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Disability Income Insurance: What Every Professional Needs to Know

Most people know they need to insure their life, their car, and their home or condo. But they often overlook insuring their most important asset - their ability to earn an income. Your income is the primary source of funding for a lifetime of things, from basic necessities to the hopes and dreams you have for yourself and those you love. Think about your income over an entire working life – a $75,000 annual income at age 30 today accumulates to $4,534,656 at age 65 (assuming 3% annual increases).

But what would happen if your income stopped because you were too sick or injured to work? Without a paycheck, how long could you pay your rent and utilities, buy groceries, make student loan payments, etc.? In all likelihood, your life would be thrown significantly off course.

Before you say this could never happen to you, consider the fact that 1 in 4 of today’s 20-year-olds will become disabled before they retire.1 And if you’re thinking that most disabilities are the result of freak accidents, you’re in for a surprise. The vast majority of disabilities, about 90%, are caused by various forms of illness including cancer, mental disorders such as anxiety and depression, muscle and back problems, and heart disease.2

What to Look for in a Disability Income Policy

Disability income insurance (DI) can help replace your income if you become too sick or hurt to work. It provides a buffer against the unexpected. Should disability strike, DI provides income that can be used to keep your household running as well as to help you adjust to your changed circumstances.

But before you go shopping for a DI policy, you need to know what features to look for to get income protection you can count on:

How Disability is Defined

The definition of Total Disability outlines what constitutes being totally disabled.

  • If a policy defines Total Disability as inability to return to work in any occupation, then it would typically pay benefits only if you were unable to perform any job, either your own or a job in a new field or occupation.
  • If the policy defines Total Disability as an inability to work in your own occupation, it typically pays benefits if you cannot perform the duties of the occupation you were engaged in prior to becoming ill or injured.
Coverage for a Partial Disability and/or Recovery

Not all disabilities will result in a total disability. Sometimes an injury or sickness will result in a partial disability.

  • Partial benefits are typically paid in an amount that is proportionate to the loss of income you suffer due to partial disability
  • Recovery benefits support your financial recovery even after you have physically recovered
  • These benefits are not available with most group plans.
Flexibility to Tailor Coverage to Your Specific Needs3

Optional features (also called “riders”) can offer you additional coverage base on your specific needs. Riders can let you:

  • Increase coverage as your income grows with no medical insurability requirement.4
  • Adjust benefits to help keep pace with the cost of living.
  • Safeguard retirement contributions.
  • Protect student loan payments.
Portability

Most professionals expect to change jobs or employers multiple times during the course of their career.

  • You can take individual DI coverage with you when you change jobs.
  • Group Long-Term Disability (Group LTD) plans typically are not portable.
Cancellability

To avoid the possibility of losing your coverage just when you need it most, choose a policy that’s both non-cancellable and guaranteed renewable to age 65 or 67— your policy cannot be cancelled by the insurance company and premium cannot be increased.

  • With group or association group coverage, you run the risk of being dropped and left unprotected at a time in your life when, due to your age or to a change in your health, it would be very difficult to qualify for coverage from another provider.
Timing

It’s important to note that the cost of individual disability income protection is age-based, so you can lock in a lower rate by buying now while you’re young and healthy.

  • You’ve made a significant investment of time and money to build your career with the promise of financial security and the other rewards your profession provides. But should you become too ill or injured to work, that promise evaporates. Contact a reputable DI insurance agent to ensure you have adequate protection for your greatest asset.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly-owned subsidiary of Guardian. Well-Being Wealth Strategies is not an affiliate or subsidiary of PAS or Guardian. MN Insurance License #20538279, AR Insurance License #8555982, CA Insurance License #0l10178.

CFP Board owns the CFP® mark, CERTIFIED FINANCIAL PLANNER™ mark, and CFP® mark (with plaque design) logo in the U.S.

  • 1. U.S. Social Security Administration Fact Sheet, December 2018.
  • 2. Council for Disability Awareness 2014 Long-Term Disability Claims Review.
  • 3. Product provisions and availability may vary by state. Optional riders are available for an additional premium.
  • 4. Restrictions and limitations apply. The amount of additional coverage available will be financially underwritten based on the amount of disability insurance you have or are eligible to receive, as well as your income at the time you apply.

Prepared by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY.

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2021 outlook: 6 trends that will influence construction this year

Several factors – some positive, some less so – are poised to shape the industry this year.

Here's some perspective to ring in the new year: “2020 bad, 2021 good.”

That’s the takeaway from construction observers looking ahead at the turn of the year, even as the bleakness of the pandemic surge and record deaths in the U.S. continue to weigh on their minds.

“My expectation is that the U.S. economy will shrink between 4% and 5% in 2020,” said Anirban Basu, chief economist at the Associated Builders and Contractors during a year-end webinar, where he also made the good-bad prognostication quoted above. “But we’re going to come back hard in 2021.”

There are reasons for hope, such as a second coronavirus vaccine being authorized for emergency use and shipped in recent weeks and the $900 billion relief package recently signed by President Trump. But the drivers of optimism among those who track construction are also more specific to the space, while encompassing fundamental shifts in markets and processes that will lead to more broad-based development activity in 2021.

Just listen to Tom Stringer, managing director for site selection and business incentives at professional services firm BDO, whose job is to find suitable development sites for corporate clients who want to build new facilities and offices.

“Site selection tends to be a leading indicator in the economy that businesses are starting to think about capital investments, and our phones have been ringing,” Stringer said. “So if your readers are the folks on the contracting side, well, they’re about to get busy, too.”

Stringer isn’t alone. According to a post-election survey of engineering and construction executives conducted by Deloitte, 68% of respondents characterized the business outlook for the industry as somewhat or very positive.

“We do see pent-up demand sitting out there as we end out 2020 and come into 2021,” said Michelle Meisels, Deloitte’s engineering and construction practice leader.

That widespread optimism among construction executives is grounded in the reality of several factors – some positive, some less so – that are poised to shape construction in 2021. Here are six of the top factors that will influence the industry in the new year:

Subs on the skids

The coming months and beyond could be particularly hard on subcontractors, and the contractors who will need them once projects pick up again.

“The market is just getting much more competitive for subcontractors, and therefore, sadly, some will go out of business, especially the smaller guys,” Meisels said. “General contractors may need to self-perform a lot of work they would normally sub out, and build those capabilities in house.”

That’s the road Michael Bordes, president of New York City general contractor AA Jedson Company, is already on.

He said during the pandemic, he’s had to pivot from the restaurants and gyms he built previously to focus on affordable housing projects that were still considered essential. But he’s also flipping the script and limiting his risk from subs by handling more work in house.

“We’re self-performing most of the construction tasks ourselves because the subcontractors that are out there are having a very hard time,” said Bordes, noting that affording insurance is one issue subs are struggling with. “The people we’re dealing with may not be transparent about saying we're having trouble with assurances or we're short on labor. If you keep it on your payroll, you at least have 95% control.”

Staying safe

Meanwhile, Bordes said he’s focused on keeping his workers safe and healthy by combating complacency and continually reinforcing mitigation strategies, which has become more challenging as the pandemic has worn on. And while he hopes his workers will sign up to get the vaccine, he says he’s not planning to force them to do so if they have reservations about taking it.

“We know masks work. We know sanitizing on a regular basis, washing your hands and not touching your face works to not get this disease,” Bordes said. “But while we would suggest to employees that it’s important to get the vaccine, we don’t feel we can force them. Some are still cautious about what the side effects might be in the future.”

While the Equal Opportunity Employment Commission, as well as a panel of construction lawyers, recently determined that employers could require workers to be vaccinated with certain exceptions, the implications of forcing workers who object to get inoculated over potential safety concerns is sure to be a challenge for contractors in 2021.

Hiring for the surge to come

With subs being squeezed, contractors will also surely be challenged to hire enough workers, even in house, when the pent-up demand of mothballed projects are put back into the marketplace once the pandemic is brought under control. At the same time, observers say companies aren’t doing so yet, since many new projects still aren’t coming to market, given the explosion of coronavirus cases going into 2021.

"The story there is that projects are still getting pushed to the right, so companies are not hiring unless they have a job to put someone on,” said Patrick Jones, who leads the architecture, engineering and construction division at Raleigh, North Carolina-based recruiting firm Orion Talent. “They’re not just out there building bench strength.”

He says while experienced superintendents and estimators are still in high demand, companies don’t necessarily want to hire individuals they would have to train and invest in while jobs are still scarce. “We see that hiring for what I would call the entry level roles has slowed,” Jones said.

At the same time, nonresidential construction has only regained 58% of the jobs it lost since the beginning of the pandemic, according to Ken Simonson, chief economist for the Associated General Contractors of America. In November, he noted, the industry’s unemployment rate was 7.3%, not seasonally adjusted, with 732,000 former construction workers idled.

On its surface, that may indicate contractors will have an easier time hiring coming out of the pandemic. But that’s still not likely to be the case, according to Basu.

During his economic forecast in December, Basu asked his audience of more than 1,000 participants how many intended to increase staffing in the coming year, with more than half responding affirmatively. That’s in line with the ABC’s Construction Confidence Index from November, which indicated a majority of firms intended to increase staffing in the next six months.

Given the demand for projects, along with many firms trying to hire workers whenever jobs are finally released in 2021, contractors may experience labor challenges all over again.

“I would predict that many of you will continue to suffer difficulty finding truly motivated and skilled workers,” Basu told his contractor audience. “One thing that has happened in past recessions is that many construction workers who lost their jobs left the construction industry altogether.”

Infrastructure on the agenda

On the bright side, there should be some increased infrastructure and building projects on the horizon.

This is especially true with President-elect Joe Biden pushing his Build Back Better initiative, which is envisioned as a broad spending program that could benefit contractors on multiple fronts.

"He's looking for a multitrillion-dollar infrastructure bill that includes a broad definition of infrastructure, whether it's surface transportation, aviation, waterfront, Army Corps, civil works, flood control mitigation projects, clean drinking water, renewable energy projects, K-12 public school construction or broadband," said Jimmy Christianson, vice president of government relations at AGC. "There's a lot in there."

Meisels also sees opportunity for contractors under that kind of program in 2021.

“Infrastructure and public utility projects could possibly see a sharp rebound,” Meisels said. “If the administration comes through and directs funds toward that, you’d see projects that are driven by this government spending.”

Office, manufacturing, distribution projects ahead

Part of that jump-start may already be happening on the private side. Take the activity Stringer, the site selection executive, has been seeing lately.

His clients are calling and expressing interest in expanding offices in tertiary markets away from where their headquarters are in densely populated cities. But they’re also looking to build manufacturing and distribution facilities, to help alleviate some of the vulnerabilities the pandemic brought to light in the just-in-time supply chain. 

“The supply chain issues that were rampant during the start of the crisis really presented significant business opportunities for the unsexy old ways of things like inventory and building warehouses,” Stringer said. “Hopefully, we’ll never be without toilet paper again.”

Indeed, the explosion of e-commerce has caused a boom in the sector. “The most obvious change of the year has been robust development of warehouse and distribution facilities to meet the sudden rise in e-commerce,” said Robert Smietana, CEO at Chicago-based industrial developer and consultant HSA Commercial Real Estate.

For example, CRG, the real estate development and investment arm of Chicago-based Clayco, plans to identify industrial development and acquisition opportunities in cities such as Atlanta, Chicago, Philadelphia, St. Louis and Columbus, Ohio. 

“It’s no secret that e-commerce has been a tailwind to industrial real estate over the last cycle,” said Kevin Scott, vice president of investments and developments for CRG. “But e-commerce users still represent just a fragment of the overall industrial user base. Specialized uses such as cold storage and data centers continue to grow, and we are excited about opportunities there.”

Renewed focus on the environment

Data center construction is one of two top-growth industries for Jones, the construction recruiter, to find specialty contractors. The other? Utility-scale solar.

“Big players in utility-scale solar have been on a growth pattern, and are really kind of hitting their stride in this next year,” Jones said.  “Obviously, the new administration would be beneficial to that as well.”

For example, Fort Lauderdale, Florida-based Moss Construction highlights several of the utility-scale solar installations it has worked on in recent years in its portfolio, and promotes on its website that it is "helping our nation move towards a cleaner energy future."

That growth has come as renewable energy is becoming cheaper than any new electricity capacity based on fossil fuels, according to sister publication Utility Dive. 

But that opportunity for contractors also illustrates the widening awareness of a broader range of companies focusing on the environment.

For example, contractor giants AECOM and Fluor said on recent conference calls they were experiencing increased interest in their environmental services practices from clients, while Jacobs announced it achieved its net zero carbon goal for its operations and business travel in 2020, with aspirations to be carbon negative by 2030. Balfour Beatty and Lendlease also recently announced carbon-cutting initiatives

“The construction industry is under tremendous pressure to improve their energy use,” said Meisels. “But I also think that construction companies that build capabilities to support green building standards and sustainable efforts by their clients are going to be positioned to thrive. You can't not address this if you want to be a leader in this space.”

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FBI Alerts to Rise in BEC Cyberattacks on US Orgs, Impacting Resources

A recent private sector alert from the FBI warns that hackers have been increasingly using business email compromise (BEC) attacks that can hinder operations and strain resources.

The FBI recently warned private sector entities that cybercriminals are increasingly leveraging business email compromise attacks against federal government agencies, which has hindered operational capabilities and further strained resources.

The alert was coordinated with the Department of Homeland Security Cybersecurity and Infrastructure Security Agency. Private sector entities have been encouraged to review BEC insights to bolster privacy and security mechanisms to avoid falling victim to these evasive tactics.

BEC is a constantly evolving and increasingly troublesome threat, as hackers become more sophisticated and adapt to current events.

Dig Deeper

The attacks typically target entities using spoofed emails, phishing attacks, compromised vendor accounts, and credential harvesting in an effort to alter payment instructions for services rendered by vendors or to hijack payroll direct deposit information.

Successful exploits not only lead to lost funds, it can also impact operational capabilities, damage business reputations, and lead to the loss of sensitive information, like employment data, banking details, and personally identifiable information.

The latest FBI IC3 Internet Crime Report showed BEC attacks are the costliest cybercrime under the current threat landscape. In 2020 alone, 19,369 BEC complaints were received by the FBI and led to about $1.8 billion in damages.

The FBI has observed these attackers leveraging open source information on victims, then pairing the gathered insights with malicious tools to masquerade as trusted partners and vendors to further the impact.

Hackers have also targeted government agencies that operate with assumed inadequate cybersecurity protocols, including a lack of personnel training. The aim is to compromise victim entities with minimal effort.

For example, threat actors often utilize phishing kits that bundle tools and resources within a user-friendly software, which are increasingly available for sale on the dark web and empower “even inexperienced cybercriminals with minimal technical skills to conduct more sophisticated attacks.”

“Rapid adoption of ad-hoc teleworking environments driven by the COVID-19 pandemic coupled with the ease of BEC operability against… government entities and vendors have exacerbated cybersecurity challenges,” according to the alert. “This surge in teleworking has increased the use of potentially vulnerable services, such as Virtual Private Networks and other remote support tools.

Notably, DHS CISA conducted 25 phishing campaign assessments in 2020 against government entities and found that of the more than 40,000 test emails sent during the assessment period—users made roughly 5,000 unique clicks of malicious links, or a 13.6 percent click rate.

The data reflects the need for entities to employ improved defense in depth migitations, coupled with enhanced phishing awareness training and email security efforts.

The FBI provided a list of mitigation measures for all sectors to employ, centered around bolstering employee education, conducting internal phishing campaigns to raise awareness, and encouraging a “skeptical cyber posture” within the workforce.

IT administrators were also urged to prohibit the automatic forwarding of email to external addresses and to frequently monitor the enterprise email Exchange server for configuration or custom rule modifications.

Further, the FBI recommended the use of an email banner for messages that come from outside the organizations and to enable alerts for any suspicious activity. Email filtering services should be employed or enabled, while administrators must disable hyperlinks in received emails and legacy account authentication.

“Consider if legacy email protocols, such as POP, IMAP, and SMTP1, that can be used to circumvent multi-factor authentication, are required,” according to the alert. “Ensure changes to mailbox login settings are logged and retained for at least 90 days.” 

“Configure Sender Policy Framework, DomainKeys Identified Mail, and Domain-based Message Authentication Reporting and Conformance to prevent spoofing and validate email,” it added. “Stay current on available patches for remote access features as well as VPN hardware and software.”

In healthcare, email phishing is now the prime entry point for ransomware attacks, which futher highlights the potential impact of the increased number of BEC attacks. Europol previously provided in-depth guidance on the best ways to defend against highly tailored spear-phishing attacks.

Earlier reports also support that employee security training and education against this critical threat can drastically reduce the risk to the healthcare enterprise.