Category: life insurance

Banking on Yourself for Your Business

Change is inevitable both in life and in business.

We prepare for life’s changes by saving money, buying insurance, and so on. Owning a business is no different, in fact it is even more important for the small business owner to protect themselves from change so they can continue to bring value to their clients.

While there are many different seasons for a business and various strategies to cope with changes, one extremely important factor that affects a business’s ability to weather any storm is adequate cashflow.

For example, one common trend is the expansion and contraction cycles of the economy. Right now, we are seeing high inflation and although we are not technically in a recession, many of us are feeling the pinch. Having adequate cashflow can ease struggles like this.

Y0u are probably asking, “what does this have to do with insurance?”. Insurance is designed to protect, and one of the best ways to protect against the ups and downs of cash flow is to create your own bank. This can be done with cash value life insurance.

There are several types of cash value life insurance and although each product is slightly different to support different needs, they are all based on the same principle. All cash value life insurance policies throw extra money in the form of elevated premiums into investments or investment indices. This in turn yields returns based on the stock market.

The best programs are indexed off the market, meaning that when the economy soars you participate in the growth, when it contracts your accrued money does not diminish. This strategy has been used by some families over the last several decades to build generational wealth.

In the hands of a business owner this strategy can build a very robust emergency savings plan for smoothing out the ups and downs in the economy as well as be instrumental in weathering big changes in the business environment such as the recent COVID19 pandemic. Additionally, because it is life insurance, it can be used in the event of the death or disability of the owner or a key employ as well as ensuring equity in dissolving a business partnership.

To set up an effective program, it is important to consult with an insurance professional. You should also consult with a business continuation specialist to get a more in-depth analysis of how to keep your business going through the variety of changes that we all encounter. For starters check out this article by Patty Bonsera.

If you do not have a good insurance professional on speed dial and want more information, reach out to my office at 719-247-0008.

Celebrate Life

SEPTEMBER IS LIFE INSURANCE AWARENESS MONTH

Especially after the recent pandemic, more people are acknowledging the uncertainty of life and the need for protecting their family or business when they are no longer around.

BUT, how does one protect themselves and their loved ones in the midst of a health crisis?

People often assume that their health insurance will cover most eventualities. This is not necessarily the case. In general, health insurance only provides for treatment of health conditions and there are major gaps (depending on one’s plan) in what treatments/conditions they will cover. It is important to note that even a good health insurance plan will not cover periphery services or extra living expense due to a health issue.

Disability insurance, long term care insurance, as well as a wide variety of supplemental insurance programs attempt to close that gap. However, these programs have many limitations such as, scope of care provided, age restrictions, as well as significant limitations on what counts as a triggering event.

HOWEVER, there is a better option! No longer is life insurance just to help others when you die. Now, there are riders on some life insurance policies that are called living (or accelerated) benefits.

These benefits allow early access to a portion of the death benefit for certain major or long-term health crises. Depending on the trigger it is possible to access anywhere from 50% – 80% of your death benefit. If you have a million-dollar policy, on the low end of the spectrum you would receive around $500,000 as a tax-free lump sum.

This opens a world of possibilities so you can fully live the life you have. With living benefits, you can pay for good care, pay bills, or go take a vacation.

What if you don’t use the benefit?

Often, the living benefit riders are attached to permanent (cash-value policies) so, if you live a long, healthy life you still receive a benefit, or you can always use the normal death benefit. So, whether you live long and healthy, or die young, or some other iteration, you can celebrate life through knowing every eventuality is covered.

The best way to get the right program in place is to talk with your insurance professional. If you are a Colorado resident in need of an insurance professional, feel free to reach out to my office via the contact form.

What You Don’t Know Can Hurt You

One of the things I have become increasingly aware of the longer I am an insurance agent is that there is a ton of misinformation proliferated about this industry. It doesn’t help that it has been organized in such a way that the average person has difficulty understanding the nuances in coverages. 

One example of a misunderstanding that came back to bite me hard was regarding life insurance. Back in my previous career, I knew nothing about insurance, especially life insurance. I did not realize that underwriting for individual life policies was very selective. To the point where most major illnesses, especially those that are rare and not well studied, are barred from being covered. Since my health condition had just recently been diagnosed and I was still coming to terms with it, I just assumed I could get more later.

Fast forward 9 years and I became an insurance professional. One of the first things I realized was that the small amount of insurance from my previous job would barely bury me and I needed more. Sadly, it was too late. Because no one bothered to explain the system to me, I operated off of bad assumptions because I didn’t know better.

That is why I choose to educate others, so they can hopefully avoid similar situations. Obviously, people don’t realize what they don’t know. That is why it is important to have a good agent who will help you to navigate this very confusing industry. If you don’t have a good agent, feel free to reach out to my office.

Dangerous Myths About Life Insurance

I hear it all the time when I talk with people about life insurance.

“I am good because…”

There are many of these excuses and I made many of them myself. The most common misconceptions are also the most dangerous because they leave people assuming they are good when usuallly they are not. Here are the top 3 “I am good” traps people fall into.

  1. I have a policy through work
  2. I am young and healthy.
  3. I can’t afford it/I don’t need that much.

I have a policy through work

I have heard this numerous times from people. Many medium to large companies offer life insurance to their employees as a work benefit. While this in itself is all well and good, the policies are often very small and if the employer pays the premium they control the policy, meaning that if you seperate from them ever your life coverage vanishes.

Even if you carry the policy with you when you move on they are typically only good for replacing a year or two salary and the premium typically doubles or worse. This is not good news for a family, like many I work with, who rely on both incomes to run the household . It is even worse if one spouse brings in most or all the income. I was working with a client, I’ll call him Dave, who brought home 90,000 of the household 100,000 income. Dave’s work policy pays 200,000 upon his death. Like a many young families, he has 2 little kids and a mortgage. I asked him one question. “How long…?”

How long does your wife get to keep the house, the kids fed and clothed, and maintain some sense of normalcy before she is out of money?

We opted to get Dave a supplemental policy to fill the gaps left by the work policy.

I’m young and healthy

20-30 year olds without major health issues often feel as if they don’t need life insurance, espcially if they are not married and don’t have kids. The truth is this is the best time to get life insurance for 2 reasons.

  1. No other time in life will it be this affordable or this easy to get.. For young adults that are still single, they don’t need much coverage but it is good to get a start while you can breeze through underwriting.
  2. It guarantees insurability. You never know when disaster will strike, in fact the best case scenario guarantees that you will get older, have health problems, and die. By getting life insurance before that time you are ensuring that you have available protection that can be converted into more long term solutions that meet life’s changing needs.

I can’t afford it

This is perhaps the dumbest excuse ever. i know because it was tbe one I made until it was too late. My wife and I got married in 2008, 2 years later I started showing symptoms of what would eventiually be diagnosed as a progressive neurological disorder called Cerebellar Ataxia.

Hindsight is 20/20. Had I known then what I know now, I would have made room in the slim budget for enough life insurance to fulfill my marriage vows to protect my wife. I should have done this on our wedding day or at least heeded the symptoms 2 years later before being rendered uninsurable by the diagnosis. I was given another opportunity in 2015 to get a policy through work that because I paid  into it was mine for keeps. I opted for a minimal policy to cover burial. I simply didn’t think through how my wife would be affected financially by the likelihood of my early death.

Having made such agregious mistakes myself, I am passionate about helping people avoid the pitfals I fell into. If you or a loved one are unsure about the state of your life protection or if you have been assuming you’re good, Take a few minutes to contact yoour insurance advisor to make sure you are good. If you need help feel free to contact my office at 719-247-0008 or fill out the form below.

What You Never Knew About Life Insurance

September is Life Insurance Awareness Month.

You may be asking yourself, “what is the point?” I mean who cares, really?

According to research by LIMRA (a non profit group supporing financial services) 75% of U.S. households realize that life insurance is important and about 40% feel concerned and worried about life insurance.

So what is it that concerns us? We just don’t know enough. Most people grasp the need for home and auto but life insurance is very abstract until a family uses it.

With an increasing number of ads and telemarketing designed to sell life policies over a distance it is no wonder we don’t understand. The best way to learn is to work with a financial adviser or insurance agent who is trained. The following is a summary of what life insurance can do.

Life insurance’s primary goal is to replacce economic loss from early death, but it can do a whole lot more. Many companies have living benefit riders or accelerated death benefit riders that pay out around 75-90% of the death benefit upon a severe or terminal illness. There are also numerous other riders, or add ons, that protect against disability, changing needs, forgetting a premium and more. Talk with your agent about how you can make life insurance work for you.

A little understood benefit of life insurance is its ability to grow wealth. This is a very complex topic but some basic pointers are:

  1. Life insurance should not be the primary or only savings vehicle but it is a valuable way to grow money.
  2. Life insurance proceeds (cash value or death benefit) are accessible tax free.
  3. It is very powerful for the young.
  4. As with any money growth plan, it takes commitment.

So how do you figure out the amount of life insurance your family needs?

Although the best way is to talk with your individual agent,There are several great tools and calculators available online, like life happens. Generally with my clients I look at, any debt, income replacement needs, outstanding mortgage, and higher education for the kids/grandkids. It is also important to account for budget and overall financial goals especially in regard to cash growth through life insurance.

Particularly in light of the pandemic it is critical we be aware of life insurance and how it can help us. If you have questions, talk with your agent, If you don’t have an agent fill out the form and my office will reach out.