Ernesto Hines – Insurance Saves a Family Business

Ernest “Peanut” Folks took great pride in the fact that his son, Ernesto, chose to follow in his footsteps. Peanut owned P&A Collision, an auto body repair shop in Montgomery, Ala., and his plan was to one day pass along the business to his son. Life insurance never factored into Peanut’s plan until an agent called on him in 2003. Peanut became convinced he should protect the business and its 10 employees with a $100,000 life insurance policy.

Downturns in the business sometimes would make it hard for Peanut to make the $84 monthly premium payment. He occasionally considered dropping the coverage. Fortunately, his agent at New York Life, Jon Shoemaker, CLU, ChFC, LUTCF, understood how much he needed the insurance. When a payment was late, Jon would drive out to Peanut’s shop to pick up the check. On a visit in 2005, Jon noticed Peanut didn’t look well and had lost weight. Soon afterward, Peanut got the worst possible news. He had an advanced stage of lung cancer. Doctors gave him just six months to live.

The treatments that followed kept him away from work, and medical costs mounted. Fortunately, Jon knew a way to ease Peanut’s burdens. Invoking a provision that allowed for an early payout to a terminally ill policyholder, he delivered a check to Peanut for the face value of his policy minus a small fee. In the months before his death at age 49 in October 2006, Peanut was able to pay off his debts and turn the body shop over to Ernesto. “The early payment allowed him to transition the business without having to borrow money or pass the hat,” says Jon. “It allowed him to go out with dignity.”