Focus on Risk: 5 Ways to Use Risk Management to Achieve Financial Freedom

In this episode of The Amber Stitt Show, host Amber Stitt explores the topic of using life insurance as a tool for achieving financial freedom. She emphasizes the importance of risk management and highlights that it is a continuous process throughout one's career.

Amber's expertise lies in assisting new medical professionals, but she assures listeners that the principles discussed are relevant to any business professional or owner. She encourages everyone, regardless of their current situation, to stay engaged as the information shared can be valuable for future endeavors.

Amber shares five key ways to leverage life insurance for financial freedom. She explains how life insurance can provide a solid foundation for a secure financial future and act as a safety net during unexpected events. From protecting loved ones to building cash value and supplementing retirement income, Amber provides insights into the various benefits of life insurance.

To gain a deeper understanding of how life insurance can contribute to financial security and freedom, tune in to The Amber Stitt Show.

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Transcript

Host: Amber Stitt
 
I am thrilled to be here with all of you today for another episode of The Amber Stitt Show!

This episode is focusing on steps towards Financial Freedom, which really follows the Pathways steps of focusing on risk and focusing on money.

Today, we talk about five key ways to consider this through risk management and this can be one of those things that will happen throughout your career. 

So, first and foremost, let's talk about the general nature of my business. I specialize in assisting new medical professionals who have recently completed training and are entering the workforce.

Typically, that's where I'll meet my clients. But really, any business professional or business owner can book a consultation with us, but stay with me because even if you're a student, or on a sabbatical from a job, maybe staying home with children, eventually, you may go back through these phases.

Or, this might help you think about what happens in this process. Maybe this can help you find some motivation or aspirations. 

Let's start with Step Number One:
I work with you to understand the importance of the benefit package you have, and let's determine how the coverage inside those packages can truly protect you and I'll focus on protecting income. That's usually my main focus here because I want to be sure that that income does not go away if there's an unfortunate event like a disability. So that's my niche, my specialty.

This can be true with anyone that has a benefit package, we really want to dig in and look at income protection. My primary objective is to transfer risk away from you, your families, and your businesses, to ensure the security of your hard-earned income.  So, I work with private coverage, which means independent from the group coverage. And although private coverage might be limited, due to these group plans, maybe you can't buy a lot because the group insurance is there, we're going to work together to see if we can supplement it because if your circumstances change, we'll be able to then bump up and buy additional coverage when the timing is right. So, my team and I are striving to offer a plan that will safeguard your income should a disability occur.

There are different features like rate locking, portability, and having the right to increase without medical underwriting. And we can always talk about what that means for the episode, but really make sure you have a private independent plan. 

Step Number Two:
Do you need your own private plan for income protection?  Step one is reviewing those benefits. What do we have? Step number two is obtaining a private plan if you need it. So, let's be sure to supplement if there's a gap in the income protection needs. Often there is because group insurance plans are often taxed at claim time, they offset if you have other income. There's just another language as I am not an attorney and I do know there's another language in there that can be problematic, that feels a little bit hidden. 

Step Number Three:
While you may already have private insurance in place, it may not be sufficient enough to meet the loan requirements. So, you need to think of this as similar to buying umbrella insurance. If any of you have done that, you might ask for umbrella insurance and your property casualty agent might say we need to up the coverage at the home, or the auto level because that's got to come first and then the umbrella covers the other pieces. So, often you need to level up and buy more to add on that umbrella coverage. And this is similar when we look to provide comprehensive solutions depending on what's happening with you. We want to make sure we have enough coverage to fulfill the loan requirements.  Really what the banks are looking to do is do a collateral assignment on these policies. So they're looking to have enough coverage when the time is right for that bank loan. But they're looking to make sure those policies are in place and that's easier to have the banker sign off on the risk. If they're about to lend you some money. They need to know that they can be on that policy in case something were to happen to them. They need to be made whole if something were to happen like a death or a disability. So, while we're covering those loan obligations, we are often recommending implementing a tailored life insurance plan specifically designed to protect the loan.  So, we always want to take a look and supplement from there and as we know, life is full of changes, and many business, or medical professionals experience transitions. It could be just in general income transitions, changes to income going up or down, or maybe just moving on moving to another position, or moving into maybe buying a business or buying a practice. So, some may eventually reach a point where they're ready to go to the bank and see if can I obtain a loan. And during this exciting time, the question often arises from the bankers, do you have disability coverage? Do you have life insurance to protect the loan in case something happens to you? 

Step Number Four:
Maybe during that period of time, you're picking up term life insurance for yourself. Maybe you're picking up term life insurance for the bank, but maybe for that business partner that might be there now, too. So, there are a few ways that in step number four, you might be reassessing your term life insurance needs, so, in some cases, there are separate policies to cover both personal and business aspects. The bankers will see that you're taking a proactive approach and the reason that banks need to see this is they really need to be confident you can pay and be good for the money that they're lending out. So to finalize the loan, they're really looking at this usually, for those that are new in business, don't have a lot of resources, they don't have a lot of extra cash flow, you don't have a lot of capital is really what I'm trying to say.  So, these policies are crucial for new doctors, and new business owners with limited capital. So, as you're embarking on your entrepreneurial journey, this gives the bank peace of mind.

Step Number Five:
And this really leads me to step five, there could be a business policy that's necessary for the practice owners that do have a lot of overhead. And if something were to happen, can they pay for all the expenses for the payroll? And so, that might be the fifth step is as you get through all these stages, maybe that there is a period of time you actually own a business and you are employing people and you have that overhead that may be where we recommend a business policy and that policy covers essential expenses of your practice. 

This doesn't pay for your personal bills, this is strictly for the business. So, this might be another piece that we add on, depending on what's happening.  Not everybody will have a storefront, but that will be maybe the fifth step in this phase of career building and business ownership. 

So, as we look to cover the risk, and transfer the risk, this is important as you explore additional investment opportunities, and real estate projects, as you're generating passive income to meet your future financial needs. This is a way to help you head towards financial freedom and have control over that risk because we know that things can pop up.  

My ultimate goal is to transfer risk, provide ongoing support and empower you to excel in your business ultimately leading you towards financial freedom. So, that was a quick episode for today. I hope you found that valuable. Let us know if you have any questions we'd love to help and assist you on your journey towards financial success. 

Thank you for listening!

Closing Outro 6:51
Thank you for joining us on today's episode of The Amber Stitt Show. For more information about the podcast, books, articles and more, please visit me at AmberStitt.com. Until next week, enjoy your journey at home, and at work. Thank you for listening!