Business Innovators Radio - Interview with Ft. Worth Financial Professional Guy McCord, MBA Discussing the Myths of Life Insurance

Episode Date: June 15, 2023

Guy McCord lives in the Dallas/Ft. Worth area with his lovely wife of 30 years, Patricia, and their son, Andrew, who will soon be a senior in high school.Growing up in Plano, Texas, his grandparents were his heroes. One of his grandfathers served in Germany US Army and received a Purple Heart. His other grandfather was a West Texas rancher and worked for 40 years as a rural mail carrier. Guy’s grandmothers were steadfast in their faith.Guy has served in staffing as CMO, logistics and commercial building maintenance as both a CFO and CEO. He has also served many small businesses in consulting.Guy is a retired Texas rugby referee and serves Dallas County as Presiding Election Judge. After earning his MBA in 2007, he authored 7 articles. He supports the Monastery of the infant Jesus of Prague and St. Joseph.His faith is his foundation, and he lists Jesus, Mary, Joseph, his wife, his son, and his great friends among the most important things in his life.By structuring client retirement money to minimize taxes, safeguard against market losses and allow for upside gains while allowing for lifetime income.Learn More: https://guymccord.com/https://www.guymccord360.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-ft-worth-financial-professional-guy-mccord-mba-discussing-the-myths-of-life-insurance

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Fort Worth financial professional Guy McCord, and we'll be talking about the myths of life insurance. Guy, welcome back to the program. Hey, Mike. Great to be back. How are you doing today?

Well, and awesome. And I think we have about a nine hour episode if we're talking about the myths of life insurance. So I know we just want to kind of touch on the low hanging fruit and clarify some of these things. But first of all, why are the myths about life insurance? Where does that start do you think? Because I know that when you say the word life insurance, people's red flags go up. So let's get started with why is that? Well, I think Mike, I think it's because.

well, at least 60% of Americans underinsured or not insured for life insurance. And, you know, there's a lot of myths about, you know, how much does it cost? You know, most Americans think that it's about three to four times more than it really costs. And, but, you know, essentially, you know, what is life insurance, you know, it's not, when you buy life insurance per se, It's not an emotional decision. It's just a risk management decision. And it really protects you against five simple different risks. The first one would be mortality, which would be like term life insurance.

And it's simple form would be pure risk. Term is a pure risk, what they call a pure risk product, protecting you against death or disability. The second one would be morbidity, which is like disease. and most of the life insurance carrier companies out there have what's called a critical illness rider on there. So if you get cancer or if you get something that's going to cause you to die within 12 months, it's imminent. It'll protect you against that. Thirdly, it covers you against longevity. Americans are living longer and longer and longer.

I have lots of clients that are living well into their 90s. So it covers you if you live beyond your income generating capacity, some things that can do that are annuities and long-term guaranteed returns. The fourth thing it would help you with on risk would be market volatility. You know, you can get guaranteed returns on a participating or non-participating products that you're going to get a return when the market goes up, but you're not going to lose money when the market goes down. And then finally, financial discipline, it's protecting money from consumerism and a lack of discipline. So it really protects against those five different things. You know, those are huge points that I think a lot of people don't think about. And I think that most of the time people think, ah, mom, dad, grandpa, grandma told me to get life insurance.

So let me just get it. So let me just go to the place that I normally go to Google. Let me just Google this. And then I'm going to do what I'm normally conditioned to do, which is find the cheapest thing. and then click buy. Why is that a mistake? Well, the cheapest, you know, it's like anything else. In life, at least in this country, you get up, you, the old proverb, you get what you

pay for. Sometimes you get what you pay for, sometimes you don't. But if you're dealing with a reputable advisor and you can get, and you get a, typically, I don't like to write companies that are anything less than an A rated carrier. What I mean, how's it rated? Well, there's three or four. different rating services that rate carriers based on their financial strength, based on their ability to pay claims, and so forth. So let me jump right into some of the myths. Okay. I think

there I know of about nine or ten myths. I'm going to, I'm just going to do as many as we can do in this call, try to keep it simple and keep it quick. But the first myth is that life insurance is only useful after you die. Okay. Okay. Okay. So that's really a myth because in the last five to ten years, like I said previously, carriers have, you know, the markets always are changing, right? That's one thing we know is that the world is always changing, okay? So many years ago, life insurance was just about dying. But now, like I said, it's about many of these policies have,

critical illness riders. For example, if a person can't do two or more of what we call the activities of daily living, the policy can kick in and start to pay. And then many of them have what's called a terminal illness writer. If you're projected and you get a letter from your doctor saying you're going to die in 12 months, you can get 90% of your money out, if not all, your money out of whatever the death benefit would be. Really, the second myth is, well, I've got, you know, I work and my company covers me so I don't need another policy. Okay. Well, that's, that the thing about employer provided what's called group life insurance is, is that the coverage is only last while you're working for that company, okay? If you,

if you terminate your employment for any reason, usually your coverage goes away. And what a lot of my clients that catch me later in life after they've started to retire is that they could have become uninsurable or have so many health conditions because, you know, our health is never better than it is now. Because as we age, our health is always going to decline in most cases. I do have a 92-year-old client that plays golf every Monday and Friday, and he's as fit. I mean, he looks like a Navy officer. He's perfectly fit.

You know, he just out there. He said, I'm going to live a long life and I'm going to enjoy it, and I'm going to stay healthy. And playing golf on Mondays and Fridays is the way he does that. And he's still got all his faculties. He, you know, he's just a super guy because most of my. clients what I tell them when they when they when they retire I'm like what's your life going to be like at retirement are you are you just going to hang it up and sit on the couch and watch tv or are you going to enjoy life and I know I've got one client that's 72 years old she's got half a million dollars in a guaranteed

account where whenever she decides but she actually she works as a travel nurse so she'll go on job assignments all over the country for 90 days apiece. And if she doesn't like that job at the end of 90 days, she just doesn't go back. She goes somewhere else. But I've told her, I said, look, you know, you like work. She's a neonatal respiratory therapist and speaks Spanish for Mexico, but she lives here. She's a Texan. And she loves working with the doctors because she says, you know, I said, why do you like work? Do you just like working with the babies? And she goes, yeah, I do. I like that. but I like working with the doctors because they listen to me. I'm like, okay.

So she's got, she's 72 years old. She's still traveling every night of day. She's active life. And I said, well, Wendy, you know, she has no kids. She never had children. I said, Wendy, when do you want to sit on a couch and watch TV? And she says, never. And I said, okay.

You know, it's going to be highly unlikely. You're going to be able to work into your 90s. But whenever you're ready to turn on your income flow, we can do that. and we will have you guaranteed income until the day you die if you live to 120 you're going to have a guaranteed income now that's a myth that people don't understand that for example a fixed index annuity will has the ability to pay somebody until they die and even if their account balance is zero they will still get that check okay so you know guy this that's a couple of points that made me think of a comment slash question for you. It reminds me of like when you think of real estate rent versus buy. If you rent a house and five years later you move, you have nothing to show for your money. You just paid the landlord your rent. But if you buy a house, you've got tax deduction, you've got equity buildup. So it's kind of like term life insurance is renting because you don't have any benefit.

And those don't provide those things that you've just described some of those living benefits. Because I think that myth of people thinking life insurance kicks in when I die, well, I don't get any benefit. I'm still living. Well, yeah, you do. And those are a couple really big ones there that you've just mentioned is being able to access that life insurance even when you're alive. Those are some great living benefits. Correct. Like the third myth would be, why do I need life insurance?

I'm young, single, healthy. okay well life insurance is the one product that can't be bought when you need it in other words if your house is on fire you can't buy a fire insurance policy right yep so same thing with life insurance you know you buy it when you're healthy because the rates are going to be younger because the rates are going to be less so yeah the fourth myth is life insurance is expensive okay um and like i've already said most americans actually think that it's three to four times more money than it really costs um so the fifth fifth uh myth would be you know term insurance is the only form of life insurance well that's just not true um term insurance like you said mike is like renting

your house okay when when you have a term policy it's set for 10 15 20 30 years and And once you've paid all the premium over that term, you're done, right? You have no more benefit, but you're not paying more premiums, but you've rented that policy for the term, kind of like leases in a car. You lease a car at the end of the contract, you turn the car in or buy it, right? So, anyway, so. Now, one thing that I think is important, too, here, and correct me if I'm wrong, people, people, comparing premiums for term versus whole life, it's going to be cheaper for term.

So it is going to be more expensive on whole life. But when you get all these living benefits you've been describing, as well as other things like buildup of cash value and dividends and all that, be prepared that it's going to be a little bit more expensive, but it comes with so much more value, right? Well, I, I use hope, you mentioned whole life. Okay. Now, whole life is, I would say, with most carriers, probably the most expensive way to buy life insurance. And why is that? Because it covers your whole life. If you're paying the premiums and the policy is funded, it never lapses and you'll have a death benefit if you live to 130 years old. So I only use whole life with selected clients. clients where it's appropriate, okay?

And there's specific reasons. They're way too complicated to get into on this call. But yeah, whole life is, I use it rarely. I use, but I do use it, but only when it's appropriate for that client for their specific application, okay? There are other forms of coverage like universal indexed life. So, you know, where the money in the account, what it is. is it's, you have a, and what we would do is design a policy that's what we call fully funded

with the minimal death benefit that you can buy under the IRS tax code in order for it to not become what's called a modified endowment contract, which is taxable. So the great thing about life insurance is it falls under the tax code called 7702. It's where you can, like an IUL, an index universal life policy, you can dump money into that policy with the minimal death benefit allowable under law in order to part money in there to get indexed returns and protect that account. So unfortunately, there are many advisors that improperly design those types of accounts. And if it's not done properly, you could take a bath. And so the key thing is always to set the assumptions properly. The old proverb is under promise and overdeliver.

If you, if the advisor, if you have an ethical advisor that does that, that's not just trying to get paid, but is actually setting up what's best for the client over the long term, given any type of market considerations, that can greatly benefit the client on their wealth building. Okay. It's kind of funny because most of wealthy Americans, and I'm talking about the top 5%, use index universal life because it's just a superior vehicle. The next thing would be I'm not eligible for insurance

because I'm too old or I have a pre-existing condition. Okay. Life insurance rates are, designed based on averages, averages on mortality, averages on height and weight, averages on health considerations, age. So when we have a client that's got certain risks, let's say they have diabetes, for example, they would, they can, in most cases, still get life insurance. It's just going to be rated differently based on their specific health conditions. Okay. Another, another myth. I will get better returns from investments other than life insurance. Okay. Well, let me ask you this.

When you do comparisons of accounts or products, you should do apples to apples, not apples to oranges. So in other words, let me explain that. Would you ever compare, you know, getting your smartphone and comparing that, you know, taking your smartphone apart and looking at the components like the phone, the camera, the hard disk, the browser. No, you wouldn't, you wouldn't compare those because those are apples and oranges. You would want to compare smartphone to smartphone. So the same thing is like that with life insurance accounts. And so we'd want to make sure that we're comparing the right thing, okay?

And you're not saying put all your money in that. You're just saying use this as a tool. Yeah, I would never say put all your money in one basket, all your eggs in one basket. you know, life insurance is a, should be a component of the investment portfolio, not all or nothing, okay? You know, Guy, regarding the health insurance point that you made, isn't it true that in a permanent policy like you were mentioning, like you said, it covers your whole life or it's a permanent policy, you don't need to get re-examined in a period of time, whereas in whole life, or term life, If you got a 10-year term or 15, you've got to re-qualify. So you might have your health change in that time frame and now might have extremely high premiums or not get coverage. Whereas in that permanent policy, once it's set, you've got it till you die.

Exactly. That's a big piece. Yeah, you hit the nail on the head. I would say probably the last myth is that, you know, filing a claims a hassle and that the insurance. company can deny paying out the beneficiary or hold back money, that's really a myth, because most states have a one or two-year what's called the fraud clause. Let's say a client made a material misstatement or just flat out lied on their application. Well, you know, I'm based in Texas. And For example, Texas has a two-year window from the date that the policy is issued.

So let's say, let's say I bought a life insurance policy and I lied and the insurance company did not uncover my lie. Well, the carrier under Texas law and a lot of other states, it's two years or one year, they have that two-year window to either uncover that misstatement or and terminate the policy or if they've taken my premium beyond the 24th month, then they're stuck with me and I got away with it. I'm not telling clients to do that. That's theft. That's fraud. But let's for example, somebody's, you know, a guy commits suicide.

Well, if he does that in the first two years, it's called the suicide clause. The carrier under Texas law is not going to pay. But if he gets the month 25 and does it, the carrier has to pay, regardless of what he did, because they've lived and taken those premium payments beyond that to your window. That's a good clarification. I think there's so many points that people just if you were to, you know, you hold up those, you see in the movies, those Rorschach test like, oh, tell me what you see here, tell me what you see here. Or what's the first thing you think about when you hear the word, whatever.

Well, I think that like we started off this conversation, when you hear the word life insurance people like red flag, well, you've brought up some huge opportunities for clarification. You clearly let people realize that, hey, here's a myth, but that's not the case. Hey, here's a myth and here's how it really works. So there's a lot of choices here. And like you said, under the permanent type of policies, there's so many variations, index universal or permanent and all these different whole life, these different ones to see what might be. the best fit. It's not the best fit for everyone. And we don't put all our eggs in one basket. So I just like your approach to just taking care of your clients and making sure they're getting the best thing for them. So boy, if someone is interested in learning a little bit more,

what's the best way they can do that and also reach out and connect with you? Online at Guy McCord-360.com. That's G-U-Y-M-C-C-O-R-D-360.com. And my number direct is area code 214, 329-4-8-00. Well, Guy, it's been a real pleasure chatting with you today. Thank you so much for coming on. Thanks for having me, Mike. Talk to you soon. You've been listening to Influential Entrepreneurs with Mike Saunders.

To learn more about the resources mentioned on today's show or listen to past episodes, Visit www. www. www. influential entrepreneurs radio. com.