What’s the most important thing you can do today for yourself and your family?
Plan for life insurance--before it’s too late.
But what type of life insurance should you buy? When should you buy it? And who should you buy it from?
How can you create wealth for yourself today AND leave a legacy behind when you die?
This podcast episode breaks down life insurance fundamentals and shows you how to get the most out of this essential financial tool.
Listen to learn:
Why you can’t wait any longer to plan for life insurance
The common life insurance mistakes to avoid
Which life insurance strategy is right for you
How to use life insurance to grow wealth while you’re alive
And more
April Schoen: Hello, everyone, and welcome to our webinar today, which is going to be all about life insurance. Life Insurance, The Essential Tool That Everyone Loves To Hate. I just love that title. Again, just say thank you and welcome. My name is April Schoen. And I am sitting here today with John Curry.
John Curry: Hello, April. Hello, everyone.
April: John is the author, his new book that just came out recently, which is The Secure Retirement Method: Life Insurance, The Essential Tool That Everyone Loves To Hate. And we recently announced the book was published and available for people, you can purchase it on Amazon. And then we were also sending out some complimentary copies as well. And we had an overwhelming response to the book, which got John and I thinking we should have a webinar because we typically host webinars anyway, about once a month on retirement planning topics. And we said we should have a webinar. So we can go into more detail, because we're already starting to get some great feedback on the book and some good questions.
John: I think we should refer to this as being like a book overview. And I encourage you to read the book. Any book that we write is designed, you can read it in 60 to 90 minutes, make it quick, easy read. So it's not heavy stuff.
April: Absolutely. And if you if you're on the call, or you're listening to this later, as a podcast, and you don't have a copy of the book, we're gonna get to that in just a few minutes how you can make sure to get your copy. So John, anything from your perspective about today's webinar, before we dive in?
John: I just want to talk about the importance of this topic. And we'll get into some of that. But I want to add to that upfront, I'm 69 years old, just turned 69 in December. My life insurance, particularly my whole life insurance I've had all these years is more important to me now than when I was a young man. And let me explain why. With all of the market volatility, we're seeing, the cash raised, and my life insurance policies go up every day. They never, never, never have a bad day, they don't go down. They only go up.
That money is protected from the market volatility and other protections we'll get into. The reason that life insurance is so important to me at 69 years old, I have a lot of clients that are older than me, because I've been doing this for 47 years now. The life insurance death benefit allows me to spend other assets and leaves a legacy behind. We'll touch on that in more detail in a moment. The cash values allow me to be more aggressive with some of my investment money.
April: And I know we're going to talk about that more as well, as we go through the presentation.
John: Very good. I just want to emphasize this, folks. Pay attention. There's some I promise you that matter if you're 19 years old, or 99 years old, there are some things here you're going to learn. Whether you have life insurance or not. And if you're interested in talking about life insurance, let us help you with that.
April: So before we can get into this, a little couple of housekeeping items. Once this is recorded, it's going to be on our website as a podcast, which we'll get into how you can get there as well to see that information. And tell you a little bit about about John and I, if you are new to our world. If you're new to us, welcome. We're glad you're here. And just to let you know a little bit about who we are. We, John and I, we typically work with people who are getting ready to retire. Many of them are members of the Florida Retirement System. And I was just actually having a call with someone earlier today, who's going to be retiring in May, May 31st.
And what we find is that a lot of our clients when we first meet with them, they they struggle because they've been so busy with their careers, with their families, that they just haven't had the time to really devote to their finances. So sometimes they get frustrated, sometimes they get anxious. Gentleman today said, April, we have no we've never done this, I have no idea what to do with the money in my retirement account when I retire. So what we want to do, what we do, is we help them understand a lot in a short amount of time. Because everyone wants to make sure that they're making the right decisions for their future, right. We all want to make sure we're making the right decisions.
And sometimes our clients who just don't know how to get started or where to start. So we help them learn a lot in a short amount of time. So that they have systems in place and they're confident, that their money is actually working for them and they're on track to reach their goals. And part of our work that we do when we do retirement rehearsal or we're doing planning for someone, is we do look and talk about life insurance and who gets what when you die. How do they get it? And we just have these overall conversations about, about the planning side.
John: I want to make a comment real fast. This person that you're talking about and other persons we've dealt with over the years. They had time. They just didn't take the time. So the most important thing you can do for yourself and your family, whether it be April and me or another advisor, take the time to sit down with someone and get some help. I'll give you a quick story of myself. 10 seconds, 30 seconds. Just this morning, when I was getting my leg adjusted at the orthopedic place, orthotics, the young man was telling me how his mother is in a position now that she's having to protect every dollar because she can't enjoy it. She's fearful of losing it, since her husband died. And that's another example of where with proper planning, they didn't do it. They did no planning. None. Now he's worried about his mom running out of money. Take the time and do the planning, first. The products come second.
April: Absolutely. We talked about that every day. So I know some of you may have to jump off the call early. So I want to make sure that you have our contact information, you can reach us at our office, which is 850-562-3000. You can also send us an email, my email is April_Schoen that's S C H O E N @glic G L I C .com. And then also, our website is johnhcurry.com. And on our website, you can find all sorts of information. You're going to see our podcasts are posted there, as well as some links to be able to see our webinars, you can schedule a call with someone in our office as well. And so today, we're going to be talking about some specific strategies that you can implement.
And it's incredibly important, I can't under stress this that you just don't do this without seeking professional advice. So you just don't make a rash decision, right that you just pull the trigger and do something that it's actually thought out, right. So one of the things I would recommend that you do is schedule a time for a strategy session. And at a strategy session, here's what we're going to help you. We're going to help you get clear on what opportunities are available to you. We're going to talk about what are the roadblocks, what's holding you back.
And we're going to talk about specific steps that you can take, that's going to save you time and money so that you can get to where you want to go even faster. So you've got a couple of ways you can schedule a strategy session. You can call our office directly. 850-562-3000 and ask to schedule a call with either John or with myself. You can also email us or do it straight from the website. The book, as I mentioned earlier, was recently released, but it's available, you can purchase it on Amazon, you can get a paperback version or Kindle.
So you can go straight to Amazon to request your copy there. You can also request your copy by, our complimentary copy, by calling our office or sending us an email and we can send you either the electronic version, or we can send you a hardcopy as well. And I'll make sure John, when I send a, I'll send a follow up email too and make sure that everybody has the link where they can get the book if they want
John: Very good. So, by the way, some of you might be asking, why are we sending that out? No charge. I'm gonna tell you my attitude about the books. I'm on a mission to help as many people as I can, with whatever time I have left in this world. I'm in great health other than an amputation back in March of last year. But working through that. But, I to the point of where if I can help someone, whether they do business with us or not, doesn't matter. And that's why our books are so important. So help yourself to them and spread the word, and people you love and care about, make sure they have access to it, also.
April: Perfect. Well, John, let's get started. And here we are going to go through a little bit of an introduction. And then we're going to talk about really just this idea of life insurance. And I love this first topic, this fear of death and why people don't talk about it. So why don't we start there, John.
Let's do it. I can't tell you how many hundreds of times I've heard during the years in this business. I don't want to talk about life insurance. I don't want to talk about estate planning. I don't want to talk about what happens when I die. For some reason, more so in our country than others. We have this fear of talking about dying, but yet every one of us will die. It's not if you die, it is when you die. And once people understand that it is not some big boogeyman trying to get you, and they understand I need to talk about this so that I don't leave a mess behind. And that leads into there's questions about life insurance, you know. Should I buy life insurance, or not my life insurance? Do I want to pay my money on it instead of spending it or investing it.
But the, I look at it this way. If you will sit down with an advisor once a year. I do it around my birthday roughly within a week or so my birthday. Each year review everything I've got. What's working, what's not working, what I need to improve But if you'll do that, then the fear is gone. Because you have a plan, you have a plan in place. I can say with total total confidence if I dropped dead right now midsentence, my wishes are carried out. Because I have the life insurance in place, I have my investments in place. And I have my will and trust in place. And all of my important papers like durable power of attorney and things like that. But those are the things that, that people fear talking about, because it's the subject of dying.
April: And then these big questions about life insurance, which I know we're going to talk over, we're going to go through these in our presentation today. But what are these big questions that people may have about life insurance?
John: There's three of them. What type of life insurance should I buy? When should I buy life insurance, and who should I buy it from? And I always have fun with the third one, of course, you should buy it from us. But what type? We'll get into that in more detail in a few minutes. But basically, there's two times. You've got permanent insurance that never goes away. As long as you're alive you've got it. You have term insurance, which is temporary coverage. It's you buy it for 10 years, 15, 20 years, 30 years, whatever.
It is like renting, you're renting instead of owning. And most people don't like the idea of renting if they count. And then when should you buy it? As soon as possible, while you're healthy. For two reasons. One, your health determines the rating that you get, and your premiums will be lower. It's, I heard a saying one time I came in this business in 1975 on the life insurance side. You buy it with your good health, you pay for it with your money.
April: Right. Good. And then for those on the webinar today or if someone requested the book or maybe they're even listening to this as a podcast later, there is this information for?
John: Well, the short answer is for anyone who is even thinking about or they own life insurance. So if they're thinking about getting any, this is good for them. Someone who owns life insurance, and they look at it as being a necessary evil, then learn how to use that life insurance better.
April: Right. Good. And I know this last one here, we talked about planning, over products. Planning, not products. Something we talk about every day with our clients. So let's talk about that a little bit and why that's important for this discussion today.
John: As you said that, something just popped in my head. I'm thinking of a gentleman who came in one time, it was back in the 80s. And I'll use this story quickly to make the point. He came in, he pointed his finger at me and said, Curry, I want to buy this product, and it through illustration on the table of life insurance. I want it. If you can't get it for me, I'm going somewhere else. He was a good friend, good client. I said Bill, I don't agree with you, this product is not right for you. Let's talk about what you're trying to accomplish. I told you, either you sell it to me or I'm buying it elsewhere. I said hang on.
Got the paperwork and did it. Almost 13 months, like two days shy of 13 months, we're at a Rotary Club meeting, he said I screwed up. Will you please meet with me and we'll do the planning, I've got to get out of this product. It's not the right product. I said I told you that up front. He said, I know, it's on me, so we redid it. So if you don't do the planning first, it's very likely that you will end up buying a product that doesn't work for you. So you've wasted time, your energy and your money. And if you're unhealthy, all of a sudden, like when I had an open heart surgery back in 2008. All of a sudden, you can't get life insurance. So the planning is critical. Before you go out and spend your money buying a product.
April: And I think so too. And so the way I say it from a planning perspective, is that you just can't make a decision in a vacuum. We can't just look at one thing and say this is what you should or should not do. You have to take it all into consideration. It's there's no one size fits all.
John: Well, you know, much smart aleck, smart aleck answer is you can do that. But you're not going to be happy with the results.
April: Correct. I had someone tell me one time, like April, can't you just tell me? Like, isn't there just a blanket answer on this? And I said, no, I wish there was I probably make my job a lot easier. But there's not. It's not a one size fits all. It has to be individual.
John: Yeah, we're not like the talking heads on television and radio that can just spurt out stuff. We have certain rules and regulations and regulatory people that we have to answer to.
April: That's right. So now we're gonna get into all those discussions and really kind of dig into you know, life insurance, what is it? Different types, how they work? When does it fit into your life? So before we do that, let's just kind of give an overview, John, about where does life insurance fit? Because one of the things we talk about is how life insurance works in every stage of life. And then we're gonna hit the high points here and then I know we're gonna dig in deep as we go, go through the presentation.
John: Alright, good. Well I'm gonna pick on being single for a minute. When I was single, I owned life insurance and a lot of my clients because I was 22 years old when I started, they were single. And people would ask me, why in the world should I buy life insurancy policy when I'm single? I said do you think you'll be single forever? Well, I hope not. Okay. So when you get married down the road, do you think you'll love that person enough to want to have life insurance to protect them? And cover debt? Yes. Think you might buy a house and have a mortgage? Yes. Then why would you start your program today? Save money for your future and cover the liabilities later? Same thing for a young couple and a family, like you.
April: Yeah, so I'm good example, you know, I'm 38. Married, I have two boys who are five and eight. And so for me, life insurance is a big part of our plan. And I know we're going to talk in specifics, but I'll go in and kind of tell you a little bit of what I have, and what I've done personally. But I have, we talk about there's different types of insurance, term and permanent. Where do they fit in with someone's overall plan, which we're going to talk more about the different coverages. But I'll go ahead and give you the Cliff's Notes version is that I have both.
And that both fit in with my overall plan, and that for a lot of our clients, they have both because they serve different needs. So but for sure, for me, one of the biggest risks that I face financially, it's really two that I think of. One is to my family. So if something happens to me tomorrow, and I die, and I can't get up and go to work tomorrow, then my family is going to have a financial loss. And it's my responsibility to make sure that they're provided for. So there's that side. And then, this is not a discussion for today. But the other risk that I face is same thing, if something happens to me tomorrow, but I don't die, I just can't get up and go to work. And my income still stops. So that's, those are the two biggest risks at my age, 38, that I face.
John: They're the biggest risk all of us face no matter our age, because even in retirement, if you become disabled, now, that's a form of long-term care need. So death and disability will definitely mess up your income streams.
April: Yes. And then soon to retire. So as I mentioned earlier, John, I work with a lot of people who are getting ready to retire, most of those people are probably I would say, one to five years. But really, when we look at someone soon to retire might be even someone who, let's say is 50 and older. And we're really looking at some overall financial planning, there's lots of reasons why someone in that group may want to have have insurance. They may be looking at it and saying, hey, I'm gonna lose my group coverage that I have insurance through my work, and that's going to go away when I retire. They may have still some debt, they want to make sure it's covered. Obviously, legacy. You want to make sure there's something that's left behind to future generations,
John: I'm surprised at the number of people that we meet with, who they've given no thought to the fact that they're going to lose their group insurance coverage when they retire. And all of a sudden, it hits them. Oh, my God. Even though 60, 65, 70 even. I don't want to lose that. I want that to be there for my family. And now they got to pay a higher premium because they waited so long. And the sad part is when people who want it, they got the money to pay for it, but they can't get it because they have health issues.
April: Right. What about leaving money to charity? Where does it fit in there?
John: Well, I love this one. I have three life insurance policies on me that are payable specifically to foundations. Foundations that I love and care about the work they're doing. So the way I structured it, I set it up where they are the owner of the policies, therefore the premiums I pay are deductible. Some people can't deduct it because of the standard deduction being so high. So I wanted to make sure that the gifting that I do while living would continue upon my death. It could be your church, it could be a charity. For me one's a hospital, one's a Rotary Foundation, one is the million dollar roundtable foundation. But those are things that I want to make sure that upon my death money is there.
April: And for people who are charitably inclined, who are giving, it is a good resource. It is a good way to make sure that their ultimate wishes are carried out.
John: Absolutely. Because let's just take a small number, let's just say you're giving $1,000 a year to a church or a charity of some kind. No, upon your death that's gone. But it would be very easy if you just did a small life insurance policy or dedicated part of your coverage to go to them. Now you can continue that in perpetuity.
April: Absolutely.
John: Done properly.
April: And that's a legacy discussion. Part of what we talk about in planning is how important is that to you to leave a legacy and who are you going to leave that legacy to? Is it kids? Is it grandchildren? Is it organizations you care about? Is it a pet? Right? So it that's all part of that legacy discussion. What's important to you? Right, in the decisions that we make.
John: By the way, you make a comment about pets. Long long time ago, I've only had this happen one time in my career. When it first happened I thought, when it happened rather, I thought, wow this is weird. Lady wanted to leave money to her pets. Well she had no children. So I said, okay, I can't name your dogs as a beneficiary. What we can do is you can leave the money to someone in trust that you trust to take care of them. So she did that. She actually went and got a trust document, built up.
And she died several years ago, long before you came to work with me. And I want to talk about that for just a minute. April joined me eight and a half years ago. And now, we used to talk about wanting to make sure I have a team to protect my clients. It's no longer my clients, it's our clients. We work together. And I have the peace of mind of knowing, practice what I preach, that if I died today, not only is my personal finances taken care of, but our clientele are taken care of because of April, Zac, and other teammates.
April: Yep. Very important. Succession planning, right? Not just in business, but also in personal too.
John: Absolutely, absolutely. Which is a good, that's a good segue to business owners. If you own a business, or you think you will own a business in the future, before you go into business, you should also have an exit strategy. So you got a front door and a back door. We talked about this all the time, in personal and business planning. If you enter something through the front door, but what if you have to get out? Work on that ahead of time. And with business owners, we can help them with exit strategies. Life insurance is important to a business owner for key person insurance. Buy sell, so that they die, somebody has the mind to buy them out. And vice versa.
April: Absolutely.
John: This last one, I love this. As you know, I own a lot of life insurance policies on children, grandchildren and now great grandchildren. Why do I do that? It is going to be tough enough for them in the future. On their own. Life insurance is important. What if they can't get it because of health issues. I can almost guarantee you they're not going to have a pension plan. So the cash values in the life insurance policies that I'm building up now will help my children and grandchildren in the future. As long as I'm living I own it. On my death, they can become the owner. But I own it, it's an asset I control.
All the cash value shows up on my balance sheet. So I'm losing nothing. All I'm doing is taking money, that's low utility sitting in savings not working, and put it over here into this. This product called life insurance. And if you haven't looked at that, folks, chat it with me about it, because I promise you I have a passion for that. It is really something you can do. They're gonna get the damn money anyway when you die. Why don't you help them now?
April: Yeah, well, I'm thinking about a client who did that too for their two children. This is kind of getting into some specifics, but they set up the policies where there's different types of policies we're going to get into, but one of the policies they did is called a 10 pay, which means you pay it for 10 years, and then you're done paying for it. So that was important to our clients, because they wanted to make sure that it was going to be completed, right. They felt that they could make the you know, obviously with their assets, they can make the premium payments for 10 years. They wanted to make sure that it was going to be self completing and not have to have any issues there.
But when we looked through it, and it, I just remember the day going through the illustration, and them looking at it and saying, wait a minute, they're going to have how much cash value when they are 65? And they can do what with it? They can take a tax-free income from that policy. It's so powerful, what you can do with it. It's pretty neat. Alright, we're gonna get into talking a little bit kind of more fundamentals when it comes to life insurance. Let's talk about this concept of human life value, John. So first go through, talk to us about what is human life value. How does it relate to life insurance, and I know there's, we really think of two different schools of thought or two different philosophies when it comes to how much life insurance someone should have.
John: Very good. I'd love this topic. When I became a CLU and a ChFC, through the American College. I already got my master's degree there. We studied a lot of information from a gentleman named Dr. Solomon, who really turned the life insurance profession into a profession. At the time, it was kind of like dog eat dog, but he made it professional. And he wrote a book about human life value. And the best way to describe it is this. I'm going to use something totally unusual. So you, you have a house, you buy your home, and that's called property value. If you have a house worth a half a million dollars, how much insurance would you have on it? If it were to burn down and be blown away with a hurricane?
April: I hope I'd have at least half a million.
John: At least a half a million, but the correct answer is and you most everybody would do it. You would have replacement value.
April: Replacement. Exactly.
John: So isn't it interesting that all property value is a result of human life value. Meaning your ability, economic value to go earn a paycheck. And in the book I call it economic value also, because human life value is the economic value of you. If you were killed in a wrongful death situation, the attorneys would bring in experts to say, okay, 38 year old female, making X amount of money, she was on this glide path for the future. And then we work back into the present value. We can do that all day long with our software.
So human life value simply says this, what would this person's economic value be over their lifetime, and then strive to have enough insurance to replace that value. But people don't do that. Well, I don't need that much. Well, you don't need $500,000 on your house either. What's the likelihood your house going to burn down. How many homes have burned down in your neighborhood? How many homes have been picked up with a tornado and blown away in your neighborhood. They look at me like I got two heads. They go, well none.
So think about, you will go out and insure something. Homes, cars, jet skis, motorcycles, for full value, or replacement value. But yet the most important asset you have is your ability to earn a paycheck. Coming back to the death and disability. So economic value says let's determine what the economic value would be, the loss to your family and ensure that for as much as possible. And then another philosophy is simply, needs analysis. I don't need that much. I just need enough to cover the mortgage. And it's okay. It's the clients choice. Our job is to educate, the client's job is to decide which path they want.
April: Right, and so on needs base, again, looking at human life value. That's what I've done for my family, because it ensures that I have enough coverage that my family is provided for. Like I said earlier, if something happens to me tomorrow, my family would suffer, suffer an economic loss.
John: Correct.
April: So the insurance I have ensures that might have been nothing financially will change for my family. It means that the house stays the same and cars stay the same. And my husband can still take the two boys on vacations over spring break in the summer. It means future weddings are paid for and college is paid for. All those, all of those things that are important to me and my husband, the giving that we do, that continues on as well. Because all of these, these values that are important to us, they are all tied up in this ability for us to continue to earn this income, right. Earn any income.
John: And the most important thing you said in that, is what you want.
April: Correct.
John: Get rid of the word need. What do you want? So I don't need this. I know you don't need it. I don't need the life insurance I've got on me. I love it and I want it. And I keep paying premiums. I keep paying premiums on policies I don't even have to pay for it. I still do. Because it's building a ton of equity.
April: Absolutely. But yes, there are definitely two philosophies. And like you said, John, we do have people come in and say no, I just want to do like a needs analysis. And you know, you may look and say this is how much debt I have. I'm gonna pay for future college expenses, especially with a young couple. and things along those lines. Definitely the two, two kind of schools of thought. And then that leads us into how much life insurance should I buy? So how much life insurance should I buy? And then do those change? Do those needs change over time?
John: Well, we just talked about how much life insurance lasts either to replace as much as your economic value as you can, or whatever you feel like you need to cover a debt. And let's be candid, there's only two reasons you buy life insurance. It's because you love someone and want to take care of them or you owe someone. So if you have a big loan at the bank, maybe you have life insurance to cover that. The bank may even require you to have life insurance to cover that. And do life insurance needs and won't change over time? Absolutely. Absolutely. Some people think that when I retire, I don't need it. That may be true, you may not need it, but you may still want it. If you understand how to use it. Sadly, most people do not understand, including agents, insurance agents, how to use life insurance in retirement.
April: And I know we have, we get this question a lot too, clients ask, will I ever be able to self insure or have I reached a point where I can self insure? And yes, that does that can happen and does happen. So I'll say this too, is if someone is listening and they don't have any insurance, if you don't have any insurance, then your assets become your insurance. Right? Then your assets, your investments, your retirement account, your savings, they have to do both. They have to provide liquidity for you and income for you when you're in retirement .If you're married, provide that income for your family, any sort of legacy wishes that you have. So if you don't have insurance, your assets become your insurance.
John: Let me say it this way. What you've done is you've locked your assets up. They're in a box, you can't really spend the principal. If you spend your principal, what happens to your income? If you spend the principal, less money going to the family and you can't take any risk. You can't participate as well as other people can in the market because you're fearful of losing your money. And that's why the life insurance for me is so important at this stage of my life, because you know, I add money to my investment account, it's extremely aggressive. But I don't have to worry about. I don't even know if it's up or down today, I don't care. Just keep adding the money each month, and don't worry about it. It will all work out if you're invested. And you've done the planning first.
April: Correct. So let's talk about these different types of coverage, John. So we really think of life insurance and we break it into two categories. There's all different kinds of life insurance, but at the end of the day, we break it into term insurance, and then permanent insurance. So these two types of policies, the way that I explain them is I say term insurance is and this is also in the book, but term insurance is similar to renting. If I have a term policy, it means that I have insurance for a set amount of time.
So let's say you have a 20 year term policy, that means you pay a premium for those 20 years, and as long as you're paying the premium, you have this death benefit. The death benefit does not change over time, it remains fixed. And if you pass away in those 20 years, that death benefit is going to come in to your family or whoever you've named as a beneficiary tax free. Very important. Tax free benefits. But there's no equity, right? Term insurance is purely a protection only vehicle. It's similar to having homeowners insurance or car insurance. It's that what if coverage. If something happens to you in those 20 years.
At the end of 20 years, that policy goes away, you stop paying premiums, but you don't have any insurance anymore, either. Okay, it's good and bad. If we compare that though, to permanent insurance, permanent insurance is, as it sounds, it's not temporary. It's meant to be in force, it's meant to be in place for your entire life. And you pay a premium, you still have a death benefit on the policy that comes into your family tax free. And depending on how the permanent policy is set up, the ones that we use, the death benefit actually increases over time, which is important. Especially if you think about cost of living, right, inflation, things are gonna cost more tomorrow than they do today.
John: We're experiencing that now.
April: We're experiencing that very much right now. Highest that we've seen in decades. And so it's important that our insurance rises as cost of living rises as well. And then, as you're paying premiums, part of the premium is going to go right into cash value. This is where you have equity in the policy. As that cash grows, it grows tax deferred. So you don't have to pay any tax while it's growing. It's liquid, it's an asset you can tap into if you want it or need it. And you can take it back out tax free as well as long as that's structured properly. And I know we're gonna talk a bit more about that cash value. But that cash value is also what we would consider to be a non correlated asset, which means it's not in the stock market. It doesn't have the same risk that stocks may have, it doesn't have the same risk that bonds have with interest rates.
John: Let's address the word risk for a minute. I've had people say, well, my money's sitting in the bank, because there's no risk. There's a risk in everything. There's inflation risk, market risk. So if your money is sitting somewhere and not growing, that's a risk because of inflation. But I've got two words I want to use. Term insurance, think of the word rent. You're renting, you have no ownership. Permanent, whether it be a whole life policy, universal life, and variable life, index life. There's pros and cons with all types of life insurance. But it's basically, it's a form of ownership, you own it. It's like your home, you have a choice, you can either own a house or rent a house. I've never found a person who told me they really prefer to rent. And that's not true. I thinking of a guy he sold his house and he rented until he died. He said no more cutting grass. None of that stuff. He moved to a condo in fact.
April: Absolutely. So we're gonna talk more about these different types. But really, we think of it as term insurance is a protection only vehicle because you are going to have it for a temporary amount of time. Permanent insurance or whole life insurance is more of a savings vehicle because not only do you have the death benefit, but you have the cash value.
John: I want to make a comment here, I tell every young couple, start with term get all you can get. Just get it all. If the company will give you 3 million get it, because it's very low cost. And as it gives you the ability to upgrade later if you choose to do so. So I say, get all of it you can get right up front, and then protect your family. And then you can always upgrade it. It's called converting but we call it upgrading it later.
April: And a lot of our clients that I mentioned earlier and myself included have both, where we've got term insurance to give us the death benefit protection that we want. And then we have the permanent insurance which goes more in line with our wealth building. And I think we're going to touch a little bit more on that too when we use that. But that's why I have both. I have term to protect my family and then I have the permanent coverage more for wealth building.
John: Let me throw something out for you folks. On page 17 in the book, you'll see a discussion of several different types of policies. And I go into some of how that works. But just be aware, we don't believe that there is a one size fits all. Plan first. And then if it comes down to what April just said, you may end up owning two, three or four different types of product slash policies to carry out your wishes. Like the grandparents who love the 10 pay policies. Pay for it for 10 years, and be done with it.
April: Absolutely. Okay, John. So someone's listening to this. And they're saying, okay, I may want to look at having some coverage, right? Make sense what I'm hearing so far. Want to look at this for our family. So when is the best time to buy insurance?
John: Well, you know the answer. Now. For two reasons. One, if you don't, you're gonna procrastinate. You see these commercials all the time about, you know, the husband said, I didn't buy the life insurance and the wife gets mad. And speaking about, I see, well we'll that at the bottom point. But once you do your planning, you know what you want, take action, take action. Don't fiddle around in waiting. In the book, I talk about examples of where people didn't. And I had to tell in both cases, the widow, I'm sorry, your husband did not give me a check, I don't have any benefit for you.
April: Right. So definitely important, the planning to get it done as soon as possible. That doesn't just include the life insurance that includes all of it.
John: Everything.
April: Legal documents. I can't tell you how many times we've seen where people had good intentions and didn't follow through. So it's important that you get these things buttoned up.
John: It's even worse, we see people who did go see the attorney, that got a draft, or they even got the document, but never sign all the documents. And they either became disabled, I'm thinking of a gentleman with a stroke that we got in front of in time to get it done. But he procrastinated for years and years and years. And let me hit the next one. I've been kidding around about who to buy insurance from. I said us. Of course you should buy it from us. But here's the real answer. You find someone that you can work with, you like, and you trust them. And they're straightforward. If somebody gives you a bunch of BS about something, get the hell up and leave. You're the consumer, you have a right to understand it. Our rule is simply this. Just be respectful, be coachable. And we'd love to help you.
April: And I'll say, too, about who you buy it from, we already hit this at the beginning, I'm gonna hit it again, because it's so important. I think you should work with someone who focuses more on the planning, not just the product who's not just trying to sell you something, but really sits down with you, understands what are your wishes? What are your goals? What are your concerns, what are you trying to accomplish? And how do we get you, they're not just trying to sell you a policy.
John: And I'll tell you the other thing. The way you're gonna get that is don't be cheap about it, sit down with somebody, pay them a fee for their time and their wisdom and their knowledge. We charge fees for our planning depending upon what we're doing. And then move forward if there is a desire to add products. And I'll loosely address something here. That takes pressure off of us also, because we don't, we do not have to sit there and sell a product. And I love that. Your position where you don't have to make a sale. I don't have to make a sale. That is a powerful position to be in because, folks, it ain’t our problem. Ours is taken care of. It's the client's problem that we're working on solving.
April: That's right. Yeah, it allows you to have an unbiased opinion, right and to give your, your honest thoughts and opinions based on your level of expertise and experience and you know, no bias there. Okay, John. So we get this occasionally. This last point. If someone is thinking about canceling their policy, or we see all the time, these ads about selling your policy to another company. Talk to us about what someone should do before they cancel their policy?
John: Well, first of all, they should talk with us, and to see how you can use your policy and to number one get educated. But It cracks me up that think about this. You have total strangers out there with insurance companies who would love to buy your policy. Why would somebody buy your life insurance policy from. It's because as Dr. Heitmer said there's an inevitable gain in a life insurance policy. Someday we are going to die. If we have a life insurance policy, then you want the family to get that benefit or a total stranger. And the biggest financial mistake I've ever made in my life was I canceled one of my whole life policies many many years ago.
That was stupid. And the reason I did it is because I had policy loans against it. Instead of paying the loans back I got to the point where the interest was too high. And I thought I'd be better off just canceling and buying a new policy. I should not have done that. That's why I would take the time to help anyone understand their insurance and understand why, why it's important to keep it in force. At some point, if somebody doesn't want to get help, then that's okay. I'd give up too. But until they give up, I won't give up.
April: Absolutely. I say, first be educated on what you have, know what your options are, make sure you have all the information available to you.
John: Correct.
April: And then you can make the best decision for you and your family.
John: Or at least enough information on it that's pertinent to that challenge or problem.
April: Correct. Okay, now, this is the fun part. Because a lot of people think that life insurance is just about some money that's going to be left behind. Oh, someone's gonna get this money when I die, I'm not going to be able to use it. I'm not going to be able to use it for anything, why would I have life insurance? So I know you've got a chapter in the book all about this, about how to use life insurance the right way, even before you die. So let's talk about this a little bit about some.
John: That's chapter five.
April: Scenarios where people can use life insurance along the way.
John: Okay. Because the time, may I just hit these kind of like a little quick forum? First of all, the first bullet point going beyond the death benefit. It's not just about dying, it's about using your policy to help you carry out your financial mission. Now, this will give you a quick example. And I'm going to have April come back in just a moment. Accessing the cash value, I have used the cash value of my policies to buy automobiles for me, children, one coming up probably for a grandchild, unless I just get, buy give them one. But how do you do that? You have a choice, you can take a policy loan from an insurance company, or you can set up a line of credit against the policy.
I have a line of credit where I can go on the computer and I can transfer money to it if I want to. Right, now I don't have any outstanding balance on it. I don't like debt. The business uses of life insurance, key person life insurance, you've got somebody a top notch person, and they're important, and if they were to die would cost you money to your business. Or you want to keep them with you, you can set up what's called a non qualified deferred compensation account where you give them a benefit if they stay a certain period of time. Using life insurance in times of crisis. I can't even, dozens, probably two to three dozens of people during the crisis 2008 and 2009 that had to use the cash values in their policies to make loan payments on properties they own so they would lose them.
I remember a medical doctor, who's now I think, actually passed away now. But he used the cash values of his insurance to meet payroll a couple of times, because he did not want the banker to know it, he did not want other people to know he was having some financial stress. So he had total privacy with us. So cash values. Maybe like some people, they use the cash value to pay their premiums for about six months, until they got back on their feet than they paid it back. I would like you to talk about your journey. Also the last one, life insurance as an asset class. Because you love investments even more than I do.
April: I do. So yes, I've told you a little earlier about, you know, I've got both types of insurance, term and permanent. Term is to protect my family. And then the whole life is more on the wealth building side. And, you know, John mentioned, I've been here about eight and a half years. And then I was with a previous firm for several years before that. So I've really been in the financial services business since 2010.
John: So you're an old, you're an old pro.
April: An old pro. That's right. And, you know, I really kind of come in and I have more of a background on the investment side. So that's really kind of more where my knowledge, experience, my passion lies on the investment side. And I really studied it. And I really saw the benefit of having the life insurance as part of my wealth building. And, you know, I won't go into too much detail today for sake of time, so I'm happy to chat offline about it. But basically, because I have the whole life that I do, because I have the cash value on my balance sheet that is safe, secure, the good rate of return, tax efficient, all those reasons for the cash value, it actually allows me to be more aggressive in my other investments.
So when we look at life insurance as an asset class, we think of a couple of different things. We're really we're talking about permanent insurance, because term is not going to help you here because term has no cash value. So when we think about having life insurance as an asset class, it's going to be some sort of policy that's going to build cash value. And we like the type that have more guarantees and aren't says, you know, don't have the market volatility. Because you can have life insurance, variable life insurance, that's tied more to the market. But here we don't want to use that for this. We want it to be more of what we call this non correlated asset. This cash value that's growing on your balance sheet that's not in the market.
So last year, no it was two years ago now. So you think about March of 2020, right. Pandemic, COVID is just getting started. And the market, the S&P is down 30, 35 30 to 35%, in like 23 trading days. I mean, it's happening so fast that people could not get out in time, even if they wanted to. Here's what the cash value allows you to do, the cash value actually allows you to stay invested, because our cash values never went down during that time. So it's not in the market, it's not susceptible to market losses. And it's also protected from interest rate risk as well, because then we think about bonds, we could have a whole discussion webinar just on that piece.
John: We should do that.
April: We should do that. The issue with bonds right now is one, you're getting very low yield, because interest rates are so low, but then you also have a lot of risk, because we know interest rates are gonna go up, and when they start to go up, we're gonna see the value of our bonds go down. So it'd be good. I mean, we could maybe even do a case study and talk about where we use life insurance for the wealth building piece, but very important there to help you have some diversity and help smooth out some of that volatility.
John: Well, you and I were talking about this just yesterday, as it relates to me. You pointed out to me that I'm putting almost an equal amount into life insurance premiums each year and into my investment account. I had never looked at it quite that way. Just said okay, here's the premium, I'm paying it. Probably a little bit more on the premium side than I am on the investments. But it is a tremendous peace of mind. I don't want to sound cocky back, I do care what the market does. But it is so nice to not worry about what the market does. In fact, the other day when it was down, I added some money.
April: Absolutely. You know, and I'll say this, too. It's not all or nothing. Right. We're not saying only have insurance, only have investments. In fact, the two together work beautifully together.
John: There's synergy if this is properly designed. Either one by itself has weaknesses, but investment, savings and life insurance combined are powerful.
April: Absolutely. And that comes back to the planning. Good. Very true. Now this leads into because we talked about what you can, how can you use the life insurance like along the way, we're kind of we're talking about someone who's in their working years and different ways that they can maybe use the life insurance either for wealth building, or needing to tap into the cash value along the way. But let's talk about how it can help you in retirement.
John: I love this. Let me just hit the first one quickly. If you've done your planning properly, life insurance will help you make better choices on which accounts to take money from and how to take it. You see number three below there is avoid the tax deferred trap. All the money we put into retirement accounts are considered tax deferred accounts. We have to pay the tax someday. I've had so many people early in my career who come to me and say I've got all this money going into my 403b if they're a professor, state employee deferred comp. Business owners with our profit sharing plan and 401k's.
I've got all this money, I don't need to do any planning. I don't need life insurance. Now I love to ask this question even today. Who will pay the tax on that money? And how will they pay the tax? Because all this money is great. But it will have a tax time bomb at some point. And life insurance can help cover that or at least replace the money that was lost the taxes. Backstop. If I wanted to, the life insurance cash values I have, I can flip the switch and turn that into retirement income. I can actually say I don't care about the death benefit anymore, give me more income. I can give it up if I wanted to. Or I could have some income and keep insurance. I get to pick and choose that.
April: Very tax efficient.
John: Absolutely. Right. And we tell people all the time, April, if you're going to spend something down while living, spend your retirement money, and leave other assets to family and friends if you want to, or even charities, because the retirement accounts are the most expensive dollars we have. And if you believe as I do, that the income tax rates are going back up. Think about it. You're deferring into an increased tax environment.
April: Absolutely. I say like the retirement accounts are the worst asset to leave behind to a non spouse. The worst under current tax law.
John: Absolutely. And I tell you what we do, folks. We've had people who say I'm gonna leave all this IRA money or this retirement money to my children. Well, let's do this. Let's take out enough of their earnings each year to purchase life insurance on you. So that money goes tax free, and then spend the rest of it. So sometimes we'll split the account. Take money over here to fund the insurance premiums and the rest of the money, spend it all. Turn it on and it's guaranteed lifetime income and just enjoy the heck out of it.
April: One thing we've had clients to to is use life insurance to help them when they're choosing which pension option to choose.
John: Sure. Very important.
April: So that they can take a higher pension option that gives them more income, that maybe that's just going to give them an income for just their life, but then they have the life insurance to come in.
John: Correct. Now we already talked about the group insurance. So this allows you to get rid of the group term insurance. When you retire, you lose it, but you've now got yourself covered with the policy if you do it.
April: Perfect. Well, John, let's summarize here because we've talked about a bunch of different concepts all and in a short amount of time. So let's kind of summarize about where it can fit in for different people who are listening to this.
John: Well, I'm just gonna use a smart aleck answer. I think that if you are, if you're working, and you care about leaving income behind for someone, or if you're retired, and you want to protect all the assets you've worked for, so everyone on that screen, life insurance is important. And the only reason that most people don't have life insurance in place properly is they don't understand it. It can be a very confusing subject.
April: Absolutely.
John: But if you're single and listening to this, consider life insurance, because there's some organization you care about, maybe you have debt.
April: Or even on the wealth-building side. Not even just for the death benefit, but just to say, hey, I want what this does for me on a wealth-building side.
John: Well, I'm, thank you. I'm making that assumption that if you are buying life insurance, number one, the first question is, how will this help me create wealth? Today, and in my future. The death benefit, to me, that is something you have because you either owe, or you love. And but we can hit each one of these. Each topic up here, we could do an hour presentation on each one of those? Actually, we could do a full-blown seminar for three hours.
April: And young couple and family, I think we talked about that already. Gave the example, my situation in clients that we work with that are younger in their 20s 30s 40s and have kids. Obviously seeing a need there. We talked about soon to retire.
John: I'm gonna make a quick comment there and just have something flash in my head that I remember. I remember, I touched on it a few times, but this one in particular. Guy said to me, right in front of his wife, I'm not buying all of this life insurance. So when I die, she can marry some other s.o.b. What he said. I won't even say the words. And she looked at me, looked at him, she has hurt. And finally we worked through it. And he did it. But he understood what he said was so harsh.
But it's not about dying and leaving somebody a big bunch of money. He was worried his words were I don't want to leave her a bunch of money. Well, if you're worried about that, there are ways to structure your insurance and a way to take care of people you love and provide the income without leaving a big lump sum, if that's important to you. There are some people I promise you that they talk, hear about life insurance, and that's their reaction. I don't want to leave a whole bunch of money to my spouse. I want to spend it now.
April: So yeah, we talked about obviously, like soon to retired as we're like approaching retirement and going into retirement and ways that you can use the life insurance. We talked about leaving money behind a charity. I would also say even from a legacy, an overall legacy standpoint. Business owners, whether it's to help protect the business or business owner using it for personal planning, or cash flow planning, and then obviously life insurance, too, for your children and your grandchildren.
John: And that's the one that people love. Because they're they're able to do something, especially for the grandchildren. All of us grandparents love our grandchildren. In fact, we have a common enemy, the parent.
April: Well, today, we talked about several different strategies. We went through quite a quite a few actually. Strategies that if you're listening to this as you can implement, but here's the question, here's the hard part, is how do you know which one is best for you?
John: And how do you get started?
April: And how do you get started? And we said it before and I'll say it again, I think it's incredibly important that you don't just make a decision and do this without seeking professional advice. Because we want to make sure that you don't make some big mistake, like John was talking about the client earlier. And either it's going to cost you money, time, energy, you could have tax issues, there's a lot that can kind of go into it. You want to make sure that you're making the right decision. So I'd suggest that you schedule a time for a strategy session. And a strategy session, what we're going to do is we're going to get clear first, because the first thing we have to do is get clear about your financial goals and concerns.
What's important to you? What do you want to accomplish? We want to talk about what opportunities are available to you. Is it one of the strategies that we talked about? And what's holding you back? What are the roadblocks, what's gonna get in your way from reaching your goals? And then what steps do you need to take to save time, money and get you the result that you want that you're looking for. And you know, I'll be honest, I don't know if we're a right fit for you. Because I'll be honest, we're not the right fit for everybody. But a strategy session, a complimentary strategy session is a good place to start. I would say the calls are usually 30 to 45 minutes. To help us get to know you a little bit better.
And you get to know us. Like the gentleman I spoke to today, I think we talked for like 40 minutes, had a great conversation, and we're going to meet again in a couple of weeks. So here's how you know if this is for you to schedule a strategy session. If you're motivated, if you want to really roll up your sleeves and take a look at what you have and make sure you're in good order. If you're committed to reaching your goals, right. You're committed to reaching these financial goals, whether that's you're working, or you're getting close to retirement and you want to make sure you have these things that you want. If you're coachable. If you're willing to be open-minded and learn, we'll sit with anybody for as long as we need to, to go through things and make sure you fully understand it.
We just ask that you come in with an open mind and a willingness to learn. And that you take action. That you're an action taker. John and I are both action takers. We love working with people who say, you know what, I want to roll up my sleeves, I want to get to work, I want to get this done so I can enjoy my life. How do you know if this is not for you? A strategy session. Well, pretty simple. If you're not coachable. That's one. That's one way, you'll know it's not for you. If you're not willing to listen to other ideas. If you're not willing to be open to thinking of things in a different way. And if you're also expecting some unpaid consulting, okay. That's how you know if it's not for you.
So now, if you're listening and say, you know what, I want to schedule a time for a call. I want to meet with John, I want to meet with April, how do I do that? You got a couple ways you can do that. You can call our office, 850-562-3000. And ask to schedule a time for a strategy session. Just let Zac or whoever picks up the phone, let them know you're on the webinar and you want to schedule your complimentary strategy session. It might be a couple of weeks out depending on our schedules, but they'll get you on the calendar. You can email us directly so you can email me, April_Schoen s c h o e n @glic g l i c.com.
And I will send out an email follow up to this. So you'll have my contact information there as well. And you can go to our website. So johnhcurry.com. That's where you're going to see our podcasts, you can get a copy of the book, our course just for FRS members and you can schedule a time for a call. But the best and easiest way is just to call our office 850-562-3000 and ask to schedule your complimentary strategy session.
John: Very good. I'm glad we got the topic covered. And I feel like we're just doing like a like a book review via webinar slash podcast
April: Yeah, kinda like a little book club. I love it. So look forward to talking with you guys soon. We've got several more webinars on the docket over the next few months. One just for members of the Florida Retirement System. That's coming up in February. We're going to do Social Security, Medicare, we're going to talk about taxes in retirement.
John: I want to throw something out. I want to see what, how much interest we have from people that are on here today. At some point, probably in March, we're interested in doing a seminar in our building in our training room again, like we've done many times before. Last two years we've not done it because of the pandemic. So if you have an interest, just say yes, I would love to attend a live in person seminar, just let us know. I'm just curious about how many people are interested in versus how many people are still like, nope, I don't want to go out.
April: And that'll be at our training office in Tallahassee. And then if we do do it live, we'll also offer a virtual option too for those that are not local. If you're not in Tallahassee, you'll have an option to join virtually.
John: Absolutely.
April: Great.
John: This has been very nice. Thanks.
April: Great. Thank you, everyone, for joining us today, and we look forward to talking to you all soon.
Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast. Again, that is johnhcurry.com/podcast. Or you can call his office at 850-562-3000. Again, that is 850-562-3000 John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner. Masters in Science and financial services, certified in long-term care, registered representative and financial advisor of Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue Securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue Securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use. By providing this material we are not undertaking to provide investment advice for any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal, tax or accounting advice. Please consult with your attorney, accountant and or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. Whole Life insurance is intended to provide death benefit protection for an individual’s entire life. With payment of the required guaranteed premiums, you will receive a guaranteed death benefit and guaranteed cash values inside the policy. Guarantees are based on the claims-paying ability of the issuing insurance company. Dividends are not guaranteed and are declared annually by the issuing insurance company’s board of directors. Any loans or withdrawals reduce the policy’s death benefits and cash values and affect the policy’s dividend and guarantees. Whole life insurance should be considered for its long-term value. Early cash value accumulation and early payment of dividends depend upon policy type and/or policy design, and cash value accumulation is offset by insurance and company expenses. Consult with your Guardian representative and refer to your whole life insurance illustration for more information about your particular whole life insurance policy. Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
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