Time Doesn’t Stand Still

Time doesn’t stand still and we are not getting any younger.  At least I’m not.  Eventually we all will at some point retire.  As lawyers in the private practice of law, you need to prepare for retirement from an insurance perspective.  

When you retire, you want to make sure that you take the proper steps to maintain the coverage you paid for in all the years prior.  You do this by securing what is known as tail coverage referred to as an Extended Reporting Provision.  Tail coverage will allow you to report future claims filed against you stemming from professional services you provided to clients prior to your retirement.  Hence the term tail coverage.  

Tail coverage is an essential piece of your retirement plan and it is not inexpensive (cheap).  The cost of tail coverage is usually based upon a percentage of the last premium you paid prior to retirement.  Cost can be upwards of 300% of the last premium paid. For example if the last premium you paid for your policy prior to retirement was $2000, your tail coverage could cost as much as $6000. 

It is important to note and to plan for that most carriers will offer a free retirement tail providing that you satisfy certain requirements.  Different carriers have different requirements however most stipulate that you must have been insured with the carrier for three consecutive years to be eligible for a free retirement tail.  Therefore you need to check with your broker and confirm what the requirements are in order to obtain a free retirement tail.  

Do not wait until the last minute to check as we are talking time requirements of at least three years and be careful as to not change carriers when you are within that three year time frame.  And if you do have to change carriers when in that retirement time frame, consult with your broker on what you will need to do to obtain a free tail with the new carrier.  There may be options where you won’t have to start over at year 1 of being continuously insured.

Remember, when you’re getting close to retirement, ask questions, get answers and confirm that you qualify for a free tail or at a minimum can purchase a tail. It will help provide for a secure retirement and possibly add a little more cash to your retirement savings.