The Halo of Life Insurance

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Welcome to Finishing Well. Today's show I'm very excited about. It's got a very intriguing title to it. It's called the halo, you know, like I think it was Bianca had a wonderful song, be my halo, halo. Anyway, the halo of life insurance. We're here with our certified financial planner, Hans Scheil, and you know, God is all about life insurance. I don't know if you ever have put this together, but I mean, you know, the death benefit of a relationship with God is absolutely beyond this.

You know, we've talked about that before, but I don't know if you've thought about it. There's certain things that God just seems to protect, like widows and orphans, and you can just see his kind of, you know, his signature there and the way that he's protected certain things, and we want to talk about that today, but in Amos 9 14, he's kind of given us a hint of what this would be like if you could, you know, become a member of his family. He says, I'm going to restore the fortunes of my people, Israel, and they shall rebuild the ruined cities and inhabit them.

They shall plant vineyards and drink their wine, and they shall make gardens and eat their fruit. In other words, when you fall under this halo, buddy, you know, it's going to be good, and as we put together the prep work on the show, Hans, it's clear that God's hands all over the beneficiary of a life insurance policy. Absolutely, and I, you know, as I was telling you earlier, we've kind of thrown this information together for the show, really this morning and yesterday afternoon, and a lot of that is our guest could not appear with us this morning. We had a scheduled guest person in, and he couldn't come in, and who he is is the president of a fairly large life insurance distributor who I met and listened to speak to, and he was the CEO of the company at the time, and a young man, and very much a man of faith with God, and just how he led the whole session of a bunch of insurance agents away on a convention who were not necessarily doing godly things, just how he appropriately and thoroughly and reverently, you know, thanked God and honored God through the whole session, and I just said, man, Unapologetically, you know, and it makes me want to, I'm looking forward to when we actually do interview him, but, you know, Hans was telling me that as he was sitting in this conference, he was just saying, you know, this is the way this is done, guys, we pray, and this is how we honor the Lord with what we do, and it wasn't even saying that, he was just doing it. And he was just, from his sheer leadership and God's leadership, it was just, I mean, I was there as a student, because I'm just saying, that's what I'm attempting to do, and I'm attempting to do it in a shameless way, but if I said that I wasn't concerned about some people from my past, like laughing at me when they're here in the show, or, I mean, I just, I don't let that stuff run my life, but it's kind of there, and it's gotten much better as I mix the two of these subjects together, which is life insurance, investments, financial planning, handling your money, and following the word of the Lord, and just walking the walk and the talk, I just watched this guy do it, and so I was really ready to just open-end him, and just ask him one question for the interview, and not give him a lot of time to prepare, is, what do you see as God's role in this whole life insurance business that we're both in, and you're a leader in, I mean, I just wanted to hear him talk, because I'm sure, and we will get the opportunity to do that, but then when I found out he wasn't coming, and then you and I need to throw together the show, I started thinking about, okay, so what would he say, and what, you know, how do I answer that question? And I prayed a lot about this, and, you know, we really ended up, life insurance to me, and I sense to God, is all about the beneficiary, and we spend very little time in the life insurance business really focused on beneficiaries, you know, and we're talking about people like me that sell the stuff, and people like me that are the trainers of the trainers of the people that sell the stuff. We spend all this time talking about the death benefit, and how we calculate it, and replacing income, and the tax benefits, and the pricing of it, and the underwriting, and how we charge for people that are sick, and are extra healthy, and then, I mean, it's just endless amounts of things that are all important, and they're all focused on leading the person to buy these policies. We spend, like, almost no time talking about beneficiaries, and the beneficiary is the whole reason it exists in the first place.

I mean, if you think about it, what else is there? Now, sure, there's cash value, and we can use these for some tax advantages, and get long-term care insurance, and do all that kind of stuff, but when it's all said and done, a life insurance is a way to create an estate with the stroke of a pen, and all you got to have is the first month's premium, and you got to pay that, or the first year's premium, or whatever, and that generally, relative to the amount of life insurance, is a small amount, and you're off to the races. We talk about this, for some reason I go back to the movie, I Can Only Imagine, right? And, you know, the hero of that movie who wrote the song, I Can Only Imagine, you know, his father was, you know, struggled with anger, and his son was a reflection of that to some extent, but as they worked through their relationship at the end, right before his father died, he wanted him to have an estate, and of course, he hadn't made much money, but he did do, with the stroke of a pen, and the first whatever, he bought a life insurance policy that ended up paying for, you know, the group Mercy Me, I believe the man's name's part, that began. It gave him the money to be able to form that group and live for a period of time without the income in order to create that, so when you hear the song, I Can Only Imagine, that was made possible by the estate of his father, who, you know, wasn't particularly, you know, happy with the way he raised his son, but this was, it was really a cool scene in the movie to see, you know, him give his son that life insurance, you know, policy, and how that paid off, you know, to the benefit of all of us, because a father wanted his son to have an estate. Now we're talking about the beneficiary, so that's, you know, that's where I was taken, and I started to think about things, like, and I started to think in my own work, I had many years where I ran a very large insurance agency that I built, where we had over 100 agents, and we had, like, when I left that role, almost 30,000 customers, so you can imagine, a lot of those were life insurance policies, so I had many customers that passed away during my time, and this was from 1992 to 2003 or 4, and so whenever somebody would pass that was one of our clients, the company would call us, and they'd want to speak to the branch manager, who was me, and they would ask us if we wanted to deliver the check, and in some cases, they'd require us to deliver the check. Many times they'd ask us, and so, so anyhow, I delivered most of my checks, and it would just hit me when I'd do it.

First of all, people were very thankful, I mean, they just, and many people start crying, and they just couldn't believe that their father, mother, sister, brother, somebody that had passed, just thought enough of them to leave them something, and then, so that's one thing that I'm going to note, is the gratitude was just really, really cool, and then most of them were, like, afraid to touch it. I mean, it was like, you know, can I cash that, or should I cash that? You know, I was told not to cash anything, you know, and of course, the reason they were told that is they've been down to the lawyer, because they've got to open up an estate, and I really want to bring up one of the biggest advantages of passing money through life insurance, and through a beneficiary designation, is it totally bypasses the probate process, and we got that down as number one on our list that forms this halo, is the beneficiaries, if you buy a life insurance policy and name a beneficiary or beneficiaries, you're going to be bypassing the probate court, the lawyers, the county, the state, they have no say in this. They don't even get a letter notifying them.

Yeah, let me just, you know, for those who haven't experienced this, I have firsthand that, that, you know, you're going to go down to the county, and you're going to speak to the officer there, and she's going to tell you, you need to run an ad in the newspaper to see if there's any creditors. It's got to run for 60 days, right, to make sure that somebody doesn't come up and say they've got claimed with this money. The Social Security is going to latch on to their checking account so that they can get whatever they've got coming.

The state is going to assess all the other accounts to see what their portion of the taxes are going to be, and there's great big long forms, and there's all sorts of things that will take place in very short order. However, before any of that stuff happened, my father's life insurance policy, you know, had been dealt with, paid, you know, and all that stuff way before we ever got to this. It's, it's, yeah, I mean, this stuff, money's going to come to your beneficiary, let's just say two to four weeks. I mean, the insurance companies and the law is given much longer than that. But the reason it's so quick just is providing you file the claim form, and you, which is really nothing more than sending the death certificate in and answering a few questions. If the policy is over two years old, I mean, in other words, you're, if you're the beneficiary, and your father bought this policy more than two years ago, which most of the time is the case, there's not that many policies paying off in their first two years. But if it's over two years old, it's what's called incontestable. And the insurance company can't contest it unless there was some kind of fraud involved or something. And so what I just know, for a matter of practical experience, when they get claims in, they look, see how old the policy, if it's over 24 months, it just goes over for processing. It's yours. We got this whole halo, there's five people that normally would have their hand out that you're going to sit there and go, really?

There's something in the world where these people don't have any say? Well, it just so happens that there really is a halo when it when it comes to life insurance. And of course, you can find out more about that in Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement, that you know, the seven worries tab that's there at the website, one of those is life insurance. So we're talking about today, of course, Hans would love to get an email from you. And of course, we've got all kinds of programs on this subject, as well as podcasts are available. So you just tell Siri, I want to listen to the Finishing Well podcast, we got to go to a break.

But when we come back, we have more stories. And we're going to go down these five people that normally would have their hand out for any money that you might receive and miraculously, it's really God's provision. There's a halo around life insurance. Contact Hans to schedule a live recording of Finishing Well at your church, Sunday school, Christian or civic group. Contact Hans at CardinalGuide.com. That's CardinalGuide.com. Welcome back to Finishing Well with certified financial planner, Hans Scheil. This is, of course, always brought to you by CardinalGuide.com.

Don't forget the guide after Cardinal when you go looking it up. But anyway, today's show is the halo of life insurance. And as promised, we got five, you know, there might be more Hans, but these were ones that came to mind fairly quickly of people that normally have their hand out and any money that you received in any way, shape or form, but they can't touch this stuff.

Well, no. And so we already covered the whole thing down at the county, which is the county courthouse, the magistrate, the probate court. And they'll have a separate court for the proi court. And you know, as you told me, and I've heard from a lot of people, there's a lady down there, or a man that kind of directs you. They have forms, inventories, and pages of paperwork, which isn't all that big a deal.

I mean, I think the average person could walk through it. I certainly did, even though my father's estate was fairly complicated. But one thing that was not on any line anywhere was any life insurance settlement. It wasn't there. These people are just out of the picture. They don't get notified. They don't get a memo that says we just paid Robby Dilmore $10,000 from Robby Dilmore senior nothing, right?

I mean, it just, you know, we can just cross them off, okay? Creditors, same ballgame is as if you owed somebody some money. And in other words, my dad owed somebody some money. This was distributed long before the notice went out in the newspaper. But even if they got it later, or it wasn't distributed, these creditors have no claim against this life insurance. It's a protection for widows and orphans that's just built into the whole system. So even if they did find out who you were, and you were getting there, which they won't, because this stuff is very private.

If they did find out, they still have no claim. Even if this is just money you're paying to your wife. Like on my insurance, if I died, Rhonda is going to get several million dollars in a check, and she's going to have the option to do whatever she wants with that. That's her money.

And you know, it may have had something to do with me, I'm dead. Any money that anybody that I owe money to, that she can choose to pay them or not pay them, where she's not on there, because we have a number of things like our mortgage that would be joint. My whole point is, is this money goes free and clear to her.

And it's not mine anymore. And it's not subject to, we can just cross creditors off. Well, there's one little caveat with the creditors, because, you know, you take certain people like me, who still have the Department of Revenue, not the Department of Revenue, I guess it's the Justice Department through the Small Business Administration that I still owe money to, right? That if my father's life insurance, you know, was deposited in my account, you know, could possibly, you know, at that point, it was protected up to the point it got into my account, but now it's there.

And now they could possibly, so there's protections there, too, that are available that we need to talk about. Because this money, as long as it's still at the life insurance company, in this case, because now we're talking about your creditors, not your father's creditors, okay? It's protected forever from your father's creditors, life insurance money paid to a beneficiary. But now we're talking about your creditors after you receive the money. The way we could protect that is by leaving the money at the insurance company, and then doling it out to you in small amounts. Or there's all kinds of settlement options, and as long as it's still there, which we would have the option to do. So there's even an answer for that.

Right. So if you have those situations, and you are in receipt of a life insurance, and there's a way to manage that, so the creditors just can't immediately loom onto it, you know, you can manage that through, you know. Well, I mean, if you're the parent in this situation, and you're leaving money to your son, this may be a real concern. If you have a son and a daughter, son has some kind of credit history, past, or whatever, he owes people money, and you're just afraid that if you give him any inheritance or you give him any money right now, it's just going to be globbed up by the creditors. The answer to that is you would just select for him as the beneficiary a settlement option for his part of the money. So then you put it in where he's not even going to receive it. It has to stay at the insurance company, and he's just going to get $1,000 a month until the money runs out or something like that. So he'll just have an income, and there's almost nothing for them to attach.

And they're really not going to get notified until there's a large sum of money in his bank account. I mean, there's all kinds of protections written in the law, again, for widows and orphans, and that gets extended to anybody that's the beneficiary of a life insurance policy or an annuity or an IRA, that type of thing. So now we can cross off creditors.

We can cross off creditors. Then we talk about the IRS. So the IRS, if they have past stuff that's against your dad, theoretically they could still come after you for that or the life insurance company, I guess, because the IRS can do about anything that they want. But that would be assuming that your dad had IRS debts, which he didn't, and most people don't, especially in advanced old age because they normally have dealt with this.

But if that was the case, they're not going to find out about this until you deposit this money in your checking account, and now it's in your checking account under your social security number, not your dad's. And there's no legal obligation for you to disclose this. So I mean, this doesn't get reported to the IRS. And so that's really where I've got them on the list, is that life insurance proceeds come tax-free to the beneficiaries. Then the insurance company themselves, I already talked about this a little bit, the incontestability, is the laws are set up. You don't want to be the insurance company, the life insurance company that's slow in paying widows and orphans and beneficiaries.

You just, I mean, I'm just going to make that statement. I've been in the life insurance business and been in leadership 44 years. Life insurance companies, they follow a rigid set of rules, and in them is that two-year incontestability. And they're just basically, it's against the law for them to sit on your money. And so they're going to want to get this out to you quickly.

And then the fifth one that we have on here is, this goes back to, I had a number of people come to me and say, you know, am I supposed to split this with my brother? You know, these are the people that don't want to cash the check. Or, you know, they got a check sitting there and it's for $200,000. They've never said, you know, I'm not going to do this.

I'm not going to do this. $200,000. They've never seen a check that size. And it's made out to them.

There's no conditions. There's no contract to sign with it. They maybe can sign a receipt from me that says that I handed it to them. They can go deposit at the bank. The bank might have a few questions for them and they might delay crediting the money.

Maybe they'll call the insurance company. But my point is, is you always hear about the, you know, the ex-wife or the estranged wife or the, you know, maybe a lot of you are going to say, well, my parents, we don't have those in our family. Okay. But then you could have the stepbrother or you could have the, just, but a lot of times there's, there's a sibling. There's just relatives.

There's an aunt that, you know, and I've seen this time and again with probate and stuff where this long missing relatives decides that they're going to, you know, get into an argument with this and the next thing, the whole family's in uproar because it can't be settled until they get everybody's agreement. And well, when it speaks to life insurance and beneficiaries, I mean, I slide the check over to him and I say, no, whose name is that right there on this check? You know, and it says Robbie Delmar.

Okay. You see anybody else's name there? I mean, your mother left you this life insurance and she left it to you, not you and somebody else. Now, if she had named these other people, um, then they would be getting their own check and yours would be for less, but no, this is, this is yours. And there's just nobody that can challenge this because your mother made her wishes clear in writing by their absence. This is not like a will. Again, remember there are number one, we already crossed them off. There's just, this stuff is so protected. Yeah.

And also, but it is, I'm sitting there processing what you're saying. You want to be really, really clear on your beneficiaries. If you want them to split stuff and do whatever you need to name them appropriately, because this is what's going to be described to them as, well, you see that name on that check and that's it.

Well, yeah. I mean, I've had situations where we have an irresponsible brother or irresponsible son and a very responsible daughter and mom's afraid to leave any money to the son because all of these people she's afraid of and you know, so maybe this show might make her a little less afraid of them, but it's still, her concerns are genuine. There's her son may squander that money. So she may choose with a life insurance policy to leave her daughter as the only beneficiary, but yet she may tell her daughter is once you receive this, I want you to dole it out slowly to your brother, Joe, or keep half of it just kind of squirreled away and then you dole it.

I mean, you can do whatever you want, but you better be clear about this stuff to everybody that's involved and you better have trust that she's going to do that or not add her own strings. And this would call for a trust if you really had a large amount of money. You really had a large amount of money and we could even, or you were leaving a large amount of money through life insurance. So this has got a really nice wall of protection. I don't want people to just blanketly say, man, I listened to the show. I got nothing to worry about, but there's caveats to all this, but just generally I'm impressed with this list.

When I sit here, I made it and I just look at it and this is awesome. And I will tell you from personal experience of dealing with older people and many of them in their 70s and 80s just now really starting to do some estate planning. We do a lot of work for people in advanced ages. One of their biggest concerns is they really don't believe that the right people are going to get the money and they're going to do the right things with it. I mean, so they have a fear of that. So consequently they do no estate planning or very little and that's going to do nothing but make it worse. And if you want to bypass all of this and you've got a certain amount of money that you really don't need to spend while you're alive, but you still want to keep control of it and you want to leave it to a specific beneficiary or a group of people in amounts that's single premium whole life insurance.

I mean, you could come into me at 78. We could take $100,000, put it in a single premium whole life insurance policy. It might only have a death benefit of $115,000. So it's not going to be that much more than you put in there.

But you're really not doing it for the growth. You're doing it because you're going to take advantage of the protection of all this as we can sit down with the stroke of a pen and we can write down who's going to get the money, how much they're going to get. Right. And just like you say then, clearly the IRS doesn't get their chunk, the estate taxes don't get their chunk, the lawyers, et cetera, et cetera. It bypasses all these, again, to go straight to the beneficiary, which is the idea of the whole thing, like we talked about at the beginning of the show. The beneficiary is the key to the life insurance is the state that God wants to protect.

It does. This is awesome. Again, we can find out more about this at cardinalguide.com.

Their seven worries tab include life insurance is what today's show is about, the halo of life insurance. We would urge you to get more podcasts, download the information, because the idea here is we all want to finish well, you know, where we can hear God say, you know, well done, good and faithful servant. So thank you for listening. Thank you, Han. Once again, for dozens of free resources, past shows or to get Han's book, go to cardinalguide.com. If you have a question, comment or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's cardinalguide.com, cardinalguide.com.