Cheers for Insurance and Financial Planning
By John C. Morris
"It's a dog-eat-dog world, and I'm wearing Milk-Bone™ underwear."
Many TV aficionados can quickly identify this line as one of the many
"Norm-isms" from the television show Cheers. For those who don't remember
"the place where everybody knows your name," it was a staple on Thursday night
"Must See TV" from 1986-1995.
So, looking at the title of this article, how does Cheers relate to
Insurance and Financial Planning? You might say about as well as Lilith and
Frasier did on Thursday nights. However, the characters on Cheers were
people with lives to live and problems to overcome, and while they kept us
laughing, they might also have something to say to us about planning for the
future and protecting our loved ones.
Many of us wonder, "Will my family or business be okay if something happens
to me?" The answer to this question is different for everyone, but it usually
involves some type of insurance and/or financial planning. Perhaps one good
way to address this question on a broad basis would be to look at the life
situations represented by a few of our favorite characters from Cheers –identifying
some of the problems that they might face from a financial standpoint, as well
as some of the potential solutions that could help them.
Let's begin with Sam. He is charming, handsome, arrogant and a self proclaimed
ladies' man who is a recovering alcoholic and former star pitcher for the Boston
Red Sox. He is also a single business owner who gets paid only after he pays
the salaries of his employees, as well as the other overhead expenses to keep
the bar up and running. Sam was constantly worried about having Cheers bought
out from underneath him by his long-time enemy, John Hill, from the rival bar,
Melville's
– but did he ever consider what might happen to the bar if he were to
become disabled? What about life after Cheers? Here are some things
that might have been good for him to consider:
Disability
Income and Business Overhead Insurance. If an unforeseen illness or injury
were to keep Sam from working, these policies could help replace a percentage
of his income, as well as pay overhead expenses, including rent, utilities
and salaries of non-owner, non-family employees to keep the taps flowing
and keep Carla and Diane waitressing until he could get back to work.
Retirement
Plan. Sam, like all of us, needs to plan for his retirement. There are
many options for sole proprietors, and they can choose to establish a plan
purely for their own tax-deferred retirement savings, or they can establish
a plan that includes their employees (something that might have sweetened
Carla's disposition and kept her highly motivated).
Norm! He was one of the most beloved characters, delivering some of the funniest
lines on the show. He described himself best when Sam asked him, "Whatcha up
to, Norm?", and he replied, "My ideal weight, if I were eleven feet tall." Despite
being a bit too short for his weight, Norm was a jovial business man who was
hopelessly devoted to his often unloving wife, Vera. If Norm had spent a little
less of his time and money running up a bar tab and a little more securing
his family's future, he might have considered:
Permanent
and/or Term Life Insurance. Depending on his cash flow, Norm may have
chosen from these to provide a surviving income to Vera, capital to pay off
the mortgage and his outstanding liabilities (including his bar tab), and
also to pay taxes and other estate settlement costs in the event of his death.
Individual
Disability Income Insurance. This aid for/by him could have assured that
the benefits would be received tax-free in the event he was to become unable
to work due to sickness or injury. This would have allowed him to continue
to pay the bills without Vera having to go back to work.
Finally, let us consider Dr. Frazier Crane. Frazier was the uptight psychiatrist
whose wife, Lilith, made a python seem warm-blooded. Frasier and Lilith were
both professionally successful, had a son together and enjoyed many of the
finer things in life (the company of each other not being one of them). From
a financial planning standpoint, Frasier might have wanted to consider a few
different things:
Disability
Income Insurance could help Frazier to maintain his lifestyle in the
event of a disability. He might also consider a specific disability policy
or rider that would replace lost retirement contributions in the event of
his disability to help ensure a secure retirement.
Life
Insurance to provide for his son's future in the event of his death and
to pay off mortgage and other debt obligations.
Education
Funding through his state's 529 Plan to save for his son's education.
Long-Term
Care Insurance (LTCi) would help offset the cost of his long-term care
if it should become necessary. Assuming that Frazier was a physician in private
practice and self-employed, his LTCi premiums would now be 100 percent deductible,
not to exceed the IRS limitations. In many states he could also receive a
tax credit or deduction as a first-time purchaser of LTCi.
Retirement
and Estate Planning to help ensure that his later years are financially
secure and that there is an orderly transfer of assets to his heirs, including
his son, dad and neurotic brother, Niles – but that's another series.
Carefully planning for the expected as well as the unexpected in life is
important no matter who you are. Make sure to consider the appropriate planning
for yourself, your family and your business, lest you find yourself in Milk-Bone™ underwear.
John C. Morris, CLTC, is an associate of FranklinMorris,
Coordinating Broker for the Bar Associations Insurance Agency, Inc. For more
information on the insurance benefits available to MSBA members, visit www.msba.org/departments/membership/baia/franklinmorris.pdf.
