By Les McGuire, utahvalley360.com
Editor’s note: For nearly two years, Ray Hooper and Les McGuire have educated us through the Prosperity Economics column in Utah Valley Magazine. This department quickly developed a loyal following, with titles such as “Faith vs. Fear” and “Don’t Be a Victim in Your Financial Life.” Ironically, Ray’s last column (published in our May issue) was titled “Of Principles and Planes,” where he used an airplane analogy to describe financial strategies. It was with deep sorrow and shock that we learned that Ray and Les, along with pilot Blaine Pugmire, were killed in an airplane accident in June.
Before the untimely death of these admirable entrepreneurs, Les submitted the following column to us. He wrote it for this July issue, and he also used it to launch a Prosperity Economics section in our summer BusinessQ Magazine, which was mailed the week of the accident. This final contribution to our magazine includes information on preparing temporal finances in the case of premature death. This is indicative of Ray and Les — always wanting to share their ideas and knowledge to bless the lives of others within their sphere of influence.
These men will be dearly missed by all who knew them or learned from them through their writings.
Ray and Les, thank you for making us more productive and happy people. You will not be forgotten.
Life insurance can be a more valuable tool than real estate
As I have said in every Prosperity Economics column for the past two years, financial strategies and products are irrelevant if we do not understand the underlying principles that govern prosperity. However, once principles are understood, strategies and products become tools to achieve objectives.
My company offers a monthly subscription called the Producer Revolution™ Membership. Members receive various tools and products that help them foster an abundance mentality and Producer mindset. One of the tools is an advice-column style Q&A forum called “Dear Engenuity.”
Last month, a subscriber wrote in basically asking, “I’ve heard Les speak about life insurance policies as tools. He says that he’d rather live in my basement than let his policies lapse. Please explain this statement and why you feel this way.”
The following is an excerpt from my answer to this question. I hope you profit from this analysis:
To me, the house I live in is a tool of production, and my ability to create value in the marketplace is enhanced because of it. I definitely don’t want to lose my house. This said, however, given my knowledge and skill set, my life insurance is a far more valuable tool than my house.
Losing my insurance policies would be a big loss for me on several fronts. First, insurance is not always available; I must be healthy and “low risk” from the insurer’s perspective to qualify to buy it. Real estate, on the other hand, is available for purchase any time under any circumstance. It is a less-scarce resource to me.
Second, life insurance is a protector of my human life value, or my capacity to produce. It replaces the future production (a.k.a. wealth) that would be lost were I to die or become disabled or incapacitated in some way. As a Producer, my No. 1 concern at all times is maximizing my own production or value creation given the resources and circumstances of the moment.
If life continues as it is now, my future production will be enormous, and millions of people will benefit from my efforts, which means I will receive millions of dollars in return for the value I will create. If I suddenly lose the ability to produce that value, however, then millions of people will suffer in the marketplace from what I could have produced but now can’t. As a result, my interests will suffer because they will no longer profit from the value that was to be created but is now lost forever.
What insurance does, therefore, is puts in place a contingency that guarantees that at least a portion of the value I would have created will be replaced in the event that I lose the ability to create it myself. The benefit to my own interests is obvious: the insurance replaces a portion of the lost future profits. What most people miss, however, is that the marketplace benefits as well. Since my own production is lost, my customers would suffer. If, however, millions of dollars of insurance benefits show up to replace me when I’m out of the picture, then those resources will be put to work according to the instructions I leave behind in my will, trusts, LLCs, corporations, and with my family and business associates, etc.
These people will then use those resources (the insurance proceeds) not to consume, as most people would, but rather to produce in a way that brings abundant value to the marketplace. As a result, the future value to my customers, and the future profits to my interests, remains intact and operational with or without me. Clearly, a loss has still occurred as a result of my personal contribution being gone, but the insurance policies and estate and business structuring documents help to offset that loss dramatically.
As a Producer, I am fully committed to value production under any and all circumstances. I feel a strong sense of stewardship to maximize the utilization of the resources with which I have been entrusted. Buying the most life insurance (and other insurances too, by the way) that I can possibly qualify for protects my stewardship and assures that I am as productive as I can possibly be regardless of what happens in the marketplace or to me personally.
If I was to lose my home for some reason, but keep my health, my brain, my friends, my family, my business relationships, and all of my other most productive assets, then it would be a short time before I could get back all the material possessions, including a house, that I had before. I would be in your basement for maybe a week, probably less. But if I lost my insurance policies, I might never be able to get them back. Even if I could, I would have to start over, having lost about 5 years of time (Human Life Value), which would reduce the amount I could ever get back and increase the cost at which I would acquire it.
Producers have no fear of loss when it comes to the material world. If they have any fear at all, it is a fear of losing their human life value through either poor choices of their own or through circumstances beyond their control. Staying involved in a community of Producers is the best insurance against the first, and purchasing maximum amounts of insurance products is the only way to protect against the second.
True Producers will always do both, since either/or is rooted in scarcity and is a Consumer mindset. The great news is that if you truly are a Producer, you will never lose your insurance or live in anyone’s basement ever again.
Now go create some value, and be a wise steward of your resources by protecting the value that you have created in the past, as well as insuring the production you will create in the future by using your human life value to bless the lives of others.
To learn more about the Producer Revolution™, or to become a member, go to www.ProducerRevolution.com.