Life Insurance with Pre-Existing Conditions

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This is the Truth Network. Welcome to Finishing Wealth, brought to you by CardinalGuide.com, with certified financial planner, Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Wealth, we'll examine both biblical and practical knowledge to assist families in finishing wealth, including discussions on managing social security, Medicare, IRAs, long-term care, life insurance, investments, and taxes. Now, let's get started with Finishing Wealth. So, welcome to Finishing Wealth, with certified financial planner, Hans Scheil.

And today's show, I'm very excited about it. It's life insurance with pre-existing conditions. And so, as I thought about that from a biblical standpoint, of course, we talked before about how we all have a pre-existing condition that's called sin, and how it started was that, unfortunately, Eve didn't think she had any choices, and Adam even got it worse that he didn't have any choices. And so, we can say that one of the things that Satan loves to use on us is put you in a situation where you don't know what you don't know, right? Like, that Eve didn't know. He tried to convince her that God was holding out on her, and so she wanted to get at that knowledge, but she didn't know what she didn't know about how to get it. Like, ask God instead of Satan.

What a concept. And then, poor Adam, now that Eve's eaten, he was in the situation of, wow, Eve's eaten this, and I don't want to be alone. And so, again, rather than calling on God for the piece of information that you need, he took the prideful choice of, well, I'll fix this.

I'll go with her wherever it is that she was headed, and off we go. And God's going to do that, reveal that for good. But the thing of it is, we have so many choices in life that we just don't know what we don't know. And so, I love when you did the video on this idea of life insurance with pre-existing conditions. You say, Hans, that a lot of the folks that, as you're discussing with them, you know, as they come into your, as clients, they think they wouldn't qualify for any life insurance.

Yeah, a lot of them think they qualify for nothing, but they still get in touch with us. And we're meeting a lot of these people when they're turning 65 and going on Medicare. And the government's taking care of you in that respect, is that people with very serious pre-existing conditions can buy any Medicare supplement policy that's on the market at the same prices as perfectly healthy people.

It's called open enrollment. And what we've learned over the years is that many of these folks, they're really, they think, when we start talking about life insurance, they'll interrupt us. They say, oh, I can't qualify for life insurance. I've got, you know, MS or I've had a stroke or a TIA or I've had heart bypass or I've got chronic obstructive pulmonary disease, COPD.

I've got cancer. I mean, a whole list of things. And then a lot of folks will throw in things that may seem major to them, but they're really minor to us, like high blood pressure. So there's a lot of folks assuming that life insurance is not something you can buy in your 60s or your late 50s, and you can't buy it, certainly with all the conditions they have. Right.

So there's all sorts of different levels of this, you know, but there's some that just seem too good to be true, right? Well, yeah. And so when I did this video in preparation, I mean, so who we're talking to here first is the people that have something wrong with them.

I mean, something that they... They're bad sick. They're bad sick. Yeah. I used to have a salesperson that worked with me, a very kind guy, Jelly, he used to describe, oh, boy, he's bad sick.

You know, he's been in the bed for months. But people that have, you know, a serious pre-existing condition, they're just under the assumption they can't get life insurance. And that's just not true. Now, what I'm going to talk about is, is I have an example of a person in the video, $25,000 of life insurance, a male at age 65, 240 bucks a month. And, you know, you're like, well, that's a lot of money. But all of a sudden, when we're talking to somebody that has cancer and they're under treatment right now, and they don't really know where this is going to go, or somebody that's had a stroke, people can be in a wheelchair, they can have... They're maybe under Medicare disability. I mean, they've just got a whole set of circumstances and they don't have any life insurance or their life insurance through work is expiring or is expired, or they have term insurance that's ending.

Once we point this out to people and we really walk into this, they're buying it as quick as they possibly can. And a lot of them, when we walk through the whole example, they're saying, how does the insurance company do this? You know, it's like, what's the catch?

And you could call it a catch. It's really the way the insurance company protects themselves is they can write this life insurance. And if the person that bought it dies within the first two years, what they're going to do is they're going to return all the premiums, not to the person because they're deceased, but to the beneficiary, all the premiums paid in plus 10%. So even that, we've had some people buy these and then they've passed away in the first two years. And that few thousand dollars that was accumulated in this life insurance and then added the 10% is real helpful to a person that otherwise didn't have life insurance. And then you make it to the 25th month, this policy pays off like any other life insurance policy. Right. Which in both cases, you know, you didn't lose anything and you're certainly gain, you know, you had something to go against the tragedy. Your family's, you know, in this moment.

And I remember it really well. You know, when my dad passed away and all of a sudden, you know, these people all have their hand out, the people that are going to process the body and all these things are immediate expenses. They aren't waiting for probate to happen and all that stuff. Well, and then add to that, when a person dies within a family, the family, the people that are around that are left, they need money and they need it quickly.

And bank accounts get locked up. So if you've got money in the bank, I mean, and this is a spousal situation. It's not as tragic, but it's even more tragic when there was now income going to be lost is a lot of folks in this business where they're writing life insurance on older folks and retiring people 65, a lot of them are going to sell $10,000 worth of life insurance because they're going to sell $10,000 worth of life insurance because it's presumed that that's enough to cover the funeral. And what I'm going to say is that $10,000 of life insurance is certainly a lot better than zero. But if you really want to pick a number, and I have done it in my books, and you want to pick a number, 25,000 is really kind of a minimum number where you're going to have $10,000 for the funeral, and that leaves an additional $15,000.

We can get talking about a different show, but I start in all my discussions with people. I'm going to start with a number of 25,000. And frankly, we have a lot of people that once we're on this and they find out they can get it, they buy more. They buy like 100. We have more and more people in their 60s buying $100,000 policy from us. And they're doing that perhaps not of this kind of policy, but maybe they don't have serious preexisting conditions, but they've got something that they thought precluded life insurance, and yet the life insurance company is going to look at that as something that's insurable. So we got a lot of options and a lot of policies, but the reason people are buying $100,000 is that, like married people, if they, the first one that passes, they'll be getting two Social Security checks while they're both alive, and when one of them dies, one of those Social Security checks goes away.

And this is tragic to a lot of folks. If they were on a pension and, you know, getting a pension, then that pension is reduced for the surviving spouse. Many people don't have pensions anymore. A lot of people live off their Social Security and just a little more. So this is another place that people are going to buy $100,000 of life insurance. We have a lot of people in second marriages, so they have kids. Their kids are from different spouses, okay, yours, mine, and ours, and we've talked about that on the show before. But with life insurance, you can name whoever you want as a beneficiary, and it's not going to go through your estate, so perhaps you could leave part of the $100,000 to each kid that's yours, and then if you have stepkids, so your spouse, you still look upon those children as your children, so you can list all the children and maybe leave them each $10,000 if there's five of them, and there's half of it, and you leave the other half to the surviving spouse.

This all gets settled in like a month. Then you bring the church in. A lot of people want to leave money to their church, and when you do that in the will, I mean, certainly it gets done, but it gets done much later, and then people have something to say about it. When you leave the church down as a partial beneficiary, the whole beneficiary, that money just goes right to the church.

Yeah, and you know, how beautiful that is, that you actually can have an estate through this in a really beautiful way. People have nieces, nephews, or just somebody that was special with them. I have one client who has a gentleman that stays in her house and rents a room but he's been doing it for 10 years. He's like in his 40s.

He's a construction worker. He just happens to be from Mexico, and she's a client, and she has provided in her life insurance that some money is going to go directly to him as the beneficiary of the life insurance. And our family is certainly going to have something to say about that when the time comes, but they don't really they don't really have anything to say about it, and it's going to be really private. So you're able to choose somebody that you want to leave something to.

Just name them as a beneficiary, and you don't have to worry about the will being challenged or whether that person is going to get taken care of. It's just clear as day. Right.

This isn't a public thing that goes out to, you know, this person left this to this and this. It's all just the way that you describe it. So we talked about the most expensive for the people that were bad sick as we talked about, and then we've got a couple other tiers that we're going to go into, but we need to tell you again that all this information is covered in Hans' wonderful book, The Complete Cardinal Guide to Planning for and Living in Retirement, which at the website, cardinalguide.com, you can just email Hans and ask for the book or get a download on this chapter, which is the life insurance chapter. And there's so many different things when it comes to life insurance that are just absolutely beautiful that we're going to talk about more when we come back. But again, cardinalguide.com will be right back with life insurance with pre-existing conditions. Chris 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 by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to cardinalguide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday School, Christian, or Civic Group. Contact Hans at cardinalguide.com.

That's cardinalguide.com. Welcome back to Finishing Well with certified financial planner, Hans Scheil. Today's show, we are talking about life insurance with pre-existing conditions.

And if you missed the first half of the show, well, you can always go back and get the podcast, which we talked about those that were bad sick in the first segment. For those who probably thought there's no way an insurance company could cover your, well, you know, as often as the case, Adam had options he didn't discover because he never asked God what to do with it. You know, the thing that always has driven me crazy is Adam, you know, you have a wonderful relationship with God.

Why didn't you ask him, you know, before you jumped into this situation? But fortunately for all of us, we have Hans to help us with these situations. We feel like we don't have options, but choices as you go into this stage of life, it's just a different as you reach the age of 65, 66, 67, even if you're continuing to work like I do, right? You're entering into a new situation and these options and changes are things that you spent your whole life learning about. Well, I have and living through people dying without life insurance, just examples of it, and then people dying with life insurance, talking to the beneficiaries, delivering the money, or they're contacting me because they, you know, it's where we have it. I'm with the company and just lived through the experience. And so we talked about one of the biggest objections that we get or where people are saying, I can't qualify for life insurance. So we talked about that on the first of the show.

We've got something for you. Then many people say, well, I don't need life insurance in retirement. And they've been told this by a lot of consumer type of people. Oh, because your kids are grown and you've paid off the mortgage. So a lot of folks have carried term insurance. And then that term insurance is expiring and they just have worked on it. I don't need life insurance.

And you know, what I'm going to tell you is, you know, kind of yes, you do. I don't have a mortgage and my kids are grown, but I really can't even imagine my wife trying to make it on just my social security at this point in time. Listen, we find people in their 70s that were serving with Medicare or we're helping them with something financial. And then I always talk about this and we find people that bought that and they just pretty much assumed nobody ever really talked to him about it. And they got no life insurance. You can buy this stuff all through your 70s. And with some companies in your early 80s, it gets a little pricey in your 70s. But, well, part of the thing in the price is that I really would like to highlight is this is a whole life policy for those of you who know. So it's a little different than term policy where you're sending your money away and you will never see it again, right?

Well, yeah. I mean, with a whole life policy, just listen to the word, whole life. It is going to be enforced when you die, even if you die in your 90s.

There are over 100. That's whole life. And term life is going to only be enforced and it's only going to pay off if you die during the term.

So I don't want to get into the term versus whole. Term is wonderful for younger people when they've got a large need that's going to end. Like, you know, how you are my son just had a baby, my first grandchild, and they don't really have a lot of assets together. It would be devastating if one of them were to pass away.

And I helped them buy some pretty large term policies on both of them. Now, we're not talking about that today. We're talking about people in their 60s. We're talking to people in their 70s that want to take a second look at this. And we're talking about people in their 50s that want to prepare for this because this is less expensive if you're in your 50s than it is in your mid-70s. Way less expensive. And it's whole life insurance. So what I want to do is talk about the other two options.

So we've got three options. The 65-year-old male, you ladies, it's less expensive for ladies. $25,000 at age 65, $240 a month.

The second option is the same $25,000, it's 134 bucks a month. Say, well, why wouldn't I buy that? Well, you wouldn't buy that if you couldn't answer the health questions.

And if you've got one of these serious things that we were talking about. Yeah, you're currently on chemotherapy, obviously. Yeah, I mean, you just, this is not an option, the $134 a month option. But if your cancer, was you went into remission over two years ago or three years ago, then you can buy this kind of insurance. If your TIA that you had was more than two years ago, you can buy this option. If your bypass surgery was not in the last year, but it was more than a year ago, you can buy this option.

If your diabetes is not insulin dependent and it is not, or if it is insulin dependent, if you're not on, if you're on less than 50 or 50 units or less a day, you can buy this option. So, there's a whole bunch of gray area where people would think they'd have to buy the first policy, but they can actually get underwritten on this second policy. And I'm quoting the rate here of just one company. We have about 15 different insurance companies that we use for this easy issue is what it's called. And another big difference is this thing pays its full immediate benefit. You know, you buy this policy, you die in three months, it pays the full $25,000. And something I neglected to mention back on the first policy is it'll pay off the 25,000 if you're killed in an accident. So, if you had an accident and that killed you, you would get your full benefit right away. And that's true in all of these policies. So, the only policy where there's limited benefits in the first two years is this first option, which they obviously need to do when they're insuring people with these serious illnesses. So, the second policy, we have a lot of people who don't want to go through the physical, don't feel like they can pass the physical, or have tried to buy the least expensive type of insurance and a larger amount, and they get turned down. We take these policies and we stack them. We have several clients that we've got, you know, a $35,000 policy with one company, a 50,000 with another company, and a 25,000 with another company. And we're able to get them through underwriting with all three of them where they were turned down on the least expensive kind.

So, we can get quite creative with this. And this guy thought he wasn't eligible for anything. And he really needed to buy this insurance in his 70s because his 20-year term had expired that he bought at 55. It expired at 75 because he retired at 55. He took his full pension without survivor benefits thinking that whatever he was thinking, because it was cheap. And now he's sitting here at 75. He's got a number of health conditions, looks upon himself as uninsurable, and if he dies, his wife gets nothing out of the pension that's almost four grand a month. He had a big problem.

And so, what we did is we stacked these second option policies. And it was much more than $134 a month. He's paying us like $600, $700, $800 a month. And we're talking to him now at $78 or $79 of buying more.

And his wife is like 10 years younger. And this is a real problem for their family household budget. And the second type of what is easy issue insurance is just a real problem solver for a lot of people.

Then the third option, which we ran through, is like $80 a month or $85 a month for the same 25 thousand on this 65-year-old male. But they're going to take you, they're going to take me and you together through about three pages of health questions. It doesn't mean if you answer a number of them, yes, that you can't get issued. It just means they're going to look you over from head to toe. Then they're going to send you a free physical. So then they're going to have somebody come out calling you at your house or you can go into their office. They're going to draw your blood.

They're going to go through all the same questions, take your height and weight, and possibly write to your doctor. And then it still doesn't mean if you don't pass that, that you're going to get declined. They may just rate you.

They may just charge you more, but issue the same policy. And then pretty soon you're going to be right back up option two. And a lot of people just skip that step when they've got a number of things.

They don't want to go through that. Now, as I mentioned earlier in the show, we have a lot of people buying a hundred thousand dollars worth of life insurance in their sixties or more. I mean, we have people buying substantially more, but we have a lot of people that have settled on that number when we started with 25 and they're saying, look, my wife or my husband is going to suffer a difficult situation in my absence, or I have this desire to leave things to my children or stepchildren or nieces and nephews or to the church or to pay off some loans in the event of my death.

I mean, I've just, I've got a need and I want to buy more. Okay. And then all we do is it's a little less than four times the price of the 80 some dollars a month. Um, you know, it's going to be around 300 bucks a month and they're going to get that a hundred thousand dollars worth of insurance. And keep in mind for ladies, it's about 10% less.

Okay. I mean, women tend to live longer than men. And so the insurance company knows that. And so they're going to charge less.

Right, right. And again, to me, it's a completely significant issue. This is whole life insurance that this money is going to get paid out. In other words, that 25, if you keep making your premiums, they are going to pay out $25,000 or they are going to pay out a hundred thousand. If you've bought that much insurance, there's, there's no way that this money is just going away. It actually, is it going to go to the creating an immediate estate, right? And it's budgeted by the month and it's not going to go in the estate.

It doesn't have anything to do with the lawyers. It's paid by beneficiary. We just fill out a claim form and I mean, it's paid in a month. And it's a great time as always to talk about making sure that your beneficiaries are current and, and, and they got more stories of that. I mean, I just, every time, you know, on another show, I mean, it's just, and so I have a story where a good buddy of mine, this happened, who's dad's second wife passed away and her ex-husband was the beneficiary of his life insurance that they had paid for on all these years. So we went through that. So essentially what you're saying is his ex-wife got his life insurance and there was nothing, her ex-husband got the life insurance that he obviously paid all the premiums to already. And there is nothing in the world that can be done.

There's nothing, there's nothing to be done. But then I asked the magic question to my buddy. I said, did, has your dad changed all his beneficiaries now that she's good deceased? And he says, you know, you got a good question there. I said, I know it's a good question. That's why I asked it. I mean, and I, I'm almost going to bet that if I don't intervene, he is possibly set up for the same situation later on.

And a lot of you listeners out there, I'll be glad to do that for you. Let's get the beneficiaries out. Let's look at them and see if they make sense now. And if they don't, it's very simple to change beneficiaries on life insurance. It's not just life insurance policies too, though. It's IRAs. It's everything that has a beneficial one case, you know, things to think about and, and more reason that we're glad that you're listening to finishing well, because that's a big, huge part of it is that the, the I's gotta be dotted.

T's gotta be crossed. Well, and what needs to be said throughout this is when we get into the numbers and we start now, it gets kind of sterile, the discussion and, you know, the clients want to go there. My agents want to go there. Everybody wants to go and we'll start talking numbers and sheets.

This isn't so much about the numbers. This is about having an immediate explosion of money of a large amount of money that's coming exactly when it's needed and it's paid to the family. And for people that want that, we've got something for, regardless of your health, you, you, you can, you can apply for this. Right. And you can find out again, all about it at The Complete Cardinal Guide, The Planning for and Delivering in Retirement book that Hans has and is there at cardinalguide.com.

As always, we didn't have enough time for all the stuff we had. Thanks, Hans. Thank you. We hope you enjoyed Finishing Well, brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as social security, Medicare, IRAs, long-term care, life insurance, investments and taxes, as well as Hans' bestselling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the workbook. Once again, for dozens of free resources, past shows or to get Hans' book, go to cardinalguide.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 a word. Once again, that's cardinalguide.com, cardinalguide.com. This is the Truth Network.