Were you prepared for an economic downturn? Given the current situation, many people were not financially prepared for the effects of Covid-19. Whether you’ve been laid off or are now working from home, most people are struggling financially. You may have a few options when it comes to accessing some of your invested money. You can take money out of your retirement plan, you could sell your shares in the market, you could get a 401K loan, or you can access some of your home equity. This video will go over all of the implications these options have and what you could do to prepare for future economic downturns.


“I’ve been in the financial services business since 1985 and this is actually the fifth market correction that I’ve been through and I’ve learned a few things that have helped my clients to weather the storm.”


Today we’re in the midst of the covid-19 pandemic. Because of the pandemic, there are a lot of financial and economic uncertainty in the world and today we’re going to talk about how you could possibly position yourself to take advantage of this financial opportunity and come out better on the other end.

First, we’re going to discuss what you may be experiencing out there in your economic world.If you’re an employee, you may have been laid off or working from home during the pandemic. Either way, these changes cause stress and whether or not you’re still earning income, your bills are still accumulating and if you’re a business owner, your overhead continues. Plus, you have the added stress of knowing that the livelihood of your employees and their families are in your hands. So, at this point, most people, whether you own a business or whether you’re an employee, you’re stressed out trying to think about where you can raise some money to get through this financial crisis,
which brings us to our next point. Where do you have money stored that you could have access to it during this tough financial time?

Let’s face it, most people had money invested in the market and for 11 years that was the place to be and it worked until it didn’t. Well, now the market’s down quite a bit and with your income being reduced, you’re scrambling to get access to capital. Now may not be the best time to be selling your investments in order to pay for your current lifestyle.

Another place you may have access to money is in your retirement plan and for some people this may be your only option. There are a few things to consider if you plan on taking money from your retirement plan. First, if you’re 59 and a half, you’ll have to consider the penalty that will be applied to your distribution. Everyone will have to consider the taxable income from the distribution and most people at this point will have to consider the losses that were hit on their account.

You may not want to be selling at this point, but if that’s the only place you can get access to money, that may be the only option. You also may have options in a 401k, where you can get a 401k loan. But again, there are things you need to consider. Number one, the amount of the loan is limited and number two, the loan has to be repaid usually within a five-year period. In essence what you’re doing is obligating your future income.

This could become a problem, especially if your job is eliminated. Any outstanding loan balance would be taxable fully as income at that point. Also, if you’re under 59 and a half, you’d have to consider the penalty that would be applied. Another place you may have access to your capital is in your home equity, whether you were paying your minimum mortgage payment or paying extra on your mortgage. People have money stored in the equity of their home and they feel that it’s their money. They can get whenever they want, but the reality is the bank will only give you permission if you qualify for being able to repay that loan. The fact of the matter is during these uncertain financial times, the bank may not be readily willing to allow you access to your home equity. I remember a quote from the syndicated radio show host, Paul Harvey, and he said, “it’s times like these that remind us that there have always been times like these.” The point that I got out of it is, the fact that if you were prepared for these times, you wouldn’t have to be scrambling and looking at accessing money from places that may be have restrictions as far as accessing it.

I’ve been in the financial services business since 1985 and this is actually the fifth market correction that I’ve been through and I’ve learned a few things that have helped my clients to weather the storm. First and foremost is the importance of having access to liquid cash when these scary financial times occur. The importance of having liquid cash, cash that isn’t tied to the stock market, or money that isn’t tied to the economy tap, cash that isn’t going to leave you with a tax bill. Cash that you could access at any time with no questions asked.

What we’re talking about is cash value, life insurance. Ladies and gentlemen, this isn’t new. This has been around for over 200 years. In fact, JC penny used cash value life insurance. He literally borrowed against his life insurance policies to weather the storm created by the great depression. He had 1400 stores, that’s 1400 stores full of employees that he was responsible for the well being of them and their family. He borrowed against his life insurance to weather the storm. Our point is that if you’re properly positioned, you can utilize and access the cash in your life insurance policy to help you weather Covid-19 and actually take advantage of the opportunities that are going to be created by this pandemic and created by this financial uncertainty.

Keep in mind, life insurance companies are specifically designed for times like these. They’re the most well capitalized businesses in the world. They’ve been through this before. They have a 200-year track record. They know what they’re doing during these scary financial times.

If you have a cash value life insurance and aren’t sure how to use it, please give us a call. We’d be happy to be of service. If you need help designing a policy to help you get through the next financial crisis, give us a call. We could help you design one that helps meet your needs.