One week earlier…..
“Hello, John how is your day going?” I initially said when I called.
“Just fine, thanks,” John responded. “I know why you are calling; it has been a few years since we have been able to get together and we need to speak with you because we have been having some big changes in our family. Jane and I have been meaning to get in touch with you each time we get your email or card in the mail.”
“I never want to be a pest, but I am confident the financial strategies we put in place will make a huge, positive impact on your life.”
“That’s definitely true already. I can’t tell you what a difference the things you’ve taught us have made in our life, and in our thinking. Now that we are on the telephone again, it pains me to think it has been so long. Could we set up a time to meet with you? Maybe next Tuesday at 11:00?” John asked. “Jane and I could both take an early lunch.”
“That will work just fine. I have it written down. See you on Tuesday,” I said.
“Jane and John, so nice to see you again. I understand a lot has happened in your lives since we last met, please update me,” I said.
“The most wonderful thing that has happened is we have had two children, sons. Their names are Todd and Jason. Todd is the oldest; he will soon be two. Jason is 10 months old,” Jane proudly announced.
“Pictures?” I asked.
“Oh here let me pull them up on my phone,” Jane said.
John started, “I have been wanting to talk with you about our boys. One of the best things Jane’s parents did for her was to purchase that $100 a month policy. I want to do something that awesome for our boys”
“I think that is a fabulous idea. In fact, I was going to bring it up with you, but you have once again beat me to the punch.” I complimented John. “Are you thinking of doing the same amount as Jane’s parents did for her 33 years ago?”
“I keep going back and forth. At one time I think, sure that is a great place to start. But then I go to the grocery store and realize things are a lot more expensive today. So I am thinking we should do a policy on each of the boys for $200 a month.” John said.
“Here is a picture of the two of them together,” Jane beamed. “I am in favor of the $200 a month for each of them. Since they were born, all I’ve been able to think about is providing the best possible future for them. Purchasing a policy is the best thing we can do. The second best thing will be to educate them on the value of their policies,” Jane said.
“I like the way you are thinking,” I said. “But, before we go further with the policies on the children, do you have any other questions?” I asked.
“Yes, I do. First of all, I’m wondering if you could help me see the ‘big picture’ view of our policies. I also wanted to discuss with you some additional income we have coming in. We’ve both had raises since our last meeting. We’re each taking home about $7,500 more than we were when we set up our original policies. That’s in addition to the $4,800 we’re setting aside for the children’s’ policies.” John explained.
“Great questions. Will you write those down on this piece of paper so we will be sure to cover them?” I slid some paper across my desk to him. “Let’s start with your salaries. You are fortunate to be getting raises and progressing in your careers. What are you thinking would be the best use of the additional- might I say ‘discretionary’- income?”
Looking a Jane, John said, “We have talked this over several times. We can’t think of a better place to put this money than inside our insurance policies. Can we do that?”
“When you purchased your other policies, we designed them right at the MEC limit. As you might remember, that meant you had some wiggle room to decrease your premiums, but very little room to increase your premiums.” I explained.
“Yes, I remember, now that you say that. You said that the MEC limit was not anything to be afraid of, it was simply a trigger to know when we should start another policy. I guess since we have this additional money, and our current policies will not hold that amount of money, we should just do applications for new policies on each of us,” John said.
“John, how would you like to come to work for us in this office?” I smiled at him. “You have a great memory and are right on target with what you said.”
I turned to my Life Insurance Summary calculator and input the numbers displayed on my screen. Now for your question regarding the “big picture,” John. Here’s a calculator that will let us see a summary of all your policies going forward,” I said pointing to my screen.
“So that is how much premium we will be paying including these 4 new policies we’re talking about?” John asked.
“Yes, it is,” I answered. “How much cash value will you have when you turn 40?” I asked him
“That is a lot of money,” Jane exclaimed. “Never in my wildest dreams have I imagined us having that much money. Don’t you think we should do something with it?” Jane asked.
“Go into those ‘wildest dreams’ you just referred to and tell me something you would like to do,” I said to Jane.
“When I was a kid I got to go to Disneyland only once. I want to take the kids to Disneyland.” Looking at John she asked, “Could we do that?”
“Jane, one of the best lessons we have learned here is that we finance everything we buy. How do you propose we finance a trip to Disneyland?” John said.
“As part of our budget, we set aside ‘fun’ money. If we looked at that amount each month as a repayment of a loan against our policies, I am sure we could come up with a budget for the trip.” Jane answered.
I was enjoying the conversation between these two. As I listened, I thought back to our first meeting – they were over $20,000 in credit card debt. I remembered how they wanted to get rid of the policy Jane’s parents had purchased for her. Then the thought occurred to me, how could a 25-year-old couple $20,115 in credit card debt, have over 3 million in assets by the age of 65?
“I do not want to get in the middle of your domestic decision process,” I chuckled. “But when you two first met me, you were $20,115 in credit card debt. In your wildest dreams, would you have ever thought that working with me would allow you to have over $3,000,000 in assets by the time you turned 65?”
“Not a chance,” John answered. “I am not sure that’s even possible now following what you have taught us.”
“Take a look at the projections of your combined policies when you reach 70 years old,” I said pointing the screen.
“Is that for real?” Jane said.
“I can’t believe it,” John said.
“That is the real amount you’re expected to have when you turn 65,” I responded. “Now a word of caution: You are starting to accumulate some cash value. When someone has cash, opportunities seek them out. I mean there is always something that comes up that seems like a good deal. Often though, the deal is not as good as it seems, and might derail this wonderful thing you have going.”
“We are not going to make a major financial decision without talking to you first,” John said emphatically.
“I agree. You have become part of the family. I trust your judgment as much as my own parents,” Jane added.
“OK. I just want to be your coach. Every decision you make should be yours. My intent is to equip you with the right kind of information and education that will allow you to make good decisions.” I said.
“You mean to show us the whole truth about money,” John added.
-Jason Henderson for Truth Concepts