WEBVTT
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The best things in life are You
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can give them to the birds and bees traditional media and TV and looking for information and sources elsewhere.
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And that kind of brings me to the point of this podcast today because, you know, lately what I've been seeing is there are just tons and tons of ads that I keep seeing about mortgage protection insurance and, you know, of course the traditional colonial pen type commercials where, you know, you have a old lady or whomever and, you know, mom, what's What are you doing?
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You know, and oh, I just am feeling, you know, bad about world.
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And I just think that I don't want to leave you with a big financial burden when I die.
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And so I took out a policy today, you know, oh, mom, it's so fantastic.
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And, you know, there you go down that road, tugging on everybody's heartstrings, right?
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Because nobody wants to feel that mom doesn't know what she's doing and don't really want to tell Hey mom, we probably should have done this a long time ago, but even so that may not be the best, you know, thing to do right now because it's quite expensive and they probably don't even know that.
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Right.
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Because unless you're really steeped in the world of insurance or your financial advisor plan or what have you, you know, okay.
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You don't really know, right?
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You don't know what you don't know.
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I mean, there's tons of things I don't know, right?
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I mean, if I were to go out and build a house, I don't know really the first thing about building a house except for buy some wood and buy some nails, right?
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So it just is out of my wheelhouse.
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And really, that's the whole point of this podcast, really.
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It's just to educate, empower, and enlighten the gay community, LGBT+, Q, queer, what have you.
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So all I'm saying is is it's good when you know more than the average bear, no pun intended, but it's good when you know more that helps you do better in life because we should learn from each other, right?
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And not have to always go through the school of hard knocks.
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But what I did is what I tried a little life insurance experiment because I wanted to see, you know, maybe things have changed.
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I This world is just all about change, right?
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So I ended up doing an experiment with three life insurance companies because I wanted to check their rates and I just wanted to see how competitive they would be because you know that when you're looking at apples to apples, then you make your decisions based on what you think is the best one for you at the right price and maybe you pick a private label brand.
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Like, you know, I don't know, let's say Monty's or Dole or whatever it is, you know, over the store brand or, you know, I remember back in the eighties when seventies, eighties, whatever it was, they used to have generics and you walked into the grocery store and on the shelves would be these black and white cans and it would say corn, peas, whatever.
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And that's all that was on them.
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Nothing, no colors, no brands, no nothing.
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And they were really really inexpensive because there was, you know, no color, you know, the label was just plain, like I said, and plus that there was no brand from any company on it.
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So it was just a lot less expensive.
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Let's say if a can of peas was, I don't know, dollar 50, the generics were maybe like, I don't know, 50 cents.
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So it was just a lot, lot cheaper.
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And sometimes people bought them, but a lot of times people didn't buy them because they were like, Oh my God, this makes me feel so poor.
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You know, I'm not going to buy these.
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And then I think what happened is they actually got phased out over time.
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And I think they turned into like store brands.
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So you have your Kroger's and your Publix and your, you know, HEB and everything else.
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And now you have your store brands that are competitive with some of the private label brands.
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Anyway, the same can kind of be said for life insurance, because when you're looking at these various companies, they all tend to kind of look and sound the same.
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Because if they do the same, you know, if it walks like a duck, talks like a duck, it probably is a duck, right?
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But in this case, all those ducks, when you're looking at them in the row, although they look the same on the outside, on the inside, there's some big differences.
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And that's really where the rubber hits the road.
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Because in this case, let me just jump into my story.
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Because this will really help illustrate, again, why it's important to to do your homework, do your due diligence, and work with a professional.
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So I started off with just calling, and actually I didn't call anybody.
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That was what I did before.
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But this time I went online, and I went to this company, and I'm not trying to throw any company under the bus, okay?
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And I'm not really proposing or recommending any one company over another, but this was just my experiment, okay?
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You can do your own however you want to do it.
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So I went to this website with a company called Ethos.
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They have no underwriting, which means they don't send anybody to check your height, weight, blood pressure, stand you on a scale, draw blood, none of that stuff.
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And that's what usually happens when you take out a life insurance policy with a traditional company like the Mass Mutual or whomever.
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Anyway, so I asked for a quote for$250,000.
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And this case this had like sort of a sliding little bar and you can move it back and forth and it would give you your quote and you know you put your age in whatnot and I don't even think it asked me for any health questions I think it did I think there was like a few health questions it asked me but not many and anyway bottom line is with this ethos company$100,000 at my age because I'm 62 right and a guy so$100,000 with ethos no underwriting,$415 a month.
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So you might be thinking, wow, that's a lot, which is what I would think.
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That is a lot.
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But if I can't get any insurance from any other company, maybe then I'm willing to just eat that because I need this$100,000 so bad for whatever reasons I need it.
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So again, and this was just$100,000.
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Remember, I'm shopping really for about$250.
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But just$100,000 was$415 a month.
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Then I went to a company called USAA.
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Now, they're really known for their property and casualty, meaning auto insurance, homeowners, etc.
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But they do some other stuff.
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Anyway, I went to them and I actually spoke with a representative.
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And again, I asked for a quote for$250,000.
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And they asked me a few questions health-wise.
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And they quoted me$212 a month for$250,000.
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So I got a lot more coverage and I'm paying a lot less.
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Now, this is, of course, pending underwriting, meaning again, once you initiate the process, then they will send a third party team to you and a nurse or whomever, you know, will come out and like I said, check your height, weight, blood pressure, they would draw some blood and that goes all off to, you know, the underwriters and then they get your medical records, etc.
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And then ultimately, they will hopefully approve you and then you will get a finalized quote.
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But still, so just for my purposes right here, right now, Ethos,$100,415 a month, USAA,$250,$212 a month.
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Again, they're not known really for as a life insurance company.
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This is more of a property and casualty company, but they do this as well.
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And I think they used to do, yes, they did do investments as well.
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They also had a jewelry store at one time too, but all that I believe is gone.
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And now they're just kind of going back to their core business, but they're still doing this life insurance, apparently.
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Anyway, here nor there.
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Then I went to an insurance broker and I went through a company called Big Lou.
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They're out of Florida.
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And I work with a guy named Chris.
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Chris has been in the business for a long, long time.
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I think he said over 20 years.
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And again, he quoted me on$250,000.
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Now, I don't know if you know, but there are actually about 1,500 life insurance companies that exist right now in the U.S.
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Now, that is a significant number of companies.
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And if you're trying to get quotes from them, well, good luck, right?
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Because that's going to take you a long, long time.
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So, cut to the chase, working with someone like Lou, who was able to, Lou, Chris, big Lou, he asked me enough questions that he was able to narrow it down to this one particular company.
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And he quoted me on Pacific Life.
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So, they have been in business for a long, long time and they're a reputable company and they have a good payout history and a good rating because insurance companies are rated.
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You can get ratings from a whole different bunch of sources, but ultimately, you know, they have positive ratings, negative ratings, and they can go down from there and you can look online, et cetera.
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And usually you can ask for, let's say the top 10 life insurance companies, the best, or you can look at top 10 companies that are the worst.
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And And usually the worst comes in play in terms of customer service, payout history, because if at the time comes that obviously you're deceased and your heirs go to claim this life insurance policy, if there's a big hassle with the payout, then you haven't really done them any favors, right?
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No, you really haven't.
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You've made the process that much more difficult.
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And the last thing you want at that time when they need this money for whatever reasons that it doesn't pay out the claim is denied it's caught up and who knows what circumstances and they don't want to pay out so you really want a company that you have again has a good track record and you have confidence that when the time comes that your heirs are going to be able to get this money because that's the whole point of it right you've been paying into this over time and now it's time for them to cough up anyway so with big glue he quoted me 250,000 for 121 a month.
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So what I'm looking at here, I should say, these are term policies.
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Term policies are just like the name says.
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They're temporary policies, meaning they're only good for a certain period of time, usually 10, 15, 20, maybe 30 years if you're lucky.
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It all depends.
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So the older you are, the fewer years they're going to insure you for.
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The younger you are, the longer they're going to insure you for.
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And all their rates usually are based, again, on the outcome of the underwriting.
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You could be rated ultra preferred, you know, the best rating you can get.
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I think maybe 15% of the population gets that.
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It could go down to preferred, which where most people fall into standard, below standard, or you could be even be table rated, meaning the insurance company will offer you a policy, but it may not be at the best rate.
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It could be at a table rated rate because of your activity, your health, some situation that they have to look at it more closely and say yes we're willing to extend life insurance to this person but they're going to have to pay a premium well the premium is what you pay to the life insurance company anyway on a monthly annual basis whatever it is for the coverage but they make you pay a little extra because of whatever circumstances they see they deem as risky because life insurance like all insurance is risk averse they don't really want to take on more risk Then they absolutely have to, because the name of the game is for them to make money.
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And if they were insuring every Tom, Dick and Harry and all Tom, Dixon, Harry's die, then they're going to be out of business pretty quickly.
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So they only want to insure the right people for the right amount for the right number of years.
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So the older you get, then generally in the term policy, it's just going to end.
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Now, there are the opposite of term policies, which are permanent policies.
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These would be your whole life.
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Your universal life, your variable universal life, etc.
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Now, those kind of policies, as the name says, that it's for your whole life, for your entire life.
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They will usually insure you up to the age 100.
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I believe it's even now up to like 120.
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But you pay for these policies year after year.
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And over time, it builds up cash value inside of it.
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Term does not.
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It just is what it is.
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You pay for that.
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You quit paying for it.
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It goes away.
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Right.
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So in this case, if let's say you've been paying on it for 10 years and there's whatever cash inside of it, let's just say$10,000, then if you stop paying and then the monthly premium, let's say, it can just draw sometimes on the cash that's in there.
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Or let's say, hey, I've got this life insurance policy and it has$10,000 in it.
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I want to take a trip, buy a car, whatever it is, and you want to borrow against this life insurance policy.
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You can.
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typically you can just go to the life insurance company and say, I want to borrow$5,000 from my policy.
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Okay.
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So they will then take that cash against your policy, give it to you, you do whatever you want to with it.
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And then typically you will pay it back.
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Now, if you don't, then usually when you die, then that 10,000 just going to be subtracted for the, from the death payout.
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So again, it just is what it is.
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So you can go to a bank, right?
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You They're going to cost you money because you're paying interest on that amount of money that the bank lent you.
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Now, in this case, you're lending your money essentially to yourself.
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So, of course, the insurance company takes your money, my money, everybody else who's put money into it, and they invest in lots of different type of investment, stocks, bonds, what have you.
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And then they make money on your money, my money.
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And then, of course, that's how they stay in business.
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But then when the time comes to pay out, they have, of course, all the money they made on their investments and then they pay you out etc and then you've been paying your monthly premiums on top of that anyway you get the idea so nevertheless back to my story my experiment so i went to the three companies and like i said i went to the ethos the 100 000 for 415 a month the usa 250 212 a month and then pacific life they quoted me 250 for 121 so again that is a big difference and that's the whole reason why when you're watching those commercial about mortgage protection, you know, pay off your house when you die.
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And gee, mom, I'm so glad you took out that policy because now we don't have to worry about, you know, putting you in the ground and how it's going to be paid for.
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So with one thing I'll say about like the colonial pen type policies, their nine 99 deal is that they're sold in units.
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And each of these units are roughly about$5,000.
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So when you're talking about, again, let's just, I don't want to I'll say significant amount of coverage, let's say a hundred thousand dollars.
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Right.
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And you're buying this in units.
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You'd buy 20 units, you know, times they're nine 99, you know, you're paying 200 bucks easily.
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And so, uh, In this case, like I said, in my experiment, I was able to get like twice the coverage and I'm not paying anywhere near that amount.
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Now, of course, like I said, the caveat being you have to clear underwriting.
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And again, this is in just general terms, right?
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Because the whole point here is to educate you, empower you and enlighten you to how things really work, because there is really no class classes that I'm aware of, maybe in high school or outside of that, that teach you some of the ins and outs about things.
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You really need to know about financial products and services because most people just don't learn that.
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Maybe it's taught more widespread today, but at least when I was growing up, et cetera, it was not something that I remember was remotely available.
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They had welding and wood shop and there was a class, I remember, that was bachelor survival and all kinds of other silly kind of things.
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classes you could take.
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But the ones that are really significant to people were just not even available.
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So nevertheless, these are the type of policies that you want to take advantage of.
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And generally, you want to take advantage of them early on in life.
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So as you can see, even in my example, I'm getting a relatively small amount of insurance in the grand scheme of things, and I'm paying a relatively larger amount because of my age, et cetera.
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Whereas, let's say If I was in my 30s, I could probably get a million dollars of insurance for maybe 15 bucks a month, right?
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Because the chances of me dying early on are relatively low, right?
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I mean, of course, we could go out today and get hit by a bus.
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But in the grand scheme of things, in the case of like myself, I have more years behind me than ahead of me.
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So it just means that your health is generally better when you're younger and you've got far more time on your hands.
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So when you're talking with usually a financial advisor, planner, what have you, they will usually structure a policy that's something like based on your circumstances, let's just say a half million dollars, million dollars worth of term for 30 years.
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Then they will usually couple that with maybe a 50 or a hundred thousand dollar whole life policy that runs alongside of it so that you are actually buying two policies, giving you a lot more coverage, but one only lasts a certain amount of time, the term, and one lasts your entire life, which is the permanent policy, the whole life.
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All life insurance is worth something.
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I know it's kind of strange to think about it, but especially the whole life policies, and I'm saying whole life, I might as well say permanent because I'm also lumping in these universal policies as well.
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Universal is just a different type of permanent policy where whether you have the ability to change the monthly premium, you could go up, you could down.
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Some of them are tied to the stock Some of them are not.
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There's usually an A side and a B side, and you really, really need to work with an advisor if you're going to go down the route of a universal policy.
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Not that they're bad in any way, shape, or form.
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They're not.
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It's just a little slightly different animal, and you really need someone who's capable of running these numbers for you in the best possible way to adjust the policy based on your circumstances because it can be extremely helpful in your overall to have something like a universal policy because there's just many, many benefits.
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And really, when you think about it, again, going back to the reasons why you want life insurance, going back to my point about the TikTok where these ads come up about mortgage protection insurance.
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In my experience, mortgage protection insurance is life insurance.
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That's just what it is.
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Now, maybe a policy that's structured to have held by the bank that the day you die it pays off your home loan if there is one and which is nice right but if you're a beneficiary let's say your husband your wife whomever your kids let's say that they're like well you know jerry's dad dad's dad then it's nice that the house is paid off we don't have to worry about that anymore but wonder if there's other debt that is still hanging out there student loan debt credit card debt auto loan personal loan what have you then And that still has to be dealt with somehow, some way.
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That has to be paid off somehow, some way.
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So usually the proceeds of life insurance then will pay off the house, pay off your debt, leave money to your heirs, and then they can go on about their living their life, right?
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Without the financial burden and the worry that comes along with it.
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Now, if you just buy the mortgage protection insurance, that's it.
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Then you leave them sort of out to dry.
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Although the house is paid off, they have to now sell the house, right?
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Because unless there are other assets your investment portfolio savings account what have you then there's no more money to pay off all these other outstanding debts so yes you've done them a favor but you haven't really done them a favor as well in terms of leaving them in the best financial situation so you want to use a life insurance policy for the reasons that it makes sense to use it pay off your debt leave the money to do whatever because at the time of your demise you don't want to leave your family like I said hanging out to dry because they're already going through this whole what do you call it?
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The death cycle, you know, the acceptance and grieving and all that.
00:22:48.500 --> 00:22:58.228
So they're going through that whole phase, but you want to make sure that money is not one part of this process that really causes a significant financial burden for them.
00:22:59.088 --> 00:23:42.792
So that all being put aside for the time being just also ties into what I would always say is, again, you should work with a competent financial advisor or professional because they're really going to be your biggest help and again in the circumstances of how much do I have to pay these people you don't pay them out of pocket yourself right so the guy at Big Lou Chris is not waiting for me to cut him a check right he to pay him he gets paid by the life insurance company they pay him in this case they pay Big Lou and he pays him but you get the point that I don't pay them directly they get paid via the life insurance company.
00:23:43.354 --> 00:23:45.175
So that's just how it works.
00:23:45.355 --> 00:23:47.337
That's been in place for forever and a day.
00:23:47.959 --> 00:23:50.280
So not anything you have to worry about.
00:23:50.801 --> 00:24:00.332
You just have to make sure that, again, you're in the best position to take out the most life insurance you can, you need, and you want early on in life.
00:24:01.073 --> 00:24:05.297
So that is really my spiel about this.
00:24:05.837 --> 00:24:12.045
But one other thing I'll mention is, especially when you're working with a financial person, professional.
00:24:12.565 --> 00:24:27.740
Now, like everybody, right, there's some people who are very knowledgeable, they're really good at what they do, and you certainly can trust them to give you the best advice and guidance out there.
00:24:28.221 --> 00:24:31.986
There are others, right, that are not so much any of those things.
00:24:32.546 --> 00:24:44.159
They're maybe not very diligent at what they do, maybe they're not really the type of person who is precise, and maybe they just don't know know some of the things they should know.
00:24:44.618 --> 00:24:51.125
What I'm referring to specifically is when you're looking at a universal policy, a permanent policy, I'll just say that.
00:24:51.467 --> 00:24:58.673
When you're looking at a permanent policy, and I'll just say life insurance period, there is the cost of insurance.
00:24:58.733 --> 00:25:00.455
And I think I've talked about this before.
00:25:00.997 --> 00:25:06.883
So no financial product has really a price tag on it per se.
00:25:07.182 --> 00:25:44.525
It's not like you go to the grocery store and you look at the can or whatever have you and it tells you exactly how much it is right three dollars to whatever it is so with any financial product that the price is built into the background somewhere so when you're comparing apples to apples let's say term policy like i described it's pretty easy to see the difference now in this case i used 250 and then i went to the 100 but the whole point being at the 250 level okay we're looking at twice the amount versus with USA versus half the amount with Pacific Life.
00:25:45.244 --> 00:25:50.710
So the cost of insurance is built into that, and you can see the difference right away.
00:25:50.750 --> 00:26:03.480
Now, it doesn't mean I know 100% what the cost of insurance is, because again, I don't have all the numbers, but I get a general sense in this case with term about which policy is more expensive, right?
00:26:03.901 --> 00:26:11.567
Which has stricter underwriting, which is more difficult to obtain, hence, which has, they're more risk averse versus one that's more loosey-goosey.
00:26:11.567 --> 00:26:27.345
So when it comes to a permanent policy, though, this is really where it becomes more challenging for your financial advisor because, again, they can run illustrations for you, let's say, on, I don't know, you know, 1,500 companies.
00:26:27.545 --> 00:26:29.027
Not that they would, but let's say.
00:26:29.827 --> 00:26:41.519
Then, of course, they will have to pull out the ones that make the most financial sense to you in terms of how much you want to pay for this on a monthly, you know, annual basis.
00:26:41.519 --> 00:27:17.739
whatever it is but they need to do their due diligence because they are actually selling you something and they really really need to know the ins and outs of it to the best of their ability because they need to offer you the best one for your circumstance and if not you know line them up so you can make an apples to apples comparison and you choose the one you want but at least you go into it with your eyes open now generally most financial advisors, and I'm saying this loosely too, that they will just run the illustrations for you.
00:27:17.939 --> 00:27:22.304
And then the one with the lowest premiums is one that you take, but there's also more to it, right?
00:27:22.723 --> 00:27:32.314
Because we need to look at the rating of the company, make sure it's a reputable company because believe it or not, lots and lots of insurance companies die on the vine.
00:27:32.755 --> 00:27:36.018
They go bankrupt, they go out of business, all kinds of circumstances.
00:27:36.519 --> 00:27:49.532
So again, if you're planning for 20, 30 year policy to remain in effect, You need a company that has been around 20, 30, 100 some odd years and will most likely going to continue to remain in business.
00:27:50.053 --> 00:27:52.075
Otherwise, what's the point of having this policy, right?
00:27:52.715 --> 00:27:54.017
So that's one side of it.
00:27:54.097 --> 00:27:55.519
We need to pick a reputable company.
00:27:55.838 --> 00:27:59.182
We need to pick a financial advisor who knows what the hell he's doing.
00:27:59.222 --> 00:28:11.375
And then we need to make sure that we're looking at this with the granular detail in terms of making me really understand how much this policy actually costs.
00:28:11.375 --> 00:28:20.064
Because often in the illustrations, they will again use hypotheticals that are kind of unrealistic.
00:28:20.523 --> 00:28:23.405
Let's say the returns that you're supposed to get are run at 14%.
00:28:23.747 --> 00:28:29.771
Now, I don't know that you could get a consistent 14% return year after year.
00:28:29.811 --> 00:28:31.854
That seems highly unlikely.
00:28:32.634 --> 00:28:37.659
Now, if it's being run at maybe a 5% rate of return, that is more likely.
00:28:37.699 --> 00:28:41.021
Then that illustration is probably far more accurate.
00:28:41.377 --> 00:28:47.002
But you need to know what numbers are actually using and how they're using them and why they're using them.
00:28:47.343 --> 00:28:49.065
And then you can see and you can understand.
00:28:49.105 --> 00:28:51.487
So the cost of insurance is baked in.
00:28:51.507 --> 00:28:58.653
And even if they show you what the cost of insurance is, how do you know that you're getting a good deal?
00:28:58.692 --> 00:29:01.115
You may still not really understand.
00:29:01.154 --> 00:29:14.186
So when investment portfolios are being created, whether your own advisor picks a then they usually have a benchmark, right?
00:29:14.227 --> 00:29:24.897
They need some way to assess whether this is beating or not exceeding the standard expectations of this class.
00:29:24.979 --> 00:29:27.201
Let's say the S&P 500, right?
00:29:27.741 --> 00:29:40.394
So we know if your portfolio is being measured against the S&P 500 index, if the S&P is up 15%, your portfolio is only up 5%, something's off, right?
00:29:40.535 --> 00:29:41.296
Something's not going right.
00:29:41.296 --> 00:30:56.573
right some part of your portfolio needs to be adjusted we don't know the advisor should be able to sift that out and explain and make a recommendation about what you should do sell it whatever write it out whatever it is but at least you know same thing in this case that the benchmark there has to be a benchmark that you can assess what you're looking at in terms of cost of insurance is reasonable unreasonable it's good it's bad it's whatever it is so your advisor has the that responsibility to you otherwise they left themselves exposed and they can be sued right for not giving you the best advice because they didn't do their due diligence for you because they should have they should have been able to show you these numbers against an appropriate benchmark so that they fully understand what they're selling you and you fully understand what you're buying makes sense hopefully it does anyway that's really what i wanted to talk about today I know it probably sounds like I went on a rant, and I did, but I really think it's important that you don't get swayed by these commercials you see on TikTok or TV, whatever it is.
00:30:56.613 --> 00:31:07.903
They're almost crying about getting the right coverage, which is okay, like I said, but you want to make sure it's okay for you, not everybody, just you.
00:31:07.923 --> 00:31:10.786
Now, I'll just throw this caveat in.
00:31:11.617 --> 00:31:19.924
If you cannot get insured for some reason, this often happens when you are depressed or you've been depressed for a while.
00:31:19.964 --> 00:31:23.587
You are on some significant medications for whatever reason.
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