The American Institute of Certified Public Accountants (AICPA) has roots going back to 1887. Since then the association has gone through several name changes and membership rules until finally settling on the American Institute of Certified Public Accountants in 1957 and limiting membership to only certified public accountants.
The mission of the AICPA is to be an advocate for CPAs before various legislative bodies and public interest groups. The AICPA membership receives assistance and resources from the association through educational materials, career guidance, CPE and Learning tools, and certifications from the association.
The AICPA insurance trust provides CPAs and spouses and dependent children several insurance options. We will discuss benefits that the AICPA life insurance trust provides the members.
The AICPA publishes their mission statement on their website as:
What are the Benefits for an AICPA Member?
The AICPA members are offered various benefits such as a free subscription to the Journal of Accountancy, networking opportunities at meetings and seminars, substantial discounts on AICPA products and services, and significant discounts on products and services that are offered by partner companies such as Dell and Lenovo electronics, Hertz rental cars, and the Starwood chain of hotels.
Additionally, AICPA offers a solid Member Insurance Program where they offer personal and business insurance products that are designed to meet the specific needs of their CPA members, families, and their firms. For the purposes of this article, we’ll drill-down into the life insurance products offered through the AICPA life insurance trust.
AICPA Life Insurance Programs
AICPA members have different financial needs and different budgets for life insurance protection so the association made certain that the membership would have choices provided by the AICPA insurance trust. Currently, all of the life insurance products are being offered by Prudential Life Insurance which is a highly-rated national insurance carrier with an impeccable reputation for competitive pricing and outstanding customer service.
About Prudential Life Insurance
Even with operations spread out among the U.S., Asia, Latin America, and Europe, Prudential is one of the most well-known insurance providers worldwide. Established more than 140 years ago, Prudential has worked to help individuals, families, and businesses protect their wealth and assets. It’s safe generally safe to say that Prudential is considered the “gold standard” when it comes to life insurance providers.
Prudential Financial and its affiliated companies rank very high with all of the top rating services:
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AICPA Life Insurance from Prudential
AICPA reports that the life plans offered by Prudential and endorsed by the AICPA are one of the key reasons that they joined the AICPA.
CPA Life and Spouse Life Plans
Prudential’s CPA Life and Spouse Life Plan is a Term Life Insurance product that can work well as a stand-alone life insurance program or supplement other insurance that you may be covered under through an employer. This plan is available to AICPA members or members of other qualifying organizations.
Highlights of the CPA Life and Spouse Life Plans include:
- Death benefits up to $2.5 million at group negotiated rates that are extremely competitive
- Insurance coverage for members up to age 80-years old that is portable as long as your AICPA membership is active.
- Initial low insurance rates that will increase as you age.
- A Tax-free death benefit to your beneficiaries.
- Prudential will allow members to apply for additional insurance coverage at any time.
Optional Riders Available
Since the AICPA understands that members have different financial needs, certainly, a cookie-cutter policy will not be a suitable solution for every member. As a result, Prudential offers optional insurance riders that can be used to customize your insurance plan to meet your specific needs and broaden your insurance coverage.
- Annual Cash Refunds – The CPA Life and Spouse Life Plan provides an annual Cash Refund that serves to lower the actual cost of a member’s life insurance coverage. Although not guaranteed, members who are covered under the CPA Life and Spouse Life Plan have received a Cash Refund every year since the Plan’s inception.
- Dependent Child Coverage (CPA Life Plan only) – With the optional Dependent Child Coverage rider, policyholders can insure all their eligible children for $10,000 in coverage for only an additional premium of $6 per year. This coverage is also available for adopted or stepchildren as long as they are considered dependents of the named insured.
- Accelerated Death Benefit – The Accelerated Death Benefit rider is a free option that provides living benefits to the policyholder. This rider provides for the insurer to pay a lump-sum payment to the insured if he or she is diagnosed with a terminal illness. This payment is considered an advance of the death benefit and payment amount can be up to 75% of the policy’s death benefit or $1 million, whichever is less. The amount of the accelerated death benefit is then deducted from the death benefit paid to the beneficiary when the insured eventually passes away.
- Accidental Death & Dismemberment (AD&D) – The AD&D rider provides for the insurance company to double the death benefit of the policy if the insured dies as a result of an accident, or suffers the loss of both eyes, both hands, or both feet. If death results from an accident, the proceeds are paid to your beneficiary. If you lose the hands, feet, or eyes, the proceeds are paid to you.
- Disability Waiver of Premium – The Disability Waiver of Premium under the CPA Life Plan provides for the insurance company to waive your insurance premiums if you become totally disabled before the age of 60.
Level Premium Term and Spouse Level Premium Term
With face amounts up to $2.5 million, the LPT policy is an inexpensive stand-alone insurance policy or supplemental insurance to another life insurance policy. The primary difference between the LPT policy and the CPA Life Plan is that the LPT offers level premiums for terms of 10 or 20-years with level and then increases annually up to age 95.
Highlights for the Prudential AICA LPT are:
- AICPA members up to age 65 are eligible for coverage
- Death benefit available is up to $2.5 million
- Two policy terms of 10 years or 20 years
- The death benefit is paid tax-free to your beneficiary
Optional Riders Available
Just like the CPA Life policy, the AICPA LPT policy provides many optional riders that allow policyholders to customize their policies by broadening their coverage and adding living benefits.
- Cash Refund Opportunity
- Accidental Death & Dismemberment Benefit
- Disability Waiver of Premium
- Dependent Child Coverage
- Accelerated Death Benefit
Group Variable Universal Life (GVUL)
The AICPA life insurance trust also offers AICPA members who want lifetime insurance coverage combined with a cash component that accumulates substantial cash value over the life of the policy, AICPA is pleased to offer the Prudential Group Variable Universal Life plan.
With the GVUL, you get the features found in the CPA Life Plan and the following additional benefits:
- Guaranteed life insurance coverage to age 100 for policyholders who maintain their membership.
- Policyholders can choose a tax-deferred investment option that also includes a fixed account the is guaranteed by the insurer not to go below 4%.
- Provides access to your cash account via policy loans or withdrawals that are typically tax-free. These funds can be used in any way you choose.
Here are the product highlights of the Group Variable Universal Life Policy:
- Eligible Applicants: AICPA and State Society members or other organizations that qualify up to age 74.
- Maximum death benefit: $2.5 million
- Length of insurance coverage: Up to age 100
- Cash Refund Opportunity: Yes
- Tax-Deferred Cash accumulation
- Investment options
- Optional Riders: AD&D benefit, Disability Waiver, Dependent Child Coverage
Since the GVUL policy is regulated by the Securities and Exchange Commission, agents must hold special licenses and a prospectus must be delivered with every policy.
How Much Life Insurance do I Need?
Before you decide to calculate your death benefit, you should consider why you are purchasing life insurance. Some life insurance policies are purchased and designated for specific uses such as Mortgage Protection insurance or Final Expense Insurance. In these cases, the applicant is generally purchasing just enough coverage to meet a particular need.
If, however, your intention for purchasing life insurance is to replace your income stream for surviving loved ones, we recommend completing a “needs analysis” using an insurance calculator.
How does an Insurance Calculator Work?
First of all, if your insurance agent tells you to make sure you have at least ten times your annual income, tell him or her “no thanks” and ask for a “needs analysis.” An insurance needs analysis takes into consideration your debts, your assets, your planned investments, and any current insurance coverage, and then calculates a death benefit sufficient to replace your income.
Its purpose is to take into consideration your surviving loved one’s immediate needs, long-term needs, and the resources that are available in order to establish a sufficient death benefit to meet those needs.
The amount of life insurance you purchase should not be a guess and there are no specific rules to determine your coverage. The best method to determine the life insurance needs for you and your family is to use our Life Insurance Calculator which considers all of your financial circumstances to help you determine a sufficient amount of coverage. Click here for more information about calculating your insurance needs.
Group Life Insurance for CPA Firms
The AICPA certainly understands how important group benefits can be for employers. Having a powerful benefit program can make a difference in loyalty and tenure of valuable employees. In fact, in today’s economy, many job applicants are reporting that benefits and not compensation is the deciding factor on where they would rather work.
The AICPA Group Life Insurance products offered by Prudential Life Insurance help to provide valuable protection for employees and their families. There are two group life plans offered by the AICPA.
Prudential’s Group Life plan endorsed by the AICPA is designed for CPA firms who employ 25 or fewer employees. Similar to personal life plans, the Group Life plan offers very competitive pricing and the opportunity for annual refunds.
Employers have the opportunity to establish Plan Elections that include:
- Maximum coverage of $500,000
- Coverage based on earnings with a choice of 1, 2, or 3 times the employee’s annual earnings
- Offer immediate coverage or establish a waiting period
- Offer a dependent coverage selection
A firm’s principal office must be located in the U.S. excluding the state of Texas. The owner of the firm or at least a partner must be a member of the AICPA and the firm must have at least one employee who is not the owner, or partner, or member if the firm is an LLC or LLP.
Evidence of insurability is required based on answers to questions on the application. Typically, a medical exam is not required.
Applicants can choose from the following optional coverages:
- Optional Dependent Coverage rider
- Disability Waiver rider
- Accelerated Benefit Rider
Group Elite Life
Group Elite Life is offered by the AICPA Group Insurance Trust and is designed for firms with 25 or more employees and is underwritten by Prudential Life Insurance Company of America. The coverage is available is to partners, owners, and employees of the firm and is based on the number of eligible persons to be covered, their earnings, and the benefit schedule chosen by the firm’s management. Owners and partners are always eligible to select the maximum amount of coverage that is available.
Interested firms should contact the AICPA for complete eligibility rules, available face amounts, available optional riders, and a complete schedule of coverage. The AICPA Group Elite Life plan is considered a premium employee benefit that helps to increase employee loyalty and tenure.
We at Ogletree Financial insure many CPAs and their families looking for better options than what can be found through the AICPA life insurance trust. Lets face it, we are not all the same. Who is to say that Prudential can provide the cheapest life insurance policy for everyone?
For more information about the AICPA member life insurance program, you can contact the association at WWW.CPAI.Com.