Time to Market some Real Truth

Real Estate Pic 2I know what your thinking. This guy used a catchy title to grab my attention, and for that I agree. I am guilty as charged but I assure you there is some raw and real unprecedented truth to this article. If your a full time real estate agent chances are you are commission based just like me. You work hard and if your good, successful, and consistent at your money making activities, you are likely making an income that warrants all those late evenings, and weekends that come with homes showings and negotiations. Let’s face it any commission based job means that sometimes you won’t get paid for months. I know because it works the same way in my insurance business. I can identify with waiting on deals to close, medical underwriting, and reports from doctors which are all holding up the approval process and sometimes in my profession that can mean months without pay which can be very frustrating and stressful. So where am I headed with all of this. A couple months ago I attended a sales convention sponsored by Industrial Alliance where I heard Preet Banerjee speak, he identified 5 simple rules to follow in order to achieve financial success. Now Preet the Ajax, Ontario residing money expert has been featured on numerous media and news publications. He has appeared alongside Oprah Winfrey, a featured author in Money Sense and the Globe and Mail, and I have even seen him on the evening news recently. So when I received a free copy of his latest book called “Stop Over-Thinking Your Money!” I dug right in. I was quite shocked to see that his very first rule was “Disaster Proof Your Life”. Most people would think that a book about creating financial success would not touch on such a topic, and traditionally jump right into investing your money. I loved the “Disaster Proof your Life” slogan so much in fact that I have actually coined it as my daily verbiage to clients. As Steve Jobs states ” Good artists copy,  great artists steal.”

Now I work with a lot of real estate agents, in fact I am known for being the Marketing and Sales Social Media guy that they speak for ideas and help. We spend a lot of time brainstorming and going through branding, marketing and sales strategies. So I can really identify with their goals and frustrations when it comes to growing their business. Let’s face it the Real Estate Market is saturated, never mind the full time agents, but now there are so many part-timers which make it  difficult to standout from the crowd.  If your interested in getting some more info on branding and marketing feel free to visit my www.jackbendahan.com where you can download my 21 Marketing Strategy Guide or 18 Ways To Get More Leads Course.

After devouring the first chapter of  Preet’s book I began to identify a key problem with real estate agents. A problem that can put them in grave danger down the road, and most of them are completely blind to this fact. But After reading his very first chapter my blood started boiling and I realized just how much trouble my fellow real estate agents were in. For many of them it can take 3 months for deals to close which can mean a lot of time in between pay days. If your not seasoned or if you don’t have enough business in the mill this can mean you borrowing from a credit line or racking up your credit cards especially if you don’t have a float set up to deal with those lag periods. Now here is where it gets really scary, most of the real estate agents I speak too don’t have disability insurance nor do they even think about getting such protection. I have been educating people on life insurance for over 8 years now,  yet I openly admit the most needed product and yet the most unrecognized for the self employed is disability insurance. You see what Preet refers to as sticker price shock for disability insurance always scares people off, but only because its not explained properly.
Hey listen I get it, there are so many bills to pay, so many other responsibilities like children’s activities, family vacations, gym membership’s, the latest Iphone. But after reading Preet’s explanation I began to realize how this mistake could literally wipe a real estate agent and his family out. If  you struggle like me to fund dance, swim, hockey and gymnastics lesson’s for your children, what seems overwhelming presently, can mean total devastation down the road.  Add in the water, hydro, electric, and  property taxes, plus your mortgage and car lease and you might never sleep again. Just take a step back and imagine what it would be like without your income for the next 3 years. This is what a full time realtor, quite frankly any self employed individual without disability insurance has to face.

Now Preet’s style of writing is aggressive but it made me see the importance of  pushing through the missing education for such individuals. If you think I am exaggerating you only have to ask and answer this one question out loud. What would you say is your single biggest asset ? According to Banerjee assuming you earn $ 45,000 per year, and we assume raises, promotions, or for realtors a business growth of 4% per year on average. Over a 40 year career that translates into total earnings of  $4.25 million. From my insurance dealings with real estate agents I know that we are talking about annual salaries that far exceed 45k. So that 4.25 million can be more like 7.25 to 10 million. Now if you answered that your single biggest asset is your ability to earn an income you would have been correct. So what have you done to protect your income ? If you have done nothing up to this point the truth is its not your fault, most insurance specialist don’t explain the reality of this situation nor do they provide the real statistics for fear that you would walk away thinking that they are being too greedy or pushy, suggesting additional products on top of the known life insurance you probably purchased. But now that you are educated it seems completely justified doesn’t  it ?

So think about it for a second, if your already waiting for 3 months to get paid (sales cycle) and then you get injured in a car crash or fall ill with a critical illness, what would it mean to you and your family in terms of financial hardship with no income for another 3 months. According to Banerjee, Great West Life reports one in three people will become disabled for longer then 90 days before age 65, and the average length of a disability longer then 90 days is 2.9 years. Can you imagine not being able to earn an income for 3 years ?

Preet States:

” If you are self employed, or don’t have a benefits plan, run, don’t walk, to get a disability quote from an insurance agent. Be prepared for the sticker shock, because policies can sometimes run to more than $100 per month–but remember, disability coverage may be your most expensive insurance policy because the asset you are protecting is potentially your biggest.”

Real Estate Agents and DisabilitySo this why I believe that real estate agents are in big trouble. They can earn above average yearly incomes but many of them don’t have the simple disability protection needed to protect their family from disaster. Here is a classic simple example:  You earn 100k a year of self employed income. Remember your income is based on what you produce, and for my fellow salesman and saleswoman in the field we all know that there is a needed sales cycle in order to drum up business. Sometimes it can be a  month or even several months. I have heard specifically for real-estate agents it can be 6 months. Now imagine you are driving home from a showing and get into an awful car crash where you injure you back and neck. You are in hospital for a month or two but your doctor says that it will be 4-6 months before you can return to work. So that would mean no income for 4-6  months and then the add an average sales cycle of 3 months to drum up some business. It could be 8 or 9 months before you see a dime in income, all the while your wife and kids are depending on you. Maybe it’s not a car crash but a heart attack, or debilitating disease that takes you out of the game. I will use Banerjee as the fall guy here when he states:

” Life Insurance can be structured to provide your family with an ongoing means to sustain, after your death, the lifestyle you have created in your lifetime. But what happens if you don’t die from an accident or health ailment, but suffer an injury serious enough to keep you from working? What if you become disabled for an extended period? It’s a sad truth that sometimes people would have been better off financially if they had died, instead of surviving with some form of physical handicap, simply because they didn’t take the time to ensure they had proper disability insurance coverage.”

All of these scenarios I have come across in my profession especially in the last 2 years. But what about the scenario that can occur from a simple recreational basketball or floor hockey game that has you tear your ACL  requiring months off work, knee surgery and an even longer recovery time. Have you really thought things through ? From where I am standing these things happen everyday and they still scare the hell out of me, and I am well covered. If you had the disability insurance in place your income would have continued until recovery, depending on the plan you chose, some plans will even cover you until age 65. This is how I sleep sound at night. If you are thinking that  I can get away with this, you are gambling with your family’s well being. Ask anyone who has had to rely on disability insurance,versus the one’s who didn’t have it.

In conclusion there has got to be a reason that the number one money expert in Canada has this as his first rule for being financially succesful  “Disaster Proof Your Life”.  If you want to understand how disability insurance works or would like to get a quote, feel free to download my free ebook “The Naked Truth About Insurance” or email/call me anytime at jack@lifeman.ca or 416-995-8705.

Jack Bendahan, Toronto's honest life insurance broker. Making life insurance simple and protecting your family like I do my own.