Bullshit on Stilts: Tackling the bullshitology of financial decisions.
Join two financial brains turned podcast hosts unleash their wit and wisdom drawing on vast financial backgrounds. Using highly-tuned bullshit sniffers they call out the clichés, crap spackle and flapdoodle spewed by so-called experts across the landscape of financial advice. Identifying as doctors of bullshitology you can count on your hosts to bring you a lively if not deadly mix of serious analysis, hijinx, and tomfoolery. All within a 99.1% bullshit free safe space.
Bullshit on Stilts: Tackling the bullshitology of financial decisions.
Is Your Life Insurance Policy Good, Bad, or Ugly? The Fab Five Questions on Life Insurance.
Can understanding life insurance be as simple as building a house? Tune in to Bullshit on Stilts as we promise to demystify the often confusing world of life insurance. This episode is packed with crucial insights starting with our Fab Five questions designed to empower you. We'll help you identify the different types of life insurance—term, whole, universal, indexed universal, and variable—and why knowing which one you own matters. We'll break down the essentials, from understanding why you have your policy to what your premiums are really paying for, ensuring you're not left in the dark about your coverage.
Picture your life insurance policy as the foundation of your financial house. It's something you might not see every day, but it's essential for long-term stability. We’ll discuss the often overlooked importance of assessing your policy's performance, especially for younger and healthier individuals who tend to dismiss its necessity. Learn how to measure your policy’s performance by comparing current in-force illustrations with original projections to ensure your coverage remains adequate. We'll share practical tips on interpreting these figures, so you can adjust your policy management with confidence.
Navigating the life insurance landscape can be daunting, but we're here to simplify the process. We'll delve into the debate between term life insurance versus permanent life insurance, comparing them to investment accounts like Roth IRAs and 401(k)s. You'll get a clear breakdown of how factors such as age, gender, health status, and lifestyle affect your premium costs and eligibility. More importantly, we'll guide you through a structured decision-making process, ensuring you're well-prepared when it comes time to choose a policy. With our Fab Five framework, making informed decisions about life insurance has never been easier. Join us for this enlightening episode and take control of your financial future.
Developing your financial bullshit sniffer one episode at a time.
Welcome to Bullshit on Stilts, a podcast hosted by two guys with vast financial backgrounds and great bullshit sniffers who call out the cliche crap, spackle and flap doodle, spooed by so-called experts across the landscape of financial advice Identifying as doctors of bullshitology. You can count on your esteemed hosts okay, maybe knuckleheadsheads to bring you a lively, if not deadly, mix of serious analysis, hijinks and tomfoolery, all within a 99.1 bullshit free, safe space. Let's get after it. Welcome to bullshit on stilts.
Speaker 1:Um, Mark and Kelly, we're going to be talking about our Fab Five questions that we believe brings control to consumers out there. Our earlier podcast, we talked about the Fab Five when it comes to investments, and now we're going to apply that same simple methodology to help you have control of your life insurance policies around. The Fab Five questions as they relate to life insurance. Whether that's you own a policy, you want to review it and get real comfortable as what it is how does it work or whether you may be considering or in the process of purchasing a life insurance policy. So that's what we're going to be doing today. Mark, you want to lead us off on this whole discussion. Let's do it.
Speaker 2:And Kelly. I think this is a very important topic. We've reduced the complexities of insurance down to five key critical questions that will show evidence that you know what you own and why you own it and you have some level of understanding to where you can say I am in control of my insurance needs and I can answer questions sufficiently, to where I know that I have adequate coverage in the areas I need coverage. So let's review the five and then we'll get into that with Kelly's expertise in describing and defining and explaining each one of these. So the Fab Five for insurance life insurance are what do you own, why do you own it, how is it doing, what are your premium dollars paying for and what other benefits do your premiums buy? If you're able to answer those five questions, you are in control, which means that you've circumvented a lot of bullshit explanations or I don't knows or splinations for stuff you just can't explain. Let's get into these. So, kelly, the first one is what?
Speaker 1:do you own? Yeah, so it's a great question, and we meet lots and lots of people that have life insurance but they have no idea what it is. They fumble around whether it's a term life insurance or permanent life insurance. So really there, it's a term life insurance or permanent life insurance. So really there's many kinds of life insurance but it boils down to, let's say, four typical varieties. So one is term life, term life, I think people you think about it as it's temporary, it's going to be here for a little while, maybe it's 10 years, 20 years, 30 years, even 40 years but eventually the cost of it will be prohibitive and you'll get rid of it essentially. So there's a sort of a maturing date from a cost of the coverage of insurance right on term. The next type is whole life. That's a permanent type of policy, and whole life is a policy that most people associate with life insurance, where it's fairly costly, but the policy will be there forever. So long as you pay the premiums, as you're required to pay them, it'll always be there. It never goes away. There's lots of guarantees inside of it.
Speaker 1:Universal life is a type of insurance policy that actually sort of has some perspectives of a whole life right, actually sort of has some perspectives of a whole life right. It has crediting inside it. You can build value, called cash value, in it, just like you do whole life. But universal also comes with lots of flexibility the flexibility to change the amount of premium you pay depending on what's going on in life. Also, maybe, the ability to change the death benefit levels. So there's lots of flexibility there and it's typically less expensive than whole life. By the way, it's also permanent.
Speaker 1:Index universal life is another type of life insurance policy. We bring it up not as it's its own animal it's a universal but the fact that it's index universal. It's the fastest and most dominated product being sold in the market today. It's an interesting product and the question is do you own it or not? And lastly, it's variable life. Variable life is. When you hear the term variable, think like it's a 401k with a whole bunch of investment funds that you can put your money into, and so, just like a 401k, the value of your life insurance policy can go up and down based on the performance of the financial markets.
Speaker 2:So what terms would you use, Kelly? Common everyday terms? Would you use to compare one of these against another? So how would you compare term to index? Universal life, whole life to term life?
Speaker 1:Yeah, I think that. Well, first, the comparison is is it a temporary type of a policy, like terms, or is it a permanent policy? Does my need to ensure risk of me, let's say, dying prematurely or forever?
Speaker 2:Check with your insurance company on how they define premature death as opposed to forever death and how each may affect your death benefit.
Speaker 1:Of me, let's say, dying prematurely or forever. Is that need a long-term thing until I die need or is it just temporary, like right now? My kids are three and five years old? I have a temporary need to have a lot more life insurance, and so I'm going to use a term policy to insure against that particular risk that I'm concerned about, that being, if I don't make it home tomorrow, is there money there to support my kids as they grow and maybe even when they're adults, and that term policy can do that.
Speaker 2:In 30 seconds or so. What has Indexed Universal Life? Why is that so popular?
Speaker 1:It's a cool product. It's very complicated and there's lots of jargon in it. But here's why the Indexed Universal Life policy gives a person. Let's say these are big generalizations, but maybe it's 40% less expensive than a whole life policy. When I'm speaking about that, I'm speaking about the participating whole life policies that pay you five, six, 7% dividends every year. That's a Cadillac of policies. It also costs a lot, so IUL is often going to be about 40% less. You get to have your policies cash value accumulate based on market indexes. But here's the catch you don't actually invest in the index. You just kind of monitor it and over the course of normally 12 months, the policy index that you're following. If it ends up having a plus in front of the performance, your policy is going to receive credit in the forms of dollars. So your cash value will grow. However, here's what they sell zero's your hero. If the index has a negative performance on the year, you get no credit, you just get zero so it's like a participation trophy.
Speaker 2:I'm a winner because I participated in the market, but I was never a loser.
Speaker 1:Shut up and sit down. So the big sale is participate in the market, have less expensive life insurance and, by the way, you get no negative impacts to your cash value or policy values if the market turns in a negative return. Well, I can see the interest in that it's huge.
Speaker 1:And, by the way it's interesting, lots of investment advisor-based planners like IULs. They sell a lot more of it versus a life insurance agent. A career agent will probably think IUL, but also whole life, because it's a more permanent guaranteed structure as opposed to a permanent but less guaranteed structure like the universal life is.
Speaker 2:So in some instances a combination of these types of policies might work.
Speaker 1:It might work, depending on what you're trying to achieve. And, as we've talked in the past, the idea of diversifying your investments is a big deal and everybody's kind of familiar with that. But diversifying how you transfer financial risk using life insurance is altogether a completely different type of stratagem. I don't wanna. And so working with people that help you view that and help you truly apply the right tool for the right purposes yeah, one could own whole index, universal and term all combined, really shaping how they've insured those risks, knowing that they've maximized each dollar they're spending.
Speaker 2:All right, so that's number one what do you own? Number two why do you own it?
Speaker 1:Yeah, why do you own? It is sort of the top line thought that I think you as a consumer out there need to think about. Why do you own? It comes in first of all. What if I die prematurely and I leave my family here or my loved ones or maybe even my favorite charities without a final gift? So life insurance can certainly provide protection against that uncertainty in life, right. But there are other things. It could be that you want to make sure that your kids have an educational fund, as an example. So if, theoretically, you have three kids and no matter what happens, if tomorrow you don't make it home, you want to make sure there's at least $100,000 in an educational account for them.
Speaker 1:Term life, great use of it, it's cheap, inexpensive, you're young, it can be there for 20 years. And so if you pass away in the next 20 years unexpectedly, boy, you at least know that, no matter what, kids have $100,000 tax-free money in accounts for themselves to use in advanced education, maybe starting a new business. Whatever the case is, you've solved for that. So why do you own it? Another reason is because I not only want to plan for my eventual passing. It might be unexpectedly or when I'm older, we come back to the permanent idea of life insurance. But it can also be that there are other life uncertainties out there that we all face, you know, an illness, an injury, alzheimer's, when we're older or younger due to an injury, let's say Just the ability to not have cognitive faculties that you need to make your own decisions from close head injuries and auto accidents. So there's other reasons why life insurance policies exist and can be part of your overall reason. Why do I own this? Does that?
Speaker 2:make sense? Yeah, that does make sense. Staying with that. Why do you own that? Often we can kind of fool ourselves and we've got great explanations which might border on bullshit. I think most of us are truth seekers, so I don't know whether we really lie to ourselves as much as we just kind of dance around our rationalization for doing something. How often are people buying term just because it's cheap and then they start rationalizing well, nothing's going to happen to me in 10 or 15 years or 20 years.
Speaker 1:Yeah, right, so one. I think it's amongst the most purchased type of insurance because it is cheap. Oh, by the way, most employer group plans that you get just because you're employed there and you have a group term life policy for $50,000 on your life that's a term policy as well. It's just that the employer is paying for it for you. So lots of terms out there.
Speaker 1:Reason is my experience has been people don't like to talk about life insurance. They don't want to talk about death, chronic illness, injuries and all that. They just they're not interested. We're all super people. Until life's uncertainty knocks on our doors, we can't plan for. We don't know what's going to happen and so often most of us don't want to even think about that happening. So we fool ourselves by saying I don't want to spend 50 bucks on that life insurance policy. Oh look, term for 20 years and I'm 28 years old. Well, it only cost me $18 and 70 cents. Boy, that tastes good, I'm not going to waste my money. Quote, unquote. But the question is does that policy fulfill the needs that arise from unexpected life events? Obviously, top line is unexpected death due to accident illness, whatever the case might be so really, with the why do you own it.
Speaker 2:we've got to also quantify how much you own of something.
Speaker 1:Yeah. And I think that when you're asking yourself, why do I need life insurance In that case, you start simply adding up numbers. So if I'm 50 and I plan to retire in 20 years because I'm just going to work until I'm 70, I'm going to do that. I want to maximize my social security retirement benefits, so I'm going to work the next 20 years. So when you're thinking about how much do I own, or how much life insurance do I need, figuring out, the amount that you need comes with.
Speaker 1:Well, if I die, how many years of income does my family not receive now? If I'm 50, I want to retire at 70, that's 20 years. And if I make $100,000 a year, well, that's $2 million. That's not going to come into my household. So one can start at well, if I die now, I'd like to replace at least that that's $2 million of life insurance. I have $150,000 left on my mortgage. You want that paid off? Well, that, add $150,000 to $2 million. If you want to leave $100,000 for each one of your kids and you have three kids just in case well, add $300,000. All of a sudden you're in that. Just simple example. You've added up Best, added up Best case scenario. If something would happen, how much life insurance would you need? The next step is well, can you afford it? And can you afford it depending on what?
Speaker 2:kinds of policies. You decide to own purchase and so forth, and often it's not. Can you afford it? It's, do I want to? Yeah, it's construal level theory, and the farther something is away or the more hypothetical it is, the more you get stupid. Well, you know, it's how 20 years. Am I going to think about it now? Or that's hypothetical, I'm not going to die, sure. So though I get the numbers on what I want to protect, it's not a matter of do I want to afford it. I construe it because it's either too hypothetical or too far out there. I'm going to poo poo it. So it's like saying, hey look, do you want to put out the whole fire or three quarters of it? So you've got that element that comes. And then we start rationalizing. Really, we just don't want to spend that and we do what typically we do is spend now on what we want to and worry about the consequences later.
Speaker 1:Yeah, I think that it's helpful for people if they're working with a professional out there, does the professional help them understand? And I'm going to use this from a metaphor or analogy.
Speaker 2:Kelly is about to attempt the rare and extremely difficult metaphor analogy combination to make his next point.
Speaker 1:If you got to spend $25,000 on your house, would you rather put it into the foundation that you never see, you never touch, but at least your basement's dry? Or would you rather put it on an all season porch addition that you get to enjoy up in Michigan eight months out of 12? Which would you rather spend the money on? And so I think, when people come to the table of building their financial well-being, their health, their peace of mind and so forth, life insurance, any insurance, but certainly life insurance, is sort of like the well, it's not going to happen to me. I'm young, I'm healthy, I'm 38. And for 38 years nothing bad has happened to me. So it's not gonna, and so I can afford not to, because that's sort of like putting money into the basement, into my foundation.
Speaker 1:I don't see it, I don't enjoy it, I don't touch it, I don't look at it, there's nothing to appreciate with that expenditure, and I think there's a lot of that thought out there, which is why I also think you see GoFundMe all over the place. That's become the new way of life insurance. Oh shit, feel bad for me. Here's my story, and some of it is very tragic. I don't mean to minimize that. But for lack of your planning, you're going to everybody else to help pay for the things that could have been paid for had you just saved a little of your money toward a policy that you don't outgrow Usually a permanent policy of some sort.
Speaker 2:All right, Are you pretty much finished with? Why do you own it? Number two I think we killed it. I take my gun and I go pew pew, pew, pew.
Speaker 1:Okay, I think we killed that horse, all right so let's move on.
Speaker 2:So just to keep the flow going, here it's what do you own? Why do you own it? Number three is how is it doing?
Speaker 1:Yeah, this is a question that it's much harder to measure for a policy owner. So, in taking the policy owner, how's it doing? How do you compare that? One easy, straightforward way to compare it is to compare a current illustration of the policy. You ask the insurance company or the agent that sold you the policy.
Speaker 1:Hey, do me a favor go ahead and run an in-force illustration of my policy, in-force being run it as of today, as of last month, as of the current status. So let's say you've owned the policy for five years. When you say, run me an enforce illustration, that illustration will be five years after you purchased it. You get that in your email. You compare that illustration and the projected numbers that it shows today compared to the original policy illustration that was published when you bought the policy. So it's a real cool way of well.
Speaker 1:I bought it and in five years that the original illustration said that my $5,000 a year in premium would equate to roughly I'm making this up $20,000 of cash value and a death benefit of $250,000. I'm just making this up. Where the Inforce illustration shows that this year I only have $18,300 in cash value, I still have a death benefit of $250,000. Why is there such a difference compared to the original projection versus the current in force actual numbers? So that's a real easy way In force illustration and just compare it with your original illustration. There's other things you can compare it to too.
Speaker 2:So what do we extract from that as a practical matter, or is it just an observation?
Speaker 1:Well, I think it's an observation. One. A practical matter is they gave you an assumed rate of return, an annual rate of return of, let's say, 6.5, 6.5, 6.5. If your cash value is lower than that, well, your crediting experience may be 6.5 minus something average. Maybe it's only been 6.2. As an example, it's good to know, especially if you have the option of changing how that policy may receive credits next year, like an index, universal or a variable life. When it comes to universal, it's not going to change anything how it credits and when it comes to the whole life, that's not going to change much. But with those other two types of policy it leads you to that kind of conclusion and maybe you don't know how to change it. But that's a great conversation to have with your agent and I'm sure if they're a quality, strong-handed advisor they're going to love the opportunity to help you understand and make really good decisions. So I said that there's other things you can measure that by.
Speaker 1:Well, there's this huge debate that's been around for a long time since the late 1960s Buy term and invest the rest. And that's a great theoretical idea, just like buy low, sell high in investments Great. Not many people do it that way and not many people actually buy term to save money and invest the difference. The reason why they bought the term is because it was cheap and they could keep on spending the rest of the money that they would have spent on a more expensive permanent life insurance policy. So I love to compare that to a Roth IRA, a 401k, a brokerage investment account or even a cash account, because, no matter what, this is what people miss. If I have a term policy or a permanent, there's a cost to that insurance and I got to pay a premium. Fair enough, if I die with the Roth IRA and I put, let's say, seven thousand dollars a year over the last three years in the Roth IRA, the value of the Roth IRA is going to be around seven times three is twenty one thousand plus or minus growth or depreciation. That's what it's going to be. When I'm alive, it's twenty one thousand plus and when I die, guess what? 21,000 plus period. End of story.
Speaker 1:If I spent 7,000 into a permanent policy, as an example, or even a term policy, when I die, the value of that policy to me was what it cost me 21,000 bucks, the value to my loved ones, the charities that I left money to or whomever else I named as a beneficiary in my example here. That's $250,000 of death benefit, tax-free, to that person or individuals. No, uncle Sam, no, pasco, no, go to the court to probate and get some court order saying you can do this. It just goes to them now. And that what we refer to internally as a life event revaluation.
Speaker 1:That's what life insurance is all about. So when you compare it to the Roth, sure your 7,000 times 3 plus growth might be higher than the cash value in your whole life index universal or variable piece. But if you die next month, what will the value of that investment account be? But if you die next month, what will the value of that investment account be? And normally in my math it takes around 20 years before that investment account supersedes the death benefit of the life insurance policy. Isn't that interesting?
Speaker 2:All right. So what do you own? Why do you own it? How is it doing? What are your premium dollars paying? Oh, this is a great question.
Speaker 1:So in investments, we ask what are your total costs of investing? And in insurance, it is a great question. So in investments, we ask what are your total costs of investing? And in insurance it's a little bit different, and so we phrase it like what are your premium dollars actually paying for?
Speaker 1:So there are, let's say I'm going to simplify this there are, let's say, three main factors of how your policy is priced right. There's personal factors your age and you get older every year. So every year you look at new life insurance is gonna be a little bit more expensive. Gender matters Women last longer than men on average from a mortality standpoint, so women's policies are priced lower on average than male pricing is. If you're a healthy person, you can get what's called, let's say, super preferred, which means that your policy grows and operates much more efficiently than someone with just standard health and operates much more efficiently than someone with just standard health and a whole lot better than someone with, let's say, diabetes 2, well-managed. It's just going to be that health rating will add cost to your policy depending on how healthy or unhealthy you may be, even to the point of you might be so unhealthy the insurance says no, we're not going to give you any life insurance.
Speaker 2:Let's stay on that for just a minute. I think that there are individuals who just say you know what? I'm not healthy, I don't want to even try, I'm going to get priced out because I'm unhealthy. Yeah, my understanding is that there's a lot of forgiveness regarding your health, and there are others. It can be quite punitive. Yeah, give me an example of somebody that might be preferred or standard.
Speaker 1:Sure. So let's take a 50-year-old male or female, I'm not going to pick on a 22-year-old, let's assume they're all healthy. So super preferred might be someone that's within height, weight limits, they are on no medications, they don't do nicotine, they don't do any extreme sports. They're just a healthy person. Maybe they're a yoga person, maybe they are active because they garden every day and they walk up this damn hill, whatever the case might be. So that's going to be someone that has a shot at being super preferred.
Speaker 1:If you're over 50, the shot of you getting super preferred is lower. Obviously, just because as we age our bodies start changing and breaking down. Obviously just because as we age our bodies start changing and breaking down. Let's compare that to someone, let's say a 50 year old, with diabetes, to one of the most prevalent diseases and in Western diets thank you food industry.
Speaker 1:That person it becomes a question of is it well managed or not well managed? Maybe that diabetes has been losing weight? They're not on any other medications. They have an average A1C of I don't know 6.2, let's say, and they're not going to get knocked nearly as they might even get standard on a health rating, whereas someone that isn't managing it well is on four different meds and shots and their A1C is 7.8, they're probably going to get rated, meaning there's going to be premium attached or a higher dollar cost for their life insurance policy, because their diabetes too isn't well managed and so all the horror long-term that diabetes can do to the internal body becomes a higher risk to that insurance carrier. So they're going to price it that way, sure.
Speaker 2:So the difference between standard and someone who is rating not from a dollar standpoint but from a percentage standpoint just ballpark, what the difference might be.
Speaker 1:I'm going to stay away from that. Oh, what a wuss. Just because every carrier has their own algorithms and own actuarial tables and so they all kind of price it a little bit differently. Let's look at it from another standpoint. On a permanent policy, when you look at the projected cash value accumulated amount at future years, someone in a standard rated policy will have less accumulated cash value than someone with a super preferred health rating and depending on how long we're talking, that could be 0.5 percentage annually accumulated difference, it could be one, could it be even two plus percentage points, depending on how long of a timeframe we're looking at within those projected numbers. Does that make sense?
Speaker 2:Yeah, that does, but I'm asking it as a consumer and a consumer saying I'm not going to buy insurance because I'm 10 pounds overweight.
Speaker 2:I'm taking blood pressure medication. I don't want to get rated. I don't want to be paying twice the premium. I mean, this is the thinking, sure, is it safe to say them, without quantifying anything that if you're just like a lot of 50-year-olds you got a few extra pounds, you might be taking a couple of meds. It's under control. It should be pretty affordable and not getting nicked with a lot of ratings that might make you think that it's a lot more expensive than perhaps it is.
Speaker 2:And therefore avoiding all the benefits that insurance could bring you because you think you're going to get priced out. Yeah.
Speaker 1:I think a way to succinctly say that is what you don't know can hurt you right.
Speaker 2:In this scenario.
Speaker 1:Yeah, because you're rationalizing why you don't want to, as opposed to. Maybe I should just know and then decide whether I want to. First of all, we go back to do you need life insurance? What's the purpose of it? And if the purpose is rock solid, like I don't want to leave my family with a huge bill or whatever I want to pay for the cost of my funeral, whatever the reasonings are, finding out whether you qualify or not is a great step. You don't have to do anything. You just got to find out.
Speaker 1:And then after that, I agree with you. A 50-year-old that's a normal 50-year-old that's put a few pounds on, that might be on a hypertensive drug for a slightly high blood pressure, maybe their family history is one of diabetes, but I don't have it. All these things come into the picture and you may be very well surprised that you do qualify for insurance. It's not that punitive, by the way. It may be a great instrument if you're looking at permanent to add a great financial instrument for all the flexibility it might add to your overall plan.
Speaker 2:All right. So you've covered personal factors age, gender, health, family, medical history. You've also covered lifestyle related factors like nicotine certain hobbies.
Speaker 1:Sure what other factors? Other factors including like well, $200,000 of life insurance is less expensive than a half a million dollars of life, and so how much life insurance are you looking at getting? How much do you want, need? Is there a way to buy life insurance and have the coverage amount, the death benefit amount? It grows into that amount, rather than right off the bat as an example? The other thing is did you add optional features of protection? They call it riders, insurance riders, but that might be geez. If you have a long-term care event, like you need assistance with daily living, then your policy has a feature that you can advance a portion of the death benefit tax-free to help pay for those kinds of services. Hell yeah, that's what I'm talking about. Do you have a feature as a part of your policy or is there an optional feature, slash rider that you can add to your policy to ensure against that financial risk exposure Could be critical illness, could be all sorts of other things.
Speaker 2:All right so let's review where we are here. Yeah, what do you own number one? Number two why do you own it? Number three how is it doing? Number four what are your premium dollars paying for? And number five what other benefits do your premiums buy?
Speaker 1:Yeah, and this is a great question and we touched on it just a moment ago right, with these riders. So it's easier to discuss this in my brain by comparing it, maybe, to policies that were issued 10 years ago or earlier, 20 years ago, compared to more recent policies. So I will say that the insurance industry does a great job of adding features and benefits to the policies to meet current known needs. Let's compare Riders today come in all sorts of varieties. Certain carriers offer them, others don't offer them. Some offer some of them, so it's really a potpourri of have and have-nots depending on the insurance company you're working with, the agents you've been talking to.
Speaker 1:Here are five great riders that current policies come with with certain carriers. So one rider is terminal illness, right. Lots of carriers have 12 months. So if you're diagnosed with a terminal illness within the last 12 months in this example, you have a right as a policy owner to prove that terminal illness by virtue of your physician and so forth, and once you prove it, they'll give you the option of advancing a portion of your death benefit. If you got a million dollar death benefit, maybe they'll advance up to 80% of that given your terminal illness as an example, that's a great thing to have Other carriers.
Speaker 1:Terminal illness will be a 24-month thing, not just a 12-month. Is that important to you or not? Good thing to think about. The next is chronic illness. We often refer to this as long-term care when it comes to elderly people, but chronic illness is an illness that robs a person from being able to do two activities of daily life. That could be can I get up and out of a chair by myself? Can I go to the bathroom by myself? Can I shower by myself? Can I feed myself? There's daily activities. Or could it be that I'm cognitively impaired? For whatever reason, my brain doesn't allow me to make lucid decisions anymore on my behalf.
Speaker 1:So when that happens, a physician confirms this and once again, you present the claim to the insurance carrier and now a portion of your life insurance benefit can be advanced. For you to use the cash now during life on a tax advantage basis guess what to pay for services, help in the home or whatever. Maybe it's just a trip around the world. Before you know, it's your last day and you got to get up and go upstairs, so to speak. So another one is there's critical injury. Think about becoming blind, doing an accident, losing an arm, those kinds of critical injuries, critical illness, stroke, aneurysm, heart attack. So these are events where, if it happens to you with that type of a policy, once again, the death benefit, a portion of it, can be advanced right now to help you pay for services, needs, hospital bills, whatever you need, because that event qualifies you to advance a portion of the death benefit.
Speaker 1:And lastly, there are carriers out there that now have a specific Alzheimer-related, dementia-related rider. So it's not the chronic illness, two activities a day, it's just. If you have a cognitive impairment, guess what? You can advance a large portion of your death benefit right now, whether in lump sum. In all the cases, whether they're lump sum or periodic, you know monthly payouts, quarterly payouts, however you want to structure that. So those riders essentially add juice to the piece of meat called life insurance, because otherwise the only way I collect, the only way my beneficiaries collect, is if I die. Life's not that generous.
Speaker 2:I'm sorry, but.
Speaker 1:I cannot fix this problem for you. There are an awful lot of things that knock us out from earning money from living life but still costs me and my family a lot of money for the services and care that I require.
Speaker 2:So let's run through the Fab Five for life insurance again. What do you own? Why do you own it? How is it doing? What are your premium dollars paying for? And, number five, what other benefits do your premiums buy? I don't think anybody has ever gone through this process before.
Speaker 1:I agree with you. I think most people come at it from a standpoint of what's the cost, what's the death benefit and are my beneficiary's designations correct?
Speaker 2:So what is the importance of this, then? Whether I'm prospectively looking to purchase insurance or I already own insurance, why is this process so critical?
Speaker 1:We believe in separating financial service decisions into two distinct steps. Right, we like to help people work through the decision development. What do I need? What am I looking for? What solutions are out there? Does this make sense for me? And all of that what, who, when, where, how all of that is an isolated brainstorming process, right, and so our Fab Fives are built to allow individual consumers to think through the decision that they're considering when it comes to life insurance in this example, right. The second step in the process after the brainstorming session is okay.
Speaker 1:The product purchase choice or decision to us is a separate, distinct event. People can go out and implement it with anybody they want Brother, cousin, agent they've been working with their mom and dad's agent doesn't matter, we don't care. But now you're prepared with a body of perspective and some knowledge and compare and contrasting for yourself and you get real clear on what you're looking for. You don't go into the car shop saying I don't know what kind of car I want to buy, I just want to buy a car today. You go in with some preconceived notions of the type of vehicle, the features and benefits that the vehicle comes with. This is what we're here to help people do, and the Fab Five does just that. It helps them think through the top five critical pieces that most people aren't aware of and helps them start putting it into perspective from their perspective and realities.
Speaker 2:What I like about it also is these are they got hard edges? Every one of these questions does. You can't tap dance around them. You either have an answer or you don't. A hundred percent. Yeah, yeah, yeah, Good stuff. Thanks for watching.