MDRT Study: Families who seem financially stable may not be protected against potential risks

PARK RIDGE, Ill. (June 6, 2017) — About half of Americans (47 percent) say if they were to lose their primary source of income tomorrow, they could only maintain their current lifestyle for three months or less. A new study commissioned by the Million Dollar Round Table (MDRT) – conducted online by Harris Poll among over 2,000 U.S. adults ages 18 and older – finds that many Americans, even those considered financially successful, do not account for unexpected risks during financial planning.

Planning for the unknown
It appears that many American households are unprepared in the event of something unexpected happening to a family member, thus losing a primary source of income. A majority of Americans (61 percent) say their family would assume debt if they passed away tomorrow, with 38 percent of U.S. adults saying the debt would be $10,000 or more. Additionally, only half of Americans (50 percent) have life insurance. Of those who have any dependents, 47 percent say their dependents would run out of money without their personal income in two years or less if they were to pass away tomorrow.

“While these families with a steady source of income may seem prepared, they are jeopardizing it all by not having the right protection to ensure future financial security for themselves and their families,” said Mark J. Hanna, CLU, ChFC, MDRT President. Americans are also not taking in to account the possibility of disability or illness while planning for their financial future. One in 20 Americans (five percent) are unemployed and unable to work because of disability or illness, but only 20 percent of U.S. adults have either short-term and/or long-term disability insurance. Of those Americans who do have disability insurance, only 39 percent believe it would be enough to cover their long-term care and medical expenses if they were to have an accident.

Even financially successful families do not anticipate financial risks
On average, Americans say their household has two sources of income, with 40 percent having income of $74,000 or more.

“It’s not just lower income Americans who are vulnerable to financial strain in the event of a life-altering incident; families considered financially successful are also at risk,” added Hanna. “A financial professional can help identify potential risks and work with you to set up a plan that protects your family from these pitfalls.” Of the Americans surveyed:

• 70 percent have received some college education, are graduates or have a higher degree

• 62 percent are currently employed

• 67 percent are homeowners

• 80 percent have medical insurance

• 56 percent are parents

Saving for the climbing cost of college
College expenses are rising faster than inflation, yet only 36 percent of parents with children under the age of 18 in their household are saving for their children’s college education. Lack of college savings may be a result of many Americans still working to pay off their own student loan debt. According to the Quarterly Report on Household Credit and Debt from the Federal Reserve Bank of New York, Americans currently owe $1.31 trillion in student loan debt.1 For a high-resolution infographic that highlights the potential risks Americans face, please contact Tori Unger at TUnger@gscommunications.com.

Survey methodology
This survey was conducted online within the United States by Harris Poll on behalf of MDRT January 9– 11, 2017, among 2,192 adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, please contact Tori Unger at tunger@gscommunications.com.

1 Federal Reserve Bank of New York, Quarterly Report on Household Credit and Debt

About MDRT
This year, MDRT celebrates its 90th year of delivering innovative ideas and generating empowered growth. Founded in 1927, the Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is a global, independent association of more than 49,500 of the world's leading life insurance and financial services professionals from more than 500 companies in 70 nations and territories. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of excellence in the life insurance and financial services business. For more information, please visit mdrt.org and follow them on Twitter @MDRtweet.

Brittany Lange
MDRT
+1 847.692.6378
blange@mdrt.org
@MDRTweet

Tori Unger
Gibbs & Soell, Inc.
Phone: +312.648.6700, ext. 2124
Email: tunger@gscommunications.com
@ToriKUnger

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Buy-sell Agreements, why are they important?

Do you and your co-owners have a strategy in place to transfer your business to the right people, at the right time, for the right amount of money? That’s what a buy-sell agreement allows you to do. Having a buy-sell agreement in place can help protect the future of your business.

A buy-sell agreement is an important aspect of your overall exit strategy. It helps create a market for the business when an owner dies, leaves the business, or becomes disabled. When structured correctly and funded with life insurance, and or disability insurance, a buy-sell agreement can help provide a solid start to your business exit plan and the people who depend on the future of your business.

Some of the key protection benefits of a buy-sell agreement includes:

Co-owner: Co-owners of the business get protection by providing them the opportunity and funding to purchase the business interest of a deceased, disabled, or a departing owner.

Business: Protect the business by preventing and/or limiting transfers to parties that might be unqualified or undesirable, by requiring certain restrictions.

Continuation: Minimize conflicts among owners by setting the price and terms of a sale when an owner leaves the business. Depending on the growth of your business, you may want to have the business valued every couple of years or so to be sure the buy-sell agreement has the appropriate funding in place.

Estate: Fix the value of your business interest for estate tax purposes if the price meets the IRS guidelines at the time the agreement was signed. Also, be sure to consult your accountant regarding all tax related questions. The estate tax limits can change.

Family: You and your family can be protected by having co-owners buy your interest in the business for a set price and providing them with the funding to do that if you die, become disabled, or leave the business.

Thank you for reading. For more information about how a buy-sell agreement funding option can work for you, please submit your information on our contact page, or call us today!

Four Simple Steps to Buying Life Insurance

Four Simple Steps to Buying Life Insurance.

It can seem difficult at first, but it can actually be an easy process if you follow these simple steps.

Step 1: Find yourself a trusted life insurance broker. A broker can find you the best policy and best pricing on the market. Since the broker has access to a multitude of companies, instead of just one, it gives you the best chance at finding the best product for your needs.

Step 2: A trusted life insurance agent will do a fact finder to narrow down what your exact needs are. They will explain to you how the different types of life insurance products work, so you are better educated to make the proper decision. After verifying your needs, the agent will make a professional recommendation. They will help you determine which product makes most sense to you. With life insurance, there are two basic types of insurance policies to choose from, and your agent should be able to explain how they work for you in detail. Choosing the proper insurance product is a team effort between you and your agent.

Step 3: Be sure your agent chooses for you a reputable company. The insurance company you choose should have been in business for many years, be financially stable and have strong ratings.

Step 4: Choose how you want to buy. There are many safe ways to buy a life insurance policy especially during this time of Covid-19. Your agent should give you the option to either meet in person (if possible), do the appointment by phone, or do a video meeting online i.e. Zoom. More and more of these meetings are moving to video platforms for the safety and convenience of all parties.

Buying life insurance can be a simple choice with lasting value. Don’t leave your family or your business unprotected, make the decision that can help keep them covered today.

Top 5 Reasons You Need Life Insurance

OK, let’s talk. I know, talking about life insurance usually isn’t the most fun thing to talk about, but it is one of the most important aspects of your financial plan if not the most important. Talking with an expert regarding these matters can surely help lighten the load with what is needed to make a good decision in these matters.

I have been very lucky to know and meet a lot of absolutely wonderful people from all walks of life. And with knowing many people, your chances go up with knowing more people that have passed away. It is always hard to see friends and family stress about money during trying times like this. Seeing many of these types of circumstances is one of the many reasons why I chose to get involved in the life insurance industry. I am passionate about helping people get prepared, so when the unexpected happens, family and friends will not have the financial stress that comes shortly thereafter.

This article will outline just 5 of many reasons why you should have life insurance as part of your financial plan.

     1. Funerals aren’t cheap.

According to the most recent data from the National Funeral Directors Association, the average cost of a traditional funeral, including embalming and a metal casket, is almost $6,600. From my research, that represents a more basic casket. Most statistics out there say it is usually closer to $10,000 and in many cases higher. Most people don’t have an extra $6k-$10k or more to dedicate to funeral costs so they usually have to draw money prematurely out of a 401-k, savings, fundraise for it or go into debt paying for it. Don’t leave it to your family to deal with the added stress of coming up with money to pay for the funeral.

2. Take care of business.

Life insurance is a very important part of the small and large business equation. Having been a business owner throughout my life, I can relate with the stress of wondering what would happen if the unexpected took place. Ask yourself some of these questions: What would happen if a key employee dies or becomes disabled? What happens to my business and my family if I die? What happens with the structure of the business if a business partner dies? These are just a few things to think about when owning a business and to take the proper steps in protecting yourself and those dependent upon you.

3. Supplement retirement.

How do you supplement retirement with life insurance you may ask? Certain life insurance policies (Whole Life) in particular, have both a death and a living benefit. These types of policies can accumulate cash that can be borrowed at a later time for cash needs. These types of policies are also usually protected from creditors, have a premium payment that is guaranteed to never increase, tax-free access to your funds as well as a myriad of other features and benefits.

4. Peace of mind.

Having a life insurance plan gives you the piece of mind that whatever happens to you, that you have a plan in place to care for loved ones that are left behind. You can also allocate some of the proceeds to your favorite charity if you wish. Just knowing that business will be taken care of and that you are leaving a legacy behind is a good feeling to have.

5. Nobody gets out of this world alive.

My grandmother used to say this and it made light of a sad situation. With this obvious knowledge, it is nice to have a plan in place that will not only take care of funeral expenses, but also pay off debts, a mortgage, take care of rent for a couple of years, pay for a college education, and the list goes on. In addition, life insurance is usually a lot cheaper than you think.

Don’t hesitate on getting something set up to protect the people you love. It can make all the difference in the world.

Do You Have Trusted Advisors On Your Team?

Every business owner needs a team of trusted advisors.

If you’re a business owner, you are used to wearing a lot of hats. Still, you can’t be an expert at everything, which is why it’s important to build a network of trusted professionals that you can turn to for help whenever the need arises.

No matter how successful you are, there are plenty of reasons to establish a professional network. In addition to exchanging contacts and referrals, there’s also the opportunity to share ideas and receive free advice from specialists in their field. And, much like getting a second opinion on a medical procedure, your network can act as a system of checks and balances by making sure you weigh all your options.

Ask yourself: Whom should you invite to be part of your network? While the members may vary depending on your strengths and weaknesses, your team should probably include some—or all—of the following professionals:

Attorney: Unless you have in-house council or a legal background yourself, an attorney—especially one with some experience in your industry—is almost a necessity. Among other things, an attorney can help defend you and your company from potential lawsuits, review contracts, and help with succession planning.

Accountant: While most people only use their accountant during tax season, business owners will find that an ongoing relationship can save them money in the long run. Not only can an accountant keep you from running afoul of the IRS, they can also show you how to structure your business and become a more tax-efficient operation.

Banker/Financier: As we all know, cash flow is the lifeblood of any business. And in today’s restrictive lending environment, having a banker in your corner can be a real boon. By providing easy access to credit, or letting you hear about the most favorable rates, a banker can be an invaluable addition to your team.

Insurance agent: A professional insurance agent can help you prepare for a number of critical business issues. Specifically, an insurance agent can help your business overcome the loss of a key employee, enhance your executive benefit package, fund a buy-sell agreement, and protect your family’s future by insuring your business interests.

As you can see, there are a host of advantages to creating a network of professionals with expertise in their field. Best of all, it’s a win-win for all parties, so setting one up may be easier than you think.