Stacked Income Protection Plan

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Stacked Income Protection Plan (STAX)

STAX is available for upland cotton only in counties where actuarial documents have been released. If there are no actuarial documents, STAX is not available. It cannot be added by Written Agreement.

There are two STAX policies available – STAX RP and STAX RP-HPE and they can be purchased as a “stand alone” policy or may be purchased in conjunction with:

Common Crop Insurance Policy (YP, RP or RP-HPE) policy; or
Area Revenue Protection Insurance (AYP, ARP, or ARP-HPE) policy.

If purchased in conjunction with another MPCI policy, the STAX & companion policies must be with the same Approved Insurance Provider (AIP).

STAX is based entirely on the area (typically county) performance and an indemnity is only paid if the Final Area Revenue is less than the Area Loss Trigger. If the Final Area Revenue is above the selected trigger, no indemnity is due, regardless of the individual’s yields.

Area Loss Trigger

The Area Loss Trigger is selected by the insured in 5% increments from 70% to 90%.

Example

Expected Area Revenue = $400
Insured elects 90% Area Loss Trigger.
If the Final Area Revenue is less than $360 (90% X $400), an indemnity is due.

Expected Area Revenue

The expected yield for the area times the Projected Price as determined by the Commodity Exchange Price Provisions (CEPP).

Final Area Revenue

The actual yield for the area as determined by NASS or crop insurance data times the Harvest Price as determined by the CEPP.

STAX Coverage Range

The STAX coverage range is the difference between the Area Loss Trigger and the underlying policy coverage level, if applicable and cannot exceed 20%.

STAX Area Loss TriggerUnderlying Policy Coverage LevelMaximum STAX Coverage Range
90%85%15%
90%65%20%
90%None20%

A policy with a 90% Area Loss Trigger and 20% Coverage Range means the policy:

Will begin to pay when the Final Area Revenue drops below 90% of Expected; and
Is completely paid out when the Final Area Revenue is equal to or less than 70% of Expected.

Amount of STAX Coverage

The amount of STAX coverage is the Expected Area Revenue times the insured’s share that falls within the STAX Coverage Range.

Protection Factor

The Expected Area Revenue can be increased or decreased by electing a Protection Factor between 80% & 120% in 1% increments.

STAX RP Example

STAX RP PolicyArea Yields and Revenues
Area Loss Trigger90%Expected Area Yield525 lbs.
Coverage Range20%Expected Area Revenue$ 404.25
Protection Factor110%525 X $ 0.77* 
Share100%Final Area Yield399 lbs.
Acres in the Unit100Final Area Revenue
399 X $ 0.77
$ 307.23
Projected Price$ 0.72  
Harvest Price$ 0.77* Higher of Projected or Harvest Price
When a Loss is Triggered
$ 307.23Final Area Revenue
$ 404.25Expected Area Revenue
76%Area Performance is < the 90% Area Loss Trigger, so an indemnity is due.

 

STAX RP-HPE Example

STAX RP PolicyArea Yields and Revenues
Area Loss Trigger90%Expected Area Yield525 lbs.
Coverage Range20%Expected Area Revenue$378
Protection Factor110%525 X $ 0.72 
Share100%Final Area Yield399 lbs.
Acres in the Unit100Final Area Revenue$307.23
Projected Price$0.72399 X $ 0.77 
Harvest Price$0.77  

When a Loss is Triggered

$307.23Final Area Revenue
$378.00Expected Area Revenue
81.3%Area Performance is < the 90% Area Loss Trigger, so an indemnity is due.