by atlantamonart » Thu Dec 20, 2007 03:20 am
Did you know all commercial contractors they need to have life ins.. This is a requierment by their bonding company. This is just incase if they die at the middle of the project.
Has anybody approch them to sell life ins. to them. I think if you have good term ins that you can sell them you are in a good position with them!
Has anybody has any experience with them?
May
Has anybody approch them to sell life ins. to them. I think if you have good term ins that you can sell them you are in a good position with them!
Has anybody has any experience with them?
May
Posted: Thu Dec 20, 2007 03:30 am Post Subject:
I know nothing about life insurance but cannot see that this would be true. Life insurrance would be paid to the contractors befeficiary... not to the party they were working for. So why would a bond carrier care about life insurance? Anyone doing a job could die in the middle of it. Everyone is not required to carrier life insurance.
As always... I could be wrong.
Posted: Thu Dec 20, 2007 11:36 am Post Subject:
I agree with tcope, first that I don't know squat about life insurance...but would hazard a guess that this may be a state issue to make sure that there is money to pay his vendors and subs...but again not sure how the bonder would come into play other than to make sure ''they'' arent' the only ones paying...... :?
Posted: Thu Dec 20, 2007 02:52 pm Post Subject:
To answer your question: The general contractor has to buy life insurance and have his company to be at least part of the beneficiary, so that bonding company can come and finish the jobs he has insured.
May
Posted: Thu Dec 20, 2007 04:50 pm Post Subject:
A bond ensures that the contractor will complete the work on-time and for the stated amount. If the contractor dies, I'd think a valid claim could be filed against the bond. As such, the bond would address this type of situation... so why would life insurance be needed? If the money from a life ins. policy went to the remaining owners of the CG's company, how would this change anything? Are you saying the proceeds from the life policy would need to be given to the bond company (I don't see this as enforceable anyway)? If so, what good is a bond if the life policy is going to pay the claim anyway?
Posted: Fri Dec 21, 2007 01:20 am Post Subject:
Life insurance policy for General Contractors are required by the bonding companies, for the following reason:
In case of death for the owner of GC company, the bonding company will use the life money to expend for finishing outstanding contracts, left behind by the deceased GC.
Posted: Fri Dec 21, 2007 02:00 am Post Subject:
So what would the purpose of the bond policy be... if it's the life insurance policy that would pay? Beside that, if the GC's family or even the business get's the life money, there is no way for the bond company to make them complete the job or to pay that life money... it's not the bond companies money and they would not have a legal way of obtaining it.
Posted: Fri Dec 21, 2007 02:26 am Post Subject:
The life insurance purchased by the GC, the beneficiary to the policy, is the corporation.
a general contractor is to make, the benefoiciary, part the family and part the company.
we are familiar with the subject matter, because my husband & I have been in the business of general contracting for 20 years.
Posted: Fri Dec 21, 2007 10:38 am Post Subject: I don't understand this either
I don't understand either, why the bonding company (in effect) would be the bene. of the life policy...are we sure this isn't a pecular state law? Not that it isn't true just that it makes no common sense...Why not just have a higher bond? I thought that bonding insured deligent care of property and money not necessarily owned by the bondee....i was bonded when we owned a bait and tackle shop, because i sold fishing/hunting permits and had to send the conservation dept their money..so if i ran off with the money then the bond would've had to pay them....i totally get partners requiring large life policies but not the bonding companies...."a general contractor is to make, the benefoiciary, part the family and part the company." OP does it say this in the policy? and what percentage? It seems like a rip off to me the bonding company gets away with using the proceeds of a life policy? and the bond is for a certain amount anyway right? wouldn't they just pay that amount and be done with it?
OP please don't misunderstand we aren't challenging your experience
we are familiar with the subject matter, because my husband & I have been in the business of general contracting for 20 years.
it's just from a legal and insurance stand point it's just not making sense to us....and we both freely admit to limited knowledge in the life insurance area...ok?Where are our agents, and ins. teacher we need you dude! I've sent ins teacher a pm and hopefully he will have time to comment and maybe clear this up for tcope and i ....since we are having so much difficulty understanding this premise. :?
Posted: Sat Dec 22, 2007 01:32 am Post Subject:
I beleive i have been totally misunderstood. a bonding company in an in
direct way requires a general contractor to purchase a life policy, with the understading that portion of the benefit goes to the corporation, and other portion to the family of the deceased owner, in this case the owner of the general contracting corporation, wether "C" or "S" corporation. the portrion for the corporation will be used to finish the uncompleted contracts, which was left behind by the deceased CEO, owner, or president of the subject company.
Posted: Sat Dec 22, 2007 01:59 am Post Subject:
No misunderstanding. No one can legally make anyone spend the life insurance money to complete the work. This would not be legal.
Also, many CG's are self employed or their relatives have no interest in the CG's "company". So again, no one could make these people spend the proceeds of the life policy on anything.
Lastly, we have been saying that he _purpose_ of a bond is to ensure that the work is completed and completed on time. What good is spending money on a bond when the bond company would make the CG get a life policy that would take the place of a bond? This makes no sense.
I've not been able to find any information showing that a GC needs a life policy to get a bond.
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