Protecting Income Made Simple

I earned my first income as a restaurant dishwasher working for $4.25 an hour. In college I earned $7.00 an hour working in the gym. And, in my first professional pilot position, I earned $22 an hour (limited to 100 hours per month). As my income increased, the financial options in my life increased, too.

Today, my income still drives the financial options in my life. But, I share those options with Melissa (my wife), Raymond (my oldest), and Bennett (my youngest). Income isn’t about me now. It’s about them. Their health, shelter, food, clothing, and more depend on my income. If my income stoped, because I died too soon, then my family’s financial options in life get limited real fast and everything they know becomes questionable.

A questionable future with limited financial options is not where I want my family to be. Ever. So, to protect them… to protect their financial options in life, I protect my income. How?

The Easy (but costly) Option

In first real job as an airline pilot, my benefits package included a perk designed to protect my income. It was life insurance. I remember reading the benefits “open enrollment” book and thinking…

• What is life insurance? And, when should I buy it?

• How much life insurance should I purchase? And, where should I buy it from?

• Is this life insurance price the best deal for me? And, does the price ever go up?

The airline provided some life insurance for free (equalling about one year’s salary, around $26,000). And, I could purchase 3 times this amount ($78,000) for a monthly cost of $15 (payroll deducted). This seemed like a great deal. So, as a single, healthy guy with no wife or kids depending on my paycheck, I purchased all of my life insurance through work. This was easy. I learned later, this was also kind of dumb on my part (you’ll see why in a minute).

The Right Tool at The Best Price

If you’ve read about me, you know that I began studying personal finance with my Grandma on weekend breaks from college. While she oversaw my early lessons on building wealth by investing, Melissa’s Uncle Chuck made sure I knew how to protect my income (just in case I married his niece… which I did a few years later). He showed Melissa and I why the life insurance I had at work was a rip off.

While I was paying about $15 a month for a $78,000 life insurance payout to someone (a beneficiary), Chuck showed me how I could pay $18 a month for a $500,000 life insurance payout to someone (a beneficiary)!  My employer life insurance was expensive!  I asked Chuck why.

He taught me the difference between GROUP life insurance and INDIVIDUAL life insurance. In group life insurance, the insurance company says, “Hey… some of the people in the group are healthy and some are not. Since we don’t know who is who… we’ll protect ourselves financially (limit our risk) by pricing the insurance for everyone as if everyone is not healthy.”

Since my employer life insurance was a GROUP policy, I was being charged as if I was unhealthy… when in fact I was quite healthy! I also learned that people insured only through group life insurance have the lowest average amount of coverage. Yikes!

In INDIVIDUAL life insurance, the insurance company says, “Hey… we can see if this guy is healthy. We can check his individual medical history, family history, and blood. If all looks good, he is a safer bet and we can lower his life insurance cost, since our risk on this healthy fella is lower, too.”  Chuck asked me… “Makes sense, right?”

Saving Money, Sign Me Up

Now I understood I could shop around for a lower-cost, individual life insurance policy outside of work. This is exactly what I did. And a few weeks later, I purchased a ten-year term, $500,000 individual life insurance policy through a major life insurance company for $18 a month: 6 times the life insurance coverage for only $3 more. Afterwards, I canceled the employer life insurance (with the exception of the free life insurance they offered).

 

This just made sense to me. I asked Chuck, “Why doesn’t every healthy man and woman in the USA do what I just did:  get an individual policy and increase their life insurance for about the same price as they pay now?” Chuck smiled and replied, “That’s the question that drove me to start selling life insurance in 1986.” I responded, “How do I get started selling life insurance, too?”

As a side note, my employer later went out of business. When my job disappeared, so did my benefits… including that free life insurance. Now, what if I had also opted into (bought) employer life insurance through my benefits package? Well, I would have lost that, too.

So I also learned: employer life insurance disappears when a job disappears. Another reason to own individual life insurance outside of work!

Getting a License to Learn

Chuck taught me the ropes of the life insurance industry. Within a couple of months, following his instructions, I earned my first life insurance license.

Now, when I earned my first pilot license in 1995, the FAA examiner handed me a piece of paper and said, “Here is your license to learn.”  At that time, what she meant was I now had a piece of paper certifying that I knew the MINIMUM necessary to safely fly an airplane.  Just the minimum.  That’s it.

When I earned my first life insurance license in 2004, just like my first pilot license, I knew that all I had was a license to learn.  Just a piece of paper certifying that I knew the MINIMUM necessary to “safely” sell life insurance.  Just the minimum.  That’s it.

So, I set out to learn.  And since 2004, I’ve learned a lot using my life insurance license to help couples with kids and careers protect their incomes (e.g. options) with the right life insurance at the best price. This has carried over into my vision at Your Money House: “to help people protect wealth.”

 

Here are some frequently asked questions about life insurance to help ensure your family’s financial options will be protected if your income stopped (e.g. you died too soon).

 

Question:  What would my family use life insurance money for?

Answer:  The short answer is to protect their financial options in life. What does that mean? For my family it means we have peace of mind because:

• Melissa will have the option to not work. She can stay home and take care of Raymond & Bennett (life insurance money will replace my income).

• Melissa will have the option to keep our house in the country. And, the boys won’t have to move away from their friends (life insurance money will pay the mortgage).

• Melissa will have the option to pay utilities, credit cards, her student loan, or Raymond’s and Bennett’s college with zero worry (life insurance money will pay the bills, too).

With life insurance in place, Melissa has financial options. She has a secure, stable future because of some simple life insurance cash. And because she also owns life insurance, I have the same peace of mind discussed above. In other words… both husbands AND wives should own life the right life insurance at the best price.

 

 Question:  I have life insurance already. I’m all set… aren’t I?

Answer: Maybe. The better question to ask is:

“I have life insurance already. But, how do I know it’s the right life insurance at the best price?”

In helping dozens of people, only one couple happened to have the right life insurance at the best price. The other couples had too little coverage. So, their family’s financial options were at risk if income stopped from someone dying too soon. And, some were overpaying for their insurance. The bottom line is this. If you purchased your life insurance through work or through a captive agent with sales quotas (someone who can’t shop around, but must make a monthly sales goal anyways)… it makes sense ask an independent agent to shop policies for your family (it’s free to shop).

 

Question:  What is the right life insurance policy? What is the best price?

Answer: The right policy is “suitable” to your needs. It takes into account factors such as:

• your family’s income requirements. so we know how much insurance you need… FYI: buying more than you need means you pay more than you should… buying low amounts of insurance means your family’s financial options and quality of life is at risk if you die too soon

• your family’s budget. permanent insurance has more “bells and whistles” (more expensive) while term insurance has less “bells and whistles” (less expensive)… TIP: watch out for rookie or poorly-taught salespeople who may passionately talk you out of either permanent or term insurance to better meet their sales or commission goals

• your personal health and lifestyle. a suitable individual policy considers you as a person and typically provides better pricing than group life insurance plans that treat everyone as unhealthy

When you properly answer questions like these, you can get the right life insurance at the best price.

 

Question:  I’ll just buy (or I previously bought) my life insurance online (or through my home / auto insurer). So… I’m set… right?

Answer: From my perspective, no. Online agents are great because they can shop for the best life insurance rates (as ANY independent life insurance agent can). However, online agents struggle to service policies as the relationship factor is missing. Also, most online agents have sales quotas to meet. I disagree with sales quotas as they can force an agent to sell you the wrong insurance just to meet company sales goals.

Also, home /auto insurers will typically want to sell their proprietary life insurance products to you. Even with “bundled” discounts, this life insurance is usually more expensive than obtaining your own individual policy. I check my own policy against my home / auto insurer at each home /auto renewal date.  So far the home / auto “bundled” price for their proprietary life insurance product is more expensive. So I stick with my individual life insurance plan.

Time again, I see better results when people protect their income and family’s financial options with an individual life insurance policy.

 

Protect Income Using Life Insurance: Here’s How

So what do I do? Simple. Melissa and I have individual life insurance policies that we each own. We list each other as primary (first-in-line) beneficiaries. If we both die together, say in an auto accident during a night out together, then we each list our family living trust as the contingent (second-in-line) beneficiary. Since our children are minors, the insurance company will not pay them directly… but the insurance company will pay benefits to our living trust, which then allocates money as needed for Raymond & Bennett. We each have seven-figure, twenty-year term policies through a major life insurance company. This “protects” Raymond and Bennett until both kids are capable of earning their own incomes. We pay $75 a month for the peace of mind of knowing that our kids will have financial options should we die too soon… while they are still depending on us financially.

 

Now you know how easy it is to protect your income with the right life insurance at the best price. It’s time to go shopping for a suitable policy to protect your income. I can help.

 

• avoid greedy agents selling overpriced products.

• enjoy zero sales pitch or pressure.

• receive unbiased advice.

• learn simple options that you can understand.

• become confident and overcome any uncertainty or  overwhelm.

• feel good making the right life insurance decision.

Let’s get started today. Confidentially contact me here. I’ll personally respond!

-Tom

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What Others Are Saying

“We increased our life insurance coverage by hundreds of thousands of dollars for a minimal increase in our monthly bill. We were shocked to find out that the old life insurance rates we had were really not that great.”

-Dena from Phoenix, AZ

 

“I am very happy and pleased with the excellent service and help Tom gave me in securing life insurance. My situation was very challenging due to my occupation as a worldwide charter pilot. Tom went out of his way to find me the best policy and coverage tailored for my specific requirements. I would recommend Tom.”

-Tim from Simi Valley, CA

 

“I’ve known Tom for 15 years, so when I needed to upgrade my life insurance due to a new addition arriving in my family, I knew I could rely on him to get me the coverage I needed. He worked with us to find the right coverage at a great price from a reputable company. He was available to answer any questions and the process was quick and painless. I was able to double my coverage for less than my old premium. When we need to make changes after the baby is born, we’ll be using him again.”

-Bob from Shaker Heights, OH