My first inclination is to begin this entry with a rant regarding how incredibly stupid people in general can be (myself included), but instead I’ll just tell you what happened.
Cell phone rings…
Husband answers, “Hello!”
Stupid man, “Uhh….this is A___. Um…I…uh…we’ve decided not to go with your company’s policy…we’re going to just stick with what we’ve got.”
Husband replies, “So you’re going to stick with what you’ve got?”
Stupid man, “Y-y-yes. We’re going to stick with what we’ve got.”
Husband, “Help me understand this for a minute…we can give you three times the coverage for half the cost….your other policy is going to be VOID in under 10 years if you don’t pay higher than normal premiums,by that time, there’s a good possibility you won’t even be insurable later, PLUS your cash value will be surrendered back to X company, leaving your wife and kids without anything when and if you should die prematurely, and you want to stick with what you’ve got?!”
Stupid man, “Yes. Um…well…I know that if I die, C____ and the kids may not have anything, I mean..my policy may not be worth anything…but we’re gonna stick with what we’ve got.”
Okay, people…help ME out here…of the 68% of Americans that have life insurance, 86% have the WRONG kind. This man has the WRONG kind. He has whole life or cash value…something that builds up cash and was sold to him as an “investment vehicle” for his retirement. What his insurance agent (his uncle) DIDN’T bother to tell him was that the cash that has been building up in his account for the last 20 years would be “surrendered” back to the insurance company when he dies and his wife would only get the face value (which is very low and will not cover her actual needs), if that.
See…he has a “paid up policy”…what that means is that after 20 years, he doesn’t have to pay his premiums anymore…it’s “paid up”. Well, folks…let me tell you something…”paid up” is just another term for (and please excuse the expression, but it’s the only one that fits) “screw-job”.
It means that you don’t have to pay premiums anymore! Yea! Right? WRONG. You tell me…what company in the WORLD do you know of that can afford to do that? NONE, thank you. Is your auto insurance ever paid up? What about your health insurance? Nope….gee…I wonder why? Well, on a life, it’s because the cost to insure as you grow older goes UP.
All that poor man’s cash value will go towards paying his policy when he stops making his payment, hence the “surrender” part. YES…the insurance company will RAID his cash value to pay the premiums…and once that is gone? The policy lapses and he is notified that it is no longer of any value. So then the face amount will be gone…as well as the cash. It’s a horrendous situation and we see it everyday with folks that have life insurance.
Please don’t think I don’t care about this man. I do…he’s been a close friend of ours for 8 years. He started out as ignorant as to how it all worked…then, once we educated him and he made the decision to continue down the wrong path, he became stupid. I believe in what we do for families…and the life insurance is only a small part, but it’s the foundation of the house.
For those of you that have policies…please READ them. If you don’t understand what they are saying, I will be happy to help you translate. If you don’t have life insurance and own a home, have a family, etc…please consider buying survivor protection – but do me a favor…buy term and invest the difference so you’ll have something to show for it when you get old….I can hardly bear seeing people being misled by insurance companies who want to make a profit and couldn’t care less about the little man.
Thanks for letting me vent…this is a subject that is near and dear to my heart – my dad had a whole life policy when he died (it was supposed to be for $50K back in 1979) but my mom never saw a penny of it because it was “paid up” and had already been raided by the insurance company and was worthless. I look back to how we lost everything and had to live with my aunt in Alaska and my mom HAD to remarry in order to make it….I just don’t want my friends to go through that. I don’t want ANYONE else to ever have to go through that.
So I’ve been somewhat busy this week…trying to expand my mind and learn more. I am spending more time reading behind really great business minds (Tom Hopkins, David Bach, etc) so that I can grow as a person.
Lack of preparation in business is only about 20% of why people fail…the other 80% is due to the fact that they never have any personal growth. Most people operate basically on what they can see – they have to see it before they can believe it. It’s what’s underground that creates what is above ground…like planting a seed. It has to be watered, fed, and nurtured.
That’s what I’m doing…I’m in the growth stage…
As promised (or threatened, whichever way you want to take it) I will be devoting a couple of blogs a week to financial “stuff”. My hope is to show you a few simple concepts that you can take and apply in your life (if you so choose) to make a difference for you.
First of all, lets say I gave you $10,000 to do with whatever you wished. What are most people going to do with it? (besides spend it) If you said stick it in a bank (cd’s, money market acounts, etc), you’d be right on track with 95% of America. Problem is that historically, banks give a very low rate of return on your money…usually somewhere between 3%-5%. And what do you think that bank is doing with your money? Are they going to just say “thank you, Mr. Brown” and band your money together and stick it in the vault for safekeeping until you decide to withdraw it? Of course not…they are going to invest it in the global economy and get a MUCH higher rate of return on it (usually 12-20%). One thing that my husband and I teach people is that you have to bypass the middle man (the banks) and go straight to the global economy to invest. Your money is working 24-7 for SOMEONE…why not make it work for you? Invest with a good mutual fund company…make it automatic so you don’t have to think about it. In other words, have the payments set up to come out of your checking or savigns accounts on automatic withdrawal…you don’t miss what you don’t see.
Do you know about the rule of 72?
A simple concept that banks don’t share with you that shows the dramatic effect of time and compounding. The Rule of 72 says that your money will approximately DOUBLE at a point in time determined by dividing 72 by the interest rate you earn.
The Rule of 72 illustrates the amazing way money can compound if you just give it enough time.
Your money will double in… 72 divided by 2% interest – your money will double in approximately 36 years. 72 div by 4% interest – 18 years 72 div by 6% interest – 12 years 72 div by 8% interest – 9 years 72 div by 12% interest – your money will double in approximately 6 years!!!
So take that $10K I gave you…would you rather put it in a bank at 4% interest and have $20, 000 in 18 years? Or would you rather invest in the global economy and have $60,000 at the end of the same 18 year period because you have three doubling periods at a higher interest rate? Make sense?
The earlier you start investing, the greater the growth on your investment. If you are 25 and you invest $200 a month for 35 years, with the rule of 72 and compound interest at work, it will grow to be about $1.3 million by the time you are 60. Could you live off of $100,000 a year in interest at that time? I think I could!
Okay…enough for today. I could go on, because I love this stuff….I wish everyone lived in the same area I do, because this can be such life changing information for folks. There is no reason why everyone in America that has a job or is working should not be millionaires when they retire! It just takes discipline…and somebody willing to show you how to do it.
Recently, I was introduced to a new concept, “The 90-day Madman Cycle”. I know it sounds a little, well….mad. But I honestly think it’s terrific! What is it, you ask? Well, it’s the thought that you can do anything for 90 days and go at it like a madman. You can give something your all if you know it’s only for 90 days! What’s 90 days out of your entire life? Then, of course, when the 90 days are up, you are supposed to do it again. Basically, it’s breaking things down into smaller bites so you don’t get overwhelmed by the magnitude of it all. I have also learned that there’s a HUGE difference in “shall” and “will”. Shall merely means that you “may” do something, while using “I will” states intent. I need to have more intent in my life! I don’t want to be a lukewarm anything. I want to be known for being a person who DOES WHAT THEY SAY THEY ARE GOING TO DO. A person of integrity. So this is what I’m doing. I’ve set some goals for myself and I’m going to go at them like a mad man for the next 90 days. I need to post them so I will feel like I am being held accountable by someone other than myself. (Sometimes it’s so easy to just say you don’t feel like doing that today when it’s just you that knows what your goals are!)
During the next 90 days:
1. I will lose 20 pounds.
2. I will finish reading my Bible through for the year.
3. I will stop raising my voice when I am stressed, angry, frustrated, etc.
4. I will pass my licensing exam and get licensed with Primerica.
5. I will clear the clutter from my bedroom.
I recently ordered new checks from checks in the mail. There is a place on the checks where you can put your own sentiment. I inserted “I can do anything for 90 days”. It goes right above the signature line on my checks. It will be a constant reminder for me that I have goals….everytime I write a check for bills, groceries, tithes…whatever. I’ll see that. And remember my goals.
There. It’s done. Those are my goals for the next 90 days. Simple really.
I can do anything for 90 days.
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