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The Lovable Lawyer with Steve Gibbs, Esq.

Dec 1, 2019

All right. Hello and welcome to the lovable lawyer podcast, episode two. So excited to be with you guys and thinking about an episode two and was trying to come up with the right topic that kicks off. You know, really our entire podcast last week, episode one was our origin story and in my background and what propelled me into this arena of legal estate planning and life insurance planning. And as the two merge and come together, it came together with insurance and the which we're very excited about is that grows and develops. And so this podcast is the merger of these two important areas and how they really should be together in terms of subject matter and and synergy and all these things.

So today's topic is why you need defense as much as you need offense and sports analogies in there. I know that. And it's because the first time that I heard that idea related to life insurance was years ago, my uncle who was a insurance agent, and when I became newly married and my daughter was on the way, and this was some time ago, she's about to turn 17.

So I had this discussion with my uncle and he kinda went into a sports analogy. And the background story on my uncle was that he had been a very prolific athlete in Minnesota, a basketball player. And he had actually thought about coaching basketball at one point, and, and he started sort of his money-making world and began to realize that he could make more money selling pots and pans actually than he could as a, as a coach. So he realized this and, and for whatever reason decided to move into the sales arena rather than coaching. And, and he became really prolific in the life insurance world and he used that sports idea to encourage people, and the need for an offense and a defense.

So really a lot of people in life have incredible offense, particularly entrepreneurs, business owners, real estate investors, kinds of people that I spent a lot of time talking with.

And so it's great to have an offense. It's great to go after business revenue and it's great to do marketing and it's great to do the networking thing and to put out value for potential customers and to make yourself known. And most people are really good at that. And that's the offensive side of things. And as I touched upon in our origin story and week one, that was me as well, but I began to experience the side effects of not having any kind of a defensive plan whatsoever. So I experienced the roller coasters in business, some months would be really abundant and things going on and busy. Then at other times you'd have these cycles where things would feel slower. And so those are anxious times. In the origin story, I was reflecting back to my upbringing and the years that we had sparse Christmases because there were lack of sales in dad's business.

My dad was in the real estate business, so I could overhear my parents in the other room talking about whether we could even afford Christmas presents. And then there were other times that were abundant years where you could hardly get into the room. There were so many Christmas presents, and my mom loved having a lot of Christmas presents. And so we were a bit spoiled in those times. So it was kind of a feast and famine thing. And so the important thing to having a defense is to try to take the roller coaster cycles out of the mix. So that's really what we're talking about. And how do you do that? In other words, how do you create a defense? And I think the first step I'm going to suggest is to be really honest about your plan. And so you know, to look at, to do an honest evaluation of whether you have a defensive plan and if you've never thought about a defensive plan, there's some reasons for that.

Number one, I'm going to pin the blame a bit on our current culture and our society. And just to say that at one point in time, life insurance was a very commonly held asset and it was viewed as an asset and it was really focused around permanent life insurance, which we know as whole life insurance. So people would have life insurance as part of their retirement plan and they would have permanent life insurance to take care of their families. Over many years that emphasis began to shift. As you can see if you really look at it, you can see the emphasis away from stability and having a defense in toward sorta this idea of profits trending almost toward a gambling mindset, which is what we see oftentimes today for sure. We see an emphasis on that.

So perhaps the financial community, the profits to be gleaned from certain kinds of products, you know, mutual funds and these kinds of things and have something to do with that. And so what's happened is that we've had this emphasis shift. And so people don't emphasize having permanent protection in the form of life insurance and having, you know, even having savings, I mean, the statistics on savings are somewhat staggering. Most people are a paycheck away from financial hardships. And so that's something to think about. So, but it's not your fault really. You know, if you're, if you're listening and saying, wow, you know, he's being hard on us or whatever. Well, I guess it, it, people love to point the fingers at the consumers when the abundance of messages out there really has everything to do with offense and very little to do with defense. You know, is it really the consumer or is it something else?

So I let that hang there for a second.

So if you get into the idea of having a defense, what does that mean? So in our world at insurance and estates and the planning that I've been involved in on the legal side, both of these areas emphasize him in a defensive plan, estate planning. And the legal side is about having the right documents in place and the right structures for your assets, the right titles on your assets, and having things set up in a way that if something does happen, whether it be disability or death, that you have loved ones, you and your loved ones would be able to navigate that with a coherent plan and minimizing the costs and minimizing the craziness and hassles and things like that that can follow if, if there is no plan. So that's on the legal estate planning side, on the life insurance side, the common mantra that you're going to hear out there is really about buy term, invest the difference, the idea of that, and you may or may not be aware of what term life insurance is or, or the different kinds of life insurance.

We've touched on this a lot on our blog basically over the years, the mantra of many in the financial community terms is really encouraging folks to spend as little as possible on a term life product, which is a temporary life insurance product that really only offers a death benefit and will ultimately expire. Term life could be a year, it could be 20 years. Whenever that term expires, then the life insurance costs are going to go up dramatically.

So term insurance not offer the stability of having a death benefit, something happens. It's not offering any kind of long term or permanent protection. We're going to get into this more in future podcasts and get into it a lot in our blog posts, right? You're talking about a ready reserve of, of cash. So a safety net account and you can have a savings account of course.

But what we've talked about a lot at insurance at insuranceandestates and in our conversations is having that, that that savings account be housed in a permanent life insurance policy, what was ideally, usually a whole life insurance policy. So, and there's reasons around that and I'll just touch on them. You have tax advantages to doing it that way. You also get the permanent life insurance and you have liquidity attached to that account and you can use it and you can use that, that account and, and in future podcasts and discussions, we're going to get into having sort of a self banking mindset or private family finance, call it what you want, but you can use that account then for other higher risk kinds of investments. And so there's just a lot of advantages to having this life insurance safety net. So that's part of having a defense.

And even if you don't have a whole life insurance product as a defense or or another kind of permanent life insurance, you know, the, the term life does provide some defense obviously in the event of death. And then there is a particular type of term called convertible term which is a nice alternative to just straight up term. So, so that's a way that you can hit a defense set up on the life insurance side. Lots more details to come in future episodes on that topic. And I think that the thing to do now, as a first step if you're proactive, is just to look at it and ask do I have any defense whatsoever? Take an honest look. Because I bet you many of you guys listening have a great offense and yet defense may be a question mark at this point. So that's my encouragement to you today.

Applying a sports analogy. Think about your favorite team. Perhaps they have a great defense and that's helped them. Maybe they have a great defense and no offense, I mean obviously that's another problem. So we want you to have both and we'll encourage that along with many other things here in the podcast.

Our hope for future episodes is to discuss legal issues, life insurance, and these areas together, and anything else that we think that is something that you guys wanna talk about. So please feel free to comment, share, subscribe, and, thanks again. Great to be with you guys. Talk to you next time.