Protecting the nest egg

by Roy Smith

Shortly before getting married in the summer of 1985, my bride-to-be and I watched a very funny movie starring Albert Brooks and Julie Hagerty titled, "Lost in America." Brooks and Hagerty portrayed an unhappy married couple in their 30s who were stuck in their high-paying jobs which were going nowhere.

After being passed up for an executive position, Brooks convinces his wife they should quit their jobs, sell everything they own, purchase a motor home and set out on the open road to take in the best that life has to offer. Their first stop is Las Vegas, where they renew their wedding vows to begin their life anew.

How romantic!

Yet, a rather serious problem arises when Hagerty loses all of their nest egg while gambling in the middle of the night. Faced with the horrifying news the next morning, Brooks delivers an unforgettable performance as he describes the need to nurture and protect the nest egg. He is so incensed he tells Hagerty that never again is she to use the words "nest" and "egg" in a sentence. If she wants scrambled eggs for breakfast, she'll just have to order scrambled albumen and yolks!

As we sat there hysterically watching the movie, a sudden dose of reality set in. I couldn't help but think "What if that happened to me? What would happen if I were to lose our nest egg?" I am not the gambling type, so blowing our nest egg in Las Vegas seemed rather far-fetched. But a more realistic situation presented itself, "What if I became disabled and never had a nest egg? What if something happened, totally out of my control, which prevented me from establishing a nest egg? What if I were to lose my nest egg in the market?"

Today, I hear from numerous chiropractors each week who face that very problem -- losing their nest egg. They face losing it even though they have been careful to nurture and protect it. They have taken a very important first step of protecting their income by acquiring disability insurance. However, because of their high income, only a small percentage of their income is protected.

Insurance companies, in general, consider chiropractors and others in their occupational class a high risk, and therefore set rather modest maximum monthly benefit limits. A chiropractor earning $200,000 per year welcomes the $50,000 annual disability income, but that income would not protect his or her lifestyle. How would the high income chiropractor fund retirement, college education for the children, move up in home, etc.? A long term disability could very well bring those things to a screeching halt.

One popular solution is to take out an investment grade whole life insurance policy with a waiver of premium. Whole life insurance can be used to fund anything from buying a house, to college education for your children, to providing retirement income.

If one becomes disabled, and has a waiver of premium on the policy, the insurance company will fund the policy for the duration of the disability. If the policyholder is disabled for life, the insurance company will fund the policy for life. Therefore, whatever the policyholder is using the policy to fund will come about even though he or she is not putting a dime into the policy.

That is exactly what happened to my father, who at age 50, became disabled. His insurance carrier funded his whole life insurance policy for 22 years until his death at age 72. During that time, he watched his cash value in the policy quadruple. He was able to access the cash in the policy tax-free to travel, when he could, and to provide extra medical care when he couldn't. He didn't have to worry about his nest egg eroding due to the lack of funding.

A whole life policy is one of the most versatile financial tools on the market today. It is also one of the least understood.

These policies, in addition to providing a death benefit, build cash values which can be systematically withdrawn tax-free under current law. Because these policies vary greatly in their performance from one company to another, I advise clients to go with a highly-rated mutual insurance company such as Guardian, Northwestern Financial, Mass Mutual and New York Life.

Here, profits from the investment of your premiums go straight back to the policyholders, not to stockholders. Your cash values can accumulate at a higher rate, helping you to build your nest egg. It is a great way to build a nest egg and to provide protection for you and your family at the same time. The waiver of premium helps insure that the policy will be funded in the event of a long term disability. That becomes an extra layer of protection for your nest egg that is not possible through other financial products.

(Roy W. Smith, a fully-licensed financial representative with The Guardian Life Insurance Co. of America, specializes in the areas of life insurance, disability insurance and retirement planning. Additionally, as a licensed representative of Innovative Underwriters, he is able to provide superior products and services from more than 30 of the nation's top insurance providers. Currently licensed in 46 states, Mr. Smith works with Chiropractic Benefit Services. CBS is committed to enriching and protecting the lives of those in the chiropractic community and now carries quality individual long term disability insurance through MetLife, an outstanding A-rated carrier. Call 800/582-4989 for details.)