Business Innovators Radio - Interview with Rhett Chambers, Founder of Rhett Chambers Financial Services Discussing Key Person Insurance

Episode Date: March 20, 2024

Rhett Chambers, a 2006 graduate of the University of Alabama, embarked on a dynamic career in financial services in 2007 as an agent for AIG. Over the years, he flourished at AIG, serving roles as a producer, advisor, and manager. In 2017, Rhett transitioned to Transamerica, dedicating five successful years before becoming a fully independent agent and advisor in 2020.Representing top carriers in the financial service industry, Rhett specializes in life insurance, term life, disability insurance, annuities, long-term care, and business succession planning. With a clientele spanning Tuscaloosa and beyond, he extends his services across Alabama and neighboring states like Mississippi, Louisiana, Texas, and Georgia.Rhett, a devoted family man with a wife and three children, considers his career’s essence to be helping individuals make informed decisions for a secure financial future. Proudly involved in various industry organizations and his community, he actively coaches children in sports. Rhett has achieved the Million Dollar Roundtable (MDRT) organization’s achievement multiple years for production and quality of customer service work with clients. Balancing his professional pursuits, Rhett finds joy inshore fishing and reading, looking forward to growing in the industry and leveraging new technologies to better serve his clients’ evolving needs.Learn more: https://www.linkedin.com/in/rhett-chambers-5b669758/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-rhett-chambers-founder-of-rhett-chambers-financial-services-discussing-key-person-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. And today we have with us, Rhett Chambers, who's the founder of Ret Chambers Financial Services, and we'll be talking today about key person insurance. Rhett, welcome to the program. Thank you, Mike. Yes, I'm looking forward to discussing these concepts, and I'm excited to hopefully share some valuable information for anybody who's listening.

Yeah, and I always approach these conversations as a way that I learned things, and it's just never ceases to amaze me that what you bring with your background to a certain topic, it just paints new pictures. And so it's always a learning experience. But before we dive into that topic, give us a little bit of your background and story. And how did you get into financial services? Yes, I, like most people who are in financial services, did not grow up with the mindset that I wanted to go into financial services. I originally am from Mobile, Alabama, and went to college, went to the University of Alabama. and while going through the university's classes, I realized that I was more attractive,

more attracted, excuse me, to helping people. And that mindset of desiring to help people, I looked at a multitude of different career opportunities and interviewed with numerous financial planning companies and insurance companies. once I graduated from the university back in 2006. And while going through this interview process with AIG,

with American International Group, I learned about some very neat concepts that helped business owners, helped families. And I started my career a few months after graduating from the university with AIG and helped business owners and families. with disability insurance, life insurance. And particularly, I enjoyed helping business owners protect their business and protect their family against the loss of a key person within the business.

And AIG's training and their products really fit my interest. So I enjoyed a nice nine-year career at AIG and then subsequent to that. timeframe from 2006, 2007, through 2015, I then transitioned to working with Transamerica and worked there for four or five years through roughly 2020. And I still represent those companies. And then now when I founded my company, I represent all the top life and disability companies in the industry, helping business owners, helping families protect against the unexpected. Families need protection and businesses also need protection in a similar capacity to a family

because a lot of times a key person or a particular partner within a business is extremely instrumental to the continuation of the business, sort of in the same capacity that an income earner in a family is very important to the continuation of the family's potential stability. So my career has involved many awards. It's involved an appreciation of the work that I do through the experience of claims. And my passion and my interest in the business has grown year after year after year as my business has grown. And I feel as though I conduct work that helps people. And many times clients aren't necessarily excited about doing insurance planning,

but at the same time, they know and I know that it's extremely important. And I feel, yeah, I feel as though it's my responsibility to help them stay on track and get the planning they need to complete completed. So I've enjoyed already at age 39. I've enjoyed an 18-year career in this industry, and I'm excited for the decades to come because I really believe in the work that I do and I enjoy it thoroughly. I love it. And, you know, one thing that I heard through that introduction, and if we could take that clip and put it into probably chat GPT could do what I'm about to say, but what are the words that are repeated over and over again? And I feel that you probably don't even pick up on it, but this is really important to people that you work with to understand.

You said help and protect over and over and over. What you did not say is I wanted to get into an industry where I can make a huge amount of money. No, you wanted to go help people and businesses. You want to help them be protected and feel safe. And to me, that is something that just, you know, almost cannot be taught. So that is just such a huge character quality that I wanted just to point out there just in that introduction that I heard. Absolutely. And this is a career where people, as I mentioned before, are not necessarily excited to go through the process of getting insured or determining how much insurance they need or revising it.

But at the same time, they do appreciate me helping them through the process. And when there is an event where a client does suffer from a disability and illness or death does occur, the thank you that is received by the insurance professional is profound. And it has an impact on your career moving forward because you're aware that this could occur at any time. and the impact of liquidity in the event a family loses a breadwinner or a business loses one of the partners or loses one of the key people, there's really no replacing liquidity in the event that something expected happens. And there's a lot of planning that can be done that is terrific. But there's no replacement for the knowledge of no.

going, hey, from a financial standpoint, we don't have to worry in this instance. We can concentrate on all the other factors revolving around the unexpected event that just occurred. And if you've planned for that and it does not happen, then great. At least you're covered. But the worst thing in the world is to not plan for it and then it happens and now you're scrambling because maybe you've deployed your cash one place or the other and the business now has to come up with whatever the case is. So, you know, the key person concept, obviously owners and VPs and high level people that are key to the organization, talk a little bit about how key person insurance works and helps to protect that business. Yes, oftentimes within businesses, there are people who play specific roles, behind the scenes, in the field, etc.

The key people within the firm or within the business are essentially irreplaceable. The time and the effort it would take to replace the value that they provide to the business is extremely expensive and would be very difficult to quantify. A key person could be a key salesman. It could be the key person who handles all of the. the financial decisions within the business. It could be the person who is using their hands to work on, for example, machinery. There's many different types of key people within a business. But what ultimately decides if a person is key is that it would take an extreme effort

to replace the value that they provide to the business. Key person is designed, excuse me, key person insurance, the type of insurance that I'm able to provide to businesses is insurance which is designed to protect the business from the financial impact of losing a key employee. Now, losing a key employee could be that the key employee obviously passes away, either unexpectedly or over a period of time. but it could also be a key person who become sick. Cancer, heart attack, stroke, there's a multitude of different events that can occur to a key person, which causes them not to be able to perform at the level that they were able to perform before the event, whether it's disability, death, or an illness. And key person insurance can be designed in a multitude of ways, which gives protection to the business.

in the event that they lose this performance by the key, by the key, the key person. Also, the key person insurance would be almost an immediate cash influx to the business. And this gives peace of mind to the business owners and to the other workers at the business that, hey, during this period of time, while we try to recover, we're going to be in a better position to take our time and make good informed decisions and not rush to try to handle this financial situation that's that's coming upon us. Yeah, it lets you make measured decisions, not reactive decisions, and that puts them in the driver's seat, I would suspect. Absolutely. And it also gives them the ability to potentially, for example, to go out and maybe spend some

time recruiting a possible replacement for that key person. It gives them the ability to also ask themselves, how could we run the business in a more efficient capacity now that we've lost this key person? And it gives them the ability to maybe knock off some of the debt that the business might have, which alleviates a lot of the tension and the stress that the business has when a key person is lost. Sales might. go down temporarily, performance might go down temporarily, but over time, they should return back to the pre-existing performance. And this is a comfort level, which is extremely important during that time. Yeah, 100%. And that makes so much sense there. Can you think of an example? Like maybe when you've

worked with the business and key person insurance came into play. and maybe what some of those factors were that really helped them with survival or continuity? Absolutely. I can think of a partnership, actually, two attorneys that owned a firm together, and one of the attorneys became sick. He did not pass away. He became critically ill. And while he was going through treatment, and he was really not able to perform. like he was previously at the at the at the at the at the volume he still worked but at the same time he was not performing at the at the level that he was before he was able to use some of the critical illness benefits within his plan or the business was able to accelerate some of the

critical illness benefits within the plan and received a large influx of cash that while it did not necessarily replace the interactions that this attorney was having with the clients, it gave a tremendous amount of comfort to his business partner that financially things were going to be just fine. The key person insurance plan was owned by the law firm. The premiums were paid by the law firm and the benefits were received payable to the business, to the firm. So this cash influx that occurred took about roughly six weeks to process. And when the check came in, the partners, they were extremely excited. And they even made the comment to me, you know, that every business should have this planning in force. And of course, of course, I agreed with them. But what made

that example to me very unique and very a great example is that death did not occur. It was not a situation where his partner was going to be going forever. His plan, and today he's working now, his plan was to come back. And he still actually worked a little bit during his treatment, though at the same time he wasn't really mentally forced to go to work at the capacity that he was, before he started the treatment. And it provided me a great level of self-gratification knowing that I'd put that plan in force and seen it go to work in the clean. Yeah, you know, you brought up a great point right there, which is a lot of people have a

perception that, oh, key person insurance means when someone dies, then this kicks in and we can do all those great things you mentioned. That's great. And that is a point. But there are some things that could be happening before a death occurs that the key person, Like you said, they accelerate this to accomplish that. And I think that's a huge piece that you brought up in that example. What are, what's another misconception people might have about key person insurance?

Yes. One of the misconceptions that's very important to understand is that only large corporations need this type planning. In reality, businesses of all sizes can benefit from this planning. For example, the African people. mentioned partnership. Also, key person insurance can be very applicable to a sole proprietorship. If there exists a business where one owner exists and one employee exists and the business is intended to pass along to the children, for example, or the spouse of the business owner and key person, then the life insurance or the disability insurance or the critical illness insurance that is

in force to protect the family is a separate policy or a separate set of policies from the plan that's intended to protect a business. So, for example, if an individual were to pass away, well, the life insurance that is owned personally will be paid to his beneficiary, oftentimes a wife or a husband. And simultaneous to that, the key person life insurance in this example that goes to the business will be payable to the business, which will give not only a cash influx to the family on the personal side, but it will also give a cash influx to the business to give the ability to recruit and to find a person to hopefully replace the key person. So it is an ability to protect the business, which will be passed along to the family, while at the same

time, given the peace of mind of knowing this business is solid moving forward. And another misconception that occurs is that this insurance is, the key person insurance is, owned by an individual. Usually key person insurance is set up where the business owns it. So if there's a taxpayer ID for the business, whether that's, you know, for example, an LLC or a different entity, then we can have the business be the owner, the business be the payer, pay the premiums, and the beneficiary be the business. So it's totally separated from an individual, from a person.

So that's a... Did you mean the beneficiary would be the employee, so the owner is the business, and then the beneficiary is the employee? Actually, on key person insurance, the owner of the plan will be the business. So we'll use, you know, XYZ company would be the owner.

And then the payer, the checking account or the source of the funds will be the same company's checking account. And actually the benefits of the clean will, the check will be written to the business. Okay. That's a great aha for a business to hear because you might feel like, oh, I'm putting this plan on this employee. What do we get out of it? Well, you've got full control. And I think that's a great aha.

Absolutely. There's full control by the representative of the business or the owner of the business. So there's usually an agreement that the employee must sign understanding that this insurance is intended to be used by his employer or her employer for the betterment of the business in the event of the loss of a key person. And this is also very attractive for a business to have enforce if they were to look at selling the business to another to a buyer. Because that gives a lot of protection for the future buyer of the business, knowing that the key people are already insured, which protects the financial continuity of the business moving forward. 100%. Well, I tell you've really brought up some great points that businesses should consider. If someone is listening to this and wanting to reach out and connect with you, what's the best way that they can do that?

my email is a great way to communicate with me. It is RET. That's R-H-E-T-T-T-T at RET-Chambers.com. Again, R-H-E-T-T-T at RET-Chambers.com. And then also, I answer my phone, and if I don't answer my phone, then I'll give a call back that day to my direct number is area code 205-737-5-2-2-2-0. Again, that's area code 205-737-5-2-2-2-0. I communicate through email and by phone all day, every day, and those would be the best two ways to contact me.

Excellent. Well, Rhett, thank you so much for coming on. It's been a real pleasure talking with you. You as well. Thank you so much. 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.com.