Insurance Insights ~ September 2002

Employment Related Practices – An Important Issue

You may have seen this issue plastered all over newspapers, magazines, and mailings in recent years. It is becoming more prevalent as awareness of this issue surfaces. Many people we talk to are vaguely familiar with what it means, but may be taking its consequences a little too lightly.

Among Employment Practices Wrongful Acts are discrimination, wrongful termination, retaliation, and harassment. It is important that you check your business liability policy for Employment Practices Liability coverage features, as many insurance policies now exclude this coverage.

Precautions can be taken to guard against a claim. A good first step is to educate your staff, especially those in authority. Supervisors, managers, team leaders, and people in various positions who have responsibility over fellow employees should be familiar with this issue.

Prevention is the key to avoiding any claim. Develop a consistent plan. Have office manuals that clearly outline your business practices. Instruct employees to avoid dangerous situations which could place them in an awkward position, should any allegations surface. Whenever possible, try to hold meetings with more than one person present.

In situations involving termination, it is important to establish a well-defined procedure. One of the most important tasks you can do to avoid a wrongful termination claim is to document! We can’t emphasize enough the importance of proper documentation! Performance problems must be written in order to protect your organization from a dispute later. Verbal reprimands and warnings can be contested, while written evidence carries more weight. Juries will view termination of employment seriously, so you better be prepared with not only proper documentation, but also a clear and legitimate reason behind the termination. Another good suggestion is to establish a formal “probation” program to rehabilitate an employee. Many businesses try this method to avoid a wrongful termination claim. This type of program can be effective if all parties are cooperative. Remember, you are allowing them employee the opportunity to correct the poor performance, but you should warn them of the ultimate consequences should corrective action not succeed. This is also effective in securing a “paper trail” in the event of a wrongful termination claim.

There are several important points to remember. No one business or organization is immune from any of these allegations. Even if those allegations are unfounded, you still have defense costs. Don’t be caught off guard! Prepare ahead of time through education. Establish a formal program and check with your insurance agent for coverage against these types of claims. For further information, please call us at 215-257-9171 or e-mail sales@gcwinsure.com.

Equity-Indexed Annuities

The ups and downs of the stock market so far this year have put many persons retirement funds on a wild ride. Never before has it been more important to consider safety along with growth when choosing the investment to use for your retirement plan. Concerns facing your retirement dollars include safety, accessibility, taxation, and outliving your income. The following questions and answers can help you create a strong foundation with your hard-earned retirement savings.

How can I increase my income without risking my original capital?

Using a tax-deferred annuity is a good conservative foundation for your overall financial plan. Insurance companies have the regulatory reserve requirements that will protect your premium and interest. Also, interest is not taxed until it is withdrawn.

Most financial accounts charge penalties for withdrawals before maturity on the entire account value. What if I want to withdraw some money when I need it, without paying excessive penalties or losing up to six-month’s interest?

Annuities have guaranteed, penalty-free withdrawal options that allow you to access a portion of your money without paying any company penalties or charges. In the event you are confined to a nursing home, you may have access to a larger portion of your money, penalty-free.

Isn’t income earned on most checking accounts, CDs, mutual funds, dividends, T-bills, and common stock dividends taxable by the Federal and State government each year as earned, even if I don’t take the interest out?

Yes. But interest credited to your annuity is not currently taxable by the Federal or State government each year, unless withdrawn, making it tax-deferred. Therefore, you earn interest on your premium, interest on your interest, and interest on the dollars that would have paid income taxes. You will not pay taxes on your annuity interest until you take it out of your annuity.

People are living longer. I want to make sure I don’t outlive my income.

With annuities, you can choose a settlement option that will be the same every month. In fact, you can choose an option that will provide your monthly income to be the same as long as you live. Your money will never run out, and if you die prematurely, your annuity is guaranteed to continue the same monthly income to whomever you name for the balance of the minimum guaranteed period.

An equity-indexed annuity offers a minimum guaranteed interest rate with potentially higher benefits linked to the appreciation of a bond or equity index. You will be combining the stability and tax-deferral of a fixed annuity with interest rates linked to a U.S. Financial Market Index. You can lock in your interest annually and still continue to grow with future appreciation in the index. Even if you are the most risk-adverse investor, you can enjoy the potential inflation-fighting returns offered by equities.

By using this information, you can build a strong foundation and plan for your financial survival. To enjoy market-linked returns and protection of principal and prior earnings, contact us and ask about an equity-indexed annuity.

Erie Insurance Offers New Payment Option

Effective July 1, 2002, Erie Insurance is offering their auto and home insurance policyholders the convenience of monthly payments via direct debit. Called ERIEExpressPay, this plan offers the convenience of having premium payments automatically withdrawn from your checking or savings accounts.

Contact our office for more information on this new payment plan.

INSURANCE INSIGHTS is an electronic newsletter published monthly (except for January and August) by G. C. Weimer Associates, Inc. Information contained herein is accurate to the best of our knowledge and belief as of September 1, 2002. If you have a topic of interest for a future issue, e-mail us at info@gcwinsure.com.