8 minute read
INSURANCE SERVICES Protecting your crops against the unknown
from FARM CREDIT EAST
by NDSACatalogs
MANAGING RISK IS CRITICAL TO YOUR BUSINESS SUCCESS.
Mike Northrup, owner of Northrup and Sons, LLC in Rodman, N.Y.
LEARN MORE
Visit CropGrowers.com
CROP GROWERS INSURANCE
Farm Credit East offers crop insurance through its Crop Growers, LLP insurance agency. We call it weather management insurance, although it can also be structured to insure you against market fluctuations.
Most people agree that markets and weather are experiencing higher highs and lower lows. Crop insurance provides a safety net that limits the lows based on the percent deductible that you choose.
Managing the risks you face every day is an important part of running your business. Crop insurance can be an important part of your risk management plan. Our crop insurance team can tailor a program of insurance covering your needs with one of the following policies:
• Multi-peril policy. A little peace of mind goes a long way, especially when it’s easy and affordable to obtain. Multiple-Peril Crop Insurance (MPCI) can help you take some of the risk and worry out of the whims of nature by protecting your financial wellbeing from nearly all natural disasters, including drought, flooding, frost, disease, insects or other natural causes beyond your control. Yield and revenue protection are combined under a single policy for corn, soybean and wheat. The Chicago Board of Trade sets the price. • Livestock gross margin/dairy. Protection for dairy producers from rising feed costs or falling milk prices. • Crop-Hail. Gives you additional acre-by-acre protection that can be up to the full value of the crop. While not subsidized by USDA, it does provide additional flexibility for extra coverage above MPCI on high-value crops. • Pasture, Rangeland, Forage (PRF). A risk management tool to insure against a decline in the Rainfall index for a grid. The only cause of loss for a PRF policy is having a final grid’s precipitation fall below the trigger grid precipitation. • Dairy Revenue Protection (DRP). Provides protection against declines in quarterly revenue from milk sales.
INDUSTRY LEADING CUSTOMER SATISFACTION
• 96% thought our agents responded to their needs in a timely manner • 98% thought our call center employees were helpful in solving their problems • 96% were satisfied with our overall customer service • 96% said they would recommend Crop Growers to a friend. We’re proud of what our customers told us in our customer satisfactory survey. We work hard every day to continue to earn their business.
FREQUENTLY ASKED QUESTIONS CROP GROWERS
Why Crop Growers?
Our Crop Growers agents specialize in crop insurance and work on a team of Farm Credit East experts to provide customized, comprehensive management plans. They are salaried professionals that base their guidance on what’s best for you and not on commissions.
How much paperwork is involved?
All you need to supply is your planted acreage records and prior production records. In addition, perennial crop producers supply a pre-acceptance worksheet with information, such as insurable and uninsurable areas and crops. That’s it!
How much of a loss do I need to incur to receive coverage?
Qualified losses range from 25-to-50%, based on your coverage election. If you maintain production records by farm serial number, crop type, practice or noncontiguous land, you may be able to break your farm into separate insurable units. A crop loss on just one parcel, for example, may qualify for an indemnity payment. Talk to your agent about crop provisions for optional unit requirement and eligibility.
Do I have to use the county average yield in setting up my production history?
Your production records, not the county average, are used to determine the production history. Only when you lack proper records is the county average used.
How much does crop insurance cost?
Federal subsidies make crop insurance an affordable safety net for your business. Actually, the cost of crop insurance is well below the cost of commercial private insurance and ranges from just 2-to-7% of the liability. Government subsidies range from 55% to 100% of the liability. And, based on the numbers mentioned above, the cost/risk of self-insuring is far greater.
FREQUENTLY ASKED QUESTIONS CROP GROWERS
What crops are covered?
All crops are not insured in every county. But if you grow a crop that is insurable somewhere in the United States, and it’s not under a pilot program, your crop insurance agent can request rates that offer the same program and protection as insurable crops. If no other program is available in the United States, the Noninsured Crop Disaster Assistance Program (NAP) is available from the Farm Service Agency.
Do I need to be a member of Farm Credit East to use this service?
Crop Growers is an equal opportunity provider, meaning any crop grower can take advantage of this service.
Crop Insurance Plan Comparison Chart. What We Can Do for You!
TOPIC
BENEFITS ACTUAL PRODUCTION HISTORY
Production-based coverage protects the producer against a yield loss
REVENUE PROTECTION CATASTROPHIC COVERAGE
INSURES AGAINST
Production loss
APH yield X selected level
Selected percentage of the market price established Establishes a dollar guarantee based on the Commodity Exchange Price Provisions (CEPP) projected price
Revenue loss due to increase or decrease in price, low yield or combination of these
Approved yield X coverage level X greater of projected price or harvest price
Commodity Exchange Price Provisions (CEPP) projected price Production-based coverage protects the producer against a yield loss
Production loss
Approved yield X 50% level
55% of the maximum protection per acre as established by FCIC
GUARANTEE
PRICE
CREDIT LIFE INSURANCE
FOR PROTECTION FROM THE UNEXPECTED
You are the most important part of your business. Don’t leave yourself unprotected. Farm Credit East understands the value of protecting the lives of our members. That’s why we offer credit life insurance, which provides added financial security to your family and your business.
When making a major change to your business, such as taking on new debt, renewing a loan or bringing on a new partner, it’s a good idea to review your insurance coverage. Our knowledgeable staff can provide convenient quotes and cost-effective coverage tailored to your unique business objectives.
GROUP TERM
• Designed to automatically pay off or reduce your loan upon your death • Convenient one-page application • Guaranteed renewable to age 74 • Disability rider available for up to a $10,000 annual benefit
INDIVIDUAL TERM
• Guaranteed premiums for 5-, 10-, 15-, 20- or 30-year periods • Ideal for larger life insurance needs, such as income replacement, buy/sell agreements, key man insurance or estate planning • Requires a longer application, with a short paramedical exam
FREQUENTLY ASKED QUESTIONS CREDIT LIFE INSURANCE
What is credit life insurance?
Credit life insurance covers the outstanding balance of your mortgage or loan. The coverage provides money to help your family or farm business repay the loan in case of your unexpected death. It also gives them time to deal with their loss and temporarily relieves them of major financial stresses.
How much credit life insurance do I need?
Most people should carry enough insurance to cover all outstanding debt. Two other areas to consider after debt coverage are income replacement and dependent coverage. A common estimate is five times your annual income.
Who may participate in the insurance program?
All Farm Credit East customers under age 70 may apply, including your spouse and partners.
Can I insure just a portion of my loan?
It’s important to protect your entire debt, but you decide the percentage of your loan that you want to insure.
After my loan is paid off or refinanced, what happens to this insurance?
Once a loan is paid in full or refinanced, you can keep the insurance by simply transferring it to another Farm Credit East loan. If you don’t have other Farm Credit East loans, you may convert to an individual policy.
How often do I make payments?
Many businesses have fluctuating cash flows throughout the year. You may pay monthly, quarterly, semiannually or annually. Or you can have the policy charged to your line of credit.
FREQUENTLY ASKED QUESTIONS CREDIT LIFE INSURANCE
How do I apply for credit life insurance?
Simply complete an application at your local Farm Credit East office. Most customers enroll when they apply for a loan.
Do I need to take a physical exam?
Many customers do not need to take a physical exam. If one is required, the insurance company will pay for it.
What is the approval process?
In some cases, members can be approved right at their local Farm Credit office.
Who provides my customer service?
Thousands of Farm Credit customers participate in this program. Farm Credit East provides customer service and personalized assistance in all areas, including claims.
Who is the insurance underwriter?
Our partner is Minnesota Life Insurance Company, a Securian Company. They have insured American farmers for more than 50 years, and their financial strength is excellent.
A VIEW FROM THE FIELD
HOW DO YOU PROTECT YOUR CROP FROM MOTHER NATURE?
“Planting a crop means sticking a lot of money in the ground,” says Mike Northrop. Mike owns and operates Northrop and Sons, LLC, a busy dairy farm in Rodman, N.Y., where he and two of his sons grow corn and alfalfa for forage on about 500 acres of owned and rented land. The family sells part of their crop to an ethanol plant and to other farmers for silage. With so much invested, Mike felt the need for protection against the conditions they can’t control. “Of all the insurances that I buy, crop insurance is a good buy that has paid me more than I have paid in. It helps me sleep at night, because if all goes bad, I have something to fall back on.” – Mike Northrop
HOW WE HELPED
To shield against revenue loss from low yield or market fluctuations, Mike turned to Farm Credit East for revenue protection insurance. For his hay crop, he now carries pasture, rangeland and forage coverage, which protects him from loss due to lack of moisture.
“Crop insurance has given us a lot of comfort,” he said. “Jeremy Forrett, my Crop Growers agent, is very responsive. He takes all the worry out of it. I also like that my agent is salaried. If I buy a little or a lot, it has nothingto do with his personal livelihood, and that’s important to me.”
“As long as I grow crops,” says Mike, “I will take advantage of crop insurance to protect my investment.”
800.562.2235 | FarmCreditEast.com
