Finding a decent return in life insurance, with Joe Heider, Dawson Wealth Management; Adam Sherman, Firstrust Financial Resources; and CNBC's Dennis Kneale & Sue Herera.

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The Hard Market

The insurance industry has been facing difficult times since September 11, 2001. Insurance companies are required to maintain certain reserves to pay claims based upon the premiums written. They also must purchase Reinsurance to cover themselves in the event of catastrophic losses. As a result insurance companies do not hold all of the paper when they write your insurance. They purchase reinsurance to cover a portion of the coverage that they offer to you.

Because of substantial losses in the stock market their reserve accounts have been substantially reduced, losses suffered by the companies in the September 11, 2001 attack have also substantially affected their reserve account. The Reinsurance Companies have suffered the same economic losses in both the Stock Market and claims being paid in both the United States and in Europe. Floods in Europe over the last year have affected the Reinsurers. As a result of these problems insurance companies have been unable to obtain Reinsurance or have had their premiums increased substantially when they have to purchase Reinsurance. The resulting affect to you the consumer is increased premiums, reduction in coverage or in some cases the inability to purchase insurance to cover your needs.

In New York State certain risks have become even more difficult to insure due to the New York State Labor Law. This law permits an injured employee to collect for his or her injuries that occur on the job from Workers Compensation but to also sue the employer for negligence which may or may not be covered under General Liability Coverage. Many Companies that have insured the construction industry have either withdrawn from the market or put exclusions into their policies. The companies that have maintained coverage for these types of claims have substantially increased premiums. If you are an employer in New York State you must read your policy very carefully to understand the Labor Law Exclusion. The legal defense of these types of claims can be very costly.

We urge you to write to your congressman and request that he or she bring this problem before the state legislature and have this law changed. You can go to the New York State website and locate the name and address of your congressman.

Workers Compensation Insurance

Workers Compensation Insurance is extremely important to small businesses today. Failure to comply with Section 56 of the Workers Compensation Law makes you responsible for the payment of benefits to an injured employee of an uninsured subcontractor. Because of this liability you will be charged a premium for the uninsured subcontractor who works for you. You can save this money be obtaining original certificates of Workers Compensation Insurance from all of your subcontractors before they start the job.

Insurance companies will charge a premium for any subcontractor who works without help, unless you have a certificate of Workers Compensation Insurance.

Please keep in mind that you will have an audit each year. If you have no payroll you must write a few checks during the year to show the auditor that there was some payroll. This will develop some premium. If this is not done, the auditor can pick up checks drawn to the sole proprietor or to excluded officers as payroll, and this will substantially increase the premium.

Under New York State law, if you employ one or more individuals even on a part time basis, you are required to carry Workers Compensation Insurance as well as Statutory Disability Insurance. Please be sure to contact your insurance agent if there is any doubt as to whether or not you are required to carry the above types of insurance.

Tip Sheet

If you are a regular buyer of lottery tickets who has not been cashing many winners lately, here is a different game that you can play with a much better chance of success.

All that you need to participate is the same sum of money that you may have been devoting to boxes and wheels and scratch off games - lets say $20.00 a week.

Instead of Lotto, Pick Five or Pick Ten, put $20.00 each week into a piggy bank from which you will make deposits quarterly into a money market mutual fund that yields about 5%.

Here is how you win at the Anti Lottery Game. For the first 3 months you drop 13 $20.00 bills into your piggy bank and then make your deposit into your mutual fund. You will need to find a fund that will permit an initial deposit of $260.

For the next quarter, that 260 will earn 5% a year, while you save another $260.00 to deposit at the 6 month mark. repeat the same process through the third and fourth quarters and you will have contributed $1040 by the time that 52 weeks have passed.

Figuring an average balance in the account over the course of the year of just under $400, the money that you will invest will bring about $20 in interest or dividends. You can then move these funds to a growth mutual fund whose annual gains over the last 15 years have been in double digits. Call us and we will be happy to discuss this further with you.

The Insurance You May Need Most

Americans buy a lot of insurance. Health, auto, homeowners and life all take a healthy chunk of the typical family budget, and when they have those bases covered, many people figure they've got what they need.

So the last thing they want to hear is that they need yet another kind of coverage - but they do.

That other coverage, which experts say working people should have but often don't, is for disablility.

Disability insurance replaces wages that are lost when the insured person is sick or injured and can't work for a long time. It is easy to overlook or ignore this kind of insurance, because, while most of us will admit that we may die someday, the prospect of becoming disabled seems altogether remote.

Yet for people of typical working age - 20 to 65 - the chances of becoming disabled for more than 90 days are greater than the chances of dying, according to insurance industry figures. Nearly three in 10 workers from 35 to 65 will be off the job for 90 days or more at some time during their working lives, and nearly one in five will be disabled five years or more, industry studies show.

For a worker whose family depends on his or her earnings to get by, the consequences can be disastrous. Just imagine your family budget if your paycheck or your spouse's was shut off for three or four months.

If asked what their biggest asset is, most people would say their house, "but I tell my clients, it's your abililty to work," said Kathy Jatras of Organized Finances Unlimited, an Arlington, Va., financial planning firm.

Jatras said most of her clients are young, "with big mortgages and little kids," and almost always should be carrying disability insurance.

Yet surveys show a very strong it-can't-happen-to-me attitude. A Gallup study conducted two years ago for Maine-based insurer Unum Corp. found that Americans 30 to 65 believed that becoming disabled would devastate them finaincially, but they sharply underestimated the chances of that happening.

But figuring out how much you have and how much more you might need isn't easy.

"An individual has to sit down and do a complete plan. Just as they do a life insurance plan, they should do a disability plan," said Elaine D.Rosen, senior vice president at Unum. This should include a review of government programs, employer-sponsored group plans, individual policies and long-term care.

There is a government-mandated safety net of sorts. Employers are required to buy workers' compensation insurance, which is meant to cover occupational disabilities - illness or injury brought on by a person's job. Workers' comp covers lost wages, medical care and rehabilitation.

In addition, Social Security covers severe long-term disability, whatever the cause, though the standards are tough, and more than half of initial claims are denied.

Most employers help as well. At the simplest level there is sick leave, which continues a worker's pay while he or she is out, typically for a few weeks.

Most large companies, and many smaller ones, also have a short term disability plan. Such plans generally replace 40 percent to 70 percent of pay, though some are more generous, for periods ranging from 30 days to six months. And unlike workers' comp, both sick leave and short-term disability plans cover injury and illness not related to the job.

Beyond that, many employers offer long term disability plans that kick in at the end of the short-term coverage. These plans commonly replace about 60 percent of earnings up to some dollar amount, and they can last until retirement age.

However, employers often require workers to pay at least a portion of the premium for long-term disability coverage.

Keep in mind that benefits from individual and group policies are tax-free if you pay the premiums, but taxable if your employer pays them.

For a Free Quotation Call R.W.G. Brokerage Corp. now at 1-631-757-7474 or toll free at 1-800-588-7474.

Individuals can obtain the Group Rate through our Plans, Personal Auto, Homeowners, Health Insurance, or Business Package Policies.