Beginning with the End in Mind: Life Insurance

This is Chris Hughes with the Christian Perspective Podcast with Chris Hughes, where we encourage our listeners to engage the culture with Jesus Christ. Your chosen Truth Network Podcast is starting in just a few seconds, so enjoy it, share it.

But most of all, thank you for listening to the Truth Podcast Network. Welcome to Finishing Well, and today's show might grab you so, you know, the title of it. If you think about it, it might grab you.

It grabbed me, and I couldn't stop laughing for a few minutes. Life insurance beginning with the end in mind. And there's really wisdom to this, you know, as we begin to think about this, Hans. You know, my initial response to that comment, because I'd seen it in your video that you've done on YouTube, you know, on $40,000 worth of life insurance, you need to begin with the end in mind. And I thought, wait a minute, the end, I'm dead.

This can't be good. And then interestingly, and just to be completely transparent, God was telling me as we began to prepare for this show, Robbie, I want you to talk about what Pastor Jackson, or what Bishop Jackson from Charlotte had said yesterday, which is the difference between hot water and boiling water is only one degree, which, you know, that's 211 degrees is hot water, but 212, you got something completely different that you're dealing with. And of course, if you did, that reminded us both of somebody that we dearly loved. And in their last moments, moments, they were boiling.

Oh yeah. Well, one of my clients that's in my book, Dr. Bob, I mean, he was just, you know, in many ways he brought me to Christ. I mean, he just was a, just a great follower. And this guy was a dentist, a retired dentist, and just an interesting guy, led a very interesting life. He had struggled with addiction, the same as me, you know, younger, and alcohol.

And, you know, I guess as much as you can overcome that, and that's where he met God, that's where I met God, is through that. And he was sitting there eating lunch with me, and he's 80 years old, six weeks before he died. And he was just buying insurance, you know, at this point. I mean, I just sold him insurance. I was delivering the policy, and he always wanted to go to lunch.

I always insisted on paying for it. And then I made some very large commissions off of all the business he did with me in estate planning and life insurance. And then I donated a piece of those commissions to his charities, which was getting Bibles into China.

This was just a neat guy. And he was always out at the driveway. His wife was of a different faith. He was still Christian, but they had different ways of looking at things.

Let's just say it that way. And they weren't as evangelical as he was. So he's out at the driveway giving me the address of this sending Bibles missions to China kind of a thing, slipping me a piece of paper. But just before he passed away at this lunch, like six weeks before he passed away, he was literally bouncing on the chair, I'm going to see Jesus. And I was a little bit, I knew what he was saying. He was just kind of full of the joy. He knows he's going to die. And she was looking at him like, what's wrong with you? Or whatever. He was just bouncing and full of joy.

It didn't matter to him at all. So he was signing his life insurance policy. He was beginning with the end in mind. And I, I, you know, it just, that was the end in mind.

But fascinatingly for me, and of course, we'll get more into the particulars. I had a friend, his name was Lester Cranfield. And he was a truck driver, just a just an unbelievable man was in our Christian Businessmen's Committee in Knoxville. And I can see him in my mind's eye at any time. And he was just a big kid.

I mean, whenever you talk to him, he's just like a big kid. And every time I ever saw the man, every single time I ever saw the man, he told me, Robbie, I'm paid up, prayed up, packed up and ready to go. Oh, yeah. And and what he meant was he was paid up, prayed up, packed up and ready to go see Jesus. Well, he died of a heart attack. And while he was having this heart attack, his wife called me and said, Look, Junior is on his way to the hospital.

Would you please go be with them as a you know, because I can't get to the hospital right now. Can you please go make sure that somebody is there for Lester. He's fixed to go on emergency surgeries, just had a heart attack. So this is the heart attack that literally would take Lester's life.

And from what I understand, heart attacks are quite painful. And this man was in his 80s. So as his son gets there and I get there and we they are literally rolling like Lester is on the gurney. He's strapped down right as he's coming by me. He looks up at me with a smile that only Lester Cranfield had and says to me, Robbie, I'm prayed up, packed up and I'm ready to go. And I just never ever have forgotten that that man was was he was boiling.

Right. He wasn't a little bit excited about dying. He was beginning with the end in mind. And but when it comes to this, you know, the thing is, if it is, is we are talking about it is that when when that day comes for me, you know, will the people be sitting around saying, you know, gee, Robbie was prayed up, packed up and ready to go. And he was excited to see Jesus or they're going to be going, man, I mean, how are we going to pay for this funeral or or, you know, some of the other stuff? Because that that's kind of where life insurance goes. Well, yeah. And I want to qualify this business where I was when I made this YouTube video, I was just teaching some of my young folks that are doing the recording and all that kind of stuff was teaching them about Covey's seven habits, Stephen Covey's seven habits of highly effective people.

And one of those is begin with the end in mind. And I was drawing them a picture of how that's how I sell life insurance. Now, I don't really pretty much tell that to people. But if you're going to influence somebody to buy life insurance, which makes you a bigger person, I mean, it's a difficult thing to do, because you're preparing for your family, you buy it because you love your family. And so we got to have a little discussion or we're going to start with a little discussion about what you want things to look like then and just I'm going to take you there, or you're going to go there with me. And I've done that for 45 years selling insurance. And it's the same thing with long term care insurance unless we can kind of get there and you can accept that this might happen to you. And then you might need this. And I kind of hear that I'm going to skip the life insurance pitch.

I mean, it's just is that we've got to have a need or a desire for this thing. And the people really need to understand what this is for, at least from my perspective, before we get into the numbers and the amounts and premiums, because we can drone on about that stuff forever. So today's show is really about life insurance for seniors, life insurance for retirees, for people. I mean, the rates that we're using as an example are for a 68 year old person, male or female. And I use that because most of our client base, most of our people listening to the show are somewhere in the 60s, maybe in the 50s, many of you in the 70s.

And we're talking about things that maybe you've skipped or you're going to hear some. So I wanted to come up with a rate that was rateable and I didn't want to give a whole bunch of rates, but the rates aren't even really the whole point is that if you're a retiree, I'd like you to check in on your life insurance. And when people come to me, I have a whole lot of people that say, well, we don't have life insurance. We don't want it.

We don't need it. We got plenty of money sitting here and she's going to be fine or he's going to be fine or my kids don't need that if there's something left. I mean, people have a lot of quick answers to justify we don't have life insurance.

And I'm not going to sit here and talk you out of that. Now I'm going to tell you, you read a lot in the media is you don't need life insurance when you're in retirement. You need it when you were young and you had a mortgage and you had kids that are in school and if you were all of a sudden to die, they're going to be in an awful way and be orphans and they need a pot of money to replace your income, blah, blah, blah, blah.

And most people have been complicit with that. They have group insurance or they have term insurance, but the whole concept of like, why do I need life insurance when I'm retired? And I'm going to tell you exactly why, because when a person passes away, I don't care if that's at 75, 85 or 95 or even older, the survivors or the family that's sitting there need money and they need it right away.

Yeah. They got situations that certainly are there that the beauty of life insurance is it's not involved in the state. So it comes right away. It comes tax free and you, you know, there's going to be some kind of expenses coming and then there's going to be losses of income. Well, if you get a married couple, first one passes away, the survivor gets the larger of the two checks, the smaller one goes away. Pensions are reduced, expenses don't go down, at least over the short term. And so there's a need for a hunk of money to solve it. There's funeral costs.

People have no idea what that stuff costs, money that you have separately. And I guess if you're a married couple and you have a joint account, that doesn't get locked down. But then if you went to the last one to die, so if you're the second one in the couple, so you're the widow or widower, and then you pass away, your family now, well, all the social security checks go away. And then somebody's got to maintain your house and pay your bills. Like what you just described, because I experienced this with my father, is that social security themselves lock up your checking account if it's been getting direct deposits from social security. So if you're getting deposits right now from social security directly into your checking account, well, when you pass away, they know that you didn't pass away on the day of the month that, you know, you were entitled to all that money.

So they lock up your account until they can straighten out the deal. Oh, yeah. And you go use their credit card after they're deceased, that's not good. Okay. I mean, I know people do it. So there's a need. I mean, we could talk all afternoon.

All you got to do is go talk to somebody that's just had a loss in their family in the last six months, talk to them about the experience, and then just talk to them about whether they're the one handling or their brother was. Yeah, there's a need for money. And then there's a need for money for the next year for a lot of things. Sometimes there's family members that just don't have the money to make the trip.

Somebody's got to send them money. So it seems like a pretty interesting topic. Life insurance begin with the end of mine.

Got to grab my attention. That's what we're talking about today on finishing well. We're going to be back in just a minute. But we want to remind you always that all this information is on this website, cardinalguide.com, as well as this book, The Complete Cardinal Guide to Planning for and Living in Retirement. You can just email Hans there plus all these videos. The video that we're talking about on life insurance is all there at cardinalguide.com.

We'll be right back. Hans and I would love to take our show on the road to your church, Sunday school, Christian, or civic room. 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, life insurance, beginning with the end in mind. And we already talked about I'm going to be dead, and I'm going to be with Jesus, and then that's a thing to be good. But the end in mind is actually that there's going to be a sum of money that's available to meet a particular need that's been determined through some planning and what's affordable to meet that need. Because obviously you've got all those issues, and so we're going to get into those nuts and bolts now.

Well, yeah. And so the example that I put in the YouTube video that has been popular is the $40,000 of life insurance example. And I did that because I've got two different flavors of retiree life insurance here. One is what's called a guaranteed universal life policy, which you get the full physical about a three-page application when they were on paper asking you about every body part that you could imagine. It still doesn't take but about 10 minutes to fill out.

You know, you're checking most of it, no. And then you get a complementary paramedical exam. So they're going to check you out completely underwriting. That doesn't mean you need to be in perfect health.

You know, if you just ever hung out with me, you can see that I'm not in perfect health, and I've passed many of those things. That type of insurance when you're buying a larger amount, especially if you're going to buy $100,000, $200,000, $300,000 is the way to go. And you can make it through a physical just fine. Now the second type that I've got here is what's called final expense insurance.

And I've got one of the most price competitive ones. And you're still going to have to answer some questions, but it's going to be more like three minutes. And, you know, you can check them all, no. And there's some pretty major stuff on there and you check them all, no. And you get issued. I mean, they'll issue the policy sometimes 10 or 15 minutes later.

No physical, no nothing. So it's a convenience to this. It's kind of the don't ask, don't tell. I mean, it's just as long as you can answer their questions and they've, you know, they've got stuff like congestive heart failure and cancer in the last two years, that kind of thing.

It's designed to be a yes, no application. So, you know, the examples I've got is for the first kind for a 68 year old man at standard rates, $190.13 a month for $40,000 worth of life insurance. That was the one with, that has the underwriting. You have to get that.

You got to pass all the, pass all the stuff. And so that one is a universal, that's a universal life. And so that premium $190.13, $190.13 is going to be the same at age 68 as it is at age 108.

Absolutely. It's a guaranteed premium. It's written right into the policy.

There'll be no premium increase. So this is not term insurance. It's not term insurance. In other words, it's not going to run out once you're 85 or whatever.

This is going to continue on as long as you live, as long as you make the premiums, then it's going to pay out the death benefit of $40,000. Right. And the whole idea here is, is that the policies enforce when you die.

That's why they call it whole life. Right. And it would be term insurance if the premium was only good for 20 years. Right.

And then in the 21st year, the premium went to like 2000 a month or something, or it was just over with. Okay. This is permanent whole life insurance with a guaranteed premium. Okay. And it's not that hard to pass it.

So I don't want to scare a bunch of people off from this if you got some conditions as long as they're well, pretty well controlled, you know, and they haven't been serious things that have happened in the last year or two. And for a lady, $144.56 a month for the same thing. So you can see what the life insurance company is thinking about a 68 year old man and a 68 year old woman standing next to each other.

She's got a much better chance of living a little longer than he does. $190.13 for a man, $144.56 for a woman. And then if you go down to the final expense insurance, it's for an easy issue. This is easy issue, final expense. It's still a whole, it's in other words, if you make these premiums. Same thing.

Same thing. But this has a little bit more cash value than the other one has. So even though they're charging you more, it's going to build up a cash value inside of it. But most people don't cash in their final expense policies because they're buying them when they're 68 and they're buying it to keep it and have it enforced when they're deceased. But for the man at 40,000 age 68, this is 257 bucks a month. So he's paying another 67 a month just for the luxury of getting an easy issue policy.

And now once I give you those numbers, you might want to do the thing where you answer the questions. But there's a whole lot of people that can get this $257 policy that really can't get the $190 policy because the questions are pretty easy. And over on the female side, the same 40,000 is 183 bucks a month. That's cheaper than the other policy for a man. Yeah. It just is.

Guaranteed premium, easy questions. You know, the height and weight is much more liberal on this thing. Although both of them are pretty easy. I could qualify for both of them even at my old weight. I've been on a diet lately and I've lost a lot of weight. But even at my old weight, I could qualify for either one of these.

And that was just a little over 300 pounds. Now, so why did I pick 40,000? Well, 40,000 is a significant life insurance policy. And it also is the top end of the final expense easy issue insurance. But we've got this stuff, the easy issue stuff from about 10 different companies. So when people want to get that kind of insurance, but they want to get more than 40,000, they want to get like 100,000, we just stack policies. We just do them 40 with one company, 40 with another company, and 20 with another company. So we, I mean, that's pretty easy to do. And we answer all the questions.

They got all issued in a couple of days. And what I find is once we get people into this thing and they really understand that you can make a bequest more than just giving the money, the family money to pay for a funeral or to pay your bills or that kind of thing, people start seeing this as a, you can put your church down as a beneficiary of 10,000 or 20,000 or 30,000. And if you didn't want your whole family seeing how much money you gave to the church for whatever reason, you could have a niece that's special to you and you don't want to give all your nieces and nephews money. And you also don't want your children and grandchildren looking at why did she give money to the niece.

You can make the niece a beneficiary to a life insurance. Nobody's going to know about it. I mean, it just, and it's going to be tax-free.

There's no taxes due, no income taxes due. There's so many benefits to this of using it for a bequest. We have a lot of people that once they understand this and they see the prices and they're going to go through the underwriting, they buy 100,000, 200,000, and maybe they pay the premiums by the year.

Yeah. And as we had talked about in the previous show, with so many mixed families, right, there's children that are by the other spouse and the other things to make sure that you've got something so that they feel like, you know, they were. Those are the people that buy 100,000 or 200,000 because if they got deals guaranteeing that their kids get stuff made of the prior marriage, so there's already in their will, well, where does that leave their spouse? You know, their current spouse that's of the second marriage, they make them the beneficiary of the larger life insurance or vice versa. They make the spouse the beneficiary of all their stuff and then they use the life insurance to pay off the kids from the prior marriage or their kids.

So using this idea beginning and the end in mind and knowing a little bit of how you think, let me just throw this one out there. So let's just say that my father had understood this at his age of 82 or whatever and he could have taken his IRA money, right, that my siblings ended up having to pay taxes on. He could have taken the money out his income, would not have affected his income that much because, you know, he was just on Social Security at that point in time, right?

Absolutely. You can still buy this stuff in your 80s. It is going to be much more expensive, but still it's relative. So you pull 10 grand a year out of the IRA, pay the taxes of 20,000 or 25,000, you're left with the 7,500 after tax income. This is why he's still alive and he pays that to buy a life insurance policy that maybe has a 10-year premium on it.

So we can make this stuff a 10-year vanishing premium. So he's making those withdrawals every year and paying the taxes and then they ultimately get. So the beneficiaries are, you know, my siblings would have gotten this money with no tax. Yeah, and they would have gotten it a much quicker too. And they would have known what to do because it'd be cash. It wouldn't be securities and one third of an IRA and all that kind of stuff. You know, when we're talking about finishing well and you've got IRA money sitting out there and that's the idea behind the IRA is I want this to be money that I give to my kids.

Really, it's to switch this. This is a great system. System to, you know, use wisdom to get them money that's tax-free. I mean, if this 68-year-old dude wanted to buy 100,000, all I got to do is take 190 times two and a half because I'm the financial planner. That's about 500 bucks a month.

That's 100,000. He wanted to buy $100,000 policy out of his IRA and he wanted to pay 500 bucks a month, but he'd need to draw out about 750 bucks a month, 780s, 800, depending on his tax. Maybe 600 if his taxes are low. He doesn't pay it every year. And when he dies, his beneficiaries get 100 grand tax-free.

Yeah, not to mention that goes towards his minimum distribution. What's that word? Oh, yeah. RMD?

It absolutely comes. Required minimum distribution. You're using it for something.

Here you go. You're creating life insurance that is going to take care of. We even have plans with the life insurance companies that are set up to take care of the taxes and they're added to that.

They'll be planned around your minimum distribution. So we start with that as the premium, pull it out of the IRA, pay the tax, net a certain amount and then we see how much life insurance that buys you. And then that's what we sell you. And then it just goes on into the future, depleting the IRA. And then when you pass away, there's the life insurance.

If there's something left in the IRA, they get that too. So actually, as I think back to Dr. Bob and you, here was a man that he was jumping up and down because he wanted to see Jesus, right? But what he – He said he's going to see Jesus.

He didn't say he wants to see Jesus. He said he's going to see Jesus, which was great. And he was full of joy. And that's why when I heard he died, I just heard about it on a bus when I was going from the airport to a meeting. And at first I was just grief struck and in shock. And then I just thought, ah, he's just talking about this. I knew where he was and I just knew how happy he was. Yeah, yeah. And he had done all this kind of thing, right?

Just six, eight, 10 weeks. It was almost like you can't help but miss that God put this on his heart, right, to get this information. Yeah, and all of that was for his wife and his sons. I mean, all the planning is still in place. They're still paying the premiums. And it's really not going to pay off until she dies. And it's going to pay the sons tax-free. I mean, all this stuff we've put in place.

Or if she goes in a nursing home or assisted living or gets home healthcare, then it's going to pay off in just huge amounts of money. Oh, wow. That's the neat thing. God is going to provide wisdom when we need it. And he provided Hans for you to listen to this radio show today and for me. Again, this show is brought to you by cardinalguide.com, where you can find Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, as well as the Seven Worries tabs that go into all these different areas. The videos that we've talked about on the air so many times, it's all there at cardinalguide.com. Thanks again, Hans.

Yeah, thank you. Finishing Well is a general discussion and education of the issues facing retirees. cardinalguide.com, Cardinal Advisors, and Hans Schile CFP sell insurance.

This show does not offer investment products or investment advice. 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' best-selling 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.