Updated: Apr 6
Park City Wealth Advisors sat down with Nick Burgess of The Burgess Group to discuss all things life insurance.
The Burgess Group is an internationally recognized group of experts in the field of insurance and financed life insurance premiums, financial advisory, and bank forums.
Nick Burgess explains that “life insurance is an esoteric conversation.” We agree that the average person does not truly understand beyond the surface level of life insurance, including the specific policy you have, why you are paying the amount of premium you are paying, where your money is going, and how your policy is performing.
Park City Wealth Advisors would like to provide you with what The Burgess Group advises is essential to know about life insurance, whether you are thinking about life insurance or you already have an existing policy.
1. Life Insurance is a Long-Term Play - Maintain & Audit
Life insurance needs maintenance. It is imperative to audit your life insurance policy. An audit gives a transparent update on how your life insurance policy is performing and assesses further steps to take if necessary.
Nick Burgess explains that the insurance industry has a high turnover rate of advisors. Many people have a life insurance policy that an insurance advisor started years ago who may no longer be in the business. People often think just because they have checked the proverbial life insurance “box”, that it can be stuffed into a file folder and never looked at again. However, that shouldn’t be the case. Life Insurance should be viewed as an asset on a balance sheet, and therefore reviewed and amended as your balance sheet evolves.
Many financial advisors, including The Burgess Group, offer a complimentary deep dive analysis into an existing policy to determine the health of its performance and advise how to maintain the policy further.
2. Life Insurance is an Asset
It may not be common knowledge that advisors view life insurance as an asset that can be bought and sold.
If you no longer need your policy or want out for any reason, your policy holds a cash value you can sell. It is common to receive an amount for your life insurance policy that sits at a percentage somewhere between the death benefit and the cash value.
In the same way that many people may have yet to think about their policy as an asset, it also might not be common knowledge that there is a way to finance your life insurance premiums. A client base of CEOs, Founders, Entrepreneurs, and High Net Worth Individuals and their families might find financing their life insurance premiums attractive (this is exactly what it sounds like, a bank pays your premiums and you are the beneficiary of the face value of the life insurance policy).
Those who meet income, asset level, and liquidity qualifications have the opportunity to leverage an asset as collateral for their life insurance policy for a number of years, rather than putting up cash for premium payments. This method of financing an insurance premium through the bank keeps the client’s balance sheets intact, eliminates the cost of life insurance, and is money you get back at the end of the day.
3. You Get What You Pay For
Like most investments in life, you get what you pay for, life insurance included.
There are many types of life insurance; Term Life Insurance and Whole Life Insurance.
The Burgess Group compares Term Life Insurance to “renting.” While Term Life Insurance is the most affordable option, it comes with risks that many people may not be aware of.
For example, a term policy is typically only good for a set number of years (hence the “term”), therefore, a death benefit is not guaranteed if you outlive your policy. In this case, it comes time to begin a new policy of Term Life Insurance; you are starting at an older age and therefore set at a higher premium.
Permanent Life Insurance is then compared to “owning” as the policy is an asset with cash value.
An example of Permanent Life Insurance is a Whole Life Policy. A Whole Life Policy is the most expensive but comes with the highest guarantees.
With a Whole Life Insurance policy, you guarantee your fixed premium, growth in cash value, and a death benefit.
4. “A Guarantee is Only as Good as the Company.”
The average person does not understand many aspects of life insurance and may not have the time to learn. That is why it is crucial to choose the right advisor for you. A guarantee is only as good as the company making that guarantee.
The right advisor will answer your questions with transparency, develop a strategy that is in your best interest, and disclose information you may have yet to know to ask. Those specializing in life insurance know it is not as complex as it looks to outsiders. The right advisor will walk you through contracts and review them piece by piece.
Park City Wealth Advisors invites its clients into our network of professionals in their respective fields whose primary mission is your financial health. Our dedicated advisors are ready to answer your questions with total transparency and with your best interest at heart.
Park City Wealth Advisor’s client base of CEOs, Founders, Entrepreneurs, and High Net Worth Individuals and their families face unique challenges, and we specialize in overcoming those challenges. Contact us today to get started!