Post written by Nicole Rubin of Insureabilities.com
Life insurance is one of those incredibly important parts of life, misunderstood by a surprising number of people. It’s an easy mistake to make. Insurance policies have confusing rules and regulations that can be difficult to understand. But actually, the truth might surprise you!
Thankfully, life insurance policies are far easier to manage than many people think. Not only are they straightforward, but they’re a lot more affordable and easy to understand when it comes to purchasing a policy. Let’s talk about some of the more common life insurance misconceptions so you can have an easier time picking the right policy.
Misconception: Life Insurance Isn’t Available to Most Seniors
While many think that it becomes increasingly difficult to get an affordable life insurance policy once you’re over the age of 60, this isn’t true. Of course, in later years, you will likely have to pay a higher premium and you’ll want to purchase a policy with a shorter term. There are plans that will still cover you in your senior years which can be a big help to your family and loved ones, in the event of your passing.
Keeping all of this highly organized is very important. You will want to make sure that sensitive documents (insurance paperwork/policies, will and testament, power of attorney documents, etc) are easily accessible. Ensure family members can find them if tragedy should strike.
Life Insurance Isn’t as Expensive as You Think
Many people overestimate the cost of life insurance, and for good reason. Life insurance policies tend to pay out massive sums, so it follows that the premiums be sky-high too. However, many insurance policies cost less than $200 a year!
Life insurance is not as expensive as you think. Take your time and shop for a policy that meets your personal needs. Consider an online life insurance policy comparison tool so that you can be sure you’re getting the best possible deal.
You Should Get It When You’re Young
Another common misunderstanding about life insurance is that if you’re young and in good shape, life insurance is an unnecessary expense. But remember, one doesn’t purchase life insurance for today, it’s purchased for tomorrow.
Another important thing to consider is, when you’re healthy and young, you’ll be able to access better coverage at a more affordable price. Looking for a policy when you’ve experienced some serious health issues can cost much, much more in terms of insurance premiums.
You never know what’s going to happen, making life insurance an important part of financial planning. Ensuring your family and loved ones will be taken care, offers true peace of mind. It’s important to recognize life insurance is not as complicated or expensive as it seems. With appropriate due diligence, you’ll find the perfect life insurance plan to meet your needs.
Are you a Prime or Sub-contractor interested in collaboration and more opportunities? Chuck Schadl of the Georgia Tech Procurement Assistance Center, GTPAC, takes us on a 2-part journey covering important aspects of the Prime/sub-contractor partnership;
- Requirements for the Prime/Sub-contractor relationship and
- The limitations placed on the sub-contractors engaged in government contracting.
There are more than 90 Procurement Technical Assistance Centers throughout the United States intended to aid small business in the knowledge of government contracting.
Check out this episode of the Risk GovCon Podcast
SEAN MCCABE The image above published in Vanity Fair, this image portrays US Government Contractors in Sudan-https://www.vanityfair.com/news/business/2014/04/g4s-global-security-company
DBA Insurance is made out to be some sort of complex policy that few agents or brokers are familiar with unless they work with government & defense contractors. To assist in breaking down a few myths, listed are 30 commonly asked questions on DBA Insurance that may clear the air a bit. Visit https://theriskrecon.com for more details on the defense base act.
Interested in a quick quote, visit https://www.theriskrecon.com/dba-insurance-quick-quote/
- What is Defense Base Act insurance and who must obtain it? DBA Insurance is workers’ compensation insurance. The difference is it is intended for civilian employees working outside the United States on US military bases or under a contract with the U.S. government for public works or for national defense. Must be obtained by Employers, Subcontractors, Subordinate contractors.
- Is there a legal way to avoid purchasing Defense Base Act insurance? Yes. Waivers are permitted and granted for local workers however if no local workers’ compensation laws exist, the waiver has no effect and Defense Base Act insurance must be secured. https://www.dol.gov/owcp/dlhwc/dbawaivers/dbawaivers.htm
- What is Public Work? “Public work” is defined in the Act as any fixed improvement or any project, whether or not fixed, involving construction, alteration, removal or repair for the public use of the United States or its allies. However, “public work” is not limited to construction. It includes any project or operation under service contracts and projects in connection with the national defense or with war activities.
- Our contracting officer indicated DBA insurance was not required under our contract. Are we still considered liable if they told us this? If the Act applies, then Yes. Your company is still required to obtain Defense Base Act insurance. The only party responsible for securing coverage is the contractor. Not responsible for obtaining coverage include the insurance agent or broker; The contracting officer; The contracting agency; The Department of Labor; The State Assigned Risk Pool. Ultimate liability will fall under the contractor.
- Should we consider other insurance in addition to Defense Base Act insurance? Although optional, it is a wise consideration. Additional insurance programs that routinely compliment, although are not required under the Act include, Business Travel Accident, Kidnap & Ransom, and Life Insurance (with war),
- What does DBA provide in the form of “Benefits”? The Defense Base Act provides disability and medical benefits to covered employees injured in the course of or arising from employment and death benefits to eligible survivors of employees killed in the course of employment or who died of causes arising from employment.
- To whom and when does the Defense Base Act NOT apply? The Defense Base Act does not apply to the injury or death of (1) an employee subject to the provisions of the Federal Employees’ Compensation Act; (2) an employee engaged in agriculture, domestic service, or any employment that is casual and not in the usual course of the trade, business, or profession of the employer; and (3) a master or member of a crew of any vessel.
- Does DBA only apply to US Citizens? No. It applies to all paid workers associated with the contract. Third-Country Nationals, Local Nationals – Benefits under the DBA are payable regardless of nationality. Therefore, employers should secure insurance coverage for all of their employees working outside the United States under a U.S. government contract, including U.S. citizens and residents, host country nationals (local hires), and third country nationals (hired from another country to perform work in the host country). I wrote this article because this is one of the top 30 commonly asked questions on DBA Insurance.
- We work in Puerto Rico, a US Territory; are we required to have DBA insurance? Yes, Puerto Rico is covered under the Defense Base Act as part of its scope.
- Are grants required to secure Defense Base Act insurance? Grants – work performed pursuant to a grant or cooperative agreement is not covered under the Act.
- Is Defense Base Act Insurance a reimbursable expense under the contract? The cost of insurance (premiums) from a reimbursement perspective, will be defined in the terms of the contract.
- When is Defense Base Act insurance needed? DBA insurance must be provided to employees working outside the United States on US military bases or under a contract with the U.S. government for public works or national defense.
- Are subcontractors required to have Defense Base Act insurance? If they sub the workout, does that subcontractor have to have their own DBA insurance or can they be covered under ours? They must have their own. DBA Insurance is intended for those workers for a company that is under their payroll and is doing the work themselves. The sub-contractor cannot pass down the work to a sub-sub-contractor and have them covered under their DBA insurance. The insurance requirements under the DBA require every employer (including contractors and subcontractors) either to secure insurance for the payment of workers’ compensation benefits provided under the Act or to be permissibly self-insured. If a subcontractor fails to secure the payment of compensation, the contractor will be liable and will be required to secure the payment of such benefits.
- What can be used in lieu of DBA insurance from a program perspective? (We already have insurance, but not DBA.) Private Insurance Programs may supplement but cannot substitute for mandatory DBA coverage. Supplemental insurance may be considered in addition to DBA, such as life insurance for relatives not covered as dependents under the Act as these benefits are separate from the DBA program.
- When is Defense Base Act insurance needed? If you made it this far on the 30 commonly asked questions on DBA Insurance, good for you. You are halfway there. In short, whenever an overseas contract is awarded, DBA insurance must be considered. DBA insurance must be provided to civilian employees working outside the United States on US military bases or under a contract with the U.S. government for public works or for national defense.
- Is Defense Base Act insurance required for a quick, short term contract? There is no exception for the provisions of the Act for a “short trip” overseas, for “only attending a meeting”, by an executive (“not a worker”), “overseeing, not working”.
- The owner or CEO is excluded under our Workers’ Compensation insurance policy. Does the owner or CEO fall under the Defense Base Act insurance requirement? Even a CEO is an employee under the Act, and all employees are covered.
- Can we purchase Defense Base Act insurance for a period less than a year, such as a one-month contract? The coverage will be in place for one year. There are no short-term policies available that would limit the time in which the coverage would be active for less than one year.
- Defense Base Act insurance is not required for government contract work in the US. Where would the coverage apply? Employees working outside the United States on US military bases or under a contract with the U.S. government for public works or for national defense. Puerto Rico and Guam are included although they are US Territories.
- Why is DBA insurance required on our contract even though it is not specified in the insurance section of the contract? Just because it isn’t there, doesn’t mean it isn’t required. Not all contracts drafted by the US Government are worded the same way. Regardless if the Defense Base Act insurance requirement is listed or not, it is the responsibility of the contractor, subcontractor, or subordinate contractor to verify its need under each contract award.
- Can we obtain a DBA insurance Waiver for our contract work and if so, does apply to all under the contract? Waivers may be provided to employers after review and approval from the Department of Labor. When requesting a waiver, it should NOT be sent by the insurance broker, the contractor, or the contracting officer. It must be submitted by the employer. The waiver will only cover workers who are covered by another national or provincial workers’ compensation act for the entirety of their claim, without exclusions for war risks, nuclear biological, chemical, radiological or other exclusions. It is Department of Labor policy that waivers do not apply to citizens or legal residents of the U.S. or to employees hired in the U.S. Waivers are granted for local workers, however, if no local workers’ compensation laws exist, the waiver has no effect and DBA must be secured. 30 commonly asked questions on DBA Insurance addresses additional information on this one below.
- Would we need one than one Defense Base Act insurance policy if we have multiple contracts in place? Multiple task orders may be covered under one policy if the insurance company agrees. In some cases, multiple contracts may be assigned, by endorsement, to one policy. If contracts vary in scope, location, and operation, then multiple policies may be needed. Further, your insurance and contract department may elect to provide insurance for one contract with one policy for easier accounting. If your company has concurrent contracts with different federal agencies, it is quite possible that workers for the same employer may be injured in the same incident and be covered by different insurance policies (USAID)
- Does Defense Base Act insurance include coverage for Kidnap & Ransom? No. Kidnap & Ransom coverage is obtained separately from the Defense Base Act insurance program. Some insurance companies may add Kidnap & Ransom coverage to a DBA insurance policy, but the terms and limit should be reviewed.
- Is Defense Base Act insurance considered “24-hour coverage”? No. Although DBA insurance is active during all periods of work, it does not cover outside activities, such as excursions, periods of rest & relaxation (R&R), additional travel during breaks, etc. It is intended to provide benefits for injuries and lost wages due to work-related conditions.
- Why doesn’t our current insurance company want to provide Defense Base Act insurance? Although many insurance companies throughout the US are able to provide the insurance, many have decided not to. Here is a current list of approved insurance companies that may offer coverage. Insurance Carrier List
- Can Defense Base Act insurance have a deductible attached to it so the premium will be lower like our current workers’ compensation plan? No. All DBA policies are without deductibles and are considered “Guaranteed Cost”
- When we applied for Defense Base Act insurance through our insurance professional, we only received one quote. Why? Depending on the work of the contract, each insurance company has an underwriting appetite or level of comfort, when it comes to the types of risk they are willing to represent. The higher the risk, the fewer the willing insurers there may be that will offer a quote.
- How do we know if our subcontractor or prime contractor currently has Defense Base Act insurance? Your contracts or administration department should request a certificate of insurance from the subcontractor or prime. The certificate will list the carrier, expiration date of coverage and policy number. It is important to verify the coverage is in place by contacting the insurance company.
- What employment activities does the Defense Base Act apply to? Work for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside of the United States, including those in U.S. Territories and possessions; Work on public work contracts with any U.S. government agency, including construction and service contracts in connection with national defense or with war activities outside the United States; Work on contracts approved and funded by the U.S. under the Foreign Assistance Act, which among other things provides for cash sale of military equipment, materials, and services to its allies if the contract is performed outside of the United States; Work for American employers providing welfare or similar services outside the United States for the benefit of the Armed Services, e.g. the United Service Organizations (USO); and Any injury or death occurring to any such employee during transportation to or from the place of employment, where the employer or the U.S. provides the transportation or the cost thereof. If anyone of the above criteria is met, all employees engaged in such employment, regardless of nationality including U.S. citizens and residents, host country nationals and local hires as well as third-country nationals (individuals hired from another country to work in the host country), are covered under the Act. https://www.dol.gov/owcp/dlhwc/ExplainingDBA.htm
- What is the worst thing that could happen if our company doesn’t obtain Defense Base Act insurance, but is required to do so? The last question of the 30 commonly asked questions on DBA Insurance…An employer who fails to secure the payment of compensation under the Act through an insurance carrier or to obtain authorization to be self-insured may face criminal prosecution and be subject to imprisonment and/or fines. If the employer is a corporation, the president, secretary and treasurer can be prosecuted individually and may be personally and severally liable for compensation and other benefits. If the employer is not insured, an injured employee also may elect to either claim compensation under the Act or sue for damages for his/her injury under general tort law. In such a lawsuit, the employer may not rely on the customary tort defenses that the employee is prevented from recovery by (1) his/her own contribution to the cause of the injury or (2) his/her own negligence or wrong-doing. Furthermore, your company would be considered contractually non-compliant and could jeopardize performance standing and future contract awards.
If you have any questions about 30 commonly asked questions on DBA Insurance contact Brian Smith at (404) 918-4775 or firstname.lastname@example.org. or visit www.theriskrecon.com
Top 10 buying tips for Defense Base Act Insurance that are going to build confidence and simply the purchase of your next DBA policy.
Where are Rates Going?
Before we get into the Top 10 buying tips for Defense Base Act Insurance let’s review a couple of insurance carriers. AIG and Allied World Assurance Company (Allied) have maintained flat rates for both renewals and new business policies requiring Defense Base Act Insurance. Leading indicators continue to point toward a flat rate trend due to downsizing of U.S. Government Contracting presence throughout the Middle East. Changes may occur in other regions that could potentially increase rates in Western Africa and South America.
Other Insurance Carriers – What are they doing?
Underwriters maintain a conservative posture when considering new DBA insurance programs. This makes it more important to have the Top 10 buying tips for Defense Base Act Insurance. A trend supported by negative loss histories of mandated insurance programs with fixed rates based on a list of standardized classifications. These included services, construction, security, and aviation. Faced fixed rates for a wide variety of risks within these categories and unable to underwrite to specific conditions or loss factors, costs soared as claims outpaced premiums. CNA and Zurich were victims of this trend, attempting to profit by adding more risks to their portfolio of DBA accounts. The result, little engagement in the current marketplace when it comes to offering coverage as losses continue to shine a negative light on the DBA insurance program.
TOP 10 CONSIDERATIONS WHEN OBTAINING OR RENEWING DEFENSE BASE ACT INSURANCE
- Get your pricing while preparing for the proposal, not after. Get your Defense Base Act Insurance policy pricing before, not after, a proposal is sent in for consideration by the KO. This will avoid contract award margin surprises. Check out the Risk Recon Quick Quote page at https://theriskrecon.com/dba-insurance-quick-quote/
- Work with a competent insurance professional well versed in DBA insurance and government contracting. Sometimes it is not the work you are doing, but what you are not doing that is most important. If your insurance agent/broker is simply sending along the Statement of Work (SOW) with the application, the underwriter may assume those listed will be performed by your company, potentially increasing your rates.
- Complete a NEW DBA insurance application. Changes of ANY operations should be noted as well as countries, deployment periods, and payrolls. That being said…
- Verify payroll. Include the only payroll associated with the work while in the country under the terms of the contract. Short term deployments should reflect the percentage of payroll related to the work defined in the contract while under the insurance coverage only.
- Realize that DBA insurance is not 24-hour coverage for everything a contractor may encounter. Consider worldwide medical, accidental death and dismemberment coverage, and the evacuation of personnel on a moment’s notice. Periods of Rest and Relaxation (R&R) for personnel traveling outside of the contract scope or Kidnap and Ransom situations, Defense Base Act Insurance will not respond.
- Review any and all emergency response programs supported by the DBA Insurance carrier, if any, that could be used on a moment notice if needed. Perform a drill where the system is tested against a scenario likely to happen based on the location of the work or the operations in question. Practice makes perfect.
- Ask about sub-contractors and whether or not they can be added to your DBA insurance policy. Avoid contractual non-compliance due to coverage issues by discussing sub-contractors in your program. Unless agreed to in advance, some insurance companies may balk at covering sub-contractors. Always ask in advance in order to avoid costly situations.
- For companies associated with low-risk tasks or environments, ask your insurance professional about alternative market options that may consider your work. Insurance companies with a low-risk threshold may provide a quote that is competitive or lower than currently in place (renewal) or options for new work.
- Consider the rate, not the premium. The premium is a result of several factors, of which one is the rate. This is where I suggest you focus your attention. The rate is critical in any current or future contracts with similar work and/or location. When determining the price for future contracts, consider the rate when developing your model.
- A minimum premium may appear high when comparing to others, but ask why before you do anything else. Time and again, clients have mentioned the minimum premium costs associated with DBA insurance. Rightfully so. Nonetheless, even a low payroll contract in Poland will have a minimum premium of at least $5,000 USD associated with the policy. Middle East countries have a higher minimum premium of $7,500. Being prepared for this cost is critical to maintaining a profitable contract. Using any available remaining premium is suggested by securing additional contracts, offsetting the high cost of the initial insurance policy.
Finally, let’s end with some math… Top 10 buying tips for Defense Base Act Insurance by the numbers
When reviewing your need for contract proposal costs associated with DBA insurance, use this simple formula:
Payroll ÷ 100 × Rate = Cost for DBA insurance
Your payroll for a construction contract in Brazil is $1,000,000 USD with a rate of $9.50 from the insurance company providing DBA insurance. (Sample numbers for illustration only)
$1,000,000 ÷ 100 = $10,000 × $9.50 = $95,000 in premium.
For additional questions or comments, contact Brian S. Smith direct at (770) 250-0227 or via email at email@example.com