Business Innovators Radio - Interview with Maurice Bailey President of Wealthy Way Financial Discussing How Life Insurance Fits into Retirement

Episode Date: September 5, 2024

As the Safe Money Coach, he has been helping individuals, families, and business owners BULLETT Proof their assets through Safe and Tax Efficient Strategies since 2003. He grew up in Massachusetts where he attained two Associate degrees in Business Marketing and Business Management. He currently lives in Montgomery County, Maryland with my two daughters ages 11 and 17. He currently specializes in Optimal Income Strategies, that assures his clients pay less in income taxes while providing a Guaranteed Income streams for Life. His Social Security Income Strategies provide a way for my clients to clearly envision their Retirement from the first to their last day. He is a Certified Financial Educator (CFED) and a member of the National Ethics Association as well as the National Association of Insurance and Financial Advisors (NAIFA).Learn More: https://wealthywayfinancial.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-maurice-bailey-president-of-wealthy-way-financial-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 Maurice Bailey, who's the president of a wealthy way financial and will be talking about how life insurance fits into retirement. Maurice, welcome back to the program. Thanks again for having me, Mike. Hey, so I know that a lot of people will hear that word life insurance and go red flag.

I've got it. Move on. But what you're talking about is how life insurance enhances and fits into retirement. And that's typically not a connection that people tend to make. So talk a little bit about how you are advising your clients to consider life insurance as it relates to a properly structured retirement. plan. Well, Mike, I would just first like to say life insurance is really the Swiss army knife of finances that one needs. I think a lot of times where people are incorrectly informed is that they're told or taught or however they get the information is that you get life insurance

and you keep it up until you retire and then when you retire, you have enough assets so you don't need it anymore. I think that concept is 100% incorrect. I don't even know when that would be a good strategy for someone to use. Some of the wealthiest people in this country have very large life insurance policies. But for life insurance policies for the purposes of retirement planning, it fits very well into what folks are doing because not only does it potentially provide a tax-free source of income for you, it also is one of the best leverage tools that you can use for your financial situation. So life insurance.

You caught me with tax-free there because I think a lot of times people go, hold up. Tax-free income, that sounds great, but life insurance, I thought I pay a premium, and if I die, my family gets that money. how does tax-free income fall into the conversation about life insurance? Well, depending on the company that you choose, life insurance policies, when they're structured properly, they provide that source of income in the form of a guarantee, depending on the company that you're with. There are some companies out there, believe it or not, that when you have enough cash value in your policy, you can actually turn on a button just like you would. your social security or your pension, and you can say, pay me an income for life from the cash value that's accumulated in my life insurance policy. And then there are other policies out there

where you build up cash. And what you would do is essentially you would just maybe take the interest that you earn each year and turn that into income. Or you can just slowly take away or spend down some of the cash value that's built up. But the reason why life insurance is so huge as well as, especially in retirement, is that oftentimes, depending on the plan that you have structured, there are situations where people may take 4% of their accumulated value each year, but guess what? They may earn interest that year of 7 or 8 or 10%. So what have they actually done? They've put, they've replenished the account or the money that they took out and gained some all from their life insurance policy.

policy. Yeah. That's huge. Well, I think that when you're describing that, the word that comes to my mind is options. You also used another word leverage, but if you can leverage options, that sure opens up a lot of opportunities for your retirement. So talk a little bit about the types of life insurance policies that accomplish what you're talking about there, because I think the traditional way that people hear is like, oh, well, there's a term policy for 10, 20 years. And years and then when that, you know, is up, then I've got to go start it over again. So what are the other kind of ones that people can consider? Well, there are two types specifically. These policies are known best as cash value life insurance. So if you will, there's a fixed product called

a whole life insurance. And on the other end of the spectrum, there's a plan that's called index universal life. They both serve a purpose. The whole life has more guarantees in terms of an interest rate that's guaranteed each year. Versus the IUL or the Index Universal Life product, what that does is it gives you a range, a range in terms of what interest can be credited to your account. So one year, you may end up with, you know, zero or two percent interest. And the next year, you could end up with 12 or 13 percent interest.

depending on the carrier, depending on how the market goes, et cetera. So there are different plans for different purposes. So those are the two ways. The whole life as well as the index universal life, both serving that purpose of generating cash flow if you funded the policy correctly over the years. And this is where again, planning comes in. Yeah, planning for sure, because you've said properly structured. So this is not something you could just go out and Google and say click, click, done.

So you've got to set it up the right way. But one thing you just said about the rate of return can be different. Is it true that you cannot ever lose money? So like you said, one year might be zero percent return, but that's fine if the next year it's going up. But can you lose money? Can your cash value go down? Well, that's a very good question. When it comes to life insurance policies, the value will not go down.

As long as you have funding the policy correct, you don't have any worries about the values going down. That's one of the benefits in using life insurance versus having funds directly in the stock market is that you still get a decent rate of return or gain each year potentially. but when it comes to the market taking a dive, like, for instance, every 11 years, there's a, quote, market correction or market crash, whatever you want to call it, that happens every 11 years. We're several years past 11 years. 2008 was the last serious market crash that we had. So one is due now, right? Yeah.

But if you plan by using, say, a life insurance policy and you fund. a portion of your retirement funds using that. When the market tanks 40%, guess what? You can look at your life insurance policy and know that that hasn't gone down 40% because even though they tie the rates, the interest rate that's credited to your account, they don't tie it directly to the market, but it mirrors the market. Yeah. So it might, the market might have tanked, but you might just go down to zero,

but at least your principal is sitting nice and pretty. Exactly. Exactly. Yeah. Now you mentioned at some point you can like turn on, you know, hey, give me income and and all that with a certain cash value down the road for retirement. That's wonderful because you want to be able to fill gaps like, hey, I need this much to retire per month and my pension pays this, by Social Security pays that. I still need some funds, but I've got that cash value coming in. What about before retirement? What if what if you're still 10, 15 years from retirement and you've got one of these set up, right way. And can you use the cash value for things like, well, I don't want to turn it on for

income for retirement, but I need that car or I need to pay for college. So those are excellent points. So let me give you an example. If you have, say, a parent who's got a newborn and you're looking to save for college for that child, right? They can use a 529 plan. That's one popular way to plan for college. But in my state, here's what happens in Maryland. You can have a 529 plan, but in most states, the market can go up or down and your investment in something that you're going to need when that child hits 18 or 17 that are getting ready to go to college. If the market plummets a week or a month or a year before and you lose 40%, that's 40% of your child's college money that is now wiped out.

The life insurance policy can actually do the same job. It won't build as fast as any plan in the market would. But essentially, because of the ebbs and flows of when your money's directly in the market, when you use a life insurance policy, you get that steady upward trajectory with no declines. You end up coming very close to what the market. it is able to do when that parent is trying to plan for the child's saving for retirement. Now, to take it even further, the child turns age 18. They have $200,000 that the parent saved up for their college fund. It's in that life insurance policy. That child turns 18,

and that child over the years has decided, hey, you know what? I want to build a tech firm. they have $200,000 that they can now deploy to start a business with. If they want to get into real estate, they got to have 200,000. They have no interest in college, interest in college. Guess what? They have $200,000 now that they can use to start their real estate business, right? Versus if they have that same $200,000 in a $529 plan, guess what? It's locked up.

It's locked up. They can't, now the parent can pass it all to the grandparent, but it was meant for the child. So if that child use it for multiple purposes, it just doesn't make any sense. So that's a good point. Absolutely. You might even, you might even want to set one of those up. And of course, as we've said before, everybody's different.

But it sounds to me like you might want to set one of these up for the purpose of that college to get, have some options. And then set another one up for your retirement options because they do two different, uh, tasks. Absolutely. Absolutely. They do. And that's exactly what you're looking for. Absolutely. You want to make sure. Now, you asked about them using life insurance before they retire, right? If this person's planned well enough, as an example, if at 55 years old, let's use 59 because that's really young still, right? It's right. I'm 56, so that's really young. That's right. So at 59 and a half, guess what?

They can turn on income from that same policy that I just discussed. If they're 40 years old and they have saved enough, they can start taking income from that policy. It won't be in the guaranteed for life form, but they still do have the ability and accessibility to the cash value that's in that policy to be able to use it for whatever needs that they have. Yeah, that's huge. Yeah, again, I'm just going to say the word again, options. It provides options for you to consider and many different avenues like, oh, you need it for college or car. Okay, we can do this. Oh, you need it for.

You need it for. So I think that it's just so spectacular. And when you were talking about the 529 plan and being locked up, nothing horribly wrong with 529 plans, but it sounds to me like if you did that 529 plan and then your kids, decided to go to trade school or an avenue that the 529 wouldn't cover, like what you were saying, just start doing business, that money is locked up. And yeah, you might be able to get it with penalties and who knows how that works. But what it's making me think of, too, is it sounds to me like there's some other living type of benefits that you can take care of, you know, in addition to before retirement. What are some of those other living benefits people should be aware of?

So when it comes to living benefits, a good example, I'm going to give you two of them if you don't mind. The first one would be, well, life insurance policies in those living benefits that you're talking about, they are riders that's usually free. Over the years, insurance companies have gotten very competitive, right? So companies have to find competitive advantages to differentiate themselves from one life insurance company from another. So when you have these companies that have these living benefit, benefits attached to the policy, they serve a great purpose. And the first example I'll give you is if somebody has cancer as an example, right? And this happened to one of my clients where the client had a million dollar policy, got diagnosed with stage four cancer, right? Now, with that stage four cancer diagnosis, after going through treatment for some time, the client's body got weak and they never fully recovered from the chemo.

It just ate away at them. They never recovered. So they ended up having to retire early. So what that million dollar policy turned into for that client was a million dollars in income, almost, because they do take a little bit less. but because it was a living benefit attached, if he had a policy that did not have that benefit attached, that client would have been in some real trouble. Yeah, because then the policy only pays when you die. So really, it's not life insurance, it's death insurance if you think about it.

Exactly, exactly. This is true life insurance and it's best form that you can have it. Now, another example that I can give is long-term care is a really big deal today. we're getting older, right? As a as a as a country, we're getting older. So with that being said, there's a lot of people who need long-term care. Now, you can get long-term care in a couple of different ways, right? You can get long-term, you can get a standalone long-term care policy, which I've heard over the years is not that easy to collect on. But besides that point, what happens is with long-term care policies, and especially the ones that are designed today,

you got to put the money in, you put it in for 15, 20 years. If the person doesn't need it, because knock on wood, they die and they don't need the long-term care, guess what? The money's gone, right? Versus if you have this life insurance policy, especially if you have a cash value life insurance policy, and you keep that policy for the same 15 or 20 years and you just happen to die and not use the benefit, then guess what? Because you've used leverage, your family now gets the larger amount and

the form of a death benefit. And if the, if the, the advisor set to plan up properly enough, not only will the client, the clients, um, airs get the, the, um, the death benefit, but they may also be able to get the cash value on top of the death benefit, which helps them out tremendously. Right. So dual benefits. Right. Absolutely. Absolutely. It serves. It's using your dollar more than once, which is something that we all have to learn to do more is to really utilize. and deploy our dollars to be used for more than one purpose, right? Yeah, and again, giving you those options. And like you said about the long-term care, man, if my auto insurance carrier,

if I didn't have a wreck and make a claim, and I said to them, give me my premium of that, because I never used it, they would say, are you crazy? So with a standalone long-term care, you know, it's like an expense versus what you're describing sounds more like the mindset of an investment that provides you those options. Absolutely. It's utilizing your dollars in the best way possible for the outcome that's going to affect you in the most positive way. Wow. Well, Maurice, what are some final thoughts that you would like to bring up as we wrap up the conversation about life insurance for retirement planning? So I would just say to plan, oftentimes like,

I mentioned earlier in a previous segment, oftentimes we do not take the time to plan for retirement. We do not take the time to plan for our family's benefit when we're not here. We have to learn to plan better. And when you plan better, you don't have an outcome of having to depend on the government's program for you and your family. You dictate the program because you've planned properly. that's probably the biggest thing I can say there. And I would add to that, make sure you plan, but plan well enough in advance that you can implement some of the strategies and you have, you know, because if you plan a month before

retirement, well, then you're limited. So make the plan, but do it well ahead so that you feel like you've got plenty of runway to put some of these things in place. Well said, sir, absolutely. Well, listen, Maurice, it's been really great talking with you again. And so tell people how they can learn more about your services and reach out and connect with you. Well, I can be reached at wealthywayfinancial.com. And I'm also on Facebook, Instagram, all those other fun media that we use today, but primarily wealthywayfinancial.com.

Awesome. Well, thanks so much for coming back on. It's been a real pleasure talking with you today. Thank you for having me again, Mike. 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.influentialentrepreneursradio.com.