Business Innovators Radio - Interview with Luke Harrison with Olin & Associates Discussing Life Insurance

Episode Date: September 5, 2024

Luke is a value-added consultant for Medicare, Life Insurance, Annuities, and Ancillary products lines.With a 15-year background in the Senior Healthcare field, Luke has helped thousands of seniors and continues to be a guide today for thousands more.Learn more: https://olininsuranceadvisors.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-luke-harrison-with-olin-associates-discussing-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, Luke Harrison, with Olin and Associates, and we'll be talking about life insurance. Luke, welcome back to the program. Thank you, Mike. Thanks for having me back. Hey, so I know that that word life insurance, all of a sudden you can hear a screeching,

you know, break sound like a car, you know, coming to a full stop because people are like life insurance, don't need it, don't want it, already got it. But do you have the right kind? Is it doing what it should be doing? So when you are talking to people, where do you start when you bring up the topic of life insurance so that they're understanding that there might be a little bit more to it than just the typical death insurance? because I think a lot of people go, when I die, I have life insurance, it's going to pay my family X, and that's all it is. But it goes a lot deeper than that, right? Yes, it does. So there's actually much

deeper than that. So we'll break it down into sections if that's okay with you. So the first that I would say is really to try to keep it simple. There's two primary branches of life insurance. And the first of those would be permanent. So it's kind of what you're referencing now. Once I pass away, you know, I'm going to have everything taken care of. My final expenses are met. And then the other branch would be term or temporary. So let's break those down. So term policies, right? That would be something that is more like a rental. Think of that like you're going in, you're renting an apartment. You're not going to have any permanence or anything building up in that policy. So why would you get a term policy? So the biggest reason for that is going to be for income replacement or to give yourself peace of mind knowing that if you don't make it home, that your spouse or children, they're going to be financially okay.

That way your income's gone, right? So let's look at, you know, maybe 20 years or 30 years down the line. What does that look like to be able to cover your mortgage, for example, or your income that is no longer coming in for your family? That is where term usually falls in and fits that niche perfectly. very affordable, you know, and it's only good for, say, 10 year, 20 year, 30 year, whatever you elect. Now, one thing that comes to mind with that, with term, which is temporary or set time versus permanent, I know that when I've gotten insurance in the past, you've got to go through a health exam and with a term, it's like, okay, 10 years down the road, you've got to do it again. And what if your health

changed? And obviously, you're 10 years older. So now maybe the premiums have gone up and whatever. So what is your advice and how do you explain that to people to go, okay, here's the pros and cons of each. But one of the benefits of permanent is it's permanent. You don't ever need to do a health exam again. Exactly. So that and you just nailed it because with that term policy, let's say your strategy was, well, 20 years, I'll just go ahead and wait for that and then I'll get a whole life policy. Let's just use myself as an example. I am currently 30 years old.

If I get a 20 year term policy, then at 50 years old, I can. can't tell you today what my health will look like. And most likely I'll never be as healthy as I am today. And I definitely won't be as young. So 20 years later, a company is going to look at me and say, well, now we're going to have to charge you a whole lot more money if you want a permanent policy because, let's say, I've developed a new health issue. Maybe the policy that I wanted to get, I am not eligible for due to my health issues. So that's where, you know, whole life insurance is something that is permanent, but as you said, there's underwriting involved, and it is involved on the term policy as well. But again, maybe today I can get a, you know, exceptional rate on my term

policy, but 10, 20, 30 years from now, I might not even be able to get a policy. So whole like insurance then. Yeah, exactly. Yeah, you just don't know. And nobody knows. So you should have oftentimes, let's say somebody does have their children to keep in mind and their income and their mortgage. But they also want to have something permanent that has cash value. this is more like having a mortgage or like purchasing a home. It does have cash value. It's not a bill. I don't want anyone to look at life insurance and whole life and think of it as a bill. That money that you're setting aside comfortably, something that you can say, okay, well, I can put $50 or $100 aside a month for my future. That money is actually permanent in the sense that it's building up in your policy. It does have cash values that grow.

And over time, that policy is going to become worth a little bit more. It depends on the company and which policy you're looking at, but of course, the nuances there we won't dive into. Ultimately, to keep it simple, your whole life policy is the only insurance policy that I can guarantee that you have a 100% chance of utilizing someday so long as you're paying your premiums, right? Yeah, because another thing, too, about those is, you know, I like to kind of think of it as, you know, living benefits or death benefits. well, when you die, there's a death benefit, you get whatever that is. But you're talking about cash value. Well, cash means it's growing in the amount every single year, let's whatever time frame that is. So you might be able to tap into that if you had some emergency, you know, even before death.

That's right. So it's sort of like you're setting money aside, right? And that money is not disappearing. It is getting put into an account. It's growing for you. If you have to borrow against it, you can do that. And they're not even going to come after you to say, hey, we need that paid back because it's just going to lower the face value. I would recommend you do pay it back because there's interest attached to that, right?

So you're losing your pay it back. But let me give you another example. Let's say somebody has a terminal illness that comes up, but they have a whole life policy with $100,000 face value. They can leverage what's called. And again, it depends on the policy and the terms within it. But let's just pretend for the sake of simplicity that everything I discuss is. in your policy that you elected the riders or anything like that. So let's say somebody has a terminal illness come up. Okay, they had in their policy an accelerated death benefit rider. They're told

you only have two years to live. Okay, well, I can go to my life insurance policy and they're going to say, all right, we're going to pay you $50,000 of your $100,000 right now immediately, tax free, and you can utilize that because you're going to have a lot of new expenses coming up, right? So that's just one of the living benefits. Another might be. be long-term care. So whenever somebody can no longer do activities of daily living, maybe two or three of those things, simply getting dressed in the morning or showering or the things that we take for granted that we can do now, if you can't do those and you need to say a care home or have in-home care, then you can utilize this policy to help fund long-term care. So now you may have a nurse

coming in to help you with those things. And your policy can be paying for that, oftentimes even beyond the face value. So even if you only had 100,000, for example, some of the policies have certain riders and riders are in attachment to the policy that can continue to pay you even after that face value is exhausted. That to me is a very powerful leveraging tool for your retirement and planning your future. It really is, and it makes me think about something else too. It's like I'm sure that if we pulled up a standalone long-term care policy example, the premiums are X per month. They can be probably pretty pricey. And some people shy away from doing that because they're like, well, what if I don't need long-term care? But what if you do? But if you had a long-term care

policy for one or two or three years and you didn't ever use it, those premiums are gone. It's just, you know, and then what you described with that writer, that addendum kind of a feature on this policy, if you need it, it's there. If you don't, then the money still is sitting there growing. And to me, that's kind of the best of both worlds. Yeah, it's a win-win, right? So you know that you're setting the money aside anyway. If you do pass away, that money is going to be paid to whoever you named as the beneficiary tax-free. So they'll receive the money you put aside, right, if you never utilized it for long-term care. But you could think of it as saying, well, what if I want to purchase a long-term care policy with a life insurance rider? Even

though it's life insurance with long-term care, you may think of it that way. You may have an individual that says, well, I don't really want to leave money behind right now, but I'm not thinking about that. I just want enough to cover my final expenses and burial costs and funeral and everything like that. But what if they do utilize all of it for the long-term care? And in the case that they do not, because they've been very healthy and didn't have to go through that, well, they still have a large amount of life insurance left either way. It's a wonderful product. I'd really enjoy being able to help people with that. And I would say it's more important now than ever, especially because of inflation. And again, we'll discuss all of that too. But ultimately, if you're

you think about the future, we don't know the cost of long-term care. Many of these plans will actually work with billable hours on the long-term care side instead of a flat amount or dollar amount as well. You know, you mentioned retirement, and we don't want to get into specifics or recommendations or things like that, but from a broad perspective, talk a little bit about how utilizing this type of life insurance would help retirement. And for me, as a newbie, I would suspect that if you had one of these big events happen, like, ooh, I need long-term care or I need a big chunk of money for this medical need that came up, maybe people are feeling forced to pull that money out of their retirement accounts. And now that is affecting their retirement, whereas if they've got this in place,

it preserves their retirement account. But what other ways and strategies are you able to use life insurance for retirement strategies. Oh, sure, yeah. So there's many different ways to utilize it and other different vessels outside of life insurance. But just in the world of life insurance, let's say, again, with the riders, again, we already have long-term care covered, right? We have living benefits that can be placed in effect if you have a terminal diagnosis come into place.

But what about retirement planning on, you know, outside of that, right? So I'm talking now about as a tax shelter or deferring tax, there's, there are tools and ways to leverage that utilizing IULs or life insurance to be able to grow some wealth as well. And another side of that would be annuities, which I know we can dive into. Sticking on the life insurance side for now, you know, a lot of this also, if you're thinking about retirement as one of your goals, you know, transfer of wealth, is one of your goals to make sure that you're leaving money behind for somebody in your family. You know, those are some of the things to consider. Again, life insurance can be utilized like a tax shelter because whenever it pays to a beneficiary, let's just say you have $500,000 that you want to be able to have moved to a child, right? Well, if you don't have it go through life insurance or, you know, the proper ways of doing that,

then you most likely are being hit with probate and it's going to be touched by attorneys and much of that money disappears, right? Sort of evaporating. So life insurance has so many little benefits like that that oftentimes people are not thinking about right now. Yeah. But it's my job to try to think that way and say, okay, well, how do we keep more money, you know, in your household or to the people that you wanted to go to, right? So. 100%. Yeah, that's a big piece of that.

You know, you mentioned a child. And I think a lot of times people, young couples will have a baby and go, oh, the next thing we need to do is set up a 529 plan for college. well, would it be worth using something like this to put on a young child so that as time goes by 18 years or so, you've got that cash built up and you can use it for college? Absolutely. Yeah. And that would be virtually the best product, I'd say, would be an IUL for that, index universal life. And so, I mean, there's other product lines as well.

I don't want to narrow them too much. But the way that works is your money is being placed into a life insurance product. Why do that for a child? Well, for one, the life insurance will be very cheap. Most likely your child's young and healthy. If they're not healthy, we'll dive into that too. There's another reason. But on the side of college or for future planning, yeah, life insurance can be used to help grow money and allow that child to be able to help bond their college because of your thoughtfulness and planning ahead, utilizing life insurance to do so.

Yeah. And, you know, we don't need to dive into specifics of benefits of 529s. but I think a lot of people are aware of the concept of it. And aren't I correct in thinking that if you have a 529 plan set up and a decade goes by or 18 years and now you need to use it for college? But what if that child decides, you know what? I'm just not going to go to college. Well, now you've got this money tied up in a, it's locked up in a 529 plan. So then what?

That would be a benefit then, right, of doing this life insurance strategy. Absolutely. Because now let's say that child decided to go a different route. well, you still have a very well, you know, established life insurance policy. This money's already grown. It's continuing to grow. They had the most powerful thing on their side, which is time. And time is allowing you to leverage compounding interest.

This is growing their money exponentially. And if you structure this properly, refund it properly, you are now an unstoppable force, or they are now an unstoppable force, I guess you should say, with this policy. The money has grown so much. at that point. They have so many options. It can be leveraged or utilized for other needs as well. And if anything, they have a life insurance policy that they can keep for the rest of their life and just continue to properly find out. Yeah. You know, I think that so many people are, they kind of scratch their head going cash value, grow, and life insurance in the same phrase

doesn't seem to fit. But this almost feels like it's an investment. So talk a little bit about what kind of a range of rates of return. You know, obviously we can't guarantee anything. But, you know, when you hear cash value and growing, what are some of those rates of return that are you seeing typically out there? Sure. Yeah, and that's a good question. It depends on the policy and the company.

And they will show you on a rate sheet, basically, whenever you're paying in, let's say, $50 a month. And your policy only needs $20 a month. this will be on a universal life policy. So the reason I'm using that, it's a combination of a term in a whole life. It has growth attached and cash values. And if you pay more into it, you're growing it faster, right? So depending on how much somebody puts into their policy, that's going to allow it to grow more or less.

Now, if it's just a simple policy, like I say a whole life policy, you know, cash values might be anywhere between 2%, maybe lower than that. Or it could be upwards of 10%. It all depends on the policy and how it's being funded from the beginning. And every company is a little different with that. So one of the powerful things to think about with that, too, you can't use life insurance purely as an investment tool or else it becomes what's called a modified endowment contract. That is whenever you've overfunded it so much that you're trying to utilize it because of high returns.

And at that point, you're virtually simply trying to invest money without playing in the market. That's where annuities come into profit. play. So if your main goal is to grow wealth, you know, quickly or to really have a strong performance, your, I would say, your money is going to be a little bit better placed in such thing as an annuity, right? Well, it just gets back to if you hear about life insurance doing all these things, you shouldn't go out and Google, you know, and check and set it up. You need to do it the right way. You need to structure it the right way. You need to make sure you're funding it up to certain limit because you don't want to do it wrong. So I think all of those things just kind of tie into

what you do with your clients, which is just educate and teach and show some options. And is this the right strategy for every single person? Of course not. But when it is a good strategy, if that cash value is getting a good rate of return and it's growing tax-free, that's a, that's an aha that I think a lot of people don't realize. Yeah, absolutely. Yeah, there's either tax-free advantages or tax deferred advantages. It just depends on the product line. And again, I don't want to dive too deep into that because I could get very, very, that's a deep discussion that could probably be its own podcast.

But you had also mentioned about, you know, like kid putting money, an insurance on a kid, if they're healthy. And you said, what if they're not healthy? Is there something to be to make a point there about what if someone, either a kid or an adult? How does that health play into things? Let's start with a child first because let's say someone's already unhealthy. It's a little bit difficult to write life insurance sometime for somebody. Now, I have niche products that I can utilize and I would love to discuss that more too.

I know we're going to talk about niche markets, but let's, on the topic of health, I'd like to discuss guaranteed insurability riders. So let's say a child. Actually, let's use an example that's realistic. and I've seen this happen multiple times. And even I'll leverage a story that I know of somebody. Somebody's child has Down syndrome. Okay. Now, their child can be insured as a child,

but whenever they become an adult, life insurance companies don't like to insure somebody with Down syndrome. This is something that you should think about now whenever your child's young, right? So let's say that they get a life insurance policy for their child. Their child has Down syndrome. And then they get something called a gamut. guaranteed insurability rider on that policy.

That means that whenever that child becomes an adult, 18 or older, now they can go back to that company and the company says, it doesn't matter if they've developed new health issues. It doesn't matter that they have Down syndrome. We're going to write them a policy now for, let's say, 25,000, 50,000, whatever that policy may be in the terms of allowance of what they're going to write. And because of your thoughtfulness and planning ahead, that child's in. insurable as an adult now. Whereas beforehand, they would not be.

And probably in the examples in financial charts, which we don't need to, you know, get into there, but probably that guaranteed insurability is not that expensive to add on. But if you don't have it, man, it's a big loss. So just knowing that and knowing that you can add it on for just a small amount, that saves a whole lot of heartache in the future. Absolutely. Yeah. And it's extremely affordable.

It's a very low amount. You're talking maybe $1, $2. a month. I mean, it's a no-brainer whenever it's approached in the right situation, right? But you don't know what you don't know. And if someone went out there and just didn't know that you can have that in and one day down the road needed it, wow, that's a huge aha that you just brought up. So, Luke, wrap us up here with some final thoughts on how you advise your clients in working with life insurance. And then what's the best way that someone can learn more and reach out, connect with you. Oh, sure. So yeah, as far as life insurance goes, I would say,

and you've already said it too, and I appreciate that, work with an advisor. And in particular, work with an advisor that you've researched and that you trust their advisement. I can't tell you how many times that I've gone into a home and somebody says, I'm already taken care of. I have life insurance. And I'll just tell them, well, would you mind if we take a look at what you have? And so many times people don't have what they thought that they had, right? A lot of times people get, you know, something through a bank or maybe it's just accidental death. You have to die in an accident for that to pay. You know, again, our approach as an agency and my approach personally is to look at everybody as an individual, their own needs and what it is that they need to build out and structure. So everyone has, you know, goals for their life insurance. Maybe it's to take care of their family if they don't make it home. Maybe it's to make sure that whenever they do pass away someday, that they know that everything's covered and they're not leaving a financial burden for anybody. Maybe they're utilizing it for retirement planning or all of the above, and we can build out a portfolio to accomplish and target all of those things.

So that's why I would say you need to go through an advisor for life insurance. Don't try to just purchase online. I would say research who it as you're talking to and deal with an expert. To reach out to me, again, I'll give my phone number, and that's my personal number. Feel free to call me or text me on that if you have any questions. that is 814-28-8-8-4-33. You can also find me online, Facebook, LinkedIn, or any social media platforms, and I also have olen insurance advisors.com.

So if you would like to reach out to me, please feel free to do so. Luke, thank you so much for coming back on. It was a real pleasure talking with you today. Absolutely. Yeah, thanks, Mike. I appreciate you having me, and I think we had a really great conversation. Thank you. Yes.

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