0:02

Welcome to Money Matters , the podcast

0:04

that focuses on how to use the money you have

0:07

, make the money you need and save

0:09

the money you want . Now , here

0:11

is your host .

0:12

Ms Kim Chapman , welcome

0:14

to another edition of Money Matters . I am your

0:17

host , kim Chapman . Today I want

0:19

to demystify the maze of life insurance

0:21

policies , the premiums and the payouts

0:23

. You know , whether you're a young adult just

0:25

stepping into your responsibilities , a new parent

0:28

thinking about the future , or simply

0:30

curious about how life insurance fits

0:32

into your financial journey , you're in

0:34

the right place . Today we'll break down

0:36

the basics , we're going to uncover some myths and

0:39

we want to empower you with the knowledge to make an

0:41

informed decision , because that's what we're

0:43

all about here Giving you the information

0:45

, bringing in experts so

0:47

that you can make informed financial decisions

0:49

. So joining me today is John

0:52

Ensley , with J Ensley Financial

0:54

. Welcome and good morning , john , good

0:56

morning .

0:57

Kim , thanks for having me . I'm looking forward to

0:59

our conversation .

1:00

So , before we get started , give us a little

1:02

information about you and about

1:04

J Inslee Financial , and what makes you

1:06

an expert today .

1:08

Absolutely We'd love to . So

1:10

I founded J Ensley Financial in 2012

1:14

as a financial planning company and

1:18

I consider my practice what I call life

1:20

insurance centric financial planning

1:22

. So life insurance plays a central role

1:24

in what we do from a financial

1:26

planning standpoint . I'm also

1:29

a chartered financial consultant , which is a designation

1:31

from the American College of Financial Services

1:34

. I really started

1:36

my practice after some

1:38

couple of failures in

1:40

the late 90s and the mid 2000s

1:42

with some real estate projects that kind of led

1:44

me on what I call a journey of self discovery

1:47

Lots of books , lots of studying

1:49

, lots of learning , mostly finance

1:51

related and got

1:53

super passionate about helping people build

1:56

the life that they want to build and position

1:58

themselves in a way that is safe

2:00

, that keeps them in control and

2:02

so forth . So it launched my practice and made

2:05

a career change in 2012 and launched

2:07

that practice . Hard to believe even to me

2:09

that it's been over almost 11

2:11

years now that I've been doing this . Just

2:13

super fortunate and super blessed to get

2:16

to do something I absolutely love and

2:18

help people every day .

2:19

You know , when you say the word life insurance , I imagine

2:22

if we had a room full of people and you asked them what

2:24

it means , we would get so many different answers

2:26

, because what comes to mind is always hear the little

2:28

jingle . You know , life insurance isn't

2:30

for the dead , it's for the people that they

2:32

leave behind . So how about you kind of simplified

2:35

for us ? What really is life insurance

2:37

? What is its primary purpose ?

2:39

Well , you know , you could really say that all

2:42

insurance is about ensuring

2:44

the risks that you either can't afford

2:47

or don't want to insure yourself

2:49

. So life insurance is really

2:51

ensuring the risk that a person

2:54

in your family a loved one , a breadwinner

2:56

, a business partner , etc . Might

2:58

pass away and leave

3:01

you with some liabilities or

3:03

so on and so forth that life insurance

3:05

could help you cover . So , really

3:08

, life insurance is about ensuring the risks

3:10

that we either don't want to assume

3:12

or are not able to assume .

3:14

So and then , when we think about life insurance , there's

3:16

not just one kind . What are the different types

3:18

, or what are the most commonly purchased forms

3:21

of life insurance ?

3:22

So there's many , many different kinds of life insurance

3:24

, but let's just cover kind of the main

3:27

ones . So most people are familiar

3:29

with term life , term life insurance

3:31

, and term life insurance is kind

3:33

of just like its name says , so it covers

3:35

a particular term , so usually

3:38

it's going to be 10 years , 15 years , 20

3:40

years , 30 years a specific

3:42

term , and it's going to have a specific death

3:44

benefit amount . So there's a couple variations

3:47

that usually you're going to get . Let's

3:49

just keep it simple and say we get a

3:51

$250,000 death benefit

3:54

for 15 years and so

3:56

you're going to have a premium amount and

3:58

you pay that premium for 15 years and

4:00

at the end of 15 years that

4:02

policy is going to expire and

4:05

then you'll have the option to either cancel it or

4:07

renew it at a higher

4:09

price because you're now 15 years older for

4:12

another term and another amount

4:14

, assuming you still qualify . And

4:16

then the other type is what would be ? There's

4:19

actually two categories and we would put those

4:21

into the category of permanent

4:24

life insurance and so , just like

4:26

that sounds , you have whole life and universal

4:28

life insurance that would cover you for your

4:31

entire life , as long as

4:33

you keep paying premiums for your entire life

4:35

. So

4:37

there's some difference between whole life and universal

4:40

life . Universal life is

4:42

really a term life product

4:44

with a side fund that

4:46

accumulates cash value and that

4:49

cash value can be tied to a stock

4:51

market index . Whole life

4:53

insurance is what I call

4:55

an actuarial product , where

4:57

the underlying cash value

4:59

accumulation that also accumulates cash value

5:02

is built on a set

5:04

of actuarial tables

5:06

or calculations , and both

5:08

of them will cover you for your entire life

5:10

, provided again that those premiums

5:12

are paid .

5:14

So , of the three that you just listed , is there one that's

5:16

more popular , more commonly purchased

5:18

than the other two ?

5:20

Well , I would say the most commonly

5:22

purchased type of life insurance would be term

5:24

life insurance . Most people are

5:26

very familiar with that . That's probably what the

5:29

vast majority of people have . I

5:31

wouldn't use the word popular , because they think the

5:33

type that someone picks is really based

5:35

on their particular circumstances and what's

5:37

a fit for their specific

5:40

situation .

5:41

So let's talk about that . How do you determine

5:43

which policy or what type

5:45

of coverage you need ? What

5:47

factor should a person consider ?

5:49

So that is going to vary . It's

5:52

a great question , kim . It's going to

5:54

vary from person to person based on everyone's

5:56

individual needs . So

5:58

if it's a situation where we're taking

6:00

a long term view of

6:03

our finances and our situation , then

6:06

the product , like whole life , is really going to be

6:08

a great fit where it can build . If

6:10

it's designed properly , it can build cash

6:12

values and over time those

6:14

cash values can be used and we

6:16

can get into some of those specifics . Term

6:19

life is a scenario where we have a specific

6:22

need that we want to cover for a specific

6:24

period of time , or

6:26

cost can be a determining factor

6:28

with term life , because it is going to be the lowest

6:30

cost option in terms of

6:33

monthly premium . However , it

6:35

doesn't accumulate any cash value . So

6:37

there's really just a big difference there

6:39

between a type of insurance

6:41

that provides a definite coverage for

6:43

a specified period of time there's lots of

6:45

circumstances where that might be the

6:47

priority versus a type of life

6:49

insurance that will provide coverage over a lifetime

6:52

and accumulate a cash

6:54

value within that policy . So

6:56

you're simultaneously paying premium

6:58

for a death benefit and accumulating

7:00

an asset that's building up

7:02

cash as opposed to . You can almost

7:05

think about term life insurance as you're kind of renting

7:07

the life insurance for 15

7:09

or 20 or 30 years because it

7:11

doesn't accumulate any value

7:13

from those premiums other than that death benefit

7:16

in the event that the insured person passes

7:18

.

7:19

And I know people get into insurance at every

7:21

different stage of life . But what is a really

7:23

good age to start looking

7:25

at life insurance

7:27

?

7:29

Well , you know , there's an old proverb that says

7:31

the best time to plant a tree was 20 years

7:33

ago and the second

7:35

best time is today , and so I

7:37

think that would be a good proverb to

7:39

apply to life insurance . So

7:41

the sooner the better , particularly

7:44

on the cash value , life insurance like

7:46

a whole life policy the sooner

7:48

that you can get that started , even if you're starting

7:50

it at a fairly modest level

7:53

. Years and years and years of

7:55

that building up and compounding can

7:57

make a big difference . So I would say the sooner the

7:59

better , and again , it's

8:01

really going to be circumstantial , based

8:03

on what you have going on in your life .

8:04

So what type of factors actually affect

8:07

the premium ? Because , like you said , with

8:09

term life , that seems to be

8:11

the one most common . People

8:13

are very familiar with it and you mentioned

8:15

that . You know it's probably one of the least expensive

8:17

ones there . But what other things ? What are the

8:19

factors actually affect premiums ?

8:22

So the biggest things that will affect the premium

8:24

are age and health . Those

8:27

are two big ones , right ? Just about all types

8:29

of life insurance have some sort of qualifying

8:31

. A whole life and universal

8:34

life may require a full medical exam

8:36

and very deep medical

8:38

underwriting , whereas term life might

8:40

just be a health questionnaire where you answer

8:43

a few health questions . Depends

8:45

on the company and the product it'll vary a little

8:47

bit . So health and your

8:49

age will have the biggest impact

8:51

on premium . But

8:54

then the type of life insurance of course

8:56

factors in there as well . So term

8:58

life is going to have a very low cost in

9:00

terms of premiums , especially for younger people

9:02

. Whole life and universal life

9:05

policies are policies where the

9:07

premiums are going to be higher , but

9:09

that's also because they're accumulating

9:11

cash value and they're building up the other

9:13

side of it that term life doesn't have .

9:16

Under what conditions would a person possibly

9:18

not qualify for life insurance , whether it's

9:20

term or whole life ? Universal ?

9:23

Yeah . So once the insurance company issues

9:25

a life insurance policy on someone , they

9:27

are obligated They've made a promise to

9:30

fulfill their obligations

9:32

of paying that deaf benefit out between

9:35

then and the end of the term or , in the case of a whole

9:37

life policy , for life

9:39

. So they're

9:41

going to do some checks on the front end in terms

9:43

of health , and what they're really

9:45

looking for are any

9:47

history of some of the

9:49

big things cancer , disease

9:53

, kidney disease , some of those big

9:55

things that can be life threatening down

9:57

the road . There are also more and more

9:59

nowadays looking at lifestyle choices

10:01

, and whether you smoke or not

10:04

can make a big impact on qualification

10:06

and on the premium , and your

10:09

height and weight comes into play . So

10:11

just being generally healthy is

10:14

really what they're looking for , so that they're

10:16

appropriately underwriting

10:19

the risk they're taking that someone's

10:21

going to die sooner than expected and they'll pay that deaf

10:23

benefit out soon .

10:25

So , outside of , of course , obviously having

10:27

to possibly do a health exam , what other

10:29

type of information is requested

10:31

of the person that's looking to purchase

10:34

the insurance ? If I'm ready to get on the call

10:36

with you and I want to learn about my

10:38

options , what questions should I be prepared

10:40

to answer ?

10:41

So a good advisor is going to

10:43

ask a lot of questions about your circumstances

10:46

and your situation , and those things

10:48

fall into the categories that any good financial

10:51

professional should be asking you about , and

10:53

that is your income , your source of income

10:55

, level of income , the assets that

10:57

you have and the liabilities that you have

11:00

and get a good picture of your overall

11:02

financial picture . But maybe more importantly

11:04

, they're going to want to have some some conversation

11:07

with you about your goals and objectives

11:09

. What do you want to achieve long term , midterm

11:11

, short term ? What are the

11:13

things you're trying to do ? What are the

11:15

? Do you have kids ? Do you write ? What are

11:17

the ? What are the risk factors there in terms of life

11:19

insurance and those kinds of things ? So

11:22

you're going to , you're going to share some information

11:24

with an agent that's going to give them a

11:26

good picture of your financial

11:28

situation so that they can suggest

11:31

the appropriate type of insurance

11:33

product for you .

11:34

How often should you even review ? You know , for

11:37

individuals that already have policies

11:39

and so they're listening to this podcast

11:41

and , of course , they're going to learn some information about

11:43

the types of policies maybe that they don't have

11:45

. How often should you review your policies

11:48

?

11:49

So I review with my clients

11:51

at least once a year . We

11:53

get together and take a look at policy values

11:55

. Now , I'm a I'm a big proponent of whole

11:57

life insurance , so most of my clients

12:00

have whole life policies that they're

12:02

accumulating cash value and and

12:04

so forth . So at least once

12:06

a year I sit down with them when we look at the

12:08

policy values . We look at

12:10

how they've been paying their premiums and funding

12:13

their policies and we also

12:15

get an update on that financial situation

12:17

. That's the most important thing . Is is to

12:19

keep up with goals and objectives and what's

12:21

going on financially , to make sure that

12:23

the the systems

12:25

and the solutions that that we put in

12:28

place a year ago are still are still

12:30

working and whether we need to change anything

12:32

. So I always recommend at least once a year .

12:34

So let's talk about . You said that you're a proponent of the

12:36

whole life . What are some of the advantages ? Why

12:38

would you recommend that one ? You

12:40

know you mentioned goals . What are the goals ? What

12:43

kind of goals can be accomplished by having a whole

12:45

life versus , say , a term life insurance

12:47

policy ?

12:48

Absolutely so . A whole life

12:50

insurance policy . Number one it covers you

12:52

for your entire life . So once that policy

12:54

is issued , you know you're going to have coverage

12:57

for life , provided you keep you keep

12:59

paying the premium payments . And

13:01

when you pay the premium payments , if these

13:03

policies are designed correctly

13:05

and I stress that you really have to work with an

13:07

agent that knows how to design a whole life

13:10

policy correctly using the , using

13:12

the writers that that need to be used and

13:14

funded in the proportions . But

13:16

I look at my whole life policy as a

13:18

savings mechanism . It's a way that I

13:20

build up cash in another

13:22

place . I can build up cash aside from bank

13:25

accounts and so forth , and

13:27

the unique thing about the whole life policy is

13:29

it gives me the ability to access

13:31

financing . I can borrow from

13:33

my whole life policy or borrow

13:35

against my whole life policy would be the more

13:38

correct way to put it and use those

13:40

, use those funds at very

13:42

advantageous terms so low interest

13:44

rates . I control the repayment

13:46

, I can pay them back any way I want to , over

13:49

any amount of time , and

13:52

I can use that money for either other

13:54

investments or for major

13:56

purchases or as emergency funds

13:58

. So the way I view a whole life

14:00

policy is . It's it's building

14:02

up cash value . It's providing that death benefit

14:04

that's important for for my family

14:07

. It's building up cash value that

14:09

can then create the ability

14:11

for me to use policy loans and

14:13

an advantageous way to do other things with

14:16

. So I look at it as one tool

14:18

that's getting multiple uses

14:20

for the same premium dollar . So

14:22

there's a lot of leverage and a lot of benefits to that

14:24

. That's why I'm a proponent of it .

14:26

With the whole life policies you mentioned that you can

14:28

borrow against and it sounds like some of the advantages

14:30

would be that , like you said , low interest

14:32

rates seems like you can control the

14:34

narrative in terms of the term . This

14:37

would be some of the downsides of borrowing

14:39

against your policy . What happens if I have a loan

14:41

against my policy and I

14:44

die ?

14:45

It's a great question , kim , and

14:47

so here's the way it actually works . So

14:49

life insurance companies are highly

14:51

regulated at the state level . The

14:54

National Association of Insurance Commissioners

14:56

regulates all life insurance companies

14:58

and they are highly

15:01

regulated in what they can invest in . So

15:03

insurance company life insurance companies are

15:05

required to take the premiums that they receive

15:09

from their customers and invest

15:11

those premiums in such a way that

15:13

they will be able to meet their future obligations

15:15

those death benefits , and

15:17

so , for instance , a life insurance company can't

15:19

just go out and buy some

15:22

kind of cryptocurrency . The regulators

15:24

would have a very difficult

15:26

time with that decision so they have to buy

15:29

things that are very stable and , historically

15:32

, are going to generate the kind

15:34

of results that will help them meet their obligations

15:36

. One of the investments that a life

15:38

insurance company can make is

15:40

policy loans to their own policy

15:42

owners . So when we borrow against

15:45

the whole life policy , we're actually borrowing

15:47

from the insurance company . We are

15:49

an investment for them . They're making a

15:51

loan just like any other type of lender

15:53

would to anyone else , and

15:56

we pay them some interest for that . But

15:58

, as I mentioned , those are going to be very competitive

16:00

and very low interest rates typically , and

16:03

so what they're really doing is they're taking that whole

16:05

life policy and they're using the amount of cash

16:07

value in the policy as the limit of

16:10

what they'll loan , and the death

16:12

benefit in the policy is actually the collateral

16:14

. So to your question , kim

16:16

, if I have a loan outstanding and

16:18

I die , the death benefit

16:20

is going to pay that loan and

16:22

then the remainder of the death benefit proceeds

16:25

are going to go to the beneficiaries . So

16:27

that's really what's happening there and what

16:29

would happen in the case of if you die

16:31

. The other downsides

16:33

of borrowing against life insurance

16:35

is you are 100%

16:37

in control . You're controlling the repayment term

16:39

. You decide how long to pay it back . You

16:41

can actually decide not to pay it back because

16:44

the life insurance company knows that

16:46

their collateral is the death benefit . However

16:49

, what I refer to this as we want to be

16:51

honest bankers with ourselves and

16:54

so we always want to pay our loans back . So there's

16:56

a level of responsibility that comes in

16:58

and discipline to actually follow through

17:00

and pay those loans back . Some people

17:02

can see if they don't have that discipline or that

17:05

responsibility , they can see that as a downside

17:07

of something that could get away from

17:09

them .

17:09

Is there underwriting process or do you

17:11

have to be credit worthy to borrow

17:14

against your own policy ?

17:15

No , that's another one of the great benefits of being

17:18

able to use policy loans is there's no qualifying

17:20

, there's no application , there's no income

17:22

. You don't have to provide

17:24

income sources or income amounts or any

17:26

verification or anything like that . You're

17:29

in complete control of the policy owner .

17:31

And I know one of your specialties is using these

17:34

policies basically to prepare for

17:36

retirement , to build your wealth . How

17:38

does that happen ?

17:39

So , as I mentioned , these policies accumulate

17:41

cash value , and one of the unique things

17:44

about them is they are guaranteed

17:46

to increase by a larger amount every

17:48

single year , so that

17:50

cash value is going to continue to build and

17:53

build and build year over year over year . And

17:56

when we borrow from the policy and we use a policy

17:58

loan , the cash value on the policy will

18:01

continue to grow at the same pace as

18:03

if we didn't borrow it . And so we

18:05

have a unique situation with a whole life

18:07

insurance contract where those cash

18:09

values will compound over a lifetime

18:12

. They never go down

18:14

, they only go up . They get bigger every year

18:16

, and if we borrow from the policy

18:18

in the short or medium term , as

18:21

I was describing a few minutes ago , we

18:23

don't give that growth up , it

18:25

continues to grow . And so we can borrow

18:27

and repay and borrow and repay and borrow and repay

18:29

throughout our lifetime . And then

18:32

, when we get to that point where we decide

18:34

it's time to retire , we can

18:36

take this accumulated cash value and

18:38

if it's accumulating for

18:40

some time it's usually a significant

18:42

amount and we can then convert

18:45

that into a stream

18:47

of income that we can use for retirement

18:49

. And so , basically , we start drawing

18:51

that cash value out of the policy at that

18:53

point and use that

18:55

as a supplemental retirement income when

18:58

we retire .

19:00

And ideally for that to really be

19:02

beneficial for somebody that's looking to use this

19:04

type of policy for retirement , when

19:07

do we have to start ? I know I kind of talked about when

19:09

should we just look at life insurance in general

19:11

? But for a whole life policy

19:13

to really benefit me , for me to use this as a

19:15

tool for retirement , if I'm in my 40s

19:17

or my 50s or even 60s , ready

19:19

to retire , is it too late ? Absolutely

19:22

not too late .

19:24

So , just like any other kind

19:26

of retirement planning , the

19:28

longer you wait , the more you have to put away . So

19:31

I'm always encouraged

19:33

that the younger folks that might be listening

19:35

out there to look into these types

19:37

of policies and really

19:40

get it in place as soon as possible , because

19:42

obviously , the more years of growth and compounding

19:45

you have

19:47

, the time is really the most important factor

19:49

, and so if we're 50 or

19:51

60 or even 70 , these

19:54

policies can still be designed to accumulate

19:56

very large amounts of cash value in

19:58

a relatively short period of time . But

20:01

of course , we're funding them at a higher level

20:03

at that point . So the tool

20:05

can still be used regardless of what anybody's

20:07

age is , all the way up to about , let's say

20:09

, 75 to 80 . Beyond

20:12

age 80 , it starts getting much more

20:14

challenging in terms of

20:16

health , qualification and so forth

20:18

, but really obviously sooner the better

20:21

, but it's never too late .

20:23

Almost never too late . If I have a policy which

20:26

any one of these , the life , the whole

20:28

life , the term other

20:30

than non-payment , are there any other

20:32

circumstances that could cause the policy

20:34

to be terminated ?

20:36

So term life is going to end at

20:38

the end of the term . So you pay all

20:40

your payments for the term , but at the end of 15

20:42

years or 20 years whatever that term was originally

20:44

that policy is going to

20:46

end and it's either

20:48

going to . People have probably

20:50

seen before with term policies where you get a

20:53

letter in the mail and it says your term

20:55

policy is going to end and the new premium

20:57

after is some exorbitant

20:59

amount and that's because it can either renew

21:02

at much , much higher rates or

21:04

what most people do is they cancel those policies

21:06

and buy another term policy

21:08

or some other type of insurance . So

21:11

with the term policy , non-payment

21:13

of premiums or the term coming

21:15

to an end with a whole life or a universal

21:17

life policy , non-payment of premiums

21:19

would definitely could cause the policy

21:22

to end . The

21:24

only other things that really could cause the

21:26

policy to end is if it was discovered

21:28

that someone committed fraud on their application

21:30

something along those lines

21:32

that could come into play . The exception

21:35

to that would be universal life , and

21:37

universal life is

21:40

the best way to describe it is . It's a term

21:42

life product with a side fund

21:44

, and that side fund is what accumulates

21:46

the cash value and it's also what draws

21:49

the cost of the policy out . So there can

21:51

become a circumstance , if the

21:53

side fund underperforms and

21:56

premiums aren't paid , where the

21:58

policy could lapse . So

22:01

if the cost of the policy

22:03

is more than the side fund can

22:05

support , then either more premium

22:07

would have to be put into the policy or the policy

22:09

will lapse . So that is probably

22:12

a rare but certainly a possible

22:14

scenario .

22:15

So can I shift gears midstream ? If

22:17

I've got a 20-year policy and I'm 10

22:20

years in , is there any benefit

22:22

or advantage for me to switch it over to

22:24

a whole life or a universal ? Or can I switch

22:27

it or these completely separate products

22:29

? I just have to stick with what I

22:31

have . What would my alternatives be ?

22:33

So they are completely separate products in

22:35

terms of a term policy . So there's

22:38

really no way to switch a term policy

22:40

to whole life . The exception to that is

22:42

some companies will offer term

22:44

life insurance policies that are convertible

22:47

. So not all companies . You

22:49

would have to confirm this on the front

22:51

end . But some companies will offer a term

22:53

life insurance product that is convertible

22:56

to permanent , convertible to whole life at

22:58

any point , and so basically they'll take

23:00

that death benefit , they'll convert it to whole

23:03

life and they'll let you

23:05

know what your premium will be going forward

23:07

to support that whole life policy

23:09

. So sometimes they're convertible , but in most cases

23:12

they are not .

23:14

So , when I'm reviewing my policies , what

23:16

is really the fine print that a consumer

23:19

really needs to look for ? Because in

23:21

the ideal world , we read everything word

23:23

for word , we make sure we understand it , but we

23:25

know that's not happens . So what are those things

23:27

that consumers often overlook

23:30

when they're purchasing a policy that

23:32

tends to bite them in the rear at the

23:34

end ?

23:35

Yes . So there's a few things

23:37

that you really want to pay attention to , and

23:39

one would be contestability period

23:42

. So it's pretty common in the

23:44

industry for the contestability

23:47

period to be like two years

23:49

, and so if there was a mistake

23:52

made on an application or

23:54

something we're not talking about fraud , just talking

23:56

about a mistake usually the insurance

23:58

company , if it's beyond two years

24:00

that that mistake is discovered , they're

24:03

not going to contest the policy . The

24:05

other thing that that comes into our things like

24:07

, most people are concerned about suicide

24:10

clauses and policies , and most policies

24:12

do have some language around suicide

24:14

, but usually it's for a two-year

24:16

period . So if the policies for more than

24:18

two years , then they usually will not

24:20

contest policy in a suicide situation

24:23

. Now , this will vary from company to company

24:25

, so you really got to look at the details

24:27

, the fine print , so to speak , on the front end

24:30

, and know what the contestability periods

24:32

are and exactly what the terms of that suicide

24:35

clause might be . The other thing to look at are

24:37

grace periods . It's pretty

24:39

common for life insurance companies to

24:41

give a 30 or a 60 day grace period

24:44

on premium payments , but you might

24:46

run across a contract out there that says

24:48

if you miss a premium payment by 10

24:50

days or something along those lines , they

24:53

could cancel the contract . So you just want to be aware

24:55

of those things , and then the other

24:57

things that I would look for in the fine print are

24:59

anything about fees and costs , and whether

25:01

those fees and costs are guaranteed or

25:04

they can maybe changed . Obviously

25:06

, guarantees are better than

25:08

things that are not guaranteed , and so

25:10

you just want to know what those guarantees are

25:12

or are not .

25:14

So what does the claims process look

25:16

like ? Does it vary from the type

25:18

of policy to type of policy , and what's

25:21

the average payout time for policies

25:23

?

25:23

So the claims process is going to be pretty

25:26

similar regardless of the company

25:28

or the policy type You're going to . If someone

25:30

passes who's insured , you're

25:32

going to reach out to that life insurance company

25:34

and they're going to ask for some

25:37

verification . So a death certificate

25:39

and some identification verification and

25:42

typically within about 60 days

25:44

those death benefit payouts will

25:46

go to the beneficiaries .

25:48

So I want to talk a little bit about the age

25:50

, because you see the commercials all the time

25:52

, especially daytime TV . If you're between

25:54

the ages of , I want to say it's , 50

25:56

and 80 , always here , 80 . So if

25:58

you're a little over 80

26:00

, approaching 80 , what concerns

26:03

should that person have in terms of being

26:05

able to either continue coverage

26:07

or obtain new coverage ?

26:10

Absolutely so . This is one of the reasons

26:12

that I'm such a proponent of permanent

26:14

life insurance . There's kind of a myth

26:16

or a belief in the financial services world

26:18

that once you're old , you no longer

26:21

need life insurance , and I think the idea

26:23

is that your other assets will have

26:25

built up to a point . But that's just simply

26:27

not true for a lot of people . So

26:31

if you get whole life insurance or type of

26:33

permanent life insurance early on , then

26:35

this is a scenario you'll just head

26:37

off . You'll never have to deal with , because you're going to

26:39

be covered With term insurance

26:42

. When you get to a certain age , it

26:44

becomes very , very expensive . You

26:46

just have to approach that very carefully . There's

26:48

a lot of companies out there that are offering what are called

26:50

final expense policies , and

26:53

they're relatively small policies

26:55

designed to just cover

26:57

the cost of burial so that someone's family

26:59

at least has those costs covered , and

27:02

some of those policies can be the right thing

27:04

. Again , it just depends on the circumstances

27:06

and what that situation is

27:08

for each individual family .

27:11

Of course , no industry is going to be

27:14

immune from having scams and fosters

27:16

out there , and especially they will prey

27:18

upon the older people that are looking to

27:20

make sure that they have either

27:23

burial coverage or leave something for their loved

27:25

ones . What are red flags that

27:27

consumers should look for to make sure they

27:29

can avoid being scammed ?

27:31

I think the number one thing is

27:33

to know who you're

27:35

working with . Work with an agent

27:38

, someone who has some credentials

27:40

that you can verify as licensed in your state

27:42

. It's very , very easy , especially

27:44

online , to go to any state

27:47

insurance commissioner office

27:49

and verify the licensing

27:51

of an agent that you're working with . So that's

27:54

the first thing Make sure you're working with a legitimate

27:56

, licensed agent . And

27:58

number two , I think , look for some additional

28:00

professional designations in the industry

28:02

. So , for instance , I have a CHFC , a

28:04

chartered financial consultant designation

28:07

from the American College of Financial Services , in

28:09

addition to being life insurance licensed , and

28:12

that just is another layer of professional

28:15

certification that you can use as

28:18

kind of a verification that you're working with someone

28:20

reputable and then knows what they're doing . Some other

28:22

designations to look for would be CLU

28:25

, chartered life underwriter . Many CFPs

28:28

or certified financial planners are also

28:30

insurance licensed . So

28:32

those are a couple of the others that you can look for . But

28:34

I think that's the biggest thing is , if you're going to buy

28:36

an insurance product , make sure that you can

28:38

verify that you're working with a legitimate

28:40

person . So that would be the biggest red

28:42

flag is if you can't verify that this

28:45

person is licensed in the state that you live

28:47

.

28:48

Do door-to-door insurance agents

28:50

still exist , or is that an immediate

28:52

red flag of somebody is knocking on your door

28:54

wanting to sell you an insurance policy

28:56

?

28:57

I'm sure they still exist , but it's certainly

29:00

, I don't think , the norm in

29:02

this industry anymore . And

29:06

again , I would caution anyone from

29:08

buying on the spot , so to speak , without

29:11

doing a little research and confirming that who they're

29:13

working with is legitimate In

29:16

paperwork .

29:16

we're becoming a paperless society

29:18

. I imagine back in the day you

29:20

would get a policy and you would hold on to it

29:22

like it was cash . Is

29:25

that still the same case ? What happens if somebody

29:27

dies and there's no paperwork

29:29

to be found ?

29:30

That is such a great question and something

29:33

that so many people don't think about

29:35

, and that is , you really should have

29:37

somewhere that your

29:40

family knows where to find it , even

29:42

if it's a piece of paper that

29:45

highlights or lists out the

29:47

life insurance policies or other

29:49

beneficiary type products like retirement

29:52

accounts and so forth , so that

29:54

someone , in the event something happens to you

29:56

, knows where to find that document

29:58

, that piece of paper , and then they

30:00

know who to contact . There may

30:02

be , it's still quite common for there

30:04

to be paper copies of

30:06

the actual insurance contract . Keep

30:08

those in a file somewhere with other important documents

30:11

and , again , make sure someone in your family

30:13

knows where to find those documents . And

30:16

so much of the process

30:18

today has gone electronic

30:21

. Not every company , but most companies have

30:23

gone electronic . So the application is electronic

30:25

and the policy issue is quite

30:28

often an electronic process . Where you're

30:30

doing that on your computer , you always have the option

30:32

of downloading and saving

30:34

that copy that you could print out

30:37

. But the issue process is

30:39

oftentimes electronic now , which

30:41

makes it even more important for there

30:43

to be a and it can be a computer

30:45

file , as long as someone knows how to get into

30:48

the computer and where to find it where

30:50

your beneficiary is . Your family members

30:52

are able to find the assets

30:54

and the life insurance policies and so forth that you

30:57

have in the event from you know you

30:59

pass away .

31:00

So I want to talk a little bit just about beneficiaries

31:02

, because I'm just picturing in my mind

31:04

. You know , I've seen these stories where

31:06

people leave their money to cats

31:08

and dogs and organizations

31:11

. So what is required

31:13

, or is there a requirement , when you purchase

31:15

the policy , what type of information needs

31:17

to be provided about that beneficiary

31:20

? Are there people , age

31:22

groups or entities , animals

31:25

, or are there things that you can't use as a beneficiary

31:27

?

31:27

So the beneficiary

31:30

is really entirely up to the policy owner

31:32

within some reasonable guidelines , and

31:34

that's going to be a little different for the

31:36

way each insurance company underwrites

31:38

. But generally speaking , what they're looking

31:40

for is that the beneficiary has

31:43

some interest , that it makes sense

31:45

. It's a family member , a business partner , it

31:47

could even be a close friend that

31:49

you know . They'll ask some questions

31:52

to confirm that . But a beneficiary can

31:54

be almost anyone . Except for

31:56

the fact that you can't just go out on the street and

31:58

pick some random person to be your beneficiary

32:00

, that's probably not going to fly in

32:02

the qualification process . It's also

32:04

quite often the case where

32:07

people will leave death benefits

32:09

or portions of death benefits . A lot of folks are

32:11

also aren't aware that you can

32:13

designate multiple beneficiaries and

32:16

a certain percentage will go to

32:18

your children , a certain percentage to a charity

32:21

, etc . So leading to organizations

32:23

is also quite common , particularly charitable

32:25

organizations , and

32:28

in the case of pets , I

32:30

personally have not run across anyone who

32:32

wanted to list their pet as

32:34

a beneficiary , but I have read those

32:36

stories as well . So I think for

32:38

most insurance companies that I'm familiar with , I think

32:40

they would handle that on a case-by-case basis

32:42

and decide whether that

32:44

was going to fly for them or not ?

32:46

Is there a maximum ? And I imagine

32:48

, hopefully not times you can change your beneficiary

32:51

. You know , maybe this month it's this

32:54

child or this spouse and you know

32:56

, things happen and change and I want

32:58

to change it again . How do

33:00

insurance companies even keep up with those

33:02

changes ? And again , is there a maximum ? You know

33:04

, if I'm calling you every other month wanting

33:06

to change the beneficiary , how

33:09

does that work ?

33:11

So the policy owner really

33:13

has complete control over changing

33:15

the beneficiaries . There are certain

33:17

types of policies that will not allow

33:20

a beneficiary to be changed , but

33:22

you'll know that on the front end . But generally speaking

33:24

, for most policies the policy owner can

33:27

change beneficiaries , add beneficiaries

33:29

, you know technically , as often as

33:32

they choose to . I think the

33:34

agent and the insurance company probably

33:36

will have some questions if it's a weekly

33:38

thing .

33:39

And I want to kind of wrap up just a little bit in

33:41

terms of if you feel you've been scammed

33:44

, if you feel like you know maybe you've

33:46

purchased a policy that's not

33:48

really with a , you know , legitimate organization

33:51

or you've run into trouble having

33:53

a claim process , what recourse

33:55

do policy holders have , or

33:58

either the beneficiaries ?

33:59

Absolutely so . If you think you've been a victim

34:02

of fraud , then and it has

34:04

to do with any type of insurance , including

34:06

life insurance then you should reach out . Every

34:08

state has an insurance commissioner's

34:10

office and you should reach out to that

34:13

office and inquire on

34:15

how to file those claims and how to get help with

34:17

that , okay , and to kind of wrap us

34:19

up , what's your best advice for consumers in

34:21

the market for life insurance ? So

34:23

my best advice is

34:26

find an advisor or

34:28

an agent that you can talk to about your

34:30

specific circumstances , who will

34:32

walk through the different options

34:34

available to you so that you can make an educated

34:37

decision about what product and what you

34:39

know , what product structure is right

34:41

for you , based on all

34:43

of your financial picture , kind of like where we started

34:46

our conversation . And then , in addition

34:48

to that , plant the tree today , even if

34:50

you didn't get to it 20 years ago . So

34:52

, sooner than later , just get started .

34:54

And how can our listeners learn more if they want to hear

34:56

more about what you have to say about life insurance

34:59

and how it can be a benefit for them ?

35:01

So what I do is I offer a free

35:04

30-minute strategy session

35:06

is what I call it . It's a consultation where

35:09

you can ask questions and I

35:11

can learn more about your circumstances

35:14

and make suggestions . Very casual

35:16

, no pressure , not a sales pitch

35:18

, just a conversation . And you can

35:20

reach me at jumponwithjohncom

35:24

and that landing page

35:27

will give you the ability to jump right into my calendar

35:29

and schedule that free strategy session . So

35:31

I'll be happy to discuss

35:33

what you got going on .

35:35

Well , thank you , john , for joining me . Hopefully we've motivated

35:38

some consumers out there to

35:40

go and review your policies or start thinking

35:42

about life insurance , because it's not

35:44

a matter of if you're going to die

35:47

, it's when . No doubt about that

35:49

. Thank you , john , thanks Cam

35:51

, it's been great . Selecting

35:57

the right life insurance policy is a significant

35:59

decision that can greatly affect your family's

36:02

future . Here are some tips to help guide

36:04

you in the process . First , determine

36:06

your need Before shopping around

36:08

. Evaluate why you need life

36:10

insurance and look at the different types to figure

36:12

out which one might be best for you . Calculate

36:16

the right coverage amount you need to take

36:18

into account your debts , your monthly expenses

36:20

, mortgage basically your family

36:22

, because , again , sometimes life insurance

36:24

isn't for the person that dies , it's for

36:27

those that you leave behind . Shop

36:29

around Rates can vary significantly

36:31

, I mean , between companies and policies

36:34

. Find what's going to be right for you . And

36:36

then finally , check out neighborsfcuorg

36:38

for a slash financial education

36:41

to learn more on how to use the money

36:43

you have , make the money you need and save

36:45

the money you want .