Business Innovators Radio - Interview with John Badalamenti, Co Founder & CEO of Safe Estate Discussing How Life Insurance Fits into Retirement

Episode Date: April 9, 2025

John has lived in this business for a while, 30 years fighting the Wall Street battle! Born and raised in beautiful Michigan with a close family that he loves and cherishes. They spend a great deal of time together traveling and love visiting their family cottage in up north Michigan. One of his truly favorite spots is mystical Mackinaw Island. Being an avid animal lover and protector, he will soon provide a sanctuary for animals that need love and a safe home. This will be in memory of his “ex-partner” and beloved friend Bambi, whom he rescued and who went everywhere with him in his travels. In his business mode, he works in many states but primarily the Michigan and Ohio areas, fighting for his students and clients from the stock market insanity.“Emotions run the market,” and he has learned from all those emotions from all his students through the years!Learn More: https://www.safeestate.net/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-john-badalamenti-co-founder-ceo-of-safe-estate-discussing-how-life-insurance-fits-into-retirement

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, John Baddalenamenti, who's the co-founder and CEO of Safe Estate. and we'll be talking about how life insurance fits into retirement. John, welcome back to the program.

Hi, Mike. How are you? Thanks for having me back. Enjoy it. Hey, you're welcome. I'm excited to learn about this topic because I think when people hear life insurance, they bristle, throw their hands in the air and go, I'm good, I'm good, I'm I check the box. So it's curious to me that you're saying life insurance fits into a retirement plan. How does that, how do you start teaching and educating your clients and your network in how life insurance should be integrated into a retirement plan. Yeah, it's a great question. We were just talking about it previously. And in my classes,

there's a segment that comes up on that, usually in class two, class three, depending on what we're at and where we're teaching, always questions on life insurance. And you're right, so many people have the wrong, they hear the wrong information about it out there. I always tell people, it's always the informed that will do better. And it's the uninformed that don't know the facts that can hurt them in certain instances, right? And life insurance is a very powerful tool. It's not for everybody. Most of the insurance plans that we talk about in our class, since most of my classes at all the colleges and universities where we're at are, we have a lot of baby boomers and retirees attending them. Most of them are pretty much 50, 55 and up, right, that come to the classes.

And they're asking about entering retirement now or already just have. And they want to know a little bit about legacy planning and what they can use for that. And as I said, it's for some people. It's not always for everybody. But it is a very powerful tool in that what it does is, it allows you to cover many stones at one time, I want to call it. It not only provides legacy or money left to the family for replacement of things like taxes and things like that. It allows a chunk of money to come in tax free, what we call a death benefit. And one of the most powerful tools of the instrument itself is the living benefits. It's being used today not just for what we call just insurance for death.

Most people see on TV all over the place. They see stuff on term insurance and 10-year term and burial insurance. It's not $20 million of coverage for 10 cents a month. Yeah, it's not true. Yeah, it's not. We're talking about insurance plans that you put into effect or into place just before retirement. We call them a life insurance retirement plan. It's a form of permanent insurance. You will have it your whole life. Yes, it's costly. We tell everybody that is one of the things you have to understand. There's goods and bads to everything and it may not be for you. But if it's going to fit into your plan, you have to ignore the fact that it is a costly instrument. But once you get out of it, You got to give it time to baste, we call it, like basting in an oven. It's usually about a five to seven year basting where, yes, it's costly to you, but you get tax-free death, tax-free life, tax-free long-term care or nursing care insurance inside. So I want to go deeper on that in a minute because I know that long-term care affects so many people.

I've heard the statistic even that 70% of us are going to need some type of long-term care. But one thing that I want to touch on before we jump into that is the permanence of this type of policy. So this is different than the term where you buy it for 10, 20 years, and then you've got to go and re-up it again. Well, guess what? In 10 or 20 years, you're older. Your health might not be the same. And the premiums are going to go way higher. So it seems to me that one of the benefits is getting into something like this now, on the

run end. It's permanent and you don't ever need to re-up it or do health checks again. And I think that's a big benefit, right? Yeah, because now you're locked in it. It's there until you're 100, right? Or 120. And your cost of insurance was kind of set into stone when you first went into it. You're not re-upping it at much higher. Term insurance ends up being much more expensive. We were able to show people how that happens and they're shocked. It's more for a younger crowd, replacing, you know, God forbid anybody were to pass away. It takes care of the house. It takes care of covering their living expenses for the spouse. But this is something right before you go into retirement where you're shifting assets into

the retirement plan and it's there for the rest of your life so it never goes away. And that tax-free death benefit is there as a legacy to give money to a spouse or to the children for many different reasons to make their lives much more comfortable and better. But while you own the plan in retirement, the benefits that are inside is the tax-free usage of it because of what we call IRS Rule 7702. It's been that way grandfathered forever. You're able to let the money grow inside minus the heavier costs. You're able to let it grow inside tax-free. And at the same time, you're able to use that money up the road tax-free and also use it for what we call nursing care or long-term care, which is a big issue in this country.

The cost of long-term care you know is unbelievable. Yeah, let's dive into that because I know that I've seen out there other advisors or online going, oh, long-term care, buy this policy, it's X number dollars. Well, number one, those stand-alone long-term care policies can be pricey, but number two, if you didn't use it this year, you still paid the premiums, you don't get them back. And then if you didn't use it the premiums, you don't get it back. Whereas in this vehicle, it's there if you need it. If you didn't, it's still growing. and it's not a drain or a drag. So I think that's a huge point to bring up, right?

Yeah, with long-term care, I do a lot of that in my financial planning, you know, everything on legacy planning. It's all included in what we do at safest day. But yes, you're correct. The long-term care portion inside, if you don't use it, you don't lose it. Now, we're not telling anybody that an actual true long-term care plan isn't the cream of the crop. It is. The problem with it is it's incredibly costly, as you said. And if you don't use that, you will lose it in most instances.

At the same time, many companies have got away from that because it's heavily costly. Some of the big players that we used to use 20 years ago aren't even around anymore as far as having a long-term care plan. And so, yes, is it the best you can have that policy or a spousal policy through a main player? Yes, you got it. But what's become popular is the life insurance retirement plan by shifting a chunk of money in before retirement. Now you have that LTC plan included inside, and if you need it, it's there as almost like a fire insurance policy. Yeah. If you got to turn it on, you turn it on.

If you don't need it, the value inside and everything else you have stays in place for the rest of the years you're on the earth. You know, and I love the comparison you made between term and this permanent type because term pays out when you die. But this type of insurance, the permanent, has living benefits. And we mentioned the one here you just mentioned, the long-term care benefit is dialed in. What are some of the other living benefits like can you take money out or access the money in this for other things other than long-term care? Yes. You're able to, here, let's use an example. I have a couple of them myself, right?

And I realize when I went in and I tell people this that the cost of insurance are high through the initial years especially. But how I use the plan in my own retirement is that I would supplement at retirement age to keep that taxable income down or go to a lower bracket. Let's say I wanted to live on 70,000 a year. I would go to my tax-free bucket or my life insurance plan or possibly a Roth, things like that, to draw the money out to give me what I need to live on that year, to keep part of it out of the IRS radar so that my tax bracket stays down. So not only do I have the tax-free death benefit in there and the long-term care powerful benefit to go to in a case I ever needed nursing care, everybody else would use this the same way I'm using it. If they want to go in there and buy something or they need it that year for something or they want to increase their income that year in retirement, they can pull from this bucket and it's not on the IRS's radar.

So any growth inside the plan beyond what you put in to fund it in the beginning. And let me just say this. It's usually funded just before retirement, usually as a single drop, we call it, or maybe two, three or four drops right before you retire. And that's it. You're not paying premiums for the rest of your life. Yeah. And then it is there for the rest of your life. And you can draw the money out and use it tax-free as a living benefit to supplement your income.

And what you just explained there sounds to me like there's two elements of benefit regarding tax-free. Number one, when you pull the money out to use to live on, you're pulling it out tax free, but if that allowed you to not access other money and trigger a tax bracket, that keeps you from getting taxed on other areas. So there's kind of a double benefit there, right? Sure. You bet. You bet. You use it to offset something on the other side, like you just said. You say, uh-oh, I'm going to be too high this year because I sold a property that I had and I got capital gains and that's all going to show up this year. I'm going to owe, you know, a bunch of money on that. How can I maybe offset that and maybe get to keep the gain I'm going to.

made on the on the now again this takes planning i'm not saying the numbers are going to work perfect i always tell everybody in my class you know um everything would work perfect if there was no problem at all like today uh the market's tumbling because there's a tariff issue um we always have emotions running the stock market but you can plan wisely by drawing out of that tax free bucket of money that you've built up in there, I should say has grown in there to offset other areas and maybe bring down that cap gains tax on that item that you sold. And even if you had set that you mentioned setting this up, you know, a few years before retirement, but even if you had this well before retirement and you're getting some of that cash built up in there, you could reaccess it for things

that could really trigger withdrawals from your retirement accounts like, hey, we've got to send the kids to college. So let's drain money out of my whatever retirement account, but now you might be able to access it for college. And then that is a tax rewrotech, as well as keeping your retirement funds momentum going wherever it is. Yeah. Yeah. Great point. Let's say you didn't have a 529 college saving plan for a child, which is costly, just like, just like the insurance plan is costly. Some of those are very costly. But you also have the risk inside that 529 plan a lot of the times. We've seen 529 plans get smashed in the market right before they're going to use them for kids' college classes. So maybe you don't have one or maybe you do.

But you have this second bucket of tax-free money, which is much less riskier or pretty much risk-free, depending on the inside bucket. We are not talking about variable life insurance here. Variable life insurance is something where you're allowed to play the market. We're talking about a permanent plan of insurance called usually a universal life or an I-U-L, an indexed universal life, which is permanently there. You own everything inside, and you get to make everything inside on that investment, less the cost, pretty much safely. And then you can draw from that tax-free, the growth to do what you just said

and use it to pay possibly for college classes or for anything else you want to use it for. You know, you bring up a good point, and I do not want to get into the weeds, but is this statement accurate? But in the permanent, air quotes, permanent life insurance realm, there are many, many, many types of policies to consider. Some are variable. Some are universal. Some are indexed to this, that, the other. So it's not just let's Google this, click, set it up.

Okay, there we go. To accomplish some of these things you're talking about, this is a pretty intricate decision process, right? Yeah, I actually teach classes. I don't do it as much anymore. I'm a market guy where I teach on the markets and the volatility of the markets, as we spoke about earlier, and protecting yourself from that at retirement time, right? But yes, there are many different types just in that realm. I've taught classes just on the insurance plans. And I could teach three weeks just on that, and it still wouldn't be enough.

Because, yes, it's more of a complex beast, right? Yeah. But is it something that should be in your retirement plan? Yes, if it's there and fits and solves the price. that you have. You want to be able to have someone help guide you so you choose the right one, the right large player or company to fit the need and solve the problem you have. You just want to run out and click on something and say, that's good enough for me. It's a complex beast. It's much more, you have to get an understanding of it. And I said this earlier. It's the informed that will

make the right decision, not the uninformed. It's not that you did anything wrong. It just go out there and educate yourself. That's why I say, come to our classes, hear me gab. I love to talk. People, of course, say I speak at 78 RPMs. And if you have questions on life insurance, come and see us afterwards. Sit down with me. I live in restaurants and I will cover the aspect of that insurance plan and how it can benefit you. Yeah, as it relates to their situation, because like we've said before, if, you know, we were talking one time about Roth conversions. Those are wonderful for some people. Sometimes it's not. beneficial to people depending on their circumstances. So this type of life insurance for retirement

can be a wonderful opportunity, but it's not the right opportunity for every single person, you know, under the sun. And if you do like how this sounds, boy, you've got to make sure that it's set up and structured the right way because if you put too much in too fast, that triggers some other kind of problems, I'm sure. Right, right. You have to structure it right. Like you just said, it depends on how you drop money and you don't want this thing to do what we call mecking. I can explain. to you later where it could become taxable. As long as you stay under a mech, you're fine. And we never have a problem 99% of the time with that. But it also requires, this is a premise

does it work in your plan or not? You have to be able to be able to get into the plan too. And I hate to say it, but sometimes it can be discriminatory. We've had several people say, John, we've got to have this. This is exactly what we need to solve the problem. And as we lay it all out and fit all the little your chest pieces in a place and say, okay, this is exactly who we're going to use and how and how you're going to fund it. You have to be able to have enough to fund it and realize that money goes away for a little while. You also will have to realize the cost of insurance, like I said earlier, is high. The third parameter is can you even get it? Sadly, I was just mentioning that the couple themselves needed it really bad. This is a couple that

was outside of Michigan, of course, and we were helping put their plan together. And somehow they got declined and then unfortunately through the certified letter process from the company the client themselves found out why and it was a health issue and it was something the client didn't even realize so I mean horribly they are not going to get the plan but at the same time it let them know something was going on with their health they need to get to their doctor and they are not going to get the insurance plan sadly but they can better their healthy lifestyle right so that they're around to have that retirement to live out You know, it's very, like what we said earlier, like with term, you get it.

And in 20 years or 15 or whatever the term is, you got to re-qualify. So make sure your health is there. But with this kind of a permanent plan, yes, you still need to have the right health to be able to get into it so that all of these benefits are there. So it's never ever just a everybody come one, come all, everyone gets one. You've still got to qualify. And after you've made sure that it is right for. you. And let me just kind of readdress one of the points you've made so well multiple times, which is the premiums on these are higher than a term policy. But is there a time where it's the

premiums actually premiums go away or the high cost of the load kind of dwindles down over the years? Yes. It does dwindle down. It averages out over a period of years. You'll see after a 10 years span, what was I actually paying in this thing? What was it? And it's a higher cost or fee than most of your other investments. But it weeds out and averages out. You pay it front loaded. You're paying most of the heavier amounts in the beginning. But when you compare it to a term plan, which ends, as you said, and then you've got to re-up it to get in it, it becomes much more costly down the road, especially if you want to keep that term plan and convert it to more of a whole plan. It becomes way more expensive.

Also, and the term plan, you threw all that money away. You owned none of it. Whereas in this, you own it. So in the end, it kills the term plan. I'm not saying in every instance, a term plan can work for certain people if that's what they need when they're younger or they can afford. So, yes, it's front. A permanent plan is more front loaded. You put all that up in the beginning and then it averages out.

And that's regarding the fees. Now, what about the premiums? So did I hear you correctly that it says? some point the premiums can stop and you don't need to pay it anymore, but yet you still have it all right there. Yes. If you structure a LERP, we call it, a life insurance retirement plan. Yes. As you're entering retirement, you're usually dropping in a chunk or two or three or four chunks. You're shifting assets you currently have. You're not coming up and paying premiums every year for years and years out of earned income. That's done when you're younger. This is something

you're shifting a chunk in and it's usually done immediately. There are no more premiums. You're not in a variable life plan where you're risking the assets inside in the market where all of a sudden they call you down the road and say, hey, put more money in this baby or it's going to go away and it's going to last. This is something you've already funded up front and it's going to last the rest of your life inside. As long as you don't draw down all the money you have in it at one moment, which is not what you do. That would be the only time somebody gets, you know, say, well, I emptied this thing out all at once. Am I in risk of losing my death benefit possibly? Yes, possibly you'd have to put more money in there, but that's not how you draw for this point. But if that's the case, you already got the

money because you drew it out. Right. You drew it out. Now, you could be losing the higher death benefit potentially, but that's not how you structure it when you go in. You're going in to use this as an asset to draw, to live on and then leave legacy to the people that you love. And God forbid, I always say this, God forbid cover a nasty, tough thing in our lives called nursing care, which we know can cost a hundred thousand a year. I've seen people sit there. I've seen people sitting there. I've seen people sit in front of us with tears in their eyes because they went through it with elderly. I've seen it in my family where they paid $80,000 for a place that they weren't even happy with for their loved ones. Wow.

So it's tough. That's huge. Well, I tell you, this is a really powerful concept. And I think if someone is interested in seeing if it fits into their plan, you know, having that life insurance fit into the retirement to do all these benefits, to look at the cost and make sure that it's good. What's the best way that they can reach out and connect with you and learn more? Yeah. Well, when they do come and attend our classes, we have great classes that we teach in a lot of universities, mostly community colleges. I teach a majority of the classes on the market, including things like insurance plans and all that on financial planning. And one of the things I'll

get to that point in a minute about where they can reach us is I draw on the board a circle and I ask everybody, what is that? And then I start adding legs to it. And they say, a bug. And I say, we laugh. I say, no, that's the thing you put your butt on. That's a stool. And you need to add more legs to that stool because most of you in here have what?

I said, do you have this? S-S. Yep, Social Security. And then what else? I have my 401K. That's great. Fantastic. That's a two-legged stool ready to fall over.

Add more legs to the stool and secure it. So come to our classes and see us teach and we'll teach you more about this. And then you can ask us details. right after class, meet me in one of the million restaurants I go to, right? Visit our website, www. www.safeestate.net. On there, let you know about where we've been, where we're coming. You'll see videos of us.

You can watch some of our classes sometimes potentially live streamed. We're now doing a lot more of that, and or videos. And it will tell you where we're going to be teaching and also what areas we're coming into and the topics we're covering. You're welcome to call me direct. I try to get back to everybody and I do. I will give you my direct number. You call me on my cell as I travel, and I'll get back to you at 248-495-3852.

And you can leave a message for me that way or through the website or many different ways you can call us direct. Perfect. Well, John, thank you so much for your insights here. This has been a really powerful episode. Thank you for coming on. Thanks, Mike. I always love chatting with you. Thanks for having me. 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,

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