & Medicaid

55

 

     Social Insurance

55

 

     Enrollment Period

57

 

     Medicare Part A

58

 

               Hospital Benefits, Part A Chart

59

 

     Home Health Care

60

 

     Hospice Care

62

 

     Nursing Home Care

63

 

                Skilled Nursing Home Benefits Chart

64

 

     Levels of Nursing Home Care

65

 

     Medicare Part B

66

 

               Medicaid

70

 

               Medicare Deductibles and Copayments

72

 

     Long-Term Care Insurance

72

 

               ADLs

78

 

               Terms

80

 

               Non-Tax Qualified Versus Tax Qualified (chart)

81

 

     Partnership Long Term Care Policies

83

 

     Making Benefit Choices

84

 

     Daily Benefit Options

85

 

     Determining Benefit Length

86

 

     Policy Structure

86

 

     Home Care Options

87

 

     Inflation Protection

87

 

     Simple & Compound Protection

88

 

         Required Rejection Forms

88

 

     Elimination Period in LTC Policies

88

 

     Policy Type

89

 

     Restoration of Policy Benefits

89

 

     Preexisting Period in Policies

89

 

     Prior Hospitalization Requirements for Skilled Care

90

 

     Deciding Between Federal Tax-Qualified or State Non-Tax Qualified Policies

90

 

     Nonforfeiture Values

91

 

     Waiver of Premium

91

 

     Unintentional Lapse in Policy

92

 

     Policy Renewal Features

92

 

     Items Not Covered by the LTC Policy

93

 

     Extension of Benefits

93

 

     Affordability of Contracts

93

 

     Standardized Definitions

93

 

     Minimum Partnership Requirements

94

 

     Benefit Duplication

94

 

     Partnership Publication

94

 

     Truly a Partnership

94

 

     Saving Assets from Medicaid Qualification

95

 

     Accessing Policy Benefits

96

 

     Asset Repositioning

98

 

     Partnership Participation does not Guarantee Medicaid Qualification

98

 

     Disability Insurance

99

 

     Types of Disability Policies

100

 

     Disability Policy Features

100

 

     How Many Benefits are Needed?

102

Chapter 4

Maintaining Financial Balance

103

 

     What Does Credit have to do with Insurance?

103

 

     FICO Scores

105

 

     Changing from Joint Credit to Single Credit

108

 

     Credit Cards

108

 

     Good Debt - Bad Debt

109

 

     Interest Works Both Ways

110

 

     Where To Begin

110

 

               Chart:  Short Term Goals

112

 

     Simple Record Keeping

113

 

     Financial Foundation

113

 

     The Agent’s Role

114

 

     Creating Organization

115

 

     Factoring in Age

116

 

     Investment Age Significance

117

 

     Managing Risk Through Insurance

118

 

     Insuring Health Care Requirements

120

 

     Financial Planners

121

 

     Determining New Living Costs

123

 

     Revaluating Investment Goals

124

Chapter 5

Protecting The Assets For Both

125

 

     Individual Retirement Accounts (IRA)

125

 

     Retirement Funds

125

 

     Defined Contribution Plans

126

 

     Defined Benefit Plans

126

 

     Keeping Credit Ratings Intact

128

 

     Small Businesses & Closely Held Corporations

128

 

     Remaining Impartial during a Difficult Time

129

Chapter 6

Building A Retirement

131

 

     After the Divorce

131

 

     Terminology

132

 

               Plan Participant

               Eligible Participant

               Plan Sponsor

               Summary Plan Description

               Accrual and Vesting

               Service Years (Years of Service)

               Breaks in Service

               Portability

               ERISA

               Qualified Plans

               Defined Benefit & Defined Contribution Plans

               Pensions

               401(k) Plans

               Simplified Employee Pension Plans (SEP)

               Keogh Plans

               Other Pension Options

               Plan Trust

               Pension Benefit Guaranty Corporation

               Fiduciaries

               Actuaries

132

132

132

132

133

134

134

135

135

135

136

136

136

136

137

137

137

138

138

138

 

     Retirement Benefit Claims

138

 

     Achieving Retirement Goals

140

 

     Legal Changes Aimed At Equality

144

 

     Pension Payments in Peril

144

 

     Pension Payment Mistakes

145

 

     Financial Independence

147

 

     Today’s Enjoyment Versus Tomorrow’s Security

148

 

     Social Security

418

 

     A Government Supplied Pension

149

 

               Chart:  Normal Retirement Age by Year of Birth

151

 

     Calculating Social Security Benefits

153

 

               Chart:  When there are 2 wage earners

154

 

     Starting Small

155

 

     Taxpayer Relief Act of 1997 & IRS Restructuring Act of 1998

157

 

     Roth IRAs

157

 

               Maximum Contributions

158

 

               Roth or Traditional IRAs?

158

 

               Catchup IRA Contributions

159

 

     Non-Qualified Distributions

159

 

     RMD Now Agent 72 & Additional Contributions Now Allowed

159

 

     Roth IRA Advantages

160

 

     Educational IRAs

160

 

               Choosing Between a Coverdell IRA or a 529 Plan

161

 

               Differences Between a Coverdell ESA and a 529 Plan

161

 

               Funds not used for Education

162

 

               Choosing the Right Plan

162

 

               Using Both Plans

162

 

               Eligibility of Education IRA’s

162

 

     Pension Plans

164

 

          Pension Basics

165

 

               Defined Benefit Plans

165

 

                         Dollars per year of service

                         Career average salary plan

                         Final average salary plan

165

165

165

 

               Defined Contribution Plans

166

 

     Pension Plan Vesting

167

 

     Integrating Pensions With Social Security Benefits

167

 

               Chart:  Social Security Compensation

168

 

     Receiving Pension Benefits

168

 

     Choosing Pension Payment Options

169

 

               Form:  Excluding spouse from retirement benefits

170

 

     Pensions Must Last a Lifetime

172

 

     The Time Value of Money

173

 

     Paying Ourselves First

174

 

     Annuities As A Pension

175

 

     Keoghs For The Self-Employed

176

 

     Simplified Employee Pension Plans

177

 

     Life Insurance As A Pension

178

 

     Divorce Affects Retirement Benefits

179

 

     The Retirement Equity Act

180

 

     Qualified Joint & Survivor Annuities

181

 

     Qualified Pre-Retirement Survivor’s Annuity

182

 

     Prenuptial Agreements

182

Chapter 7

Staying Ethical

185

 

     Business Relationships

185

 

     Agent Ethics

186

 

     Ethics for Today

187

 

     Ethical Responsibility

188

 

     Caring For Others

189

 

     Ethics On The Job

191

 

     Education Requirements

191

 

     Accepting “No”

193

 

               Assertiveness versus aggressiveness

194

 

     Coping with Personal Failures

196

 

     Professional Standards

196

 

     Ethical Questions and Answers

197

 

     Professional Conduct

198

 

     Ethics In The Workplace

199

 

     Ethical Excellence

201

 

     Asking The Right Questions

202

 

     Listening Our Way To Success

203

 

     The Virtue of Patience

205

 

     Customer Satisfaction

205

 

     The Difficult Client

206

 

     Dealing With the Inevitable

207

 

     Using Positive Communication

207

 

     Family Obligations

209

 

     Acknowledging Free Choice

209

 

     Egoism (Psychological Egoism)

211

 

     Objectivist Theory

211

 

     Cultural Ethics; Perceptions of Ethics

212

 

     Moral Persuasion

214

 

     Rationalizing Morals

215

 

     Can Ethics Be Taught?

216

 

     A Moral Habit

217

 

     Violence In The Name Of Ethics

219

 

     The Addiction to Power

220

 

     Objective Morality

222

 

     Avoiding Negativity

223

 

            Re-enforcer and Negative Re-enforcer

224

 

     Who Is The Teacher?

225

 

     Are Manners Part of Ethics?

225

 

     Ethical Investing

226

 

     Investment Avoidance Approach

229

 

     Investing from a Positive Approach

229

 

     Investing from the Activist Approach

231

 

     Where does an Individual Begin Investing?

233

 

     Investment Portfolios

235

 

 

United Insurance Educators, Inc.

8213 352nd Street East

Eatonville, Washington 98328-8638

 

www.UIEce.com