Asset Protection Insurance
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Basically, asset protection insurance is a form of risk management primarily used as a buffer against possible losses from lawsuits or unexpected catastrophic events. The Bible indicates that God is concerned about people's well being. That includes finances. Passages relating to financial health can be found throughout the Bible. "Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospereth." (3 John 2) Prospering includes insuring that a person keeps what he or she has worked so hard to obtain. In the simplest sense, insurance is defined as the transfer risk of from one entity to another. Premiums are paid to do this. Car or homeowners policies are prime examples. Several other types of policies are available to help property owners, businesses, and other professionals protect their assets. It can also be a useful technique to protect property from potential litigation and creditors. Asset shielding is a serious legal issue. And, there is a fine line between legitimate shielding and fraudulent actions. Generally speaking, insurance is considered legitimate and at times required by law. In fact, some laws permit shielding of assets to prevent individuals and businesses from suffering devastating loss. But, a policy should be only one part of a larger asset plan. Since property shielding is a legal issue, an attorney or financial expert should handle the arrangements and management of any plan.
Numerous arguments in favor of developing a plan and using asset protection insurance are available. Some programs are set up as hedge against lawsuits. In fact, potential litigation is the driving force behind asset protection. Arguably, America is the most litigious society in the world with the most practicing attorneys in the world. As a result, a person practicing a profession or running a business in the United States stands a greater chance of being sued. Unlike some methods of property shielding, which seek to conceal, hide, or place out of reach of creditors or civil judgments, asset protection insurance simply guarantees the owner will not be held financially responsible, it they ever are sued. In a legal application of the practice, asset protection is sometimes referred to as debtor-creditor law. It is a set of legal techniques incorporating statutory and common law designed to protect individuals and businesses from catastrophic losses that occur from unexpected hazards such as business failures, lawsuits, and civil money judgments. Asset shielding strategies are designed based on many factors. Again, an attorney or financial expert should be involved in the management of an asset plan.
Many types of asset protection insurance are available. Most are common and used daily. More uncommon are policies that can be bought to protect investment portfolios. In practice, the policy will pay an investor's beneficiaries the amount originally invested, if the investment account doesn't do well. But, research this type of policy thoroughly because there are some people in the financial world who believe an investment policy plays more on a person's fear of losing their money than on real necessity. Therefore, it may not be a good investment. Several reasons have been given for staying away from this type of asset protection insurance. First, it's expensive. Costs vary, but can be $50 or more per $10,000 invested. These types of policies are good for the company providing the policy because the chances of a person losing their entire portfolio to bad investments are low. It pays only the amount of money a person lost. So, if a person's portfolio started out at $50,000 and dipped to a value of $40,000 at the time of the person's death the company would only pay $10,000. Some financial experts believe a term life policy would be a better investment.
Another, and perhaps more valuable type of policy, is called guaranteed asset protection insurance. It is coverage offered as a supplement to automobile policies. GAP provides another layer of protection and covers certain types of losses not covered by most standard automobile policies. Basically, GAP pays the unpaid balance of an automobile loan, when the vehicle is a total loss. A general liability policy is designed to cover a variety of lawsuits. Malpractice is another type of coverage, but it's not just available to doctors. According to an online business site, lawyers, engineers, architects, real estate brokers, and other professionals can purchase a malpractice policy. Director liability insurance is available, as is what's called umbrella liability insurance, which takes effect when all other coverage has been exhausted. For example, if a person has a general liability policy for $50,000 but a civil judgment is for $75,000, the umbrella policy kicks in the additional $25,000. Finally, there is what's called an extended homeowner's insurance. Most homeowner's policies only cover claims related to the property itself. An extended homeowner's policy might cover events that occur away from the property.
Research all asset protection insurance companies before buying. And carefully discuss any asset protection plan, of which insurance is only one key component, with an attorney. Like some other business transactions, some insurance deals and sales people can be less than honest. There is a fine line between asset protection and fraudulent transfers of property. Federal and state law prohibits fraudulent transfers. Even if the transfer of assets is legally done, it might still have legal implications and is always an issue of morality. Creditors that have a legal right to the concealed property can suffer. An online search reveals that some asset protection insurance companies are involved with what's known as the offshore trust market. Unfortunately, according to several online legal sites, there are no clear lines between what is permissible and what is not. Insurance doesn't conceal any property; it simply protects the owner from losing property. When obtained from a reputable company, legality and morality should never be an issue.
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