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December 19, 2020 8:30 am
Hans and Robby discuss the two different types of life insurance, Term and Whole, and specially what type you should have in retirement. Hans goes over why you need life insurance in retirement as well!
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1% of what you give goes to the field and get the ball went gospel fundraiser to support family of Jesus family this Christmas and give them a six explanation see chickens and camping podcasts is chosen, just starting something. This is the Truth Network welcome to finishing well brought you by Cardinal guy, certified financial planner long shot best-selling author and financial planner helping families finish well for over 40 years finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well welcome to finishing well, fun show.
Very simple title, life insurance, what you know there's some terms in life insurance. I really like is very, very much like the term whole life because now we kinda have this God even paid the premium in Jesus Christ. This phenomenal whole life policy but you get to have a whole life.
I mean it and I love what it says in revelations 21 five it says behold the one who sits on the throne says I'm going to make all things new right he's gonna make you whole.
And I love John Eldridge wrote a whole book on this that verse you are all things new.
Where he talked about how exciting is heaven is given because what Jesus is telling us here sees, he's gonna make you hold the devil's been stealing and killing and destroying your whole life and when you think about being made whole for me. You know I could. My dad my mom right yeah I am even hoping for my dog. Major right when I was a kid, I had this beagle that we love dearly and you know that was your childhood friend and how close we had beagle in the ages of Snoopy you know we had a real big I think but what I think of whole life from the standpoint of enough insurance products and then right this very minute, as I am 65 and I think GIII need that to make my wife's life whole without me being there or my children's life hold to some extent.
I dislike the term to be made whole will yeah and we I favor whole life because most my clients are 65 and over, and we have them ensure many times on Medicare supplement insurance for Medicare advantage insurance for their whole life and that's one of the things we have to deal with in our business as people pass away, and it's really nice when you're in the life insurance business if the insurance policies that you sold them are in force when they died because they pay out to their intended beneficiaries so all life is in many circles got a bad name because people have looked at people in the investment business people in the consumer watchdog business in. Take a look at and they say are you putting all this money with the insurance company and that's how they build these gigantic buildings in the UK in these huge premiums and they pay low interest rates and charge a high fees inside there and you know what my advice would be is for. Let's buy term insurance read to spend as little premium and uses.
Given the minimum you have to government you getting advice many times from really the wrong people who are just looking it at a life insurance policy is an investment product and its part that, but it is a life insurance policy that's designed to pay a death benefit to a beneficiary soon after you pass away. So then you really could say there's two types of life insurance. There's term life in his whole life and neither one of them is good or bad, so I was giving example of term insurance, which I owned when I was very young. My son were expecting our first grandchild in February and my sons been married a couple years and his young wife and they had purchased really any private life insurance since her marriage and babies come along and I said I'm a do better than recommend this, I'm screwed by that form. Pay the premium for a year and then you know really odd be if we get down to the second year they need some help with that premium on the sender then okay. It was he's 33 she's 31 1/4 of $1 million worth of term insurance for 30 years so it's guaranteed for 30 years that is covered for 1/4 million dollars of insurance and the 31st year it's over and I figure we can take care of himself by that time really can take care of himself now but so 30 years and when you really calculate that for 1/4 million dollars worth of insurance. He's going to pay $9000 into that over 30 years. The insurance company better not be paying out a lot of the claimant so they can be out of business. If you collect 9000 and paying out quarter of a million or somebody dies in the middle of the term in behalf of that so term insurance policies payout very few death benefits just most of them either lapse before the period ends or the people outlive the.
And then I have to pay out much that with the few death claims that they have they need all those premiums the people that didn't collect just to pay off the few to do so term insurance is a great deal it allows you when you're young and you don't have a lot of resources, but even middle-aged and you have large needs for life insurance and by that I mean the people that survive you if you're all of a sudden leave this world, your family needs a large amount of money and you don't really have the dough to be by a permanent insurance plan.
Term insurance is wonderful now. The reason you're having this talk today is we have so many clients coming to us when they turn 65. Going on Medicare coming to us for financial planning were looking over all their stuff and they have term insurance policies expiring and this is like you you you bought one several years ago. In the end is near 68, 168 so I mean and when you bought the thing you really didn't imagine that you would need that amount of insurance beyond 68, and maybe you don't need that amount, but it's still a concern to guy and it's like what I do with this and I replace it with another term in German, 68, even for 10 years is pretty expensive and then you just go there with affected Anza 78 so we have a lot of people in this.
Getting ready to retire at age who have these term policies and then they have some work insurance. They had some work insurance and they usually did their little foggy on whether that keeps going, how much it costs a man I always ask people questions what you know about.
They don't know much. They just know that they have it and they have taken some comfort in that.
But there's always this little uncertainty because I can just tell you it's set up to and when you quit work that doesn't mean you can't continue the price can be huge now depends on what kind of work insurance to. There are some plans that are set up at work that are designed to keep the rest of your life. So I don't want to start this and all that. I'm just what I'm just saying is when you for the most part.
If you haven't research it and you really don't know when you have an then put a lot of money in there probably ends so in many of these folks they come out with but I don't need life insurance guy and I'm always kind of thinking well okay so I thought that was what you hired me to determine if I don't really say this to that.
I just I always have this little line of humor going on inside of me that that I just mean people going to instantly avoid life insurance salesperson want to come over the house one to get into our stuff.
So now we don't know worlds that you know and I'm already in there and I'm already gone into the facts and so people have been told this is that you need life insurance when you're young you need term insurance and then when you get old you won't need it anymore because your house is paid off and you got assets that you've accumulated.
And if you die all that money is there and then the people could just live off of that again. That's a little too simple. Now one thing I want to tell you from my experience. I've been in the financial services, insurance business, a lot of years is that most wealthy people that I've advised have lots life insurance just in fact, I don't. I know very few wealthy people that are old or older.
Growing old that don't have lots life insurance so what I've always thought if this is such a bad proposition. Why do all the wealthy people have okay and I'll just gonna let you sink on that one and what what what the answer to this question and that of the advice that I give is we need to see the impact on your family. If you're to die at certain ages okay so there's many people to tell me I don't need life insurance anymore there, right about that and they just because they've got enough assets and resources that their spouse is going to be just fine and their kids, you know. By the time you reach 75, 80, 8590. Your kids are Bill take care of themselves and I really need to be by life insurance for them.
In most cases, but again many wealthy people do this just makes tax sense and transfer. There's all kinds of reasons why people have it so the answer to this is, you probably need less insurance then you needed when you were young and earning and didn't have a lot of assets but most likely you need some insurance and you may need somewhere between some and a lot you know whatever that is.
So you may need more than some, but it's usually less than your term insurance need and it needs to be whole life. The reason I say whole life is you know if you're given a choice when you buy life insurance you want this policy to be enforced when you die or you wanted to have ended five years before he died.
Okay if I give people the choice of I gave that to you right now with one of those two are. You heard recently that you know we don't celebrate the date of our death because we just don't know when it's out there by Miller. That's exactly the term I would get yeah yeah mean only God knows that and so the point I'm making is is that when most people pass away. The family needs money. Whether it's a surviving spouse or the children looking after their fears or some minimal amount of money that is needed favorite things he did talk about all the time I think about blended families, where you've got this sibling that would really feel left out is talk about that after the break as I want to go into that a little bit because that's more people that we talk to than you think it is okay and I have a special thing that I share with them.
I really share a story about the other people but go over that after the second part of the show we will do that because of the beginning. I decided not to mention that this is my good friend Hans file is a certified financial planner with no cargo advisors, which the other website is Cardinal Drive.com where you can find his book private complete cardinal guide to planning for living in retirement of those chapters, is on life insurance come back there and some really cool things you can do these products to really love on people that may feel like I'm I'm excited to hear what Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to cardinal guide.com and contact Tom to schedule a live recording of finishing well your church, civic group, contact Tom to cardinal guide.com that's cardinal guide.com welcome back to finishing well with my good friend and financial planner Hans Schild today show is life insurance and and and this just an amazing tool. It really really is in so many different ways to realize that your life it knowing it that you remember the movie it's a wonderful life don't want to Clarence. The Angels potable sayings is in a you don't realize the holy that will be happen if you were never here if you want to hear the whole that's left and just think about people that were in a meaningful to you my whole was, left when you're not there. Well, what a cool thing that we were provided with whole life insurance in order to help fill that hole that people can feel so so we take people that 65 and you know what I'm estate is a minimum and I do this in my book of $25,000 of whole life insurance that you can put in effect for your whole life so why 25,100 deal with that is a minimum because when people pass away one person passes away, the family is you know in shock and chaos and I haven't met the person yet that have all their affairs in order. This is just a gradation scale and the nice thing about life insurance. Is it just creates immediate cash as you can have a hard time when you die just your family, getting to your checking account and just getting to the availability of money to pay bills and thanks so starting with the funeral expense. I'm not a big fan of given the funeral home money because as good as they are as big as they are. I'd really have an insurance company holding my money that I would people buy these preneed pre-k things and they put in a trust fund or whatever right, I really have that enough they highly rated insurance company, but in any case, 10, $12,000 for a funeral and the other certainly can be much more, but that kind of money just as liquid to pay for funeral is nice to have you need a couple of thousand dollars to pay an attorney to settle up the estate. So if you do have money and things that these people are going live on beyond your death or your spouse that they're going to need the help of an attorney.
It's nice to have that paid for by life insurance.
Most attorneys want the money up front, and to be able to pay an executor. Even a small amount of money is nice to have that come out of the life insurance maybe $1000 and you know that's gonna leave about $10,000 $12,000 depending on how you added up to pay your bills after your death. Even if you're single and you pass away there still bills after your death just to pay the bill in the light bill somebody to mow the yard and pay the taxes on the property and all that kind of stuff is really no Social Security check coming up just as a minimum. People asked me how much life insurance do I need but I think $25,000 is a good place to start. And we happen to have $25,000 life insurance policies that you can buy regardless of your health will get into too much detail on that you can call me and talk to me but they pay less than the full amount if you die in the first two years so somebody's very ill if their terminal yet.
We generally don't try to write life insurance to go through this, but it people that have serious illnesses that I will the organ to get them rejected for life insurance, they can still buy these policies and there still a payment in those first two years, but if you make it two years there just like any other life insurance or permanent life insurance. I'd highly recommend that if you're in poor health that you would get one of those and then many of those people you come in asking for that were able to get them because they're healthy enough to get on one of the standard policies which pay the full benefit from day one and there about the same price, and then we even have some guaranteed universal life policies that are very cost effective. You get to be in reasonably good health to get those but they go as low as $25,000 and we have a large assortment of choices that decided it wants to solve this problem. Can you know can get in there and get whole life insurance.
They know it can be enforced when their deceased and they can even get that if they've got poor Diane. Even if you think well let me see him got a casket. I got a five big cement thing that goes around, you know, and that thing or maybe you think information let me tell you some things that maybe I thought about that immediately come at a mean like immediately, like there's gonna be family coming from all over, and some of those people go meet, help you in order to get there and then this can be a big huge family dinner.
I mean, or something along these lines, that all these things are come in and then. Oh by the way, when you sit down with executor sits down with the most of the state. There don't want to check in within two months of the estate tax, whatever that may and and and they're looking at you like okay you know you get strict but hot in here you go at an end. There were just it seemed like everything after thing that really surprised me like oh I didn't see that, and I didn't see that coming. I did see that, but fortunately my dad did have small life insurance policy that really like got swallowed up before I can hardly turn around. She's wonderful. You know it needs to be a life it doesn't need to be something that you worry about ending. We also have a thing called single premium whole life and that is where you got money in the bank and you just write a check dependent upon your age is your 65 and just guessing at these in your female, probably $12,000 of a single premium whole life check for $25,000 policy. If you're a man, probably 13,000 home but you just put the money so I put it under the mattress and know my pain. I return I will yeah she died quickly but admitted just I'm just pulling those numbers up on my head, but I'm not too far off. Now if you she died 20 years later you still get and $0.50 right independent program and you get 25 bags and I get your family.
Yeah, mean interest yeah and is tax-free life insurance the most part is tax-free. There are some situations where some people can mess up all the righted for the most part it's x-rays can go to the beneficiaries I've delivered over 100 checks to beneficiaries. I used to keep track of and do it anymore, but I in my crib and life insurance business a long time and I've never had any of them ask me any questions about the balls.
Never had one person asked me knows that terminal was a whole life really doesn't matter. It was a life insurance policy that was in force when the person died and there's a case where terminal life doesn't matter. Most of her whole life policies because most these people were very old some homework term as they were younger people and that was more tragic but still it just the life insurance never have them ask me a question like much they pay and premium were there other beneficiaries resist never had a person asked me a question there just many of them start crying. They know their parent and done this with her uncle or now I'm assigned your talk about families that had multiple children yeah well yeah and so so we're talking about 25,000 as a minimum and you just reminded me from the earlier hour we have a lot of people that are coming to us for retirement planning 65 that there in the second marriage that they and they many of them had their children with from the first marriage.
So now they have his blended family and most of these people are not rich enough, wealthy enough to start leaving money to their kids when they die because all the money we don't know whether the husband or the wife is going to die first, and so we gotta throw all their money at the surviving spouse, meaning they can't be making their kids beneficiaries and passing on assets lesser very wealthy and so that doesn't usually seem to be much problem to them because a lot of times these are the same people that it had just given their kids money or help them with things because their kids are in their 30s and young families are that type of player needed so so people aren't too worried about this, but something I point out to them is just delicately as I can. This is that cell phone talking to the minister here is that if he dies first and we're which we should do were leaving all the money to her. He's been married to her many years now and she's gonna need everything you got to keep living and keep on living in the way you folks are living in so your kid your kids are going to come to your funeral and everything you've got is going to their stepmother or vice versa. You know she's the one that goes for her kids are coming to her funeral and everything that she had is going to their stepfather and I try to figure out the most tactful way to say that as time passes. These become more all our kids but I'm just talking about some wounds that I I've just been part of being a financial planner and I was in the life insurance guy was a popular guy with the family and you know I've got the IRA that I'm managing. And so people coming to me for beneficiaries for all kinds of stuff in. You know, a simple way to solve this is with life insurance you can do one or two things you can either leave something the jurors do your kids like. If it's a vacation home or a special car or whatever some money in the bank or just something that's special that you otherwise would be leaving to your spouse.
You can leave this to the kids and then you just compensate for that with purchase life insurance now are going up from 25 to 5200. A lot of people end up buying hundred thousand dollars of life insurance at 65 whole life and then they have various beneficiaries.
Maybe they're going to leave 5000 each kid and a lot of people when they do this they're going to name her kids which of their stepchildren to so this is that when I go first.
If I go first. My kids and your kids. There are kids, they all get a check or maybe just 5000 or 10,000 there's a whole lot of difference between 5000 enough just a big big difference in so you may not have children and you may have some nieces and nephews. People are special. You may want to give some mightier church if you really want to be certain that whoever you wanted to get the money. Whether it's a niece or nephew or I have one lady that still has her ex-husband down is the beneficiary on one of her life insurance policy.
She's acquired is, once you broke before and she wants him to have that money going but she does yellow and dance so that that could really get challenged by her kids. I was in a will and you know that this could create a lot of things that this is going to just be real simple. It is consenting.
Check and so the beauty of life insurance is you can name who you want.
So what I'm doing is I'm just building up from there is the 25,000 whole life is really a minimum in my book and then there are reasons to get 50 or hundred and we can make that happen for people, even in their 70s. Somebody go.
This is really a neat opportunity make a lot of people haul because they are gonna have a hole in her heart course you can find out more about this in Hans is book the complete cargo guide to planning for living in retirement. You can even just go to his website, a carnal guy.com and ask for this fun show is site may not be so fun to be dying, but it would be fun to see people made holy Jesus is can I do for all of us when he makes all things new.
Thank you, thank you. We hope you enjoyed finishing well brought you by carnal guy.com is a carnal guy.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care, life insurance, investments and taxes as well as cons best-selling book the complete guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows get Hans book go to Cardinal guy.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us the word. Once again that's Cardinal guy.com Cardinal guy.com. This is the Truth Network