Quick Entrepreneur Tricks to Decide on Life Insurance!

Should I buy life insurance as an entrepreneur? Hi, I'm Evan Carmichael. I believe that hungry entrepreneurs deserve help, and this is a question I get asked a lot, especially recently for some reason. Should I buy life insurance as an entrepreneur? What do you think, Evan? So here's what I think. I am generally not a huge fan of insurance. The reason is I feel like I'm getting ripped off, and I hate getting ripped off. Insurance companies are huge companies making tons of money and they know the odds of things happening, good or bad. They know what the chances are of something bad happening to you and they make money from it. They make money because we're afraid that this bad thing is going to happen to us. Now, when things are outside my control, I'm happy to spend a little bit of money. So an example is house insurance. Okay? If my house gets flooded, that is outside my control. I don't feel like I'm better than average here. I'm at the same risk as everybody else. And so I'll pay a little bit of a premium just for that security. And my house recently did get flooded. My basement is ruined. It's going to cost $50,000 to repair, and I don't have to pay a cent of that because I had house insurance with flood insurance on top of it. Okay, so when things are outside my control, I'm happy to pay a little bit of a premium. I know I'm getting ripped off a little bit, but I'll pay for the security. But when things are within my control, I feel like I'm getting ripped off even more. So the example is on the health side, on the life insurance side, on the dental side. I'm way healthier than the average person my age. I use a stand-up desk. I'm out dancing, doing fitness classes 20 to 25 hours a week. I'm way healthier than the average person. That's not to brag. I'm just trying to share where I'm coming from when I make my decisions. So hopefully you can make a better decision yourself. I'm getting ripped off by paying those premiums because I'm getting I'm paying according to the average person, and I'm not the average person. They do ask if you're a smoker, and I'm not a smoker, so that reduces their premiums a little bit, but everything else basically is not in my favor. So I'm getting ripped off more on this side, and I hate getting ripped off. I used to have health benefits at the office for the people who are on my team here, and it was, it was health benefits, dental benefits, And I was spending $100 a month, $1,200 a year, and I sat down after the first year and I said, "Hey guys, what's going on?" And we figured out that nobody was using it. I was burning through $1,200 a month per person every year and nobody was using it. And it pissed me off because I don't like spending money that's being wasted, right? And you shouldn't either as an entrepreneur. You gotta control your costs. You should get upset when people are wasting your money and wasting your time. So I sat everybody down at the end of the year and said, hey guys, we gotta figure out something to make this work better. And I gave them two options. The first was continue as is. Keep the health plan, dental plan as is. I'll still spend the money, no problem, if you want that option. The second option was I'm gonna create a healthy living fund for everybody. I'm gonna spend the same amount of money, $100 a month, and I'll give you the money for drugs if you need it, 'cause you're sick. For dental if you need it, but also if you want to go take a salsa class, if you want to go buy some running shoes, if you want to make a down payment on a bike, anything that contributes to a healthy lifestyle. I was hiring people who were also healthier than average, I guess, and they weren't using what I was spending. Everybody took the second option. Everybody took the second option, and I felt better. I was still spending the same amount of money, Hey, it still hurts taking $1,200 a year out of your pocket per person every year. I was still spending that money, but I was happy to do it because there was tangible benefit. People were using it. They were enjoying it. I'm happy to pay for value. Now, this works. There's still a risk. There's still a risk for me. I'm still going to die at some point. I'm still going to get sick, but my odds are much better than most people. If you're on the other side though, if you're unhealthy, if you're not looking after yourself, if you're gaining weight and sitting down all day, then you need to buy as much insurance as possible. Insurance companies are losing money on you. So now it's in your favor to buy it. So that's my two cents. I want to have a little bit of fun now. A friend of mine, he's an entrepreneur, his name is Mark. He is a big fan of life insurance. He's bought some for himself, for his wife, and I wanted to call him up. We're going to put him on live with us here to get his feedback and see what he has to think so you get the other side of the story. Now Mark is not an insurance sales guy. He runs a video production company. He's grown from 0 to 8 employees, I think 8 employees, maybe a little more, in a short amount of time. If I put an insurance sales guy on the call, you'd say, oh, this guy's obviously biased. Mark is an entrepreneur like you and me. He just has different opinions. So we'll call him up, we'll put him on the spot, and see what he has to say. I'm gonna call him up on his cell phone. His company is called Phantom Media, and they do video production. So nothing to do with insurance, but he is a big fan. So here's Mark. We're gonna call him up, see what he has to say.

Mark speaking.

Mark, it's Evan Carmichael. How are you?

I'm doing well, Mr. Carmichael. How you doing?

Listen, before we go too far, I'm recording you.

Not a problem at all.

We are on air. This is gonna go on my YouTube channel and website and Facebook and everywhere.

Oh, well then, hello everyone.

Don't say anything too embarrassing.

Okay, well—

Okay, I'm talking about insurance. I've had—

Insurance?

Yeah, life insurance. A number of people have written in and viewers have asked questions about insurance. Should I buy it or not? And I know you're a fan of it. You've bought it for yourself and your wife, I think. I wanted to hopefully get your perspective on your decision-making process as to why you like and how you made that decision.

Sure, not a problem. Well, I mean, you know, essentially I think why most of us become entrepreneurs is because we want to take control of our own destiny and our own path. But with that, you know, comes responsibility. And a lot of times being sales-focused, you know, I jump when my clients say jump and I try to please my employees. And sometimes we can forget about our families while we're busy trying to grow a business. And my wife turned to me and said, we're married, we have children, you're running your own business, What would happen if something happened to you? And essentially that's what it's about. You gotta take care of your family should something happen to you and make sure that everyone firstly is financially sound. And then secondly, there are tax strategies that can go into it as well, but that's more later in life.

I hear you on the tax strategy side. What would you say to the entrepreneur who doesn't wanna spend the money? If it's gonna cost $100 or $500 a month and is saying, you know, I could put this to my business, How do you convince them that this is a good idea?

Well, so, you know, people, I think people are either, you know, of a mind to take insurance, and that's for all areas of life, or they're not, if they're a bit of a risk taker. I put it this way, you know, it's something that is just a cost of doing business. It makes sense, it's the better thing to do. Similarly, you know, I would play within the rules and regulations. I won't push the boundaries that way. I won't do anything that I feel is unethical. You know what, taking care of my family. You know, we have 3 kids and another on the way and my wife. That's, I gotta take care of that first. And I would suggest that anyone who has a family or a spouse or anyone that they care about, and if their income is solely tied to them and if something were to happen to them, you have to take care of those you love.

Are you comfortable sharing how much insurance you got out and you know what that decision process was like?

Yeah, not a problem. Well, I mean, you know, as far as I understand it, I'm certainly not an expert by any means, but there are two types of insurance. There's, there's term insurance, which lasts for a certain amount of time, a given term, 5 years, 10 years, 15 years or something like that. And that's usually typically lower in cost because they tend not to pay out. People tend not to pass away or have something happen to them during those years. And then there's universal life, which is you pay every single month essentially until you die, but you have a guaranteed amount out. Now I was fortunate, you know, when it comes to life insurance, you got to get in young and you got to get in healthy. So I was at the time, I was 24. My wife was 23 and we got in, we got in young and we got in happy. So, so really we pay, I think $140 a month and I have a half million coverage universal and my wife has a quarter million. And, and really the strategy that we were explained, which makes sense to us is many people think of life insurance as in a payout. So if something were to happen to me, my wife would receive $500,000 insurance and then they would live off that insurance. And really the way that we structured it at the time was to say, if you took that principal $500,000 and invested it— now at the time the markets were a lot better, but if you, if you invested it, you would only live off of the earnings of that principal. And so we structured it at the time And as your income increases, as your lifestyle increases, your insurance increases as well. But basically, if you can take $1 million or $1.5 million or $500,000 or $250,000, whatever it is, invest that and not touch the principal but just live off the earnings and maintain a decent lifestyle, that would be the ultimate approach.

Very cool. Thanks, Mark. Good opinions on the other side of things. It was good. Before I let you go, quick promo for Fanta Media. What do you guys do? I gave the audience a quick intro, but I want to hear from you.

Well, not a problem. Well, essentially at Fanta Media, we are a video production firm that helps businesses market and communicate through video. So be that for internal purposes, employee engagement, external purposes, marketing, promotion, product launches, elements like that, conferences, seminars. Essentially, when it comes to business and video, we handle all things.

And it's fantamedia.com, right?

That's correct.

All right, thanks, Mark. I'll talk to you soon.

Okay, cheers.

Cheers. So there you go. There's the other side of things. Hopefully that gives you some food for thought to think about. Should you get life insurance or not? The whole tax strategy side of things that Mark brought up is a really important point. Maybe we'll do that in another video. It's a great way to save tons of money from going to the taxman. If you're making a lot of it. Something that I'm looking into, not worrying about the health side of things and more from a tax point of view. So if you guys are interested, you want to learn a little bit more about that, let me know in the comments and maybe we'll do another video. So for those of you watching, you like this video, please give it a thumbs up below. It makes me want to do more for you. And hey, I always want to hear what you think. Please leave a comment below on this video. It makes me want to do more for you. It really makes my day every morning when I wake up and I see my YouTube comments while I'm eating my breakfast. So thank you guys, and I'll see you on the next episode.