Ep. 65: The Real T on Life Insurance (Guest Daphne Jones aka The Smart Money Chick)
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In this episode, we dive into the juicy details of life insurance. This conversation is neither boring nor morbid, so set aside any preconceived ideas you may have about the topic. We are joined by Daphne Jones (aka The Smart Money Chick) who gives us the real T (truth). She breaks down the importance of life insurance and why it should be the cornerstone of your financial planning. We also discuss Daphne's financial hardship, due to an illness, which lead her on a quest to help others with their money and wealth building. Daphne is a licensed agent, wealthability coach and the co-host of the Grown Women Growing Wealth podcast. She and her co-host have educational conversations with professionals to inform and inspire their audience of middle-aged, female entrepreneurs to make more profit.
SHOW NOTES:
Follow or Contact Daphne Jones (aka The Smart Money Chick): Website - Instagram - Facebook - Linkedin - Linktree - Free Download: Guide
Grown Women Growing Wealth Podcast: Website and EP. 39 with Guest Heather Zeitzwolfe (Get Radical with Your Numbers)
Shows Mentioned:
Ep. 60: Preparing Your Business for Uncertain Times (guest Mary Beth Simon)
Ep. 59: How to Maintain Financial Health in Your Business (guest Lesley Batson)
CONTACT HEATHER:
Contact Heather: Instagram - LinkedIn - Clubhouse @zeitzwolfe
Get the Balance Right Coaching: Website
Book a Discovery Call (via Zoom) - Click Here
Heather & Get the Balance Right - Link Tree
Zeitzwolfe Accounting: Website - Facebook
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From the Episode
Heather: “I have a great guest today. Daphne Jones, AKA the smart money check. She is a wealth ability coach she's got a really interesting background. Daphne, introduce yourself how did you get into wealth coaching? Did you have a career before that?”
Daphne: “Before getting into wealth coaching, I did some military service and corporate America, about 20 years. And what led on my money journey, where I want it to be of assistance is smack dab in the middle of my peak earning years, I became ill and then that coincided with the crash in 2008.
We were in a situation, my husband and I, where all of a sudden there was no income. And when you want to discover if you have any financial wherewithal is when those paychecks stop. There are a salve that fixes everything you get paid and it fixes everything. In going through that. And once you stop being scared, you start reading, you start trying to understand how did I get here? How do we go from being, the standard, for , two German cars in the driveway to, oh my God how are we going to meet house note and pay and eat?
That started the journey. And Through church and things like that, I wanted to help others to plan for the future. because economics is cyclical, that's it, you have there's boom bust cycle always has been. How do you level those out? How do you even those out, how do you make informed decisions? That you know, you're making informed decisions and that's often leads to problems because we don't know that we're not making informed decisions.”
Heather: “Thank you for sharing that and being so open, you know, a lot of people can relate to your situation for sure. And, you know, with COVID it's hit a lot of people very hard, and people have had a money awakening, I think.”
Daphne: “Oh, yeah.”
Heather: “You’re wealthability coach, and you also have a background with life insurance, you're very knowledgeable about that. And life insurance is one of those things that I think a lot of people just don't want to even think about because they think oh I have to be dead. I don't care about when I'm dead or maybe it's just a, kind of a gruesome thing to think about your mortality, whatever it is. People just don't seem to want to even think about life insurance, but why would someone now this might be a loaded question, but why would a female entrepreneur, why would they care about life insurance?”
Daphne: “That is a loaded question.”
Heather: “Okay, let me rephrase that.”
Daphne: “Nope. Nope. One we're all human. we all are going to die. We all going to die and there are costs associated with death. Now as human beings and particularly women, most of them, I know we're connected to other people some way. We're connected. through marriage where somebody's mom or somebody's sister we're connected.
That's one of the great things about being a woman where we connect on multiple levels. And again, there's a cost associated with debt and these people that. love you, you're going to leave them holding the bag literally one is they have to, we can just get rare, basic. They have to dispose of the corpse legal manners.
They're going to have to close down your residency. They're going to have to deal with your state. So how about we make it. easy on them as easy as we can. You're already not there. How about help them out financially? So that's one just the basic desktop. Would you say the gruesome part?
Secondly, particularly if you're an entrepreneur, you are going to leave a business that has to be settled. Are you in a partnership? How is that going to be handled? Did you leave written arrangement or not? Are you in an LLC? Are you in a generally basic, 50% partnership? There's going to be debt and other things connected with that. And life insurance helps there as far as transition.
Is your end going to be purchased out? If you and I are in business, you and I are in business, our husbands aren't in business, but if one of us dies, all of a sudden you're in business with my husband that wasn't your plan and you're in business, right? That sort of thing.
So it helps in transition. Also, as far as retirement planning is concerned, it's a tool within retirement savings. I wouldn't suggest making it your only one because you should have multiple income streams as you did during your working career, but it also helps in retirement too. So it's a great savings plan. As far as taxes are concerned and things like that.”
Heather: “I think there's some confusion about life insurance. So there's two types. There's whole life and there's term. And I think when people think of life insurance, they often think of term life insurance and not whole life insurance. Would you mind just defining what the difference is between those?”
Daphne: “Sure. The primary division between life insurance is permanent life. insurance Which is designed to last your entire life. As long as you pay the premium, the second type of insurance is called term insurance. It's literally, as it says, it lasts a certain time period anywhere from five to 30 years, depending on the policy its sole purpose is to pay a death benefit at a certain time. They both have uses And they can be interlocking and supporting of each other. That's the primary division. Under the permanent, you have several names. You have whole life that you just mentioned. You have something called index, universal life, and you also have variable life. And then you also get these little subdivisions where you have like burial insurance. Guaranteed issue, things like that.”
Heather: “Wow. Okay. That's interesting. I didn't know about that other subset. So when people are trying to decide. Which type of insurance to get. I know with term that's oftentimes given to people as a benefit when they have a job when they get W2 wages, but going through this whole process of trying to figure out , which is the best type of insurance for their situation and maybe their health situation, their age. There seems like there's a lot of things to take in consideration. Do they have children, all these different things. When people are starting to decide what type of insurance to have, is that something that. Is a difficult decision to make. Do you have to have doctors analyze your health?
Daphne: “It's not difficult, but I do suggest that you do with as you brought in all the things that changed the tailoring of the policy, gender sex, how many children are there? Are the children, 18 over 18, still in college or they're in their thirties? And they don't require anything from mom and dad. It's not difficult, but I do suggest that you do with A licensed insurance professional, and it's not just tooting my own horn because it is a vast field. So we just talked about the two main divisions of insurance life insurance should be a tailored. jacket. Because what you, require is very different from even what say your sister requires What has been the discussion about leaving a legacy? Maybe I don't want to leave anything for my adult children, but I certainly want to make sure my grandkids go to college.
And those are the types of things that you discuss with an insurance professional to design a plan and your health does play a part. And so does gender. We can go pretty advanced. It's much like in your business being a CPA discussing tax treatment of the difference between being a C Corp and staying a general partner.”
Heather: “When people are trying to decide, I'm going to get whole life insurance. Besides speaking with an agent, do they. Go and have a health test. What is the process with that?”
Daphne: “Often most individuals are used to taking some type of physical exam. We call them fluids in the business where there's a blood trial and urine and so forth. Many companies, quite a few, as a matter of fact are getting away from. You usually find the necessary for those type of the physical, in a sense when you're usually with the higher end policies, when you go over a million dollars, those tend to require physicals. But for instance, the majority of companies that? I work with when I'm trying to help my clients, they don't require blood and urine. They don't require that.”
Heather: “Oh”
Daphne: “Some will call for it, but it's a rarity . And that's usually, as I said, when you're trying to insure a client for four or $5 million, when you go over a million dollars.”
Heather: “Okay. So they're not going to make you go on a treadmill.”
Daphne: “No. Oh never that strenuous. Even when they do require something it's your standard blood and urine height, weight, something that can be done at home where they actually have nurses that will come to the home and do a blood.”
Heather: “Oh, okay. Okay. I was imagining being on a treadmill for 10 minutes or something and then Nope, you don't qualify for whole life insurance. Okay. So here's another thing that I think people are uninformed when it comes to life insurance. And is that the whole life insurance? It's not that you just put the money in and you never see it again. You can actually. take a loan against that money. Can you explain how that works?”
Daphne: “Yes in permanent insurance, whether it be whole and in cases of index and variable life insurance, there's an account as a separate cash account. Now in whole life insurance, this account is funded by you have your premium, that you pay portion of your premium goes to administrative costs, pretty small, and that amount is set. Then there is a cost that says cost of insurance. This is what the actuaries are saying that it's going to cost to insure you. This is why women often pay less than a guy, the same age, things of that nature. So once that's calculated in whole life insurance, that cost stays the same. It doesn't change.
That's the beauty of it. Going a little bit off subject. That's why whole life insurance is expensive at first and comparison to a term policy. But over time, it's cheaper because that cost stays fixed. Even if you're in a term policy that has a fixed cost, because it has an end date, it's going to be more expensive to insure you at 56 than it was when you bought the policy at 27, when you got married.”
Heather: “Oh, wow. Okay. My understanding is that you can get life insurance, I think maybe on a baby that's 15 months old…”
Daphne: “Sure you can buy life insurance. As soon as the baby gets here. You can give you a grandkid on literally their birthday life insurance.”
Heather: “Oh, okay. , so you don't have to wait a little while. That's very interesting. that rate must be extremely small compared to someone like me and my fifties.”
Daphne: “Oh, yes. Yes.”
Heather: “Let's just imagine that I had life insurance from the time I was a baby. Now it would just keep growing and growing over time. And does this money come from dividends? Does it come from just growth in the stock market?”
Daphne: Would the traditional whole life insurance policy, the cash accrual account is you have a guaranteed interest rate from the. And these can go anywhere from Some of the older ones I've seen is 6%, but let's say two, the 4% currently on the market, that's guaranteed interest yearly. And it compounds if your life insurance policy is with a mutual insurance company, mutual of Omaha is a good example. They pay dividends, if the board declares a dividend, then that also goes that account. And it also compounds at the rate that is guaranteed by the insurer.”
Heather: “This sounds more secure than just the stock market, because you're guaranteed that percentage. Wow. Okay. That's really great to know. As far as the people that may be listening to this podcast are a little bit older in life. Is it still a viable option to get life insurance late in life? Or is that something that maybe we should play the stock market? What is your suggestion?”
Daphne: “Again because what I said previously, because of the guarantee of the death benefit, everyone should have life insurance we're women of a certain age, so it's not like us getting life insurance. When we were 25 health does play. Into the cost of life insurance. It does. at this point to try to use it as say, a savings or an earnings vehicle unless you have money that you really want to put in there and you're doing it for a particular reason, like to leave a legacy of some type. You just need basic coverage. Hey, I want 25 or 50,000; cause I want things settled.
It's bad enough if I'm gone. I don't want honey worried with this, that and the other. So he needs to get a check as an entrepreneur. Now let's say you guys have a growing concern? You have a business that's in the seven figures. In that case, you may need to absorb the cost of getting a policy large enough, because as we said, the policy can be used for me to buy your husband out. You passed. So now he receives this money. I receive your portion of the business everyone's friends because I didn't go into business with your husband,
But when you're buying insurance like that, then you get tax benefits because it has to do with the businesses and expense more so than a basic insurance. we'll keep it simple. We'll keep it out of the business side and we'll just say, okay, I'm older. I'm 50. Do I need insurance? Yes, you do. Is it going to be a bit more expensive than if I'd have purchased it 20 years ago? Yes it is. But then we'll adjust the amount of what you need to purchase and death benefit and things.”
Heather: “Oh, okay. I see. That's really great to know. when someone is looking for someone to work with for life insurance, this is not just something that any Joe Schmoe is selling life insurance. You really have to know your stuff.
There's a difference between an independent versus a captive agent. Can you explain what those terms mean?”
Daphne: “Independent agent. The first one you mentioned they can go to multiple companies to find your policy through our conversations, we're going to establish what's necessary. What's going on with you, health wise, things of this nature.
Then I'm going to go out and find a company that best suits you and we'll discuss some alternatives. we're going to go out and select the company that way. If I'm a captive agent, the only policies I can offer you are those that are from the company that I'm captive to. The big names are Mutual of Omaha, Allstate, State Farm. Those guys tend to be captive much as when you go there for your homeowners, insurance or car insurance, all they can talk about is the policies that particular company offers not other companies.”
Heather: “Okay. That's great to know. And that's something that would be apparent when you work with the agent, you would know that they are a solo, I guess you call them like a free agent…”
Daphne: “Independent agent or independent broker; the best thing to do is ask if you're in a doubt, if you're not sure, ask. If you walk into an office and it is clearly branded on the outside, it says State Farm, Allstate, Farmers, those guys, are captive.”
Heather: “You have a guide that going to have the links in the show notes. So tell us about the guide and what's in the guide.”
Daphne: “To give you some, general knowledge in one place. Where, when you start to talk to an insurance professional, you can get an idea of their level of expertise and how they can be of assistance. Just because you pass the exam. It doesn't make you an expert that much with the CPA and tough exam, but CPAs are not all built. Same thing with insurance agents likeability and the ability to hold a conversation. And actually listen is important to watch it for the folks that are trying to push certain policies on you or push things more than what you want. That there should be a back and forth about what you need, and so forth.”
Heather: “As far as picking someone out are you licensed in different states or how does that work? Does they have to find someone their own state.”
Daphne: “Now I'm licensed in multiple states because of the way insurance is set up here in the U S you can practice in multiple states. There's a reciprocity. that I can write insurance in various states.”
Heather: “So awesome, cause you're in Texas and we have listeners all over the place. So that's great to know. All right. Besides selling life insurance, so now you've gone on to be a wealth coach. That's more of your main focus now? So tell us a little bit about why you got into wealth coaching. What is it about it that drew you to it, besides your experience that you had I had when you had gotten sick and all of that.”
Daphne: “In talking to clients about life insurance and life insurance is important. , it's the cornerstone of your financial planning. There are other things that you should do on top of that, because I've talked to clients about an investment mix and so forth and so on, but you really need to start off with life. Even say to the point where let's say someone I'll use my nieces and nephews as a prime example, 22, 23 years old. Great shape life insurance means nothing to them. no connection at all they're 23. You can start them off with a term policy it's cheap. We'll get you X amount of coverage for 30 years less than 20 bucks a month. That's how important it is need to get something in place and we can build on that and convert later, because one day you're going to wake up and it's usually when you're married and you're going to look at your spouse need life insurance and you need to have something in place at that time. That's the importance of life insurance. As an entrepreneur, there's uses for life insurance. Good example. Disney used his life insurance twice in his business career. The first time he used it was in the 1930s Disney studios was in trouble. He actually took a loan out from his policy to pay his animators, to keep the company going, put the money back in because you're taking a loan from yourself. The second time it came up was doing the construction. When they were acquiring land for Disney World. He used it as collateral for bridge loan. are the things that life insurance does for you while you're still alive. A matter of fact, most policies will allow you to access a portion of the death benefit while you're still alive , if certain medical things. So insurance has multiple use. Again, because you can take this money out, it grows tax-free, you're not taxed when you take it out. So it's different from 401ks or other qualified accounts. That aren't restricted by age or where you could get fees assessed and have to pay taxes and so forth.”
Heather: “Through this process of really understanding this, is this what drew you to wanting to help people with wealth ability coaching?”
Daphne: Yes. Because the first thing you hear is I can't afford life insurance. You can't afford not to have life insurance. You're sitting here with your spouse, you're holding hands. You got the kids running around. No, you've got to have life insurance. It's a money mindset. There's abundance out there. And then there's also a need to be prepared for what could possibly occur. Again, the death benefit, ability to access that money, but then there's also the abundance, the growth that this is a great way to get your money to work for you.
You've got compound interest. It grows tax deferred. When you take the profits. We take the growth. It's not taxable that's one of the great things. So to be able to lay points out like that, you and I get it because we deal with money. Even if things were a bit tight, you'd say I think I'd want to put X amount of dollars a month into one of these type vehicles wealth coach. You help individuals see a new money story? What their money story is? Why is it stopping them from hitting abundance and helping them work through that?”
Heather: “Okay. Wealthability coach, it's a term? I do money coaching and I help my clients with budgeting and, putting together a plan for their business. Is wealth ability coaching; is it similar?”
Daphne: “The wealth coaching does involve. A basic money management component, because that stops you from hitting wealth goals, particularly the debt that Americans tend to accrue because we tend to accrue consumers debt. Which is for lack of a better word, cancerous.”
Heather: “Yeah.”
Daphne: “It’s not like accruing debt for cash flowing real estate Or something of that nature that is paid by someone else. We pay debt don't make any money off of it. It's not useful.”
Heather: “Or people with student loan debt for studying things that they can't make any money off of either.”
Daphne: “Exactly. Exactly; how we chose to, pay for our debt you can't get rid of it. That component is there, but again, it's how you view money. Is it a lack of, or that there's plenty of money out there and it took a long time for me to understand and now to help others understand there's a lot of money out there. And the idea is that you need to get what money. You have, which is usually through employment. You need to get it working for you and you do have money to get working for you. You just don't see it yet.”
Heather: “Yeah, I work with my clients with money mindset. To me, that's where it all really starts. If you just dive a little bit deeper, you can see where a lot of these issues come from, and it really does help to change someone's behavior. If you really understand where their thought process starts. So these are all really great things, Daphne. If people want to work with you, tell us about how they can work with you. Where did they find you on the socials and all of that?”
Daphne: “Great. I'm on Instagram. The smart money chick and a great way also is to go to my website, the smart money chick.com forward slash link tree. You have multiple ways of setting up an appointment there or downloading my guide and so forth.
Heather: “Awesome. And you also have a podcast. Tell us about your podcast.”
Daphne: “Yes, my baby Grown Women, Growing Wealth, the cohost and my partner is Roberta Ravella, we're focused on women of a certain age and helping them make effective use of the tools that they have. Women entrepreneurs, their money in helping them increase sales. Roberta is a sales coach. She's great. She's out of the mortgage industry 20 plus years. And then with me with a more direct focus on how you handling your money and investing your money, to speak to women that you can make informed financial decisions and giving them the confidence to do.”
Heather: “That's great. Like I mentioned, we're going to have links to your guide into your website and your podcast. That'll all be in the show notes. Daphne, thank you so much for being on the show today.”
Daphne: “Hey, thank you for having me, Heather.”
