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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. Oh, welcome to Finishing Wealth, with certified financial planner, Hans Scheil.
Today's show, how fun, life insurance after 65. What? Oh, yeah. Well, that's what we're going to be talking about today. And so, as I was thinking about this topic, Hans, I kind of tickled myself, as I often do.
People tell me nobody laughs at their jokes more than Robbie. It's, what's your plan B? In other words, I imagine that for most of us, plan A is life, okay?
But what's plan B? And so, along those lines, you know, obviously what Satan means for evil, in other words, your death, God means that for good. And he really does mean for, you know, his faithfulness, the next generation is going to take over after you. And it's kind of neat to be thinking about your plan B, because, you know, like Paul said, to live with Christ, to die is gain. Okay, so let's do a little planning behind how the next generation will gain from my death. And certainly, you know, when it comes to that kind of plan, you know, there's a gigantic part of that is sharing your faith, right? Is sharing with those people that are in your life, you know, how they can take the gospel to the next generation, okay? That's got to be part of your plan B.
But then obviously, they got to have the resources to be able to do that, right, Hans? Well, this is a, when the topic of life insurance comes up, this is a very much talked about subject just amongst people, you know, and the common wisdom says, oh, once the kids are grown, once the mortgage is paid off, once you're retired, I don't need any life insurance. I can't imagine, you know, why I would need life insurance. And, you know, I say that, I just drove into kind of a baby boomer couples, 65-year-old couples dinner that was already in progress for three or four days when I went up and joined my family, let's say, and my wife's family and some friends that are all mutual friends. So I'm showing up, joining the dinner on Friday night, and then I got set up where, well, so-and-so wants to know, why does somebody need life insurance? And it was really asked like a, you know, it's like, hey, hello, welcome to dinner.
Why does somebody 65? She's really talking about her, you know, but my wife was setting it up, and I'm sitting there, and I said, I don't know, why do that? You know, I mean, I just, I'm thinking, boy, I want to go over this on a Friday night dinner at the Mexican restaurant like a hole in the head.
And so I just did this like a lot. I know when I'm being set up, you know, so I said, well, why do that, honey? I mean, it just, you know, and then she's kind of looking at me like, and I was about ready to just turn it on to the other people, but I didn't have to. All of a sudden, the dude pipes up that is the friend and the couple, and well, he just starts going on about, he doesn't need it, and he had tournaments, he had something through work, and it's gonna end, and I'm just sitting there, okay, good. And then my brother-in-law pipes up, and he starts saying something about, it's kind of down the same lines, and I thought that they were asking me to, you know, it was being set up, and then anyhow, the conversation goes on and on and on and on, and I said, so I looked at my wife, and I said, well, how much life insurance do you have?
I mean, you're almost 65. She had no idea, okay, and then all of a sudden, everybody at the table was really interested, like, how much do you have? And I said, well, I'm not gonna tell you. Z.F.
Hutton was fixed to speak, and he had all the representative. Well, I said, I'm not gonna tell you, but I can tell you, it's a lot, and you were asking me why somebody needs any, so I'm not gonna answer how much we have, because we got way more than any, okay, and, you know, so then I started talking about a little bit, like, why that is, and I just said, well, life insurance, I mean, my experience, most well-to-do people that I know, and my experience, and I get to know a lot of well-to-do people, and I know them socially, I know them through my business, I get to ask them into their personal stuff, most well-to-do people own lots of life insurance, they just do, they own lots of whole life insurance, and if you ask them why they do, they're gonna tell you that their accountants and tax lawyers told them to do that, okay, and, you know, if you dig a little deeper, you're gonna find out they were the beneficiaries of life insurance if their family had money growing up, and they, just because it makes a lot of financial sense, because these people were bringing up this whole topic on the basis of that it's just, you're just selling people life insurance, and they don't really need it, and you're not gonna do that to me, I mean, that was Well, you know, I resemble that remark, because, you know, I'm 67 years old, and I can assure you, I desperately need life insurance, and I'll tell you why, I mean, it's not hard, I mean, my kids are gone, and we don't have a mortgage, okay, that is the case, however, you know, were I to die, you know, especially right now, Tammy is not old enough to get my Social Security, and so, you know, how are the bills gonna get paid, right, and how is, you know, all that we really live on every single month, it goes away, and so, you know, just to be responsible to begin with, not to mention all the other things I would like to do with my estate, you know, I've got to have life insurance for Tammy to just be able to hold on, and because if she were to file for my Social Security at age 61, it would greatly reduce the amount of money she'd have for the rest of her life, and so by providing her with life insurance to be able to make that, you know, jump for the next six years until she's old enough to be full retirement age, then kabing, I mean, she can live like she's used to living, right, like we've come accustomed to, I would hate for her not to be able to live the way that she's lived, you know, since we've been married, you know, that what I want, obviously, is what God wants, and I'm, you know, I want to provide. Well, yeah, and I'm gonna tell you, the life insurance companies love people having the theories that the common wisdom has, is I only need it, you know, until the house is paid for, until like 60, they sell them term insurance, and your term is gonna expire in the fall, I mean, which is pretty typical at 67. You're an easy mark in what, you know, if I was the traditional life insurance salesman, because all I gotta do is get you to talk about your current situation, and if you were to disappear and be dead tomorrow, or next week, or next month, and you look at the current situation, your wife would need a big tax-free check, she just would.
She just would. Or me as her financial planner would need that sum of money to pick up the pieces, and we're gonna be scrambling if we don't have it. So at the very least, let's agree that you need, most people need some kind of, just an extension of the term, is your term is not extendable.
I can tell you that already, I know who it's with. It is over, baby. I mean, unless you pay some gigantic premium. So one solution for you is we can just kick the can down the road. We can get you a 10-year term at 67 and get it to 77, because you've got this income need. You're still working. You're spending the money. You're doing things for your kids. You're doing things for the both of you.
You're saving, I mean, it's just all kinds of things. If your income was gone, big problem for her. And vice versa, if her checks are gone and all the benefits that she gets, big problem in reverse for you. Yeah, which, that problem in reverse, based on, you know, actually we had some really good counsel from my standpoint back when we were in our 30s, and I had a really nice whole life insurance policy before we lost the dealership that I couldn't keep up anymore. But we did buy her a universal life policy that has been in effect ever since we went through our financial crisis, and oh my goodness, I look back on it as one of the few smart financial moves I ever made in my life.
It's still making money. Right. Okay, and it was protected through all the things you went through, and it'll be protected. I mean, life insurance money is hard for creditors to get at.
Okay, let's just put it to that. But so the topic of the day is, do we really need life insurance beyond 65? And the answer to that is yes, probably. And then if you're so well-to-do that you really don't need life insurance, those are the very people that buy tons of life insurance because they don't need life insurance, they want life insurance because it has tremendous tax advantages to it. It's just a smart way to transfer wealth to the next generation.
There's just so many other things that we could talk about. Now, then it becomes a question of how much, okay? And how much do you really need? And I don't think that in your case, this is a gigantic amount, I mean, do you need?
And then how long do you need it? Because you make it to 80, and she's 70, early 70s, it's a whole different ballgame. So maybe you don't need that large, large amount till your death if it's past 80, but you really need an extension of time where you thought you were gonna be done needing insurance at 67 when you bought this 20 years ago.
No, it's older than that. So we're gonna look at a 10 or 15 or 20-year term for you as one of our options for a certain amount. But that still doesn't get rid of the fact, if you buy life insurance, do you wanna rent your life insurance or do you wanna own it?
I mean, I'm just gonna ask you that generally speaking. Would you rather rent your life insurance or would you like to own it? Well, having been a renter and an owner of life insurance, I can assure you, I've seen the benefits of owning it are tremendous.
And I understand, you know, kind of what the balance is, but yeah, no doubt you wanna own it if you can. It isn't necessarily a fair comparison or it's kind of a slam because I own lots of term insurance myself. So I'm not trying to slam it, but whole life insurance is there for your whole life.
It's just that simple. And the reason it has cash value and some inherent value is it makes sure that when people die at like 98, there's a payment there or 90 or 88. And the life insurance companies, I mean, whole life is not as profitable as people think it is. for and living in retirement. And so when we come back, we're gonna have a whole lot more. And oh, by the way, we've just brushed on, there's three more other reasons you may wanna have life insurance if you're over 65.
We'll be right back. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.
Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well, a certified financial planner, Hans Scheil. And today's show is life insurance over 65.
And so Hans, you know, there's some wonderful stuff out there. Well, and so what I decided to do is actually show you the prices for a 65-year-old person, either male or female. And I did this at standard rates. So let's talk about the standard rate.
I mean, it's the rate for a guy like me. I'm overweight. I got some well-controlled high blood pressure.
I've got well-controlled cholesterol. But, you know, I don't smoke, certainly enough that I would be rated by the insurance companies. So I would be your typical standard rate.
And maybe I got to push it a little bit. But I could get you in at these, somebody like me, I could get myself in at a standard rate. Now, if you got a better health history than mine, and you have a good lifestyle, you could perhaps get preferred rates.
It would be less than these. And there's a thing called super preferred. These are the people that still run 5Ks. And, you know, they've got really low numbers on everything.
And their family history, their parents lived a long time. And there's a bunch of stuff to get super preferred. So we're talking about standard rates here. And there's also the, you know, where you pay extra. I mean, so like I could possibly fall into that 20% extra, just based on my weight alone.
But usually, when I've bought life insurance, even at this weight, I've been able to shave it down to getting the standard rate. But, you know, I wrote a guy who's now passed, he's in my book, who we've rated as much as 60%. And he bought it when he was 77 years old. And he had, where he had his heart, had irregular heartbeat. He had type two diabetes, but were very well controlled. And so we were able to charge him 60% more, and actually get him a policy issued at 77.
He died at about 84. So don't anybody rule yourself out of going through full underwriting. And a lot of people, if you're relatively stable, I can get you in at the standard rate. Okay, so I'm showing you two different policies.
Both of them have a cash value. But one of them is designed to be the smallest premium that we can make it, but yet still have the insurance guarantee to be enforced, guaranteed to be enforced all the way to 100. And it's a 20 year premium rate. So I don't like people paying life insurance premiums past age 85. Just simply because you'd hate to have somebody, I'd hate to sell somebody one of these policies, they have it for 20 years and somebody in their family lets it lapse or something when they're at a very old age. So all of these premiums are just 20 years at age 65.
And we can set up the same kind of thing for you, no matter what your age is. If you're younger than 65, it's gonna be less than this. If you're more than 65, it's gonna be a little bit more than this.
But we can write these all the way up into the 70s. So, okay, the one policy $100,000, guaranteed to 100, designed not to have much cash value on the lady is 3665 annually, or about 30 300 bucks a month, she's going to pay for $100,000 policy. And it isn't going to build a lot of cash value, it's going to build some. But the premium stop at 85, no matter when she passes away, as long as it's before 100, their death benefit gets paid. So it's a premium, low premium focus, low cash value policy.
A similar thing, she pays $4,500 a year, 4577 a year, which is like 375 a month, something like that. She would then have a very significant and cash value, rich, excuse me, I'm quoting the wrong rate 5332 is the premium that she would pay or like 450 bucks a month. So it's like 50% more.
Yeah, but but but 50% more in premium. But this is a very cash value, rich policy, leaving the dividends inside of the policy. And it also has a growing cash value, or growing death benefit. So if she was to die at 85, well, actually, she wouldn't have to die or cash value at age 85 is $130,000.
And her death benefit is 158,000. So this policy is is really cash value rich, and it has a growing death benefit, depending upon the dividends, of course. So I don't want to bore you with a lot of details, but it's 300 bucks a month to 450 bucks a month is the difference between high cash value and essentially no cash value. Now, if we move over to the mail, the mail is for the low cash value policy $4,500 a year, which is that 375 bucks a month. And for the high cash value policy, the growing cash value policy 5879 a year almost, almost 500 bucks a month if you pay for this by the month. But this guy at age 85 would have cash value 20 years from now of 141,150. And a death benefit of 166,000. So this is a policy that's designed to maximize the cash value. And I'm just showing you this at 100,000. Because we pretty much sell this in units of 100,000. So if you wanted a $200,000 policy or a $300,000 policy, trying to give you a range of cost that somebody could just look at this. If you go into the show notes, I have the illustrations for these policy and the show notes are kind of hard to get on the radio, but you can go into cardinalguide.com or you can go in and look at the YouTube show and those things will be in there. So I've thrown a bunch of numbers at you that are kind of dry.
Once we get into the numbers of this thing, but people generally try to give you something of value that here I've told you the rates to buy this stuff. And the other part of the video, we talked in the beginning of the show about why a couple needs to think about having life insurance. And it's because married couples, generally one of them dies before the other. And if that happens in the 70s and the other one lives into the 90s, we've got a long period of time as a survivor. We need to think about that surviving spouse. And you really don't know which one of you that's going to be.
I mean, a lot of people think they do, but we need to think about that. And a couple of things happen at that first death is number one is one of the social security checks stops. Okay. And just, and then the second thing is, is the surviving spouse goes into single taxpayer rates. That's the first problems we deal with when we're dealing with a widower widower. And so if they have certain kinds of pensions, they stop. Oh yeah.
I mean, there's a whole lot of things. The income changes dramatically, and then taxes change dramatically for that survivor. So we need to plan for that. And life insurance is one way to do that.
Okay. Now going on is we have a lot of people out there that come to us as clients and they're in a second marriage, at least one of them, many times, both of them. And so they've got kids from their first marriage. And many times, if this is a recent marriage, or when I say recent, it's in the last 10 years, um, they perhaps have made some promises, especially if they had some accumulated wealth, they've made some promises to their kids. Um, or even if they just did them in their minds, I have a lot of these people come in. The kids are the beneficiaries of the IRA or the 401k instead of the spouse, because everybody's trying to sell this second marriage when it's, when it happens to all the family around there.
They're just trying to, they're trying to get them to like this kind of thing. Oh, your inheritance is protected, whatever they're doing. And then all of a sudden I'm talking to these people at 65. And I'm saying, you know, we've got a problem here because when the first one of you dies, that survivor is going to need all this money you've got. I mean, that's the kind of the deal in financial planning. So we're going to have to make a change to that, or we're going to need to buy some life insurance to offset that either leave the life insurance money to the kids or leave the, um, the benefits like they are to the kids. And then the life insurance will go to the spouse somehow or another, you folks don't have enough money to start passing things to the next generation. When the first one of you dies, it's just, it's kind of that simple.
And so there's a lot of ways we can compensate for that. And we can even use term insurance if necessary, but it's something you might want to think about now for a single person or this married person. But a lot of times with single people, we have, they're always going to, their biggest asset is their IRA or their 401k. And they're in their sixties, they're coming to us. And then we're thinking, you know, you hand over that IRA to your kids.
You're all of a sudden gone to your adult children. Um, you got a big tax problem. We've covered that on a lot of shows and that life insurance is a wonderful is a wonderful way that we can start depleting the IRA. Now, pay the taxes, pay the premium on one of these life insurance policies so that we get it in little bits so that we spread this over a lot of years. And it won't have a huge effect on your tax return.
It'll get you ready for minimum distributions. And yet there'll be a death benefit for these kids. And it will be a tax free death benefit. And if we do one of these cash value policies, you haven't given it to them yet. You could actually access that money if you needed it for something. And I guess the last place that we talked about that we do a lot of estate planning with life insurance, if you've got that special person or that special institution like the church, and you want to give a certain amount of money to them, and you don't really want everybody to know about it, um, when you're a state, or maybe you don't care whether they know about it. You just want to make sure it goes to them.
And it goes to them tax free. Life insurance is just a simple solution. So I could go on and on and on and on about the people need life insurance when they're in their 60s and 70s. And if they don't really need it, if you're successful in making a case, you don't need it, then you're probably going to want it because you're in a, you have enough assets that you're in a tax position that it's going to be real beneficial for you to get it. Darrell Bock Right.
And I, you know, to me, you know, it's a fairly neat thing to be able to do, right? To set up the next generation. You think about what David did, right? King David, what did he do, man? He set aside all those timbers and all that stuff for the temple that he gave to Solomon.
Talk about some life insurance. I mean, just think of all the generations afterwards that enjoyed Solomon's temple as a result of King David really setting up his life as part of his plan B was he knew that God was going to build the temple after he passed on, and he put Solomon and his son in a place to do that, and we have that opportunity, Hans. And what a neat thing to actually take what Satan means for evil, my death, and actually use it for good, you know, with the resources that he's given us. It's really cool stewardship stuff.
Darrell Bock It is. It's wonderful. And so, again, we want to remind you that if you want to get in on all this fun, you've got to dial 1-800-HANS. Just go to cardinalguide.com, and there you can see contact Hans, clearly, as well as, you know, all these seven worries tabs, which one of which is life insurance, which we don't want you to worry.
We want you to have some answers there, and clearly there's the show notes on this as well as a whole YouTube video if you want more details or all kinds of resources on this as long as, as well as, of course, Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. So fun to do this, Hans, the show. I just love it. Thank you so much for sharing this with us today. Hans Scheil Well, thank you, and God bless you. Darrell Bock The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.
Finishing Whale is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal advisors are independent of each other.
Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Whale 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 Whale radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.
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