Wealth Protection

Life Insurance: Fundamental to Financial Planning

Keeping both in check

Everyone eventually needs life insurance, whether they sign up for a policy or not. The average person, however, remains woefully underinsured in America – and that means their family will pick up the tab when they pass away.

“Everybody’s an insurance company of sorts,” said Dr. Guy E. Baker, CFP®, founding partner and managing director of BTA Advisory Group, an insurance broker. “You’re your own insurance company because you haven’t laid off the risk with a policy – you’ve accepted the risk yourself. Your family is going to fund whatever the value insurance would have provided for your heirs or others, or they have to get it from another source.”

BTA Advisory Group, based in Irvine, California, provides life insurance solutions to clients who recognize that an adequate policy can ease the burden on relatives after they pass away. Baker also directs Wealth Teams Alliance, a full-spectrum wealth advisory firm that offers clients financial planning, investments, and retirement solutions. The firm does not require a minimum asset level for clients to utilize their management services, with Baker adding that the clients’ personality fit with the team means more than their bank balance.

Americans often neglect to properly insure themselves according to LIMRA, a global research and consulting association serving the insurance industry. Their 2017 study found that 61 percent of adult Americans had life insurance, down from 70 percent in 1984. Approximately one third of those people relied on group life insurance, however, leaving them vulnerable to an insurance gap if they change jobs or lose it.

Even those who hold their own policies often fail to take on enough coverage. The average policy includes $126,000 in coverage, but LIMRA’s data shows that the average policy needs amounts to $459,000. Moreover, almost half (47 percent) of the insured respondents carry coverage amounts of $100,000 or less, including 21 percent who hold a benefit amount of $25,000 or less.

With the average American underinsured by $300,000, a trusted advisor who can help them navigate the risks of remaining uninsured and the need to properly plan their future can help families avoid unnecessary pain and chaos following the loss of a loved one.

baker quote 500x400Many consumers, however, find discussing life insurance to be uncomfortable. After all, most people would rather put death out of mind and push it further and further into “the future.” That approach creates risks to families, businesses, and hard-earned wealth, Baker said. Additionally, the range of policy options available and the lack of understanding surrounding how much insurance is enough means a solid advisor is needed to guide clients through the selection process.

“How much insurance do you want? What’s the type you should buy? And how much should you pay? The steeper the price, the less the desire. People tend, when they’re solutions-based, to think more about whether they really need that solution,” Baker said. “And, of course, since death is one of those events people want to ignore, they rarely will talk about it. Besides, it only happens once, so they tend to push it off as far into the future as possible, without realizing they might be hit by a car tomorrow.”

Baker wrote the book on life insurance, literally. One of his best-selling books, The Box, presents an easy-to-understand discussion about mathematics of life insurance. The book has become a fixture in life insurance offices nationwide, with more than 1,000,000 copies distributed throughout the industry.

Baker is a frequent writer and speaker throughout the financial services industry as well, and he has spoken to advisors in more than 40 countries. Baker’s most recent book The Great Wealth Erosion teaches investors how to control the four critical factors that oftentimes make or break long-term investment success. Other books Baker has written include Investment Alchemy, a guide to stock market management, and Baker’s Dozen, which cover’s Baker’s thirteen fundamental principles for financial independence. Baker’s Dozen has more than 50,000 copies in print.

Just as many people lack the right insurance, an effective financial plan can drift away from an investor’s financial goals over time. WTA works with clients to keep their plans current, and to make sure their money is aligned to their financial goals.

“It’s easy to be in denial about what you should be doing and how you should be doing it,” Baker said. “People are so busy being successful, whether that’s in their careers or their personal lives, that they don’t have time to pay attention to the impact changes cause along the way. A plan that started out by design becomes a plan by default because time erodes away good intentions.”

Both of Baker’s firms are looking for long-term relationships. The firm strives to understand clients’ unique financial situations and needs, and works to educate them on how to invest their capital using a strategy developed from five Nobel Prize laurates. The custom solutions offered can adapt as clients’ situations change over time. When changes happen, whether in the market or in a client’s life, a trusted advisor from the firm can work with them to offer the “wisdom” that comes with experience, Baker said.

“You have to know the people well enough to know how to address their concerns,” Baker said. “Unless the advisor has those skills, and has the ability to help somebody deal with problems, then the problems are never going to be front and center. Most advisors focus on solution, not problems. In the long-run, the real issue is the connection between a credible advisor and the people who love someone or something.”

For more information on the Wealth Teams Alliance visit: www.wealth-teams.com

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