Latest / Big Talk About Small Business / Ep. 29 - Financial Foresight for the Savvy Small Business Owner

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Ep. 29 - Financial Foresight for the Savvy Small Business Owner · Big Talk About Small Business

• 0:05
  Mark Zweig: All right, everybody, we're back again with another episode of Big Talk about small business, and I'm here today with my two friends, teresa Delatosh and Micah McFadden, and we're going to talk about a lot of stuff, as we usually do, but we're going to talk about insurance and some tools that these guys have that can help small businesses with their working capital needs, and so we're going to get into that in a minute, but don't have my co-host with me today, eric Howerton.
• 0:43
  Mark Zweig: He's off on another one of his adventures and we are also breaking in a brand new studio today, so this is the first time we've ever done anything here.
• 0:55
  Mark Zweig: Guys, you can tell it's Eric's taste, though he always says everything is like black and chrome.
• 1:00
  Mark Zweig: Every room in this place is black, so it sort of reflects everything he does.
• 1:07
  Mark Zweig: He drives a black truck, he's got a black motorcycle and he loves black, but anyway.
• 1:13
  Mark Zweig: So, teresa, why don't you tell us a little bit about yourself?
• 1:17
  Mark Zweig: Where'd you grow up and how'd you get into this business?
• 1:21
  Theresa Dilatush: Well, my family goes back seven generations in Northwest Arkansas.
• 1:25
  Mark Zweig: Wow.
• 1:26
  Theresa Dilatush: Yeah, my sixth great-grandfather was Simon Sager, who founded the town of Salem Springs.
• 1:32
  Theresa Dilatush: No kidding, yeah, and so I grew up in Salem Springs and I married a boy from Mississippi.
• 1:40
  Theresa Dilatush: That's how I got the last name Dilitesh Married him 34 years ago next month Okay.
• 1:48
  Theresa Dilatush: I had five beautiful children, all grown, one grandson.
• 1:53
  Theresa Dilatush: He calls me Gigi, he can have whatever he wants.
• 1:55
  Theresa Dilatush: And I did a crazy thing in 2005.
• 1:59
  Theresa Dilatush: I started a business new course financial because I had read Nelson Nash's book and it was called Becoming your Own Banker.
• 2:08
  Theresa Dilatush: And it was this way to finance your entire life or your business, using cash value life insurance.
• 2:17
  Theresa Dilatush: You know the big boogeyman that everyone tells you is too expensive and you shouldn't get.
• 2:22
  Theresa Dilatush: But that book economically made so much sense and I couldn't find anyone to help me.
• 2:28
  Theresa Dilatush: So I called Mr Nash, the author, and I said will you help me find someone?
• 2:33
  Theresa Dilatush: And he goes.
• 2:33
  Theresa Dilatush: Well, I've just found her.
• 2:35
  Theresa Dilatush: He goes love.
• 2:35
  Theresa Dilatush: You need to go get your life insurance license and become the expert, and he was a fantastic mentor to me.
• 2:44
  Theresa Dilatush: Fast forward years later.
• 2:47
  Theresa Dilatush: I helped different agencies and brokerages.
• 2:50
  Theresa Dilatush: I taught their agents how to properly structure cash value life insurance so that it could be used like a private bank.
• 2:59
  Theresa Dilatush: My parents were small business owners and so he had financed his entire business with his cash value policy and I was looking for a business partner and couldn't find anyone but a hooligan.
• 3:15
  Mark Zweig: And that's how you end up with Micah no fast forward to what was it?
• 3:21
  Theresa Dilatush: 2019.
• 3:23
  Theresa Dilatush: This guy walks through the door because we have a little guest house and his sister was going to live there for a while and we hit it off and I realized that's my business part.
• 3:34
  Mark Zweig: Oh, it's funny how those things work, isn't it?
• 3:37
  Theresa Dilatush: No coincident.
• 3:38
  Mark Zweig: No, you know, I got five daughters myself and one grandson, but so I'm in a similar mode, except I've got a range from 12 to 36 in my kids.
• 3:48
  Mark Zweig: Oh my goodness, it's a pretty big spread there.
• 3:51
  Mark Zweig: What did you do before you got into this insurance?
• 3:55
  Theresa Dilatush: I was a full-time stay-at-home homeschooling mom.
• 3:58
  Theresa Dilatush: Really Like my days were full Wow.
• 4:00
  Mark Zweig: Okay, and this just was such a passion for you, you were so into it that it just made you start a business.
• 4:08
  Theresa Dilatush: Well, I was always an avid reader.
• 4:10
  Mark Zweig: Okay.
• 4:12
  Theresa Dilatush: I was the kid in junior high and high school that while everybody else was out, you know, doing something or listening to records in their bedroom, my dad and I were watching ABC World News.
• 4:23
  Theresa Dilatush: Tonight I was reading you know, reading all of his books by Napoleon Hill.
• 4:29
  Mark Zweig: Oh, think and grow Rich.
• 4:30
  Mark Zweig: My dad bought that for everybody in our family.
• 4:32
  Mark Zweig: I know.
• 4:34
  Theresa Dilatush: I was a total geek when it comes to all things.
• 4:36
  Theresa Dilatush: You know you can't make stuff.
• 4:39
  Mark Zweig: Wow, that's great, though you know reading, see, you can learn anything if you're willing to read.
• 4:43
  Mark Zweig: I mean anything.
• 4:45
  Theresa Dilatush: You know, the first thing I taught our children was how to read, Because I knew they could read, they could learn.
• 4:54
  Theresa Dilatush: And I turned out Well, I'm a college graduate, so Good for you.
• 5:00
  Mark Zweig: You know, I used to own them with my first wife.
• 5:02
  Mark Zweig: We had a reading clinic and it was a method that she developed and that's what she always said.
• 5:06
  Mark Zweig: It's that you know, a lot of times kids are struggling in math or science, it really is because they can't read, so therefore they can't do the problems and all, and so the reading is the basis of everything.
• 5:21
  Mark Zweig: But it really is critical.
• 5:23
  Mark Zweig: But unfortunately it seems like today very few people actually read anything that has more thick longer than about 30 seconds.
• 5:31
  Mark Zweig: A lot of this goes on.
• 5:32
  Mark Zweig: Yes, and the old days we called that the Blackberry Prayer.
• 5:36
  Mark Zweig: You know, I was like you know, but no, it's really true.
• 5:41
  Mark Zweig: But, micah, now tell us a little bit about yourself.
• 5:45
  Mika McFadden: Yeah.
• 5:45
  Mika McFadden: So married 23 years now, three children, sophomore in college, junior in high school and seventh grader, 13-year-old.
• 5:56
  Mika McFadden: Got started in the business in 98 after college, got my securities license and what I would call a traditional financial advisor.
• 6:05
  Mika McFadden: And as I went through the realm of that, I went out and had a person that I met that was kind of a mentor.
• 6:12
  Mika McFadden: That was like you know, micah, you can go talk to an individual and get one, yes, or you can leverage your time and go talk to business owners and get access to talk to 20, 50, 100 employees.
• 6:21
  Mika McFadden: And so I got into the 401k realm and as I went through that, as I went out and contacted and tried to talk to business owners, the first question everybody asked is the retirement plan is great, but can you help me on my health insurance?
• 6:34
  Mika McFadden: Right, I'm a big concern, sure Early 2000s.
• 6:38
  Mark Zweig: Well, prices kept going up and one strategy a lot of small businesses use was just change every year.
• 6:43
  Mark Zweig: You know, get the new company to buy your business and then the next year the rates are going to go up, so go find somebody else.
• 6:51
  Mark Zweig: It seemed like a lot of businesses did that, but it's painful for the employees Really is they hate it.
• 6:58
  Mika McFadden: Yes, and it puts the business owner in a bad situation of you can have a good year claims-wise Right, and then, as a broker and insurance agent, you come in and hey, by the way, mark, you're going to get a three, five, 7% rate increase, even though nobody did anything wrong, because you're pulled.
• 7:13
  Mika McFadden: And so I got into that side.
• 7:16
  Mika McFadden: I didn't do the health insurance very long because I hated bringing bad news to groups every year.
• 7:21
  Mark Zweig: I believe it, yeah.
• 7:23
  Mika McFadden: I transitioned into more of the supplemental benefits and more into the enrollment services, I saw that there was a real need for education for the employees, because as we went in and we talked to groups and talked to an employee like, you can tell me a little bit about your insurance and then we'll kind of start from here.
• 7:40
  Mika McFadden: What's going to be new or what the change is taking place?
• 7:42
  Mika McFadden: Sure, most people didn't know what they had.
• 7:44
  Mika McFadden: They might know they're deductible, they might know their copay yeah, maybe the maximum out of pocket, maybe a prescription copay but that was really all they knew about their medical insurance.
• 7:52
  Mika McFadden: And so I kind of transitioned to that, into the dental vision, disability, cancer, all sorts of things and did that very successfully.
• 8:04
  Mika McFadden: Had a great run with that and that marketplace, though I partnered with a lot of health insurance brokers.
• 8:11
  Mika McFadden: I let them handle the headache and the nightmare of the health insurance.
• 8:14
  Mika McFadden: They came in and helped communicate the changes that they had to deliver.
• 8:17
  Mika McFadden: So we were kind of the messenger, not the bad guy, if that makes sense moving forward and so got a lot of experience in visiting with business owners and understanding their needs, the employees' needs, everything, yeah.
• 8:31
  Mika McFadden: And then I'm going to look at the guest house for my sister Teresa's Right.
• 8:38
  Mika McFadden: We hit it off and she starts you know what do you do, what do you do?
• 8:41
  Mika McFadden: And she starts telling me about all these things.
• 8:43
  Mika McFadden: And I'm like okay, at that point I had been about 20 years in the business and nobody had ever in the financial services round, the employee benefit round, the life insurance round.
• 8:57
  Mika McFadden: I'd never heard all the things that she had talked about, and so we immediately hit off the marketplace I was in.
• 9:03
  Mika McFadden: There was more and more competition in the supplemental insurance world and the enrollment services Right, and the broker marketplace went from.
• 9:11
  Mika McFadden: I used to have 108 different insurance agents across about a 300 mile radius.
• 9:15
  Mika McFadden: That I chased.
• 9:16
  Mika McFadden: That did.
• 9:17
  Mika McFadden: Health insurance was down to about 11.
• 9:19
  Mark Zweig: Wow, I didn't realize there was such a consolidation in that business.
• 9:23
  Mika McFadden: They were either run out of the business or pushed out.
• 9:25
  Mika McFadden: They were forced X number of lives to keep contracts and so many merged or joined in or were bought out and became these big conglomerates.
• 9:35
  Mika McFadden: So it's that you know, it kind of goes back to that buying power, for sure, and that so yeah, and hard to distinguish yourself.
• 9:42
  Mika McFadden: then if you have all that competition out there, right, Right, and so I was really looking for a change and it was like okay, here's Teresa.
• 9:51
  Mika McFadden: I mean, I was just intrigued because it was so different, and not really against, but just really different from anything I had been taught that first.
• 10:00
  Mika McFadden: You know, 1920 years, wow.
• 10:03
  Mark Zweig: So why don't you guys tell us a little bit about exactly what you do for your clients and how it works and helps them?
• 10:11
  Theresa Dilatush: Oh my goodness.
• 10:12
  Theresa Dilatush: Well, just knowing what my parents' small business experience was, they were always looking for someone to say well, you know, who do I use for this, who do I use for this?
• 10:28
  Theresa Dilatush: And so we don't want to be the Jagaval trade, but we just try and bring multiple strategies to the table for our clients that aren't in the traditional box of all things financial planning.
• 10:44
  Theresa Dilatush: People have forgotten that cash value life insurance was the first guy to show up.
• 10:52
  Theresa Dilatush: You know, term is a relatively new concept.
• 10:55
  Theresa Dilatush: It has a great fit for a lot of people.
• 10:59
  Mark Zweig: So that's so great.
• 11:00
  Mark Zweig: When you get to be my age, it gets really expensive.
• 11:03
  Theresa Dilatush: I know.
• 11:04
  Mark Zweig: So this is why we're trying to preach to the younger crowd.
• 11:06
  Mark Zweig: I'd have do it early.
• 11:07
  Theresa Dilatush: Something in place.
• 11:08
  Mark Zweig: Yes.
• 11:09
  Theresa Dilatush: But it is a tier, one asset out of five asset.
• 11:12
  Theresa Dilatush: And so, if you go to the bank, what does that mean?
• 11:15
  Theresa Dilatush: Well, there are five classes of assets.
• 11:18
  Theresa Dilatush: The first is cash, cash equivalencies and cash value, life insurance.
• 11:24
  Mark Zweig: So it's liquid.
• 11:24
  Mark Zweig: Basically it's super liquid.
• 11:27
  Theresa Dilatush: That's why the bank will always ask you on a loan for you know, do you have cash value life insurance.
• 11:32
  Theresa Dilatush: But people don't understand how easy it is to properly structure a policy so that you have a high early cash value in that policy, how easy the process is to use, sign a form, get a loan from your policy.
• 11:48
  Theresa Dilatush: It's actually a loan from the carrier with your death benefit as a guarantee for that.
• 11:56
  Mark Zweig: Can you borrow more than the cash value?
• 11:58
  Theresa Dilatush: No, so there's no over loan danger.
• 12:01
  Theresa Dilatush: But no one understands too that the insured, the owner of that contract, is the owner of that contract and the life insurance carriers the administrator.
• 12:11
  Mark Zweig: Right, so you're borrowing from yourself.
• 12:14
  Mark Zweig: It was all over.
• 12:15
  Theresa Dilatush: From yourself and paying yourself back.
• 12:16
  Theresa Dilatush: Now, if you're a business owner, it gets even better because there's I'm no CPA, I'll just say that right now but, I do know there is a bit of a tax reduction strategy, because you can write off interest right.
• 12:28
  Mark Zweig: Right, so we don't provide legal and accounting advice.
• 12:32
  Mark Zweig: But no, I understand.
• 12:33
  Mark Zweig: So interest is tax deductible.
• 12:36
  Theresa Dilatush: However, and so for a small business owner and mediums, I don't care how big your business is or how small it is, it's just it shouldn't be the only thing you do, it should just be one more tool in your portfolio to help you create two jobs for every dollar, so that you're always getting right of return constantly.
• 13:00
  Mark Zweig: So do you all so?
• 13:02
  Mark Zweig: Well, what if I don't have a whole life insurance?
• 13:06
  Mark Zweig: I'm a business owner.
• 13:09
  Mark Zweig: I don't have any insurance I can go borrow against.
• 13:11
  Mark Zweig: Do you all sell them that?
• 13:14
  Mika McFadden: Yeah, so there's.
• 13:14
  Mika McFadden: I think there's a couple of key things you kind of mentioned whole life, in particular.
• 13:17
  Mark Zweig: Okay, and there's universal life, obviously, that which is sort of a variant.
• 13:23
  Mika McFadden: Yeah, we really kind of specify an indexed universal life particularly Okay, and whole life.
• 13:28
  Mark Zweig: Okay.
• 13:30
  Mika McFadden: We kind of compare those to the tortoise and the hare.
• 13:31
  Mika McFadden: All right, with whole life, it is slow and steady, wins the race.
• 13:35
  Mika McFadden: We know returns 12 months in advance Right, and we can do a lot of planning on that.
• 13:41
  Mika McFadden: Indexed universal life is more like the hare in that your money is not actually invested in the market.
• 13:49
  Mika McFadden: It is mirroring the index market.
• 13:51
  Mika McFadden: So if your money is in the market, you experience the highs and the lows, the ups and the downs Right Within indexed universal life.
• 13:59
  Mika McFadden: You're mirroring the market with options.
• 14:00
  Mika McFadden: When the market goes up, you capture and get rewarded those gains.
• 14:04
  Mika McFadden: When the market goes down, you have a zero floor.
• 14:07
  Mika McFadden: So your principal's always safe, okay, but we like to capture like the hare.
• 14:11
  Mika McFadden: We like to get those big gains or those big speed swings on that so that we can increase the opportunity for those cash value growth take place and so so we're not all experts in insurance.
• 14:27
  Mark Zweig: I mean certainly I don't consider myself one.
• 14:30
  Mark Zweig: I guess my understanding with the universal life, whether it's indexed or not, is typically you kind of front and load those things right, you pay more upfront and then over time you don't have to necessarily even pay premiums on them or the premiums may go down.
• 14:47
  Mark Zweig: Is that correct?
• 14:49
  Mark Zweig: Is that a good assessment or no?
• 14:51
  Mark Zweig: Whereas whole life I know it's level typically right.
• 14:55
  Theresa Dilatush: Well, you can just going to use your term front and load both whole life and indexed universal life, and Nelson Nash always used to say his thing was why do people want to quit paying premiums?
• 15:14
  Theresa Dilatush: Because you're just depositing money in your bank that's getting a rate of return and it's still going to get a rate of return when you pull it out and go use it for something else or to acquire an asset, so you can make an end game where no more premiums are required.
• 15:32
  Theresa Dilatush: We've had three or four clients in the last few months decide to no longer pay premiums.
• 15:40
  Theresa Dilatush: Those cash values will still continue to grow.
• 15:43
  Theresa Dilatush: There is some flexibility with both types of those policies to where.
• 15:49
  Theresa Dilatush: Okay.
• 15:50
  Theresa Dilatush: So 2008, nine and 10, none of my clients lost their business or their home and just talked with a client this past weekend and he abruptly got fired from a job a very criss-drop that he had in.
• 16:10
  Mark Zweig: So I always tell people having a job is risky, Right, you know you can get fired.
• 16:16
  Theresa Dilatush: Do no fault of your own, and it wasn't I mean, this guy is solid, he was a great guy, but he had a great amount of cash value.
• 16:25
  Theresa Dilatush: He said we didn't lose sleep at night and it allowed me to pay our expenses so that I didn't have to take a job I could choose to take a job.
• 16:34
  Mark Zweig: Sure, how do you like?
• 16:37
  Mark Zweig: How do you guys make money?
• 16:38
  Mark Zweig: Because if I have a whole life policy, I can go borrow against that myself.
• 16:42
  Mark Zweig: I don't need you to do that for me.
• 16:44
  Mark Zweig: What is it exactly you all do to help these people?
• 16:48
  Theresa Dilatush: We have to be licensed, okay, you have to have continuing education, and so the carriers compensate us.
• 16:57
  Mark Zweig: I see.
• 16:57
  Theresa Dilatush: Yeah, so our clients don't pay us.
• 17:00
  Mika McFadden: Okay, I think one of the most important things on life insurance policies, particularly cash value life insurance, is if it's structured properly.
• 17:08
  Mika McFadden: Those are the two most important words I can think of if somebody asked me why would I do permanent life insurance, particularly with you all, with what you're telling us to do?
• 17:17
  Mika McFadden: The policy has to be structured properly.
• 17:19
  Mika McFadden: There are a lot of agents out here that do a good job, but if they may sell a permanent life insurance policy to try to acquire as much death benefit, if you came to me and you said, what can I get for $10,000 a year in premium versus putting this into a term policy on here, we might be able to just, for example, get you a $2 million death benefit.
• 17:41
  Mika McFadden: When we go to structure policies, most of the time, if someone's looking for cash value accumulation or retirement benefits down the road and we can talk a little bit about that in the future they want to, or we want to, structure that to solve for the minimum death benefit.
• 17:57
  Mika McFadden: But the maximum accumulation I got it.
• 17:59
  Mika McFadden: That's gonna make the biggest difference in the world on what that's going to look like.
• 18:02
  Mark Zweig: Well, you're basically using less of their money to go buy insurance, in effect, and more is just invested.
• 18:10
  Mika McFadden: Absolutely.
• 18:11
  Mark Zweig: So what kind of returns do people get on these policies?
• 18:14
  Mark Zweig: Just set a curiosity what would be like a typical?
• 18:17
  Mark Zweig: I'm sure it changes based on the economy and the stock market and inflation and everything else but interest rates.
• 18:25
  Mark Zweig: What's typical right now?
• 18:28
  Mika McFadden: Yeah, I would say that I mean we see like whole life typically kind of studies around Five percent, four and a half to six percent, something around in there.
• 18:37
  Mika McFadden: Indexed universal life has a lot of different variants in that sometimes carriers, to have that zero floor where your principal can never go down, they give you a cap so it may cap out at 12 and a half percent, for example.
• 18:50
  Mika McFadden: Okay, we'd like to do a mixture or a blend.
• 18:54
  Mika McFadden: If we're doing indexed universal life to where we may have some uncapped indexes, I say you may have some capped indexes so that if the markets do rebound and we see a 25, 30 percent increase we can capture.
• 19:07
  Mark Zweig: It's like a portfolio and investment portfolio within this insurance policy basically, and that's sort of a balanced portfolio.
• 19:17
  Mika McFadden: It is, and two things with that that you just say with that particular term, cash value, life insurance is an insurance product, not an investment tool.
• 19:25
  Mika McFadden: That is.
• 19:26
  Mika McFadden: The biggest difference on that is that we don't have clients in market risk where they can lose money.
• 19:33
  Mika McFadden: Therefore, it's not really an investment, it's an insurance product.
• 19:36
  Mika McFadden: It allows them as well to have access to one of the best assets out here.
• 19:45
  Mika McFadden: In my opinion, it's the top assets you can get because it checks liquidity, safety, low cost, good rate of return and it's tax efficient.
• 19:55
  Mika McFadden: Right Dive into as much of those as we want to.
• 19:58
  Mika McFadden: As we talk to these individuals, particularly these business owners, because I see so much as a small business owner, having been in the 401K realm and in the employee benefit world realm small business owners have to wear all these different hats.
• 20:12
  Mark Zweig: Right, and we're not good at all of them, right, let's face it.
• 20:15
  Mark Zweig: I always found you gotta get the specialists in, whatever it is you need.
• 20:20
  Mark Zweig: Don't fool around with the generalists, whether that's lawyers, insurance brokers, all of them.
• 20:27
  Mark Zweig: Okay, yeah, so.
• 20:30
  Theresa Dilatush: And I didn't have.
• 20:31
  Theresa Dilatush: I didn't just wake up one day and go, hey, I don't want to be a life insurance agent.
• 20:37
  Theresa Dilatush: You know, I actually kind of fought and struggled with that whole idea.
• 20:42
  Theresa Dilatush: But my husband's a great guy and he's like you know what, you've got this, you go do it.
• 20:47
  Theresa Dilatush: And he really helped me get my business started.
• 20:52
  Theresa Dilatush: But I did understand why you would want to have cash value life insurance and multiple policies in your portfolio, whether you are paying for weddings we have four daughters paid for a lot of weddings and prom dresses taking policy loans.
• 21:17
  Theresa Dilatush: Braces all of my kids had braces.
• 21:19
  Mark Zweig: And I got two of them in it right now.
• 21:21
  Mark Zweig: Three, so you know Three.
• 21:22
  Mark Zweig: What am I saying?
• 21:23
  Mark Zweig: Three in it.
• 21:24
  Mark Zweig: One of them's my wife.
• 21:25
  Mark Zweig: She decided to go get the Invisalign.
• 21:28
  Theresa Dilatush: Yes, I believe there is a local orthodontist here that I personally probably sent his children to college.
• 21:35
  Mark Zweig: I won't mention that I may know who it is.
• 21:37
  Mark Zweig: It's probably a friend of mine if it's who I think it is.
• 21:40
  Mark Zweig: But so obviously though, you had a mind for the math.
• 21:45
  Theresa Dilatush: Yes.
• 21:46
  Mark Zweig: I mean, and just that's.
• 21:47
  Mark Zweig: I'm sure that's been a big part of this, for you is understanding that.
• 21:51
  Mark Zweig: But then the risk too, I think, is that's obviously something that you understood to get into this I wish I had.
• 22:01
  Mark Zweig: If I could go back 25 years, I would have done more universal life policies than term, because they were great.
• 22:10
  Mark Zweig: For, as you said, I'm sitting there paying 800 bucks a month in a year for 500,000 or whatever, and then one day you wake up and you get a bill for $9,200, which I just got this morning, so it's well-timed on a term policy, you know.
• 22:27
  Theresa Dilatush: Well, and here's the thing.
• 22:29
  Mark Zweig: Here's my age, shit that.
• 22:31
  Theresa Dilatush: Here's the thing that we hear all the time.
• 22:35
  Theresa Dilatush: We always hear what in?
• 22:38
  Theresa Dilatush: Someone teach me this 20 years ago.
• 22:40
  Theresa Dilatush: And then with the younger crowd, you know the folks in their 20s and 30s and even some 40 year olds they think they're gonna live forever.
• 22:50
  Theresa Dilatush: Right, we found out.
• 22:53
  Theresa Dilatush: You're not guaranteed that.
• 22:55
  Mark Zweig: Right, yeah.
• 22:56
  Theresa Dilatush: And then Micah had a health event, and it was right after we had decided to form a partnership, and I'll, I mean, that day scared me to death.
• 23:09
  Theresa Dilatush: Sure, I'm thinking I finally found him, you know, and help what's gonna happen.
• 23:14
  Mark Zweig: So Listen, and accidents.
• 23:17
  Mark Zweig: I lost a friend of mine who was an insurance broker about a year and a half ago.
• 23:24
  Mark Zweig: He was 40.
• 23:25
  Mark Zweig: And then I lost another friend of mine who was 31 years old in a car accident here recently.
• 23:30
  Mark Zweig: Entrepreneur so it does happen.
• 23:33
  Mark Zweig: Yeah, bad stuff happens.
• 23:35
  Mark Zweig: But this whole idea of the?
• 23:39
  Mark Zweig: So let's go back to.
• 23:41
  Mark Zweig: I'm a small business owner.
• 23:43
  Mark Zweig: Okay, let's just say I've got a business, I'm doing it in $10 million a year in revenue.
• 23:48
  Mark Zweig: I make a million dollars a year for all practical purposes.
• 23:53
  Mark Zweig: I've got all kinds of term life.
• 23:57
  Mark Zweig: You know my bank wants me to have it.
• 23:59
  Mark Zweig: I probably got $2 or $3 million for the term life out there.
• 24:02
  Mark Zweig: I got my 401K you know whatever variant on that retirement fund.
• 24:10
  Mark Zweig: I got maybe a stock portfolio.
• 24:13
  Mark Zweig: That's got some stuff in it, right.
• 24:15
  Mark Zweig: Maybe I got a little cash but truthfully, most of my money is sitting in that business, all right.
• 24:20
  Mark Zweig: It's hard for me to justify investing in the public market when I know my own company generates a 30 or 40% return on invested capital year after year.
• 24:31
  Mark Zweig: So I call one of you up.
• 24:35
  Mark Zweig: How do you help me?
• 24:38
  Mika McFadden: I think the first thing is to try to get a good picture of the situation and you just kind of laid out some examples is to find out what all they're doing.
• 24:47
  Mika McFadden: You know what their plans are.
• 24:49
  Mika McFadden: Do they have an exit strategy?
• 24:52
  Mika McFadden: Are they going to try to pass this business on to a family member?
• 24:55
  Mika McFadden: So a lot of analysis on the front.
• 24:57
  Mika McFadden: It's kind of like I use the analogy of going to the doctor.
• 24:59
  Mika McFadden: If you say you have a headache, I can give you a Tylenol and send you on down the road.
• 25:03
  Mark Zweig: But we don't know what's causing the headache, right.
• 25:05
  Mika McFadden: Yeah, but we don't want to go to the extreme of okay, well, mark, let's come in here in two days we're gonna cut you open and look in the brain and see if there's something else going on.
• 25:13
  Mika McFadden: We try to find that happy medium between if that makes sense, but then that there are so many things that I've seen with small business owners, particularly on this, is a lot of times I feel like they're maybe kind of neglected Right, not by saying any names again, but I had a lot of the brokers that I worked with that only targeted groups with 100 plus employees.
• 25:33
  Mark Zweig: Yeah, I don't want to mess with financial sense.
• 25:34
  Mark Zweig: Yes, I believe that, entirely Right.
• 25:37
  Mark Zweig: I've seen so many businesses that serve business that have that attitude of we only want to deal with somebody if they're at a certain threshold and then that lesser group is underserved, right, right, yeah, I believe that.
• 25:50
  Mika McFadden: So we do an analysis.
• 25:52
  Mika McFadden: We see a lot that these business owners have put everything into the business.
• 25:57
  Mika McFadden: They may not even have some of the things you just mentioned.
• 25:59
  Mika McFadden: They may have that term policy.
• 26:01
  Mark Zweig: Yeah, if I'm 40 years old, I probably don't have anything other than the business, right?
• 26:05
  Mark Zweig: It's, maybe the 60 year olds are in a little better shape, but yeah.
• 26:09
  Mika McFadden: They've neglected retirement for themselves.
• 26:12
  Mika McFadden: Right, they might have put something in place for the employees as a retention tool because they want to try to keep them.
• 26:18
  Mika McFadden: A lot of times they don't even do that because there's so much administration, so many regulations.
• 26:23
  Mika McFadden: If you do this for one, you have to do it for all, right.
• 26:25
  Mika McFadden: So we really kind of look at are there things that you could do you may be doing good?
• 26:32
  Mika McFadden: Are there things we could do better on?
• 26:34
  Mika McFadden: Okay, and so we look at from the cash value, life insurance side.
• 26:38
  Mika McFadden: It checks a lot of boxes for them in that it gives them that permanent life insurance.
• 26:45
  Mika McFadden: We talked about a moment ago that you've got this bill.
• 26:47
  Mika McFadden: As you get older, it's larger now.
• 26:50
  Mark Zweig: I mean, it goes up way higher than people think.
• 26:53
  Mark Zweig: It's not like it went up a little bit, it just like went up 10 fold overnight.
• 26:57
  Mika McFadden: So one to most people.
• 26:58
  Mika McFadden: They let it go Right there or they can get the death benefit down so low that it helps lower that cost.
• 27:04
  Mika McFadden: 97% of term policies are not used.
• 27:07
  Mark Zweig: I've done both of those things myself at various times, both yeah.
• 27:13
  Mika McFadden: And so it checks the box of providing them death benefit Right.
• 27:17
  Mika McFadden: It can give them tax advantaged income in their retirement years because during their working years they have a lot of these different deductions that they can qualify for they may not have looked at.
• 27:33
  Mika McFadden: Okay, I make 100,000 a year.
• 27:34
  Mika McFadden: If I put 15,000 in a tax deferred retirement program, I'm gonna get a $15,000 off of my gross income this year.
• 27:41
  Mika McFadden: Sure, some of them do it some adult, because it's in this conglomerate of all these other deductions that they take on here.
• 27:49
  Mika McFadden: Yeah, this gives them an avenue to have tax-free retirement when they retire.
• 27:55
  Mika McFadden: It also gives them, as Theresa mentioned and her father used this a liquid fund that they can go pull money out of and use to grow their business.
• 28:06
  Mika McFadden: And this is probably the biggest thing with cash value life interest.
• 28:09
  Mika McFadden: Most people don't realize.
• 28:10
  Mika McFadden: If you have $100,000 in cash value sitting there when you pull 50,000 out, you're not pulling 50,000 out like you would out of a money market or an IRA.
• 28:20
  Mark Zweig: Yeah, because the return stops on the 50, I take out of the retirement fund.
• 28:24
  Mark Zweig: Plus I pay a penalty.
• 28:26
  Mark Zweig: Absolutely yeah, and I pay taxes on it, absolutely yeah.
• 28:30
  Mark Zweig: So From cash, value life insurance.
• 28:32
  Mika McFadden: When you pull 50 out, the insurance company is actually loaning you 50,000.
• 28:38
  Mika McFadden: I see You're getting to collateralize against the money that you have in there Right.
• 28:43
  Mika McFadden: So now you can make money on your business real estate, like with you or anything else.
• 28:49
  Mika McFadden: If the markets go up 10%, you still get credit in that example for the full 100,000 sitting there, even though 50 is out doing something else.
• 28:58
  Mika McFadden: I see you can do small numbers, big numbers with that, whatever.
• 29:02
  Mark Zweig: I can see why people are.
• 29:03
  Mark Zweig: I'm sorry, I didn't mean to interrupt you.
• 29:05
  Mark Zweig: I can see why people get confused about this, though you have to really show the effect and the tax aspect of it is really critical, and where you end up with the pot of money that you can use, I can see that makes a lot of sense.
• 29:22
  Mark Zweig: So, like you know, let's just say $100,000.
• 29:28
  Mark Zweig: For the sake of this example, let's pretend I'm a 45 year old non-smoker, reasonably good health, you know, maybe my cholesterol's too high or whatever.
• 29:38
  Mark Zweig: So how long is it gonna take somebody like me to get to where I got this 100,000 bucks sitting out there that I can pull from typically, and what would that cost me to get there?
• 29:52
  Mark Zweig: I know it varies right.
• 29:53
  Theresa Dilatush: It does, because you know a part of our job is to look at your overall financial snapshot and determine can we take inefficient money and move it from this side to that side and make it now highly efficient money so we can make recommendations on?
• 30:14
  Theresa Dilatush: Well, you know you've got money sitting in a money market earning 2% when we know we're getting 4.5 to 6 in a whole life or who knows what, in an IUL, depending on what industry we've chose.
• 30:30
  Theresa Dilatush: And so it's just, we try and help the client find the money so they're not having to come up with extra dollars.
• 30:40
  Theresa Dilatush: We're just redirecting.
• 30:42
  Theresa Dilatush: And so, if you're, I'm just gonna use one of our clients as an example.
• 30:48
  Theresa Dilatush: He's a 41 year old guy.
• 30:52
  Theresa Dilatush: He doesn't own his own business but he makes good money as an engineer and he has been.
• 30:59
  Theresa Dilatush: He was a client of mine before I even met Micah, because he had whole life policies.
• 31:04
  Theresa Dilatush: He was referred by another client and so we were talking and I've showed him, if you do, he had an extra, I think he did.
• 31:16
  Theresa Dilatush: He did one lump sum of $25,000 and then $10,000 a year.
• 31:21
  Theresa Dilatush: Okay, and I told him.
• 31:26
  Theresa Dilatush: I said you know, if you do this, this will help you fund real estate purchases for investments or by equipment for your farm or whatever he said.
• 31:38
  Theresa Dilatush: That will not work.
• 31:38
  Theresa Dilatush: That will not work.
• 31:40
  Theresa Dilatush: What are you talking about?
• 31:42
  Theresa Dilatush: He's a spreadsheet guy.
• 31:45
  Mark Zweig: Right, so an engineer.
• 31:46
  Theresa Dilatush: Yes.
• 31:47
  Mark Zweig: Black and white.
• 31:47
  Mark Zweig: It's logical.
• 31:48
  Theresa Dilatush: He had to tear it apart and build it back three times to prove to you that now he can, now he understands this.
• 31:54
  Theresa Dilatush: He called me three days later and he goes we need to talk.
• 31:57
  Theresa Dilatush: So he started with that first policy.
• 32:01
  Theresa Dilatush: He got another whole life policy.
• 32:03
  Theresa Dilatush: He comes back to us was it last year?
• 32:08
  Theresa Dilatush: And so he's added indexed universal life into his portfolio because when he started running the numbers he realized if he put you know a good sum in there, that he could retire eight years earlier.
• 32:23
  Mark Zweig: Wow.
• 32:24
  Theresa Dilatush: Yeah, and run his farm and go hunting and do the things he loved.
• 32:28
  Mark Zweig: So that's a great success story then.
• 32:31
  Theresa Dilatush: We have so many clients who are great success stories, and so I'm 10 years older than Micah.
• 32:39
  Theresa Dilatush: You know I want to finish.
• 32:40
  Theresa Dilatush: Well, I want people to say you know, when they come to my end of life celebration.
• 32:45
  Mark Zweig: You really helped him.
• 32:46
  Theresa Dilatush: She really did something great for my family.
• 32:49
  Theresa Dilatush: And my kids and grandkids are going to have generational wealth that we otherwise wouldn't have.
• 32:54
  Theresa Dilatush: That's the story I want.
• 32:56
  Mark Zweig: Yeah, yeah, that makes a lot of sense, seems to me.
• 32:59
  Mark Zweig: Like you know, again, I've worked with small businesses basically my entire career, 44 years, some of them larger than others and been involved in every aspect of it.
• 33:12
  Mark Zweig: I find one of the biggest problems with these small businesses is they don't have the cash flow they should have because they do a really lousy job with their billing and collection, Just needlessly like.
• 33:24
  Mark Zweig: They finish a job on the seventh of the month but they send their bills out after the first of the following month and maybe that waits 10 days before they go.
• 33:33
  Mark Zweig: They just lost use of all that money and they basically need more working capital in the business than they should need and that would free up some funds maybe to do some of this other stuff.
• 33:48
  Mark Zweig: I mean, do you guys ever get into that level of assistance with these clients to really understand, like, the capital needs of their business?
• 33:58
  Mika McFadden: Yeah, we actually had a conversation yesterday with the charitable organization out of Georgia and they're looking for some guidance and some structure.
• 34:11
  Mika McFadden: They've done well, they have some revenue.
• 34:13
  Mika McFadden: They're like okay, we know this was referral from one of Theresa's other clients and said she said to talk to you, what can we do better or what can we change?
• 34:26
  Mika McFadden: And so we did kind of an analysis and a discovery call yesterday.
• 34:30
  Mika McFadden: We're working on putting some things together.
• 34:32
  Mika McFadden: They're working on putting some more numbers together, like what you're saying, the finances and analytics of how this business is working, and we will structure for them a start.
• 34:44
  Mika McFadden: We've talked about 10,000 and 100,000 and all this.
• 34:48
  Mika McFadden: We have a lot of clients that put $150, $250 a month in.
• 34:51
  Mika McFadden: That's what they can afford.
• 34:53
  Mika McFadden: We've looked at their finances and they get a start.
• 34:56
  Mika McFadden: We have one particular client that did that right when I first met Theresa and then they've come back now and there's some cash value building built up there.
• 35:04
  Mika McFadden: Let's look at what else we can do and their business has grown.
• 35:08
  Mika McFadden: So now they have some more funds they can put into this.
• 35:10
  Mika McFadden: They understand the momentum that has started within these cash value policies and now they want to figure out what else they can do.
• 35:19
  Mika McFadden: They made.
• 35:20
  Mika McFadden: Look at, we've talked about moving money from the right pocket to the left pocket.
• 35:24
  Mika McFadden: Most people when we start talking about life insurance as well.
• 35:27
  Mika McFadden: I don't have any extra money I can do, money flowing out of both pockets.
• 35:31
  Mika McFadden: But there's both payments and Hutton clubs and whatever the case may be on here a country club members, there's money, the stopping and buying coffee every morning.
• 35:41
  Mark Zweig: Oh yeah, people waste.
• 35:42
  Mark Zweig: I take my kids through Starbucks and it costs us 20 bucks in the morning.
• 35:49
  Mark Zweig: It's insane, absolutely insane for two of them.
• 35:53
  Mark Zweig: I'm like this is crazy.
• 35:54
  Mark Zweig: So, but let's go back to getting the money out of these policies.
• 35:59
  Mark Zweig: So I know you just make a phone call or you check the box online or whatever, and you got your account set up in there, or however it works, and they wire it to you or whatever the deal is.
• 36:10
  Mark Zweig: But do you have to pay that money back, or is that a withdrawal?
• 36:15
  Mark Zweig: How does that work, you?
• 36:17
  Theresa Dilatush: don't have to.
• 36:18
  Mark Zweig: Okay.
• 36:20
  Theresa Dilatush: You'll get an interest statement and a policy loan statement from your carrier.
• 36:24
  Theresa Dilatush: Okay, but we encourage you to because if you are paying yourself back, especially if it's for a business expense, you wanna pay yourself back.
• 36:36
  Theresa Dilatush: You wanna pay yourself interest, and most carriers typically charge around a five to 6% interest rate, depending on what kind of policy it is and what policy year it is.
• 36:46
  Theresa Dilatush: It's not.
• 36:47
  Theresa Dilatush: There's very little volatility.
• 36:51
  Mark Zweig: Right now that's a great rate, obviously.
• 36:53
  Mark Zweig: Yeah, you can't borrow money at that.
• 36:55
  Mark Zweig: If you wanna get a commercial building loan, it's 8.75 if you got really good credit.
• 37:00
  Theresa Dilatush: So, yeah, yeah, I always have encouraged clients yes, you own this, yes, it's your money, but pay it back Cause, cause, money in motion is money that's not stagnant, so pay it back and wait for the next thing and go buy the next property.
• 37:22
  Theresa Dilatush: We have a lot of real estate investors, their client and they've all either paid down payments or purchased properties out of their cash fund.
• 37:32
  Mika McFadden: Remodels.
• 37:34
  Theresa Dilatush: But if you're a tiny small startup and you wanna do this, you're 30 year old with a great idea, but we really just don't have the funds we're gonna get you a very inexpensive term policy with one of the carries that we know has a great permanent policy that you can.
• 37:57
  Mark Zweig: Conversion yes.
• 37:59
  Theresa Dilatush: Without any more pricks or prawns.
• 38:02
  Mark Zweig: Right, yeah, I'm sure that's a big concern for people, because the older you get, the more likely you are to have problems that will disqualify you for being able to get more insurance later.
• 38:15
  Mark Zweig: So that conversion is great.
• 38:17
  Theresa Dilatush: We also have a lot of carriers that do rapid or express underwriting Notice.
• 38:23
  Theresa Dilatush: There are a lot of gentlemen who are afraid of needles.
• 38:25
  Theresa Dilatush: We have several clients that just don't wanna give up.
• 38:31
  Mark Zweig: That never bothered me that much.
• 38:32
  Mark Zweig: I had one of my daughters was a phlebotomist at one point, but she's not doing that now.
• 38:38
  Mark Zweig: I never let her practice on me.
• 38:43
  Mika McFadden: I would say as well, to continue on the question that you asked about how do we get money out of these.
• 38:49
  Mika McFadden: I really say there's a smart way, a not so smart way and a sad way to get money out of a cash value life insurance policy.
• 38:56
  Mika McFadden: Smart way is policy loans.
• 38:58
  Mika McFadden: If we go borrow money from a credit union, from a bank, from a financial institution, from a private lender, whatever the case on this, we're going to pay that back.
• 39:07
  Mika McFadden: We're going to structure a payment schedule on there.
• 39:09
  Mika McFadden: I have a promissory note Policy loans are tax free.
• 39:14
  Mika McFadden: Right there.
• 39:14
  Mika McFadden: We pay them back.
• 39:16
  Mika McFadden: We're increasing the cash value of our policy.
• 39:20
  Mika McFadden: If we have something out and we borrow 50 of the 100,000 and then we unexpectedly have an event like your friend or my friend, our friends or could have been me that we pass or they pass, then that loan comes off the death benefit.
• 39:33
  Mika McFadden: The not smart way of pulling money out on this Cash it in Tarz this could be or even just withdrawals.
• 39:40
  Mika McFadden: The money you've put in is after tax, so that's a cost basis, but any growth that is taking place is taxable.
• 39:45
  Mika McFadden: So if we take withdrawals, we're also just like we would pull it out of a money market account.
• 39:50
  Mika McFadden: It's no longer there working for us and then the sad way is we meet our demise and then that money goes to a beneficiary but we don't get anything out of it.
• 40:00
  Mika McFadden: So I wanted to kind of clarify or answer on your question for the ways that we pull money out of a policy.
• 40:06
  Mark Zweig: So let's just say I took 100,000 cash out of one of these index universal life policies that I built up over however many years.
• 40:14
  Mark Zweig: I had it and I'm playing on paying it back.
• 40:18
  Mark Zweig: But do I get like a payment schedule?
• 40:21
  Mark Zweig: What if I can't afford it?
• 40:22
  Mark Zweig: What if disaster strikes the business and I'm supposed to be paying them a thousand bucks a month or whatever and I can't afford it now?
• 40:29
  Mark Zweig: So what happens then?
• 40:32
  Mika McFadden: For the loan.
• 40:33
  Mika McFadden: I guess how it two marks to the bank.
• 40:34
  Mika McFadden: This is a loan, paying the loan back or paying the premiums for the policy, so on paying the loans back on here, you don't have to pay those.
• 40:41
  Mika McFadden: Those can continue to accrue.
• 40:43
  Mark Zweig: So I could just sit there and not pay that month and then go back to paying after that if I wanted to.
• 40:48
  Mark Zweig: Okay.
• 40:49
  Mika McFadden: So let's do an example.
• 40:50
  Mika McFadden: Let's say that with your money that you've paid in over the years, you have a million dollar death benefit.
• 40:54
  Mika McFadden: Right, you've borrowed a hundred thousand out.
• 40:57
  Mika McFadden: Yeah, they know, if you pass your hundred thousands, coming off the million that would go to your beneficiary, you show another 900,000.
• 41:04
  Mika McFadden: That's there, right, I understand that.
• 41:05
  Mika McFadden: Yeah, well, that kind of answers aside.
• 41:07
  Mika McFadden: On the loan, the premium is important too, because we talk about flexibility of premiums in these cash value life insurance policies you have.
• 41:18
  Mika McFadden: Without getting too technical, you have a cap.
• 41:21
  Mika McFadden: There's really two limitations to life insurance Can you qualify medically and how much can you put in before it becomes a modified endowment contract or the whole thing becomes taxable?
• 41:30
  Mika McFadden: We try to get our clients right up to that, right, that's the smart yeah.
• 41:35
  Mika McFadden: Yeah, tax consequences and tax efficiency on here.
• 41:37
  Mika McFadden: Well, if we're paying $10,000 a year in annual premium for a million dollar death benefit, the premium for that million dollars may be $2,500, the $7,500 cash value.
• 41:49
  Mark Zweig: Yes, I understand that.
• 41:51
  Mika McFadden: As a business owner, we run into or we face challenges.
• 41:54
  Mika McFadden: We may not have the 10,000 one year in a down year.
• 41:57
  Mika McFadden: Well, as long as we pay that 2,500, we keep the policy in force.
• 42:00
  Mika McFadden: I see, okay, Any year moving forward, we haven't paid the full 10,000, we can make up that difference.
• 42:05
  Mika McFadden: So the next year we could put 17,500 into the policy.
• 42:09
  Mika McFadden: So you have a lot of flexibility with the premiums.
• 42:12
  Mark Zweig: Yeah, just like today I told you, I actually got two insurance bills.
• 42:16
  Mark Zweig: One of them is on a universal life policy and I thought that I put enough money in there when I got it that I wouldn't have to put anything in there.
• 42:28
  Mark Zweig: Okay, because I only got it last year.
• 42:31
  Mark Zweig: So I wrote a pretty big check.
• 42:34
  Mark Zweig: Initially, all right.
• 42:36
  Mark Zweig: So now I don't know, because I just bought another house.
• 42:40
  Mark Zweig: We haven't put our house in the market and we have to do a rehab on the new one and then we're gonna sell.
• 42:46
  Mark Zweig: So we're gonna be facing some big outflow right now and I thought to myself gee, do I have to pay all this right now?
• 42:54
  Mark Zweig: I don't know.
• 42:56
  Mark Zweig: I just sent a note to my insurance broker to find out the answer to that.
• 43:02
  Mika McFadden: I think an important aspect of that is goes back to.
• 43:05
  Mika McFadden: I mentioned earlier two key words properly structured cash value, life insurance.
• 43:11
  Mika McFadden: When I first started in the industry in 98, I sold a lot of variable universal life policies.
• 43:16
  Mika McFadden: That's what the company that I worked for.
• 43:18
  Mika McFadden: I remember those.
• 43:19
  Mika McFadden: Yeah sure, we were trained man.
• 43:21
  Mika McFadden: This is the best thing since sliced bread, michael.
• 43:23
  Mika McFadden: You go out here.
• 43:24
  Mika McFadden: Well, 2000, 2001, 2002 hits and all of this money that the excess over the turn cost was all in the market.
• 43:33
  Mika McFadden: Right and it evaporated sure I had a lot of angry clients.
• 43:37
  Mika McFadden: I did not like that.
• 43:38
  Mika McFadden: We do not set up any type of policies like this anymore because we don't have anything that is subject to risk.
• 43:44
  Mika McFadden: It's also important to understand and we do annual reviews with each one of our policies our policyholders, to make sure if they're having that off year or I've got this great year, where can I put this money, those types of things, to keep that line of communication open so they don't get into a situation like you are thinking well, I thought I was gonna be good and now all of a sudden I'm needing to dump all this extra money into this.
• 44:09
  Mika McFadden: Could something like that happen?
• 44:11
  Mika McFadden: Potentially, but most of the time, having these ongoing conversations, they know if that problem's going to take place six months, 12 months in advance.
• 44:20
  Mika McFadden: They can address it before it comes to a reactionary.
• 44:23
  Mark Zweig: I'm sure I probably did too, but I mean, I got so many things on my mind and this is just one.
• 44:28
  Mark Zweig: You know what I mean?
• 44:29
  Mark Zweig: It's just one thing of many, and so I think a lot of people don't really understand this insurance.
• 44:37
  Mark Zweig: There's no question in my mind.
• 44:39
  Mark Zweig: I bet it's rare you run into a client that actually understands all this truthful.
• 44:45
  Theresa Dilatush: Why it's so important, if they touch with the client, to constantly remind them here's what you have.
• 44:53
  Mark Zweig: Yeah, that would be helpful.
• 44:55
  Theresa Dilatush: Here's what.
• 44:55
  Theresa Dilatush: Well, let me go back to 2008 and nine.
• 44:57
  Theresa Dilatush: I could see that would be helpful.
• 44:59
  Theresa Dilatush: In 2008 and nine, all of my clients were taking policy loans and it was a couple of years before they kind of got back into the yeah.
• 45:11
  Theresa Dilatush: And I said it was almost like weekly policy reviews at them.
• 45:17
  Theresa Dilatush: But I just reminded them, like I said, you've got a base premium Right To pay to keep it in.
• 45:26
  Mark Zweig: Sure.
• 45:28
  Theresa Dilatush: Let's pay some policy loan interest, but let's not worry about the policy loans or funding the cash value rider right now.
• 45:35
  Theresa Dilatush: And every single one of them kept their policies.
• 45:38
  Theresa Dilatush: Nobody lost their business, nobody lost a house.
• 45:41
  Mark Zweig: So it all worked out, yeah.
• 45:44
  Theresa Dilatush: Yeah, we all went through that.
• 45:46
  Mark Zweig: So obviously there's lots of people that somebody can buy life insurance from and you guys say you don't even really sell it, you just direct them to other people.
• 45:56
  Mark Zweig: Or do you sell?
• 45:57
  Mark Zweig: Okay, so you do, but you're not married to any one client, company, insurance company, so you can basically sell whatever you want then Is that right?
• 46:07
  Theresa Dilatush: We just try and look at what the client needs, what their goals are, and you know.
• 46:14
  Theresa Dilatush: Then we look at our carriers and and just try and make the absolute best recommendation for them and we don't have any um, we don't care what the client wants to accomplish, we just want to help them get there.
• 46:29
  Theresa Dilatush: If you're 25 years old and you're just starting your business, we're going to put a term policy place for you.
• 46:35
  Theresa Dilatush: Let's go back to your example of the guy that's 40 years old, 10 million in annual revenue makes a million dollars.
• 46:43
  Theresa Dilatush: Well, you might need a lot more life insurance than you think If you've got 10 million in revenue and 50 employees let's see if we need to do a financed policy.
• 46:54
  Theresa Dilatush: You know banks will finance large policies.
• 46:57
  Mark Zweig: I found I hit the limit at one point.
• 46:59
  Mark Zweig: I think I had about six or seven million and I couldn't get any more Because they said well, you're worth more dead than you're alive.
• 47:06
  Mark Zweig: But my banks wanted it because I had about 19 or 20 million in debt out there.
• 47:11
  Mark Zweig: They wanted me to have everything I can get Um, so it was a problem.
• 47:17
  Theresa Dilatush: We do get calls from local banks from time to time, um, or clients that they've, you know, sent our direction, sure.
• 47:23
  Theresa Dilatush: So, um, yeah, I just, I love this school that you just can't have too much.
• 47:30
  Theresa Dilatush: If you have family, if you have charities that you love, that you want to bless on your way out the door, then yeah.
• 47:39
  Mika McFadden: I think it goes into an aspect as well.
• 47:42
  Mika McFadden: When talking to them about retirement planning from life insurance, so many business owners I feel like kind of neglect retirement.
• 47:52
  Mika McFadden: They're like, oh, I'm just going to sell the business one day and that's exactly right.
• 47:55
  Mark Zweig: That was always my thought process, absolutely Right.
• 47:59
  Mika McFadden: And that that can work.
• 48:00
  Mika McFadden: Sure, but then what happens?
• 48:03
  Mika McFadden: Or?
• 48:03
  Mika McFadden: Or we'd like to have our clients have a firm foundation, just like building a home or anything it's like what if that doesn't?
• 48:10
  Mark Zweig: work.
• 48:10
  Mark Zweig: What else?
• 48:10
  Mark Zweig: What's your backup?
• 48:12
  Mika McFadden: Right, exactly.
• 48:12
  Mika McFadden: And so this, this cash value, life insurance, can help fund their business, projects, equipment, whatever the growth that takes place, so forth.
• 48:20
  Mika McFadden: But then it also is that safety net there for them If something doesn't work out or the business fails, or you know, think about blockbuster, for example.
• 48:30
  Mika McFadden: Yeah, sure, I mean that started small and grew up and then all of a sudden Red box and then streaming.
• 48:36
  Mika McFadden: And I mean, yeah, who would have ever?
• 48:38
  Mika McFadden: I would have never thought of something like that.
• 48:40
  Mika McFadden: Yeah, just as an example so.
• 48:42
  Mark Zweig: The technology just totally wiped it out, basically.
• 48:44
  Mark Zweig: So what do you do if, if somebody wants to get a hold of you all, how would they do that?
• 48:53
  Theresa Dilatush: Uh then, go to our website, okay, newcoursefinancialcom.
• 48:57
  Mark Zweig: So how is that?
• 48:57
  Mark Zweig: N-e-w-c-o-u-r-s-e Financialcom?
• 49:04
  Mark Zweig: Okay, newcoursefinancialcom, all right.
• 49:10
  Mika McFadden: And mine is Micah, a little different M-I-K-A at NewCourse Financial for the email and Teresa's is with T-H-E-R-E-S-A At at.
• 49:20
  Mark Zweig: NewCourseFinancialcom.
• 49:21
  Mark Zweig: Newcoursefinancialcom.
• 49:23
  Mark Zweig: Newcourse Excuse me NewCourseFinancialcom.
• 49:27
  Mark Zweig: So how often do you talk to your clients?
• 49:31
  Mark Zweig: I mean, teresa, you said, like some of them, you talked to weekly during bad times.
• 49:35
  Mark Zweig: I mean, what would I expect if I because I can tell you when I bought this policy I got like, whatever it was a year ago or two years, I don't remember I'd never heard from the guy since I bought it, not one single thing.
• 49:49
  Theresa Dilatush: That's why our industry is such a bad reputation.
• 49:53
  Mark Zweig: Such.
• 49:54
  Mark Zweig: That's why I don't know whether I have to pay this or not, or anything at this point.
• 49:59
  Theresa Dilatush: It doesn't have to be an annual policy review.
• 50:01
  Theresa Dilatush: I mean, if you have a term policy, it's gonna you're not gonna have a long conversation, right, but when it comes time to convert, that that's gonna be a good conversation.
• 50:13
  Theresa Dilatush: But if you already have cash value in place, you should be talking to that client twice a year.
• 50:19
  Mark Zweig: I did, and you know I never heard from anybody on my term policies either.
• 50:22
  Mark Zweig: I just get a notice in the mail that, by the way, it's gone from 800 a year to 9,000 plus or whatever.
• 50:29
  Mark Zweig: They just send me no communication whatsoever.
• 50:33
  Mark Zweig: I think so Is that typical.
• 50:35
  Mika McFadden: Well, I think it's common.
• 50:37
  Mika McFadden: I think so many life insurance agents, if we want to kind of call it that it's a transactional event that takes place, right, our big difference, I feel like, is we really try to make it more of a relational event that takes place because the young individual, like we've talked about, there needs change over time.
• 50:57
  Mika McFadden: We want to have those conversations.
• 50:58
  Mika McFadden: You got married, you have a child now, right, have you know?
• 51:01
  Mika McFadden: Your business is growing.
• 51:02
  Mika McFadden: All of this we need to.
• 51:03
  Mika McFadden: You've brought on a business partner.
• 51:05
  Mika McFadden: He-man Paul is the structure.
• 51:07
  Mika McFadden: I mean all these different types of things.
• 51:08
  Mika McFadden: So even on the term side we have a lot more.
• 51:11
  Mika McFadden: I feel like contact with our clients, on our clients that have an understand kind of like the engineer.
• 51:18
  Mika McFadden: He is referring business left and right because he gets it.
• 51:23
  Mika McFadden: He is asking when can I do my next policy?
• 51:25
  Mika McFadden: Well, it's demonstrated.
• 51:27
  Mark Zweig: It works for him.
• 51:28
  Mark Zweig: He's sold, he's now, he's out there, you know, as an evangelist for you.
• 51:34
  Mika McFadden: He is and he wants to help his friends, family members and all those other things, and so that's that ongoing and growing relationship that I feel like takes place with our clients, versus that transactional event.
• 51:46
  Mika McFadden: I always have kidded people for years when I did, you know, retirement planning and employee benefits and enrollment services, and all of this.
• 51:53
  Mika McFadden: When I walked in and met with a small business owner, I said can we, can we put the shield down for a minute, because I know that insurance agents are viewed as attorneys, use car salesmen and the scum on the bottom of the pond, and I said just give me a chance.
• 52:07
  Mika McFadden: I don't know if it's that bad, but it is sometimes, and so I always just tried to say you know, give me a chance to explain what we do differently, if that makes sense, and then you make an educated decision if this makes sense for you on theirs.
• 52:23
  Theresa Dilatush: I have clients husband and wife and they have been with me since 2007.
• 52:30
  Theresa Dilatush: He passed away two years ago last week, and he had a very large life insurance policy that they bought multiple cars with and built their home from the cash values of that policy and it was such a bittersweet day to Deliver that check.
• 52:55
  Theresa Dilatush: But just knowing that she got a huge check and I've never been there hugged so hard in my life and I cried like a baby sugar.
• 53:07
  Theresa Dilatush: her husband was such a good man All right but what I, what I was able to deliver, you know, when no one expected it.
• 53:16
  Theresa Dilatush: It was very sad sure.
• 53:17
  Theresa Dilatush: And there's three grown children bear hugged me and thank you in that noise.
• 53:23
  Theresa Dilatush: And so you know I I love dealing with the young folks, just trying to teach them, but I also know, with the hard part at the end, sometime is coming.
• 53:33
  Theresa Dilatush: It's why I have a younger business partner, because someday I'm gonna walk away.
• 53:38
  Mark Zweig: I get it.
• 53:38
  Mark Zweig: No, I get it.
• 53:39
  Mark Zweig: I've.
• 53:40
  Mark Zweig: I made that transition myself, so I understand.
• 53:43
  Mark Zweig: Yeah, I think you know, as a, as a business owner, my strategy always was to find people I trusted and just deal with them forever.
• 53:53
  Mark Zweig: Okay, I did that with accountants.
• 53:55
  Mark Zweig: I did it with different lawyers for different purposes.
• 53:58
  Mark Zweig: I did it with my matter of health insurance Provider.
• 54:02
  Mark Zweig: I don't want to have to switch horses all the time.
• 54:05
  Mark Zweig: I would rather have that long-term relationship of trust and mutual respect, and then there's no use car salesman thing going on.
• 54:17
  Mark Zweig: One last question for y'all do you look at the, at the payment practices of the insurance companies that you deal with?
• 54:31
  Mark Zweig: I always think about that.
• 54:32
  Mark Zweig: That John Grisham book, you know, I think it was the client where there was great benefit life.
• 54:40
  Mark Zweig: Yeah, that just decided not to pay anybody for a year or two.
• 54:44
  Mark Zweig: We just don't pay any claims.
• 54:45
  Mark Zweig: And Do you look at that with these insurance companies that you guys put people into, like how Good they are about paying the benefits if needed?
• 54:56
  Theresa Dilatush: There's writing.
• 54:58
  Mark Zweig: Okay, are those good or they generally?
• 55:02
  Theresa Dilatush: yeah, they're there's a lot on, but you have to work at things like how long have they been in business?
• 55:11
  Theresa Dilatush: All of the companies we deal with most of them are mutual companies.
• 55:15
  Theresa Dilatush: They've been in business for well over.
• 55:18
  Mark Zweig: Yeah, versus the fly-by-night that cooked up in North Carolina three years ago or whatever.
• 55:24
  Theresa Dilatush: But here's something that Mike and I paid close attention to.
• 55:27
  Theresa Dilatush: A lot of people aren't aware of.
• 55:28
  Theresa Dilatush: We're banks put their money.
• 55:30
  Theresa Dilatush: They're using your money, but where are the banks putting theirs?
• 55:35
  Theresa Dilatush: Well, there's a term in the internal revenue called bullied bank old life insurance in the billions banks.
• 55:46
  Mark Zweig: Okay, so you can look at the companies they put their money into and figure that's pretty safe.
• 55:51
  Mark Zweig: Then Exactly, yeah, that makes sense.
• 55:53
  Mika McFadden: I would also say, to tie in with that, we worked with companies that go above and beyond what they have to.
• 55:59
  Mika McFadden: What I mean by that is in in this life insurance industry, most companies are required to have a dollar and five cents on reserve for every dollar that they would have to share out.
• 56:08
  Mika McFadden: Most of the carriers we work with, especially a couple of the bigger ones that we really like and feel that are safe, have five and $7 on reserve for every dollar they would have to pay out.
• 56:19
  Mika McFadden: I'm not worried about them going under.
• 56:21
  Mark Zweig: Yeah, no, that makes that makes a lot of sense.
• 56:23
  Mark Zweig: So well, that's good to know that you do think about that, because I see these ads for like auto insurance.
• 56:30
  Mark Zweig: It's like I saved 812 dollars, by God, but who knows if the company is any good.
• 56:36
  Mark Zweig: So if they fight every single claim, you didn't save anything.
• 56:42
  Mark Zweig: You know what I mean?
• 56:42
  Mark Zweig: It's not just a matter of the premium that people pay.
• 56:47
  Mark Zweig: It's the quality of the what's behind it, if they're actually gonna pay off.
• 56:53
  Theresa Dilatush: Yeah, I.
• 56:54
  Theresa Dilatush: I've had a great run with carriers.
• 56:58
  Theresa Dilatush: I've not had Any claim.
• 57:02
  Theresa Dilatush: I haven't had a lot of claims, but not one of my clients claims have ever been denied Life insurance carriers or they function a bit differently than health insurance carriers and you're with life insurance carriers.
• 57:15
  Theresa Dilatush: You're dealing with the old, conservatively run, you know.
• 57:20
  Mika McFadden: Well, actually.
• 57:23
  Mark Zweig: The only reason I say this?
• 57:25
  Mark Zweig: Because my sister's husband died 1985.
• 57:29
  Mark Zweig: He was a manager of a Merrill Lynch office.
• 57:31
  Mark Zweig: Okay, falls over dead at the age of 40 from a heart attack and so it leaves her with two little kids.
• 57:38
  Mark Zweig: They were like seven and nine.
• 57:39
  Mark Zweig: He had a life insurance policy that was less than two years old.
• 57:44
  Mark Zweig: That was his biggest term policy.
• 57:46
  Mark Zweig: That was not paid and the reason was when they did an inventory of his car there was a cassette tape in the tape player from Alcoholics Anonymous.
• 57:59
  Mark Zweig: Now he, he wasn't a drinker.
• 58:03
  Mark Zweig: Okay, he'd never gone anywhere for treatment.
• 58:07
  Mark Zweig: But they said you lied on your application that you have sought treatment.
• 58:12
  Mark Zweig: They considered the cassette tape treatment for alcohol Addiction and she was denied.
• 58:20
  Mark Zweig: Now Maybe she could.
• 58:21
  Mark Zweig: She could have gotten a good lawyer, fought that, I don't know, but I'll never forget that.
• 58:26
  Mark Zweig: It really stuck in my head.
• 58:28
  Mark Zweig: They were looking for a reason not to pay that claim, to go to that level.
• 58:35
  Mika McFadden: So, and there I will say, there are carriers out there that you have to be aware of.
• 58:39
  Mika McFadden: Yeah, we've got a client right now in South Arkansas.
• 58:43
  Mika McFadden: That was you know, and this was an annuity, but at the same time, is still an insurance product.
• 58:48
  Mika McFadden: Yeah sold eight years ago and that company has changed and been bought out by three different companies.
• 58:54
  Mika McFadden: That is a red flag and that's a train about to go off a cliff, in my opinion.
• 58:58
  Mark Zweig: What can you do with it?
• 58:59
  Mark Zweig: Can you pull money out of there and put it in something?
• 59:02
  Mark Zweig: We're moving to a more secure company.
• 59:03
  Mark Zweig: Yeah, yeah, I do think that's something a lot of people don't think about.
• 59:08
  Mark Zweig: They just look at the premium.
• 59:09
  Mark Zweig: It's just like, oh, it's cheaper, it's all the same thing.
• 59:12
  Mark Zweig: Now, it's not.
• 59:13
  Mark Zweig: Sometimes you get what you pay.
• 59:14
  Mark Zweig: Yeah, all right guys.
• 59:17
  Mark Zweig: Well, listen, it's really been fun talking with you and I hope our listeners have learned something today about insurance and how they can use this tool.
• 59:26
  Mark Zweig: And once again, new course, financial comm is the place to find out more information and for everybody else, we welcome your questions and comments at big talk about small business calm, as well as any suggestions for future guests.
• 59:50
  Mark Zweig: We're always open to that.
• 59:51
  Mark Zweig: We don't take everybody.
• 59:52
  Mark Zweig: We need to make sure that you've got something to offer our listeners, but we'd love to hear from you.
• 59:58
  Mark Zweig: So, thanks again, and this has been another episode of big talk about small business.
• 1:00:04
  Mark Zweig: I'm Mark Swig and I'll see you next week.
• 1:00:07
  Mark Zweig: You, you.