At Least You Have Your Health (S3E9)

Tuesday, August 8th

How do you navigate Life Insurance? What type of Life insurance do you need? Listen to Kris and Sheri break it down on Season 3 Episode 9 


Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

We think about insure yourself you probably first think about how concerned since they need everybody's. News feed it's on the top and everybody's mind. There's a lot more into insuring yourself. And health insurance there's life insurance peers disability insurance there's more long term care insurance. A lot of insurance according to figure out what all of those things mean I'm Sherry lengths Chris Carol that's gonna talk about on this episode of her winning the podcast. Her money is. They're ready not to retirement can be Kirby confusing and Paula detours and stops what do you simply getting started. Approaching retirement a fall somewhere in the medal join us sir our new series of workshops this summer. We college retirement simple for more information visit our website at Carol financial dot com. It's Carol financial. It's retirement simple. Chris Carroll who sued that there were so many things about use they needed to be ensured a. If well I'm sure there's probably less than them insurance salesman might lead to believe it is yeah. But you know I mean. Insuring yourself I think is one of the most complicated financial decisions that people have to go through and it's not. You know health insurance. Is annoying. To me as much as anything but life insurance is just incredibly complex. Health insurance for a lot of ice is something that we're lucky enough to get through employer actually yup. On the condition on it that that's a whole other episode or it doha that whole episode will consist of the sound of me Chris. Banging our heads and a friend over into the wall. Okay. So let's decide health insurance for a minute here. And and talk about these other forms of insurers here you. Sure so life insurance yeah. All by itself life insurance we could probably talk about for a week because his own show different kinds of life insurance than they don't mean different things. Yes they do and and insurance life insurance particularly is our major the products are just very complex. The easy life insurance is what we call term life insurance. You know somebody says I have a five year term life insurance in my grabbed the terps for the level term life insurance right. So five year term. Five years. Term if I die in those five years insurance prayed for me it's pretty Sherry Ford the just sound like Tibetan who could take it because it is but remember we talked about last time we talked about impact and frequency. Right so if I'm young what's the frequency I'm gonna die in the next five years it's a statistically statistically low very low Boca. As I get older that frequency. Increases it's more likely I might die during the next five years. Okay impact now how would. How would my Stanley be impacted financially if I were to pass away. In your particular case to be devastated and in my case it's a big deal ivory young family. My kids are gonna need to grow up and go to college races and races and all that jazz. You know. State I should have there there's a big impact if five if I passed away. But it also matters how much of less safe because that impact would be lessened if I already had a lot of money saved. Up right now and so one of the things that I think I think people are too big mistake on I think it's rampant it is. 65 year old who have life insurance. There have already retire or not they've already saved all the money you're gonna receive in their life and they have life insurance at this point. Why does that make you see because here's here's your here's the thing Syrian Telus to people use some huge joke but us. I'm really had Jody that much I never want to be worth more dead penalized. I got marble floors in my house my my way there's one little area runners she can just push me down those stairs medical marvel to bottom and I'd be gone small can I tell a watch a lot of investigation discovery it doesn't do you any good to be worth more dead animal deaths now but I think I think she'd get caught. But I'm just saying I'm but you're gonna be here. Hello yes that's again. Right so I never wanna be worth more dead than alive personally not I'm 65 and I've quit working. I retired I Murti saved all the money I'm gonna say if not a million dollar life insurance policy on myself. I am worth more dead or alive. But I makes no sense. What about the case or your 65 and you've you've you've retired in your kids are grown and all don't you wanna leave something behind for your wife and your shares. May be. That none of the formula like feature well not in the form of making a bet that I'm gonna die. Come about with term life insurance guys OK let's say on you buy term life insurance. And you are betting that you're gonna die between now and the end of the term can move if you are correct you win. By dying like die these. And you get the money if you're incorrect and you live all well the house kind sweeps the cashing out. On your expect and you just start over with another. There's life insurance policy. Yeah a lot of times you can serve five years five years five years or ten years ten years ten years. But some insurance policies make you weird like they might be ten years in the nifty and human option to renewed for a certain number years something like that. Here's what I'll tell you about insurance. The more complex. And insurance product becomes the more likely it is you're getting ripped off. Oh wow. Well that's an easy rule a phone. Yeah and and it's it's simple OK sure if I'm the one designing the insurance product. I know all the numbers I know all the maps brain. So the more complex against the easier it is for mead figure out what insurance is actually worse than the harder it is for years the person whose target figure out. When it's actually worse because you don't have all the information on great. So what happens is I have. As the insurance company. I have an incentive to make insurance products more and more complex because the more complex or make them. The less likely it is that someone I'm selling it to configure alerts actually works. And so here again click we talk about all the time on her money. You are making a very emotional decision yeah most. People who buy a moot who buy insurance it's an emotional purchase Rite Aid I mean there these are like oh my gosh what would happen is. I di so and so obese are devastated I don't know why my wife would be fine but I'm sure my dog would be very upset at rates have. So you know so it's emotional right thumb. The worst uses terror war in a dorm beat on this to about the people buy insurance on their children. Well they sell him on TV knowing they have the Gerber baby here whatever you. Yeah hmmm here's a thing. You have you have children I have children. What should pick one of your children and purchases and knock him killer off the war on what are the Arkansas children's tuition credit. But if that child worked in your life and she was no longer there. Well there's no amount of money there's no amount of money that fixes the problem is there no commitment. But it is their financial impact do you remember we talked about impact what's the financial impact. You. RA if we're going to be just total is totally blinded her cold blooded this is not emotional for the less college tuition. Okay. Clothes food through all of it embraces races are car starve so what's the financial firm Bernard treasures. I make Germany if you're Mr. Spock if you go to call a larger absolute computer if you're an absolute computer. Your financially better off. We and that is a terrible thing to say okay nobody wants secure through that blood. What we're Reese goes to think about with insurance frequency and impact frequency and impacts. That there is move bad financial impact for most people the only people who have a bad financial impact for people who couldn't afford the funeral service. Okay and guess what no amount of money is gonna make it feeling better is gonna fix the problem so it is a pure most things purchase insurance on. And. Why did face howling. I mean I need to be ready. You lose our decision right there are a lot of things that people just kind of throw away money on an emotional Susan my Tata. You know for pennies a day or whatever do you have that so there always say oh it's so cheap you know and and the only reason they're still commercials is because they do sell it. I have been paying every year I'm not complaining. But it was a very emotional decision for on cord blood storage speech he do it too had NIC shall banner that was. And it was we've never talked about the only that justice for can't let this is a trip you're gone cord blood stars who are you people out. I'll when you have a child you can store. The on umbilical cord blood which is really rich in stem cells and it can be used as as Alexi V therapeutic treatment. Not just for your child both for their siblings correct. And so I did that for both my daughters it was a very emotional decision and you could never ever have talked me out of it and it it's not a ton of money as you know we ask you doing just Libya a 150 dollars a year here and act at their end so I don't even wanna there's no talking me out of veteran away from it. But I do understand how. You can. Sign on the diet line when your emotions and your heart and your parental instincts are involved. Absolutely true and I understand all that phenomenon. You know I'm not trying to be cold about winning this I'm just saying it's one of those things that. Did. You understand what you're doing you are behind you know re insurance companies don't always act with the warm Fuzzy loose. For you how about if you have one of these and I and I don't I don't know what the names of all of these are to see them on late night TV like everyone else but. You've bought you have an opportunity to buy an insurance products for your child and we hear she turns eighteen or 21. They can take ownership of that and then they start their adult life with some life insurance so let's say. He can graduates college and gets married and has their own baby and now 26 they've they've already got in hand. Some culture modest life insurance jobs. British aren't they could've gotten insurance. For lack. True how shall. And they wouldn't of paid into it for Tony somebody that isn't one this I mean I've seen and I'm a TV and we'll try to tell yourself what if the kid is an insurer more in their corny well. If your kids not ensure aboard their tornado need to be you'll often get married and having kids you know let's be honest. You know if if if if there in such bad health that there are on insure more Tony years old on a whole different conversational different conversation guess what. What it's another one that a little bit of money can make you feel any better. Well here's a question for you were talking about life insurance you know we've described what harm life is. Mom is there a difference between you hear hole right and you hear universal life are those two names for the same. No other they're different owners should work well very different might be too strong but. What is yours. Basically. You can buy insurance that will pay off. Anytime you die. Well sooner or later all of us are gonna die right for us. So his whole life in universal life that these are not. These are not. Totally different products but they are. They're different takes on and on products OK bush with a whole life in universal life if you're looking you have insurance they can go over your lifetime. All right. And what it does is play with with term life. You're very clearly making a bet on dying in a certain period of time right brain this whole life for universal life it's it's not quite as clear. What you're. That dude that's cut that's kind of a bad semester signed an inning knowledge and it died a very good I'm actually okay right. And and this is going to pay off when you die. Didn't they kind of blend in aspects of investment so there's a cost to the insurance. We do every year that's based on the probability that you would dive that here. But that's not what you pay what you pay you this other amount based on. Sort of a much longer period of time OK so they separate out the payment from the best pitcher and I this year. And then they had do and sort of investment aspects. And I can't I'm no I'm talking very broadly generally in this kind of you kind of have to because all these talks are different. They're different depending on which company you talk to. There's. There there are different modify or someone topple whole life so you go to fusion C people's call something. That is universal caller something else over here and now called something else or hear they're out little descriptive terms he gives more more complex how. Sure what to lead just tell you about what happens in the insurance company makes it more complex. You're probably getting ripped off yeah. You probably can hammer so your ear. Overpaying. For something that you could've gotten much more cheaply. And you're buying something based on emotion and fear. That you may or may not truly need. Correct. And and I'm not saying. That there's no place. For whole life policies are actually. There actually are situations where they can make a lot of sense. I'm not sure feel strongly that there are places for universal respect looming. And why do you say Delhi what is it about universal than weeks ago he now thinks I'm. It's the game itself complexity and it's about how you mix in the investment partner for. Process. So you might just be better off with a good investment plan until term insurance yes that is the sort of the most classic way of thinking is your your. Always better off swift and invest by the cheap insurance. And invest arrest guide it and this is. There and the one thing I will say is. That insurance companies. Are very good at managing cash. Soon to warn there's a few times tonight in Macon an argument. That. And insurance. Some kinds of insurance investments makes sense. And that's when we like compare them to polling about your cash like when I rather have. 50000 dollar sitting in the bank account or 50000 dollars in a whole life policy cash value. Guy I used to say total Irish OK so. In that case I'm better off with food insurance policy because the banks are gonna pay me anything writing insurance company will make me some money on my cache re okay. So so again. This gets really complicated. And torture comparing it to. But in general the more complex insurance product more likely this year getting ripped off. And I am not blaming the guy who sold Judy insurance product or make this really clear no I mean or none at all job they're doing their job and the vast majority of them. To not do the math on the products that they sell. It's not their fault. Did not that's not your background you know gotten. If you talk I can guarantee you call the guy who sells you your insurance. He is not have like a degree in physics from MIT. And just decided to sell insurance on the side okay saying that the guys who worked in the basement of the insurance company who designed these products they do you know there had masters in mathematics from some really top in school and they sit in the basement of this insurance company designing these really complex product trade. And I mean that's what they do so I'm not blaming the guy who sold you insurance products and I'm not saying he meant to repeal law known not at all I'm saying I agree with what I'm saying is that the the math is hard to complexity is really high a lot of times it is. Higher than the insurance salesman. Really can work through on his so how was he selling used the insurance. It's an emotional. You guys he's got an emotionally he's got an emotion attached to it too and in key the guys selling the product may want to protect you and your family. I mean that I mean everybody told him we're worried about Chris yeah exactly right in some key he looks at the benefits of the insurance or she looks at the benefits of the insurance is that. Says this is good for your family. This'll give you protection. And I wanna help you right but. We don't unfortunately. Which is true that it's almost always. She worked her aunt and and Janet are you out the the more likely you are to cheaper better simple cheaper better simple. So on our way to learn over the board that citizens cheerful leftists. If I had such. You might get sick and you might get so sick that you can't. BO work to earn a living selling your street you have my permission to make fun we took a fun you know for most of my age. Life sized in the bread winner from and for many years I was single period and I was a whole circus you know and and I have a guy I'm never good job the job I love. But if I wasn't bringing in a paycheck we were not going to be able to eat up so I have had for most of my eighth home career supplemental disability policy outside of my employer. Nobody's laughing at that culture so that was a good thing almost every one who's the primary bird runner in their family. Doesn't have enough disability insurance it's actually one of those one you know when I set I think a lot of people over ensure life insurance but under closer ensure disability and particularly. Look at the disability program that you get from work and think could I live off that. And for how long can for how long because here's the thing. Disability insurance is really cheap that's what you don't talk talk about so we talked before we talk about frequency and impact. Okay look come up 41 year old male it is way more likely that I die in a car crash. Then I get like. Either paraplegic. Put in a wheelchair being can't work. It's actually really rare it's sting that won't talk about that frequency multiple it like it happened boy if it happens you you're you're you're SO well you've you've you have so. So looking disability insurance because disability insurance rates are much more reasonable than people think. It is a very rare to have something happened that makes you unable to do you were job on the radio to think about it like. Think that there's only very specific injuries that would make it not possible for you to sit in the Bruce and talk on the radio right. My partner shot had a for a long time and I had no trouble getting it is very affordable right and I could live on. I could live on take care my kids on my supplemental hostility. So like I told my partner for years and years and years you need to do she need to do is he finally gets around to that he's told. He amount of people in your business tend to go nuts but in insurance you speak now. And they denied him. That's how you went through basic urine TJ and that means there's not a lot stability there in your mental health so when I and I understand Laporte I'm not arguing. Well here's how he was not able to get it because T you're point crest how many injuries would prevent me from sitting here talking to you. But it. But if you lose your rhymes and totally there yet only kerosene. That's actually not the right term for a woman but I don't wanna say there aren't. No what I'm volumes Jeff. Click modify it what do five suffer. I as so many people do a chronic and debilitating depression and I just can't command and make the hottest. Well. And sure companies don't like mental health diagnosis. Because they're harder to empirical proof correct and so they don't like to give you long term disability for a loose and facilitating depression so. He I think it's an important thing to have especially if you're the whole party. Absolutely Richard now if you were young and married and have no children. And you know that your spouse could do just fine without you. You really need disability insurance if you don't really need life insurance either right you may want some. Just so they can pay off the house right there's this kind of policies are out there to there not bad. But but if you're young and have no kids your wire your spouse would be okay without your. Back funeral in the election disability you probably don't need extra. Life insurance but you know if if if disability would totally destroy your family. You gotta have been very few particularly. People who make good money to have too little disability. A lot of times you'll get a policy through your employer but it it's a fraction of what you need. And I'm so glad to hear that you got more than. Oh yeah and it's one of the missing this Tony assurances that one of those things that. On you pay for and you really don't want to ever have to use it because of the word disability she had cut its. There you are you're getting this money you know you beat the system play yet. But look at the price. Should I guess there's also short term disability I'd tell you. Pretty much nobody needs short term disability which they don't listen brilliant basically it's it's a policy that kicks in until your long term disability kicks. So you a longterm disability might not kick in until your our work for six months or some gap. 36 months whatever it is short term disability might kick in after two or three weeks. And don't you think you might get it just like I just yet mono or something like that makes sense. Some regular regular podcasts her Marie podcast listeners will know that in the past we've talked about that emergency fund was talked out of home equity line. He might be able to activate your your emergency home equity line and all that other stuff that we've done in previous episodes. To get you through cheer at her and desirability. My mom and I had a conversation curse. Recently and she called me ever it's a while my mom likes to call me tell me something morbid like she's made the final playing for influence so they're. There's songs out yes she saw me she says Sherry I just want you know. That I have long term care insurance and Don I've made arrangements for the dog. My god mom and for the dollars or something no she's not telling you a little what that X and I know Sydor is so you're not telling me Arnold from. I just don't even know that and I just told her and I thought long term care insurance to guy here that's thrown around a lot I'm not even sure what all that covers. OK so. Generally long term care insurance kicks and if you having medical reason picture no longer to take you longer able to take care of yourself. And there's usually this little checklist everything they have worse like if you can't do four of the following interacting daily I don't know whatever it is so it's a little bit different policy by policy but here's the thing. I'm gonna go back and say frequency and impact of the average person. Average whatever that means. Your frequency of needing long term care at some point in your life is about one in theory. About one more than three people will at some point the rest of their lives Snead long term care that's pretty significant and prepare our reserves are living longer grade for its exact derisive frequency might go off as. People are living longer but that's about where sits right now it's about one in three OK okay now impact that's completely different. If you were a person who lives off very little money. And you might need Tony for our nursing care. That can be huge change in cost strike I can't even imagine praying. For what is. You're the guy who. Has a beach house to your house here plays golf three days a week your retirement. Hangs up the country club. You know dries a nice sports car still has a weird midlife crisis suburbia right yeah now what happens if you go and to. Nursing care. I don't mean to little cute sports car that your driver around the tip their business and he can't take off when you're right. You sell the beach house digital music anymore. What happened was the financial impact for that person. They might spend less. Us they might spend less than they have a lot of disposable assets to cash out that's exactly right sued once again I'm telling you frequency. Impact is different person by treasury wanna yeah and the other thing I'd tell you is. Very few people about 50% of people that get some form of long term care it lasts less than two years. So even if it's so it's not like OK the rest of your life. Like my mom with her you know planning. Correct so he had this might cover you for a couple of years and then I'm gonna have to bring you put in my basement with a cat's OK we got ahead so soon. That with a yes. To read the policy if you're looking at long term care insurance what does it actually cover. And think through that OK there's a one in three chance I'm gonna needed at some point if it's if I mean it. 50% of the time I really needed for less than two years OK and then think about. That that last case where you need it for more than than two years. And tenure there for you certain are your fair and right there for awhile what's this policy really gonna pay in that situation. And what's your impact really gonna be in this situation that's what you need to think through. Too many people make an emotional decision. Well I had a teacher my mom so I don't want my kids have I wonder emerge and that's my mum I know your neighbors your mom lived off 181000 dollars a year and then had a stroke in women and just needed 80000 dollars a year care so you had a helper. You're spending 80000 dollars a year now and if you had a stroke can be exactly the same as what you're spending now and your kids when daycare here anyway. Frequency plus impact exactly C plus impact well on the next episode of her Monday. We are gonna take I'm not even gonna say a bite out of health care because it's so big and so huge we're gonna be lucky we know on Adam thought it. I sort of get started on the speed messy tangle that is health care insurance and coverage and everything that goes with that with your money your emotions and all of that. On the next step. As soon from her money to podcast. K if you want more information about what we talked about it on today's show or if you just have other questions about money. This is our website it's WWW Doug Carol financial dot com or you can only shoot me an email whether it's through the podcast or through my website. I'd be happy to help this I can't. Her money is sponsored by killed financial hi this is only natural financial advisor with Carol financial. They're ready to match retirement can be Kirby confusing and fully detours and stops but you're simply getting started. Approaching retirement are false somewhere in the middle join us for our new series of workshops this summer. We college retirement simple. For more information visit our website at Carol financial dot com. It's Carol financial it's retirement simple. They're hurt already my guess is hosted by me Sherry lynch and meet Chris scare. Our executive producers are no trial broke. Jonathan mini and Carol Poteat our producers have their fur and our technical director and editor is Billy black special thanks Emily Nestle and Marion Edwards threw information from this episode or to listen other episodes and subscribe to this podcast visit her money podcast dot com. Her money podcasts is now on Twitter. Follow us tweet us at her money projects email us your questions at questions at her when he podcast dot com. You can even use your phone's voice memo out to record your question. And email it to questions at her money podcast dot com and listen we might even played on the shelf the. 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