Homeowner Insurance Policy Endorsements

Posted on January 21, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Home Title and Boat Insurance for Physicians

By Gary A. Cook; MSFS, CLU, RHU, CFP® CMP™ insurance-book

The physician homeowner is well advised to consider a multitude of endorsements and/or potential increases in their insurance policy limits. 

Examples include:

· Scheduling personal property, such as jewelry, furs, golf equipment and computers, which have been exempted from coverage, or coverage has a severe dollar limitation. 

· Increasing liability coverage to take advantage of the minimums needed for “Umbrella Liability” to be covered shortly.

· Theft extension endorsement to remove the exclusion for loss of unattended property from a motor vehicle, trailer or watercraft.

· Earthquake and/or sinkhole collapse coverage.

· Increasing the deductible from the standard $250 to a convenient self-insurance amount. 

Two other important riders include home-title and boat insurance. 

Home Title Insurance

As a routine part of any home purchase, a history of the title to the property, as well as any liens or conveyances, is completed.  This is referred to as title insurance, and typically protects the mortgage lender from any title defects.

If a title defect causes loss, the title insurance company will indemnify the lender, not the homebuyer, to the extent of the loan.  These are single premium policies of indefinite duration, but can terminate when the loan is retired.

Title insurance is usually required by the lender at the time of settlement.  If the state does not required this coverage to be paid by the seller, its payment can certainly be negotiated by the parties involved. The medical professional should also inquire as to the cost of their own title insurance policy.  This second policy would protect them rather than the mortgage lender. 

Although it would undoubtedly add to the expense of closing, there is no harm in requesting that the seller be responsible for providing this protection to the purchaser as well.

Boat Insurance Overview

Watercraft and small pleasure boats are usually covered within a homeowner policy, but generally only for $1,000.  More expensive boats are often insured either under a separate Inland Marine policy or as a Personal Articles Floater (attachment) to the homeowner’s policy.

The decision between these two alternatives usually involves the liability risk element. There is no provision in the Personal Article Floater for liability, and although it could be increased on the homeowners, it is usually preferable to use a separate policy.

Other items to consider are the size of the craft, maximum speed, engine horsepower, waters navigated and special uses, such as water skiing or racing. Yacht insurance is usually written in the traditional terms of Ocean Marine insurance, with both “Hull” coverage and “Protection and Indemnity” liability coverage. 

It is quite different from an Inland Marine policy and is beyond the scope of this discussion. 

Conclusion 

And so, what is your experience with any – or all – of the above insurance policy riders; worthwhile or worthless? 

More Information: http://www.jbpub.com/catalog/9780763733421

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Debt-Based Securities Terms and Definitions for Physicians

Posted on January 21, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

A “Need-to-Know” Glossary for all Medical Professionals

Staff Writers

 

Accrued interest: Interest that has been earned but not received; when a physician purchases a bond from a bondholder, the physician owes the bondholder interest for the period of time the bondholder held the bond. Because interest is paid semi-annually, the period of time that has elapsed is the accrual period. 

Basis point: One one-hundredth of a percent; a measure for interest rates and bond yields. Bearer bond: A bond with coupons attached, evidencing ownership. 

Call feature: The provision in the indenture allowing the issuer to redeem the bond prior to its maturity date.

Convertible bond: A bond that promises that the holder can convert it into stock within a specified period of time at a specified price and specified ratio (a bond equals a given number of shares of stock). 

Coupon rate: The specified interest rate paid by a bond issuer.

Credit rating systems: The classification systems used to indicate the risk associated with a particular bond issue.

Debenture: A debt security that is not secured by a mortgage on a specific asset. It is backed only by the earnings of the issuer, known as full faith and credit.

Default: The failure to pay interest or principal on debt securities when those payments are due. 

Discount: The sale of a bond below its par value. 

Duration: The measure of volatility, expressed in years, taking into consideration all of the cash flows produced over the life of a bond. For example, if the duration of a bond is four years, then the price of the bond changes 4% for every 1% change in interest rates.

Indenture: A formal agreement between the issuer of a bond and the bondholders that specifies the maturity date, interest rate, and other terms.

Interest: The payment the issuer makes to the physician bondholder for the use of the bondholder’s money. 

Maturity: The time at which a debt issue becomes due and the principal must be repaid. 

Principal: The face value of the bond, also known as par value. 

Refunding: The act of issuing new debt and using the proceeds to retire existing debt.

Registered bond: A bond that has its ownership registered with the commercial bank that distributes interest payments and principal repayments. 

Sinking fund: A fund in which money to pay off the debt accumulates; bond issues that have a sinking fund are considered less risky than those without one.

Trustee: The entity, usually a commercial bank that is appointed to ensure that the terms of a bond’s indenture are met. 

Yield: The potential return offered to the bondholder. 

Yield curve: The relationship between yields and dates of maturities of debt securities as plotted on a graph. 

Yield to maturity: The yield earned on a bond from the time it is purchased until it is redeemed. 

Zero coupon bond: A bond that pays both principal and interest at maturity. 

  • Related info: www.HealthDictionarySeries.com 
  • Note: Feel free to send in your own related terms and definitions so that this section may be updated continually in modern Wiki-like fashion.  

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Bequest Management

Posted on January 21, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Doctors Dealing with Financial Favor Requests

Staff Writers

 

Physicians who have earned wealth – or recently acquired new wealth – often receive numerous requests from family, friends, acquaintances and others for financial assistance.

These requests may take the form of requests for loans, gifts, contributions and/or “investments.” They often come at a time when the doctor is most vulnerable to requests for assistance, especially when resources are new or far in excess of his or her previous experience. 

Just Say “No” – Initially

It is often advantageous to make no transfers [whether as outright gifts or investments and loans from which there is the expectation of an ultimate return of the funds] until after both short-term and long-term cash flow models have been constructed.

Within the framework of existing or the newly wealthy doctor’s short-term and long-term needs, transfers can then be considered and/or incorporated. With a cash flow model, total annual transfers can be forecasted and planned for, much the same as with any other anticipated disbursement. 

Example:

To illustrate within the context of the short-term and long-term projections of the newly wealthy, the doctor may want to incorporate -say- $50,000 per year of intra-family assistance. Both the timing and amount of this type of disbursement can be planned for, in much the same way as the purchase of replacement automobiles can be planned. 

Construct an Action Plan

Having a definitive, written action plan [or charitable foundation] can reduce the emotional demands placed upon a newly wealthy individual.

A written plan provides the framework for making informed, timely, disciplined transfers, rather than mere reactions to emotional pleas for assistance. 

For example, the affluent doctors may find it advantageous to adopt a policy that no transfers will be made until at least six months after the first request. This waiting period can provide the doctor time to consider whether or not the transfer meshes with his or her long-term desires and investment policy.

Retain a “Third-Person” Intermediary

It also is common to use a trusted financial advisor – or personal health economist – as an initial screening mechanism for requests, as a sounding board to discuss merit, and as a potential “bad guy” onto whom the ramifications of denying a request can be shifted. 

Just as this advisor or third-person intermediary can play an important role in being the deal breaker when appropriate in the corporate setting, he or she can be equally effective in taking the blame for the doctor, who then can maintain personal interaction with the party requesting a transfer. 

Depending on the personality of the wealthy physician, the intermediary can also serve an important role in preventing the individual from sharing too much.

Adhering to established formal written guidelines [IPS = Investment Policy Statement] that outline the parameters of an individual’s long-term financial plan can be an effective backstop to the untimely depletion of an asset base. 

Transferring the Right Way

When financial or other asset transfers are made they may take the form of outright gifts, investments, or loans. And, always be sure to do it correctly, formally and thru your intermediary. For example:

  • Gifts must be examined in the context of associated gift tax liabilities.
  • Investments should be accomplished within the framework of the individual’s written investment objectives document.
  • Personal loans should be implemented as legally enforceable transactions. 
  • Don’t forget charitable intent and philanthropic giving. 

Conclusion 

Feel free to comment and discuss your experiences with the above? 

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