October 14, 2025 • 38 mins
You’ve heard of life insurance, but do you know what it actually is? And do you really need it? Hosts Lea Palmieri and Matt Stillo are joined by Life Insurance Advisor Dennis Carlson who explains the purpose of life insurance, how you can find the best agent and policy for you, and so much more.
You can connect with Dennis on LinkedIn: https://www.linkedin.com/in/denniscarlson/
See omnystudio.com/listener for privacy information.
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Episode Transcript
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Speaker 1 (00:04):
Rube.
Speaker 2 (00:07):
Hi, I'm Leah Palmery and I'm Matt Stillo.
Speaker 3 (00:10):
Welcome to grown up Stuff, Matt. Today we are going
to talk about a topic I truly know pretty much
nothing about.
Speaker 2 (00:19):
So how much do you know about life insurance?
Speaker 1 (00:22):
I'm going to answer your question with a question. Have
you seen the movie Groundhog Day?
Speaker 3 (00:26):
Yeah?
Speaker 1 (00:26):
So Ned Ryerson Needle knows. Ned is all that I
know about life insurance. Okay, you know he's thrown around
all kinds of terms to Bill Murray's character in that movie,
a whole term you can never have too much life insurance?
Am I writer? Am?
Speaker 4 (00:39):
I writer?
Speaker 1 (00:40):
My right? Right? What about you?
Speaker 2 (00:43):
Well, that's more than me, That's truly more than me.
Speaker 3 (00:46):
I didn't have any movies to reference, even ones with
adorable groundhogs in them. So you're doing way better than
I am. But I also have amazing news for you today.
We're gonna be speaking with Dennis Carlson, who is a
life insurance advisor, and he's going to answer all the
questions we need to know. And so that starts with
what is life insurance? Who needs it? And can I
(01:09):
make my plants a beneficiary?
Speaker 1 (01:11):
I just hope that he seems more reasonable or reliable
than needle knows Net because needle knows Net is doing
hard selling. Yeah, and I feel like I want a
personal relationship with my life insurance person, so I hope
that Dennis can deliver.
Speaker 3 (01:24):
He can, and he's going to help you figure out
exactly what you should be looking for if you are
going to be exploring the world of life insurance. Things
you should avoid, things you should research. Gave a lot of.
Speaker 1 (01:35):
Good ideas well. You know, life insurance is something that
probably doesn't come up often over brunch, but it's something
that's just super important for adults, especially adults with a
family that depend on them to know about and to
have for that extra peace of mind.
Speaker 3 (01:50):
Dennis does an amazing job of making it all make
sense and honestly taking a topic that's kind of scared
to think about. Hello, there's death looming and spells it
out in a way that helps it to be way
less daunting even though we are in spooky season right now.
Speaker 1 (02:04):
And to keep those scaries at bay. Here's the man himself,
Dennis Carlson.
Speaker 4 (02:09):
Well, I'm Dennis Carlson. I am a life insurance advisor.
I've been in the life and employee benefits and health
insurance industry for about twenty years, and I serve individuals
(02:29):
and families and executives of companies, small business owners with
any needs related to risk protection for either their business
or for their families.
Speaker 2 (02:40):
Amazing.
Speaker 3 (02:41):
Okay, we're going to start real basic here, Dennis. So
my first question for you is what is life insurance?
But truly what is life insurance and how does it work?
What can you tell us in sort of basic terms there.
Speaker 4 (02:53):
Yeah, So whenever we're talking about life insurance, we're actually
talking about death. So we have to start there and
just unders standing that the audience knows that we're going
to get into these subjects, the things that people don't
usually like to talk about. But you should at least
spend some time in your life discussing so that you're prepared.
So what life insurance is in its most basic terms,
(03:14):
is it provides a cash payment death benefit to the
beneficiary of a policy should someone pass away unexpectedly. There's
a number of different types of life insurance. There's some
intricacies in the way that it works, but at the
end of it, if someone has a life insurance policy
and they pass away while that policy is in place,
(03:37):
a death benefit is paid to whoever they've named as
their beneficiary on that policy.
Speaker 3 (03:42):
So while I'm alive, what am I paying for?
Speaker 4 (03:46):
So it depends in a basic term life insurance policy,
which is where most people should start. A term life
insurance policy is a type of policy that you purchase
for a set number of years. Usually ten, twenty or
thirty years are pretty common term policies. Over that time period,
you're going to pay a life insurance premium. Premiums are
just what you pay every month or every year, however
(04:08):
you set up your policy. That's the dollars that you
pay out towards your policy. With a term policy, it's
going to have usually a set premium, the exact same
premium for whatever term you've selected. Like I said, ten
twenty or thirty years, you're going to pay that premium,
let's say, every year, and there's going to be a
death benefit associated with that policy. If you pass away
at any point during that term, that entire death benefit
(04:31):
will be paid out to whoever you've named is your beneficiary.
So when you say what am I paying for, it's
really just the security that if you pass away, your
family or your loved ones or your business partners, if
they're the beneficiaries of the policy, that they will be
taken care of financially for that policy. At the end
of a term policy, if you don't use it, in general,
(04:53):
that policy goes away at the end of the ten year,
twenty year, thirty year term, whatever you've decided to purchase.
If you've paid all your premiums and you never pass
away in that time period, you do lose those premiums. Now,
there are other ways to structure a policy to maybe
get some of those dollars back, or to look at
what's called a permanent policy, but I typically recommend that
(05:16):
most people start with the term policy can be the
least expensive way to protect that risk for the time
period that most of us are actually going to need
a life insurance policy for our families.
Speaker 3 (05:26):
I mean, can I buy one for like one hundred
years and just be really hopeful that that's how long
I'm going to last for.
Speaker 4 (05:33):
That's a good question. Yeah, So that would be what
we call it permanent policy technically. Okay, so you're going
to be hard pressed to find a policy out in
the marketplace for longer than thirty years at a time.
So most of us purchase like in our thirties, we
would typically recommend if you're starting a family. And by
the way, to be clear, life insurance isn't for everyone.
If you don't have people who depend on you financially,
(05:56):
you might not need life insurance like it might not
be something you should consider really first and foremost, if
you're buying any type of life insurance policy, whether that's
permanent or term, you should have some type of need
for the actual life insurance for that death benefit because
somebody or an organization something relies on you for income
that would be lost if you were to pass away.
(06:16):
So when you ask, can I buy one for one
hundred and twenty years to we see like on a
permanent policy where it's like a fully paid up permanent policy,
that's a different type of policy, and a permanent policy
can take many different varieties. But to your question, yes,
you can buy a policy that lasts as long as
you pay the premiums that policy is always enforce Now
(06:37):
you're going to pay significantly more for that type of
policy than you would for one of the term policies
I suggested, but it's definitely a solution that some people need.
I often ask is this a policy you're going to
need for a certain number of years, do you already
have an idea of what you're looking for, or is
this a policy that you would want to be in
place long term, maybe for state planning purposes or maybe
(06:58):
a business need that would require that, or you want
to gain some cash value out of that life insurance policy.
Say you never used it and you don't like the
idea of just throwing money away if the policy was
never utilized, you can build a permanent policy. People have
probably heard of whole life or universal life policies. These
are permanent policies that you pay premiums into, just like
(07:19):
you would a term policy, but you build up a
cash value that you can take out of that policy
and maybe never use the death benefit or have a
reduced death benefit at some point because you've taken money
out of the policy. But that's two different types of
policies really for two different purposes.
Speaker 2 (07:34):
Let's go through the different kinds.
Speaker 3 (07:36):
Because I've heard the phrases like term life versus, whole
life versus universal I've heard these things, but like, it
doesn't mean a whole lot to me.
Speaker 2 (07:46):
Let's make them make sense.
Speaker 3 (07:47):
So what are the different kinds and who is each
one good for?
Speaker 4 (07:51):
Yeah, so I'm always real careful to say who is
something good for because there's no standard. This policy is
for this type of person or this situation. There's a
number of factors, but I'm going to try to give
you the simplistic version of when people are thinking about this,
what should I be looking at? Now? I mentioned term insurance.
Term insurance is the lowest, cost, most effective way to
(08:12):
cover the risk of needing a financial provider who has
died prematurely and unexpectedly. For those that are left needing
the money that they brought in from their career, their job,
however those dollars came in. A term policy is really
for that base level coverage, so that you know you're
protected in the event of death. I would typically say
(08:33):
use that as a starting block. We've got a great industry,
But like in any industry, there are people who really
just want to sell something sometimes, and that happens in
life insurance, and so sometimes someone will get sold a
permanent policy first, when really they didn't necessarily need that
as their first layer of protection. So I usually say
start with term insurance. You can always cancel the policy.
(08:54):
If you end up getting a permanent policy that's going
to meet your needs for the death benefit, but get
the term policy in place just for the death benefit
and lock that in. And so if you're in your thirties,
I think a twenty or thirty year policy is great.
Maybe you've got kids, and you've got a mortgage to
pay off, you've got some big expenses that you know
are going to come up in the next twenty or
thirty years. Really look at those and think about how
(09:15):
much you would need to protect not only the income
for your surviving loved ones that they might need, but
also those expenses that you're going to need to pay
off or that they would need to pay off. And
they've been into your death. So term is good for
pretty much everybody who's got someone who counts on them
for income. A permanent policy is really more of a
planning tool. As an example, we'll use a permanent policy
(09:38):
like you might have heard of a universal life policy
or an indexed universal life policy. What that is is
a type of policy that you are paying annual premiums into,
but it's going to build up that cash value that
you may want to take out on a tax favored
basis out of the policy at a later date. Indexed
(09:58):
universal life policy, I would say, you really should only
be looking at if you're already maxing out other retirement
vehicles like a four to oh one K and IRA
whatever you have access to you on a what we
call a qualified tax basis, so four to one K
typically we're putting dollars that would be taken out on
a tax deferred basis out of our fourrow and K
(10:19):
or an ERA. Once you've hit your limits with those,
you might be a candidate for something like an index
universal life policy because what you can do is you
can put dollars now it's going to be after tax
dollars that you're putting into that policy, but in an
index universal life policy, you can actually pull those dollars
out later on a tax free basis as loans from
(10:40):
the policy. And the reason that that's attractive to some
people is a they want that tax favored basis to
pull out the dollars, but it also that term index.
Typically you're tying it to an index like the S
and P five hundred, similar to maybe something you might
invest in like a four to one K or something
you're tying those dollars that you're putting into an index,
and it's going to grow over time. But you really
(11:01):
want to have a long term time horizon for a
policy like that, because you're not going to just put
money in for a few years and expect growth, just
like you're not going to put money in your four
own K for a few years and expect growth. So really,
if you have a long term time horizon and you've
already maxed out your other retirement vehicles, you might look
at an index universal life policy is one way to
(11:22):
get that tax advantage retirement income later on. And in
the middle, I would say, is like a whole life policy.
Whole life policy is going to be much more conservative
than an index universal life policy, And maybe a whole
life policy would be good for somebody who really does
like you said, what if I want that death benefit
until I'm over one hundred, Well, a whole life policy
(11:42):
would probably be like the first go do solution for that.
If you're like, hey, I'm not worried so much about
building up the cash value, I want to know that
death benefit is going to be solid, it's going to
be there. A whole life policy is kind of a
more conservative version of a permanent insurance policy. So that
kind of gives you, like the policy for everybody, the
term the policy for usually folks that are earning more
(12:03):
and so are able to put more away in their
retirement plan already and a're maxing those out, maybe looking
at an IUL. And then in the middle somebody who
just wants a long term policy to last as long
as they're going to last a whole life. Now, those
aren't the only reasons to use any of those. There's
multiple reasons. So what we usually would do, and when
we were talking to somebody who handles life insurance, you
(12:24):
really want to tell them what you're trying to accomplish
and really let them ask you the questions, because they
should really guide you and say, hey, let me make
sure we have the best tool. And life insurance may
be a solution, but it may not be. Life insurance
sometimes gets over sold as the solution to lots of
financial problems, but first and foremost, it is a risk
protection product. That's what it is. If people are thinking
(12:46):
of it as an investment tool but they don't really
care about the death benefit, I'm usually like, hey, life
insurance probably isn't the best use of those dollars because
you're always going to pay for the life insurance component.
It's always built into whatever premium you're paying death benefit.
And if you don't need a death benefit, or you've
already got that covered somewhere else, then life insurance may
not be the best tool for you.
Speaker 3 (13:07):
This brings me to my next question, which is who
needs life insurance? So I am a single person, I
have no children. My plants rely on me, but I
think they'll maybe be okay without me. But I also
want to know, like maybe I want my family to
have the money to take my ashes and spread them
in Italy or something. Who is somebody who needs life insurance.
Speaker 4 (13:26):
You bring up a great point, So that purpose that
you just described is a reason to maybe purchase a
small life insurance policy. If you're telling me, look, I
have nobody that relies on me for income that if
I were to pass away, no one would rely on
me for that income. But I do want my family
to not have to worry about how to handle my
final expenses and maybe help clean up my estate or
(13:47):
whatever assets you do have. Life insurance is a great
tool for that. Normally, what we do is we'd say, okay,
how much do you make today per year? And then
we're going to extrapolate that out over the course of
your career to like, let's call it age sixty seven,
and we're going to say, hey, just with like a
three percent cost of living increase, what's the total income
that you're going to make to that point in time?
And then what are some expenses that you have coming up?
(14:09):
But for someone like you, with what you've just described,
and again we're not doing a full analysis here, but
just to give you an idea. If that's all we
knew about you, and that's all the information we had,
then I would probably say, okay, well, if you think
about your family and what they would need to clean
that up, what kind of number would you need to
get there? And you might want to purchase a small
life insurance policy with one of your family members, or
if you set up a trust for your state, that
(14:29):
money would go into the trust and then you have
an executor that the trust would be the beneficiary and
they could disperse those funds. But really that's the point
of a life insurance policy for someone like you, just
from what you've told me, probably ask a lot more
questions if I want to get too personal on this podcast,
but basically, if you don't really have that driving need
for those dollars, I would say, well, is your family
in a financial position where they would just take care
(14:51):
of it anyway, or would you want to make sure
you left some money behind so that they could use
it for these purposes and maybe something else?
Speaker 3 (14:59):
What do we talk when it comes to cost here?
Can you give me like a little bit of a
range or just an idea of what something like this
might cost.
Speaker 4 (15:07):
Yeah, I'm always hesitant to do that because life insurance
is going to be fully medically financially and lifestyle underwritten,
so they're going to look at everything now. No, oh no, yes, right,
And I should say, with the caveat that, there are
some life insurance companies that, let's say you're asking for
a million dollars in life insurance or less, there are
(15:28):
accelerated underwriting programs where you can answer some questions. They're
probably still going to maybe pull like a medical record
report or something, but they're going to do it on
an automated basis. But beyond that, typically you're being asked
for medical records, a paramedical exam, where they're going to
come out to your home or office and they're going
(15:48):
to collect blood and your br and they're going to
do your blood pressure. These are pretty standard practices and
life insurance. So when you ask how much does it cost, well,
you know, a very healthy early thirties wants one to
three million dollars in life insurance. Probably under one thousand
dollars a year is my ballpark? Guess that's not a quote.
This is not an offer of insurance, but generally speaking,
(16:10):
and people can see this online. I just challenge people
to be careful, Like when you go online and you
start quoting life insurance, hopefully they'll ask you a few
risk questions before they even provide you a quote. So
what I do is I do a pre screening with
somebody and it's very private and personal, but we ask
a few personal questions about health and lifestyle because we
want to understand what rating they're going to get. So
when you ask about what is the cost, I'll just
(16:33):
give you the standard kind of range of underwriting, not
necessarily what the cost is. But know that when an
underwriter looks at a life insurance case, if they're going
to make an offer of insurance on the person. They're
going to rate it based on a variety of categories
all the way from what we call preferred non smoker
to standard non smoker, and then preferred smoker standard smoker,
(16:59):
and then we we also have table ratings beyond that,
and of course they're also preferred plus rates for people
who have great health histories, and a lot of folks
can actually qualify for those rates, but an underwriter is
going to assign one of those classes. They vary a
little bit insurance company to insurance company, but those are
the basic classes. So when you ask what's a quote, well,
if we're talking preferred plus non smoker versus a standard smoker,
(17:23):
those rates can be ten x difference from each other.
They can vary wildly, So a always be really honest
even when you're just getting a quote, because it's all
going to come out in underwriting. So if you want
a realistic quote, either whether you're doing that online or
doing it through a person to person life insurance agent,
tell them, yes, I'm a smoker, Yes I've had these
(17:44):
chronic illnesses. Yes I take these prescription drugs. Because that's
how we as life insurance agents can do our best
job for a client, because just to be clear, as
a life insurance agent, I don't go and just send
that information off to the insurance company. I provided anonymously
to a number of insurance companies sometimes and say, hey,
this is the risk we're looking at. What's the offer
(18:06):
you think based on what you know, what's the best
offer we could probably get. And they'll give us stilligious
an indication because we haven't gone through full underwriting. But
then we can come back with an indication and say, hey,
based on what you've shared with me, I've shared it
with a couple of different insurance companies anonymously, so they
don't know what's you here's the offer we think we
could get, and I think our best bet is this
insurance company. Do you want to proceed forward with an application?
(18:29):
So now I'm getting into like what's the process. And
if they say yes, then we go through an entire
application process that you know it's going to be basic information,
all the personal information you expect it to cover. And
then depending on how much insurance they're asking for and
what medical issues or lifestyle issues we've already identified, more
questions may come. It may just be a Q and
A with the person. We have tele underwriting where they're
(18:50):
actually just doing it over the phone, or it may
be a full medical record poll with an attending physician statement,
or it may be, as I mentioned, a paramedical exam
where they're going to come out to your home or office.
I can share one story because it's me. Yeah, I'm
fifty one years old. I just re upped my term
life insurance policy for me and my family because I
bought a twenty year policy in my thirties. I have
(19:11):
other life insurance as well, but I think I want
to keep a stable term policy. I had some heart
palpitations in the past couple of years that turned out
to be no big deal. Of course, I didn't like it,
and so I talked to my doctor about it. That
goes in my medical record. When I went through underwriting,
they noticed, Hey, you complained of heart palpitations. Yeah, but
(19:31):
my doctor said, nothing to worry about. Guess what. That
wasn't good enough for the underwriters because they're not really
worried about am I going to have a deteriorated life.
They're worried about me actually dying. So you have to
also remember that stuff that your doctor even is telling
you is no big deal that you don't have to
worry about. Is a big deal to an underwriter, because
it's really binary for them. Is this person going to
(19:52):
pass away within the term of the policy. They're making
a bet that you're not ye right if they're offering
you life insurance. So I was required to go back
and do a full stress test and ECG at CO
cardiogram at my own expense, which I went and did,
and guess what I ended up with the non smoker
preferred plus rating. You know, I don't even know in
that case if they would have made me an offer
(20:12):
of life insurance without doing that, but I know that
I wouldn't have gotten a preferred plus rating if they
even were going to offer. They were probably going to
offer me a substandard rate of some type because they
just didn't know. But what I always tell people is
from an underwriter's perspective, they don't like any gray areas.
They're not trying to not cover you. They're trying to
make sure that they don't get in trouble for covering
somebody who had something that they didn't notice. And in
(20:35):
my case, it probably saved me in the order of
magnitude of thousands of dollars a year for me to
go and spend the two hours out of my day
and my fifty dollars copay or whatever it was to
go get these tests done.
Speaker 3 (20:48):
It's kind of like the car insurance thing where it's like, well,
do you drive a sexy red convertible or do you
have a very solid Honda. They're figuring things out based
on that, and so congratulations for being a sensible.
Speaker 4 (21:00):
Yeah, exactly. Yeah, And in the end you're just hoping
and braining they don't find something, yeah, which is also
you know, I have those conversations with people a lot
is they don't want to get the extra test done.
And sometimes because I've been doing this for over twenty years,
I've had those experiences where they've actually caught things earlier
than maybe they ever would have because someone had that
blood test of the paramedical exam because you know what,
they hadn't even been for a checkup in the last
(21:22):
ten years. So that's a byproduct of the process, but
it can be helpful.
Speaker 2 (21:30):
We'll be right back after a quick.
Speaker 1 (21:31):
Break and we're back with more grown up stuff. How
do I don't.
Speaker 3 (21:45):
You are supposed to if you have like a life change,
update your policy then, is that correct?
Speaker 4 (21:52):
Yeah? For any of the big life changes, marriage, divorce,
new kids, whether or not you update it as a
standard practice, check your beneficiaries. A lot of us have
life insurance through our employer as well. Right, same thing
there where you have a beneficiary that you've assigned. So
I always encourage people like check your beneficiaries. You think
of it at open enrollment because you're re upping all
your benefits. Make sure you're checking it once a year,
(22:14):
and that hopefully will trigger people to to their personal
life insurance policy, which their employer has nothing to do with.
You may update your beneficiary at your work policy, but
not update your personal life insurance policy, and the two
aren't going to match, and so those benefits are typically
just going to be paid to whoever the beneficiary lists
on that policy when you ask about updating the policy.
(22:34):
In general, if you had a two million or three
million dollar policy, is that enough? We've got more kids,
or maybe we had a windfall inheritance and maybe we
don't need the level of policy that we have. So
any big life changes, it's always a good idea to
just kind of reassess do we still have the type
of policy that we need.
Speaker 3 (22:51):
What's a beneficiary because I've heard rumors that it can't
be a pet, But what would an appropriate beneficiary be.
Speaker 4 (23:00):
Well, I haven't heard of it being a pet or
not being a pet. I can't answer that question.
Speaker 2 (23:04):
I've seen it on TV. I've seen it happen on TV.
Speaker 4 (23:07):
But I love the idea. I haven't even been asked
that question before on the pet thing. So typically with
just a standard life insurance policy, you're going to name
a beneficiary. That could be your spouse, your kids. If
you don't have a spouse or kids, it could be
a friend. Now, if you're buying a policy, let's say
you're asking for anything over a million dollars, and you're
naming someone a beneficiary who, from an underwriters standpoint, they
(23:28):
don't really understand why they would have what's called an
insurable interest in you. But the other thing is, in
a life insurance policy, you have three components. You have
the insured that's the person that if they pass away,
the death benefit goes somewhere. You have the beneficiary that's
who gets paid the death benefit. But you also have
the owner. The owner does not have to be the insured,
and the owner does not have to be the beneficiary.
(23:49):
So I mentioned this because often what we're doing is
with businesses, even small businesses. Perhaps it's what we call
a key person life insurance policy, and the beneficiary is
the business. Let's say your VP of sales brings in
a lot of money for the company. If they were
to pass away unexpectedly, that would be a financial burden
on the company, and they have an insurable interest in
(24:10):
the life of that key employee. So the company may
be the owner of that policy. The key employee is
the insured, but the company is also the beneficiary of
that policy, not an individual, but the company, like the
LLC or the corporation themselves. That's really common. I do
probably more of that than just about any type of
life insurance these days. But I just mentioned that because
(24:32):
that's one of those nuanced situations when you ask who
can be a beneficiary. There's lots of options for beneficiaries,
but really what we need is if this person passed away,
why would it matter to this beneficiary? And if we
can't answer that question, then underwriters are going to start
to ask some more questions. Even in the case of
that business that I described, you can't just go get
key to personal life on all your employees. But you
(24:55):
can say, hey, this is a founder, this is a CEO,
this is a VP of sales, or they hold certain
relationships with clients and customers that would be almost impossible
to replicate. Those are all reasons that you would assign
maybe a beneficiary that isn't just like a family member.
Speaker 2 (25:10):
Right, somebody you really know.
Speaker 3 (25:12):
Okay, so I'm ready, I'm going to go buy some
life insurance. And also I do want to clarify something
that you said too, So it's important to have both
the life insurance that my job gives me and also
my own life insurance as well.
Speaker 4 (25:25):
Yeah, two reasons. One is, typically policies range from an
employer paid policy to twenty five thousand dollars benefit. For
lack of a better term, we might call out a
burial policy kind of what you described for what my
family maybe need up to maybe one time salary or
two times salary. As a life insurance policy. A couple
of things with those is one, those are tied to
(25:45):
your employer, so there may be portability or conversion options,
and you always check with your employer like is this
a policy I can somehow take with me if I
were to leave. Generally speaking, even if that's available, most
people don't do it because they get and also typically
those policies are what are called convertible, meaning they can
(26:06):
convert to a permanent policy, and they're going to be
much more expensive than maybe someone would want to pay. Now,
if someone leaves and they have maybe a chronic illness
or even a terminal illness, they really should look into
whatever policy they had if they leave that employer, because
it's very likely they have a mechanism that they could
take that policy with them. Even if it was expensive,
it might be worth it because they know they really
are going to need that. But when you ask the
(26:28):
question should I have a personal policy and my employer policy,
the answer is usually yes because that personal policy sticks
with you no matter what you do, and that personal policy,
while it's not going to be cheaper probably than the
free policy or employer gave you, or the minimal amount
you might pay for some buy up option, in that
employer based policy, it is going to be less expensive
(26:49):
than if you were to take that one with you.
Usually this is pretty knowable. It's something that you could
ask your employer. Just want to ask, is this policy
convertible and or is portable, and then how do those
options work? But I would never say, like, rely just
on your employer policy because if you're not there anymore,
it's just as a layer of complication that does exist
(27:10):
with your own personal policy.
Speaker 3 (27:11):
Yeah, I mean, even thinking about having to find the
email of like benefits at company dot com to like
figure out who to ask about this as a challenge,
but we will do that.
Speaker 2 (27:19):
It is worth it.
Speaker 3 (27:20):
But Okay, I'm going to do my personal policy. Now,
what are some of the things that I should know
when I'm going to go and I want to find
someone who's going to help me get my policy?
Speaker 4 (27:31):
Sure, I mean I think that really depends on what
the purpose of the policies. I'm always a fan of referrals.
Ask your friends or family members, Hey, do you have
somebody who specializes in life insurance? That is I would
say the one key if people already have a financial
advisor you work with. I know a lot of financial advisors,
and there's a real mix of whether they do life
(27:52):
insurance or not, but they probably have somebody that they
refer I think those are great places to start if
you don't have that. I mean look at I think
sometimes when we have a specialized knowledge base, we can
maybe sound more condescending than we mean too when we're
talking to somebody who's brand new to it. And so
I want to delineate kind of between like, Hey, you
(28:12):
might have a really smart, good person that's your life
insurance advisor, but they don't have the best bedside manner.
I would say, be careful, don't let that stop you,
as long as you can ask them questions like push through,
because you do want somebody that's smart and knowledgeable. And
if they're like really friendly and easy to talk to,
but you can tell that they maybe don't know that
(28:33):
much or they haven't done that much in this space,
that might not be the first person that I would
want to work with, even if they're really kind. Yeah,
now I will be honest. For a basic twenty year
term policy of a million, two million, three million dollars,
if you're not literally looking for advice around it, you're
just I just want to go and get quotes. I
already kind of know what i'd need and I just
want to take care of it. Most agents that kind
(28:54):
of work in that space can probably help you with that,
and you could probably even go on Google now, and
that's not what I'm recommending. I'm certainly an advisor, and
I want people to do your research, ask questions, and
do your research and talk to a person. We are
in an age where yes, you can go get quotes
and go through the application process online. The problem with
that is, and what I see regularly in my own practice,
(29:16):
is even with a person involved, a lot of things
are online, but as soon as there's a problem, you
can't really talk to a human being. A lot of
times at the insurance company unless you're working with an agent.
And by the way, in general, you won't pay more
to work with an agent. You haven't asked the question,
but agents are paid commissions from the insurance companies that
are already built into the rates. And you don't really
(29:38):
need to get competitive quotes from different agents because they
should be exactly the same from different agents if they're
quoting the exact same thing. So the long way of
answering your question is really find someone you want to
work with, and if they're independent. That's the other thing
to look for is are they an independent agent. In
the industry, there are called captive agents and independent agents.
(29:58):
Now there's nothing wrong with the agent, and they may
have a great policy for you, but they don't necessarily,
by virtue of their captive relationship, have access to the
entire rest of the market. Okay, I want to be
careful because I want to say one's better than the other.
But if you really want to shop the market, make
sure you're going to somebody who has access to multiple
insurance companies and make sure that's what you're looking at
(30:20):
versus whatever else. But find something you trust and want
to work with, and then let them proceed.
Speaker 3 (30:25):
Yeah, are there any red flags that we should be
aware of when we're shopping for this or talking to
different agents and things?
Speaker 4 (30:32):
The one thing I mentioned, and I would say it's
more of a yellow flag. Be a curious consumer, really
be your own advocate. If someone's recommending a permanent policy
to you as your first life insurance policy, ask them
the simple question, why would you recommend this over a
term policy? Now, they may have a very good reason,
but I would say that's the most common thing I see,
(30:55):
And like, there's a lot of great quote unquote influencers
out there different types of insurance policies as a financial strategy,
and so if the conversation veers into some type of
financial strategy, then I would be questioning, well, if I
came to you because I need a death benefit for
my family, this is a risk protection. Why are we there, Like,
(31:18):
you really have to make a good case for why
we're doing that. If the main reason you bought this
is for a death benefit, what happens when you pass away? Yeah,
I should be able to explain that very simply, and
what you're paying for it, and if you're paying more
for that than you would just from a term policy,
I better be able to explain what those extra dollars
are for, how they're working for you, and what additional
benefit you get that you've expressed, like I actually want
(31:41):
those additional benefits. And here's why it makes sense.
Speaker 3 (31:43):
You have to understand it because then you've got to
go tell your beneficiary what is happening. So you got
to be able to pass that on. We did an
episode earlier this season about taxes, and they gave great
advice of like, if you're looking for an accountant, find
somebody who you feel comfortable asking questions too. And from
what you're telling me, I'm handing over urine and blood
and all this information it needs to be somebody I
(32:05):
feel really comfortable asking questions of like, I'm so sorry,
I still don't get this, explain it to me so
and thank you so far for being that person. You
have done an amazing job of explaining this to the
point where I'm like, I think I might be able
to go into the world and know something about life insurance.
Speaker 4 (32:21):
So good, good, Well, I think that was the goal
of this conversation.
Speaker 2 (32:24):
It was the goal.
Speaker 3 (32:26):
Well, Dennis, this has been amazing. Before we let you go,
is there anything that we didn't cover that you think
it's important for people to know about life insurance, or
any big misconceptions out there that you want to correct,
or anything that you want to leave everybody with so
that they go out and that they and their families
are covered and feeling good about it.
Speaker 1 (32:45):
Sure.
Speaker 4 (32:46):
I think one of the main things that I'd want
to make sure people understand is one it's best to
start early. So for most of us, we're probably never
more ensurable than we are today. Now that said, you
may have something going on today, a medical condition that
would get you a lower rating, that's going to resolve
and you could go back and get re underwritten, But
(33:08):
for most of us. When you're young and healthy, that's
the best time to buy a term insurance policy because
you're going to lock in those rates for whatever term
you purchase. And I think that's what gets missed a
lot is people think, oh, that's something i'll need later
in life, so I won't purchase a policy now. And
if you're gonna think that way, remember that I'm fifty one.
When you start to get into your forties and fifties,
(33:29):
things start to change, right your health things start to change.
You might have heart palpitations or something else that makes
it a lot harder to get insurance than it was
in your thirties. So that's the main thing I would
say is just getting a policy in place when you're
young is a great building block. And the other thing
that I'll mention we just didn't talk about is when
you're buying a term policy. There are term policies with
(33:52):
conversion privileges and without and a conversion privilege. All that
means is at the end of the term, or at
some point during the term, you could convert it to
a permanent policy if you wanted to, and that is
usually you pay a little bit more premium to have
that option in your policy. But it really can be
worth it because you might find out in ten years
that you're going to need more insurance, or you want
(34:13):
this insurance to last longer than the next ten years.
Maybe it's a twenty year policy, and you may want
to look at that conversion option. And if you bought
a policy that's just a straight term policy with no
conversion option, at the end of the term, you literally
won't have a policy anymore. And at least with a
conversion option, it'll tell you when you buy the policy,
you can convert this to a permit policy through these years.
It'll give you some schedule. There's lots of different writers
(34:36):
and different thousand whistles you can add to a term policy.
But I like that conversion privilege because it just gives
you optionality later on.
Speaker 3 (34:43):
Nice and also stop smoking so you can save money
and be a better candidate.
Speaker 4 (34:48):
So yeah, stop smoking, stop with us in the nicotine. Yeah,
all of it. I mean, this isn't about judgment. This
is just about what makes financial sense. Underwriters prefer that
you lay off that stuff, and usually they want at
least three years tobacco free to really give you that
full non tobacco rating, different insurance companies, a different underwriting guidelines.
But I get after that a lot. Hey, I stopped
(35:10):
smoking six months ago. Now I'm a non smoker. Well,
you're not in the eyes of an underwriter. Remember, they
think about things differently than you and I do. Yeah,
but those are great questions. Ask those questions. Be your
best advocate.
Speaker 2 (35:21):
Yeah.
Speaker 3 (35:22):
Well, Dennis, thank you so much for all of this
amazing information. We really appreciate you joining us today and
may your policy last for hundreds of years.
Speaker 4 (35:30):
So yes, it's been a real pleasure. Really appreciate you
inviting me on. Thank you so much.
Speaker 3 (35:41):
Okay, Matt, as always, what is something that you're taking
away from this conversation?
Speaker 1 (35:46):
Be careful what you tell your doctors, Yeah, because that
stuff stays in your permanent record and they will use
it against you in the form of premiums. And so
I'm really regretting this because if you listen to our
previous episode about a Sober Curious lifestyle, you'll know that
I was telling people that I was having like two
(36:06):
or three drinks a week. I really hope that that
doesn't come back to haunt me, especially now that I
don't drink anymore.
Speaker 3 (36:11):
Well, that's a good thing that you can update your
doctor and your life insurance policy with that information. Similarly,
I learned and feel very smug about being a non smoker.
It's always good to not be smoking. That includes vaping,
because then it will save you money in the end.
Speaker 1 (36:30):
That should tell you everything that you need to know
about smoking, is that life insurance predicting how quickly you're
going to die has an entire category just for you. Yeah,
if you are a smoker, preferred or not. Not really
sure what the distinction is there, but uh, it's not good.
You're premium going to go up, up up, So maybe
think about quitting and or lying to your doctor about it.
Speaker 3 (36:50):
The quitting is a win win for everybody, and the
lying is a lose lose for everybody. But sure.
Speaker 1 (36:55):
But the thing that I found most fascinating and really
really pertinent because of my own life situation is his
recommendation to go outside of your employer. Currently, my employer
is the only one that I have right now, And
basically you're talking about how if you could terminate it
or you leave your job, then it doesn't always carry over.
But what I've found from some research is that you
(37:16):
do have thirty one days after your employment ends to
have a conversation with your company about conversion, right, so
meaning taking your policy and converting it to a personal
or portability which, as Dennis discussed, would allow you to
continue on the group rate that you have, but make
it your own account. So there's a lot to consider
there in terms of expenses, and it's a whole process
(37:38):
to go through, but it is really important that in
most every state you do have those thirty one days
to figure it out. So consider getting your own so
you don't have to worry about this if you ever
do end up losing your job, but definitely take advantage
of those thirty one days to get your ducks in
a row, especially if you do have dependence.
Speaker 3 (37:56):
Thank you so much for doing the extra research on that.
Speaker 1 (37:58):
Now I was more just worried about me.
Speaker 2 (38:00):
Yeah, I got it. I got it because I'm worried
about me too.
Speaker 3 (38:03):
When I see these numbers, I'm like, hello, my life
is worth one billion times that of course, but thank
you for doing that research. We are going to take
that information, put it in our pockets, and until next time,
good luck being a grown up.
Speaker 1 (38:17):
This is a production of Ruby Studio for My Heart Media.
Our executive producers are Leopaul Mary and Matt Stillo.
Speaker 3 (38:25):
This episode was edited and engineered by Sierra
Speaker 1 (38:27):
Spreen and we want to thank our teammates at Ruby Studio,
including Sarah You, Ethan Fixel, rays One Krasnov, Lydia Kim,
Abby Aguilar, Harbert, Wayne Selia, Verplu, Deborah Garrett, and Andy
Kelly
Rube.
Speaker 2 (00:07):
Hi, I'm Leah Palmery and I'm Matt Stillo.
Speaker 3 (00:10):
Welcome to grown up Stuff, Matt. Today we are going
to talk about a topic I truly know pretty much
nothing about.
Speaker 2 (00:19):
So how much do you know about life insurance?
Speaker 1 (00:22):
I'm going to answer your question with a question. Have
you seen the movie Groundhog Day?
Speaker 3 (00:26):
Yeah?
Speaker 1 (00:26):
So Ned Ryerson Needle knows. Ned is all that I
know about life insurance. Okay, you know he's thrown around
all kinds of terms to Bill Murray's character in that movie,
a whole term you can never have too much life insurance?
Am I writer? Am?
Speaker 4 (00:39):
I writer?
Speaker 1 (00:40):
My right? Right? What about you?
Speaker 2 (00:43):
Well, that's more than me, That's truly more than me.
Speaker 3 (00:46):
I didn't have any movies to reference, even ones with
adorable groundhogs in them. So you're doing way better than
I am. But I also have amazing news for you today.
We're gonna be speaking with Dennis Carlson, who is a
life insurance advisor, and he's going to answer all the
questions we need to know. And so that starts with
what is life insurance? Who needs it? And can I
(01:09):
make my plants a beneficiary?
Speaker 1 (01:11):
I just hope that he seems more reasonable or reliable
than needle knows Net because needle knows Net is doing
hard selling. Yeah, and I feel like I want a
personal relationship with my life insurance person, so I hope
that Dennis can deliver.
Speaker 3 (01:24):
He can, and he's going to help you figure out
exactly what you should be looking for if you are
going to be exploring the world of life insurance. Things
you should avoid, things you should research. Gave a lot of.
Speaker 1 (01:35):
Good ideas well. You know, life insurance is something that
probably doesn't come up often over brunch, but it's something
that's just super important for adults, especially adults with a
family that depend on them to know about and to
have for that extra peace of mind.
Speaker 3 (01:50):
Dennis does an amazing job of making it all make
sense and honestly taking a topic that's kind of scared
to think about. Hello, there's death looming and spells it
out in a way that helps it to be way
less daunting even though we are in spooky season right now.
Speaker 1 (02:04):
And to keep those scaries at bay. Here's the man himself,
Dennis Carlson.
Speaker 4 (02:09):
Well, I'm Dennis Carlson. I am a life insurance advisor.
I've been in the life and employee benefits and health
insurance industry for about twenty years, and I serve individuals
(02:29):
and families and executives of companies, small business owners with
any needs related to risk protection for either their business
or for their families.
Speaker 2 (02:40):
Amazing.
Speaker 3 (02:41):
Okay, we're going to start real basic here, Dennis. So
my first question for you is what is life insurance?
But truly what is life insurance and how does it work?
What can you tell us in sort of basic terms there.
Speaker 4 (02:53):
Yeah, So whenever we're talking about life insurance, we're actually
talking about death. So we have to start there and
just unders standing that the audience knows that we're going
to get into these subjects, the things that people don't
usually like to talk about. But you should at least
spend some time in your life discussing so that you're prepared.
So what life insurance is in its most basic terms,
(03:14):
is it provides a cash payment death benefit to the
beneficiary of a policy should someone pass away unexpectedly. There's
a number of different types of life insurance. There's some
intricacies in the way that it works, but at the
end of it, if someone has a life insurance policy
and they pass away while that policy is in place,
(03:37):
a death benefit is paid to whoever they've named as
their beneficiary on that policy.
Speaker 3 (03:42):
So while I'm alive, what am I paying for?
Speaker 4 (03:46):
So it depends in a basic term life insurance policy,
which is where most people should start. A term life
insurance policy is a type of policy that you purchase
for a set number of years. Usually ten, twenty or
thirty years are pretty common term policies. Over that time period,
you're going to pay a life insurance premium. Premiums are
just what you pay every month or every year, however
(04:08):
you set up your policy. That's the dollars that you
pay out towards your policy. With a term policy, it's
going to have usually a set premium, the exact same
premium for whatever term you've selected. Like I said, ten
twenty or thirty years, you're going to pay that premium,
let's say, every year, and there's going to be a
death benefit associated with that policy. If you pass away
at any point during that term, that entire death benefit
(04:31):
will be paid out to whoever you've named is your beneficiary.
So when you say what am I paying for, it's
really just the security that if you pass away, your
family or your loved ones or your business partners, if
they're the beneficiaries of the policy, that they will be
taken care of financially for that policy. At the end
of a term policy, if you don't use it, in general,
(04:53):
that policy goes away at the end of the ten year,
twenty year, thirty year term, whatever you've decided to purchase.
If you've paid all your premiums and you never pass
away in that time period, you do lose those premiums. Now,
there are other ways to structure a policy to maybe
get some of those dollars back, or to look at
what's called a permanent policy, but I typically recommend that
(05:16):
most people start with the term policy can be the
least expensive way to protect that risk for the time
period that most of us are actually going to need
a life insurance policy for our families.
Speaker 3 (05:26):
I mean, can I buy one for like one hundred
years and just be really hopeful that that's how long
I'm going to last for.
Speaker 4 (05:33):
That's a good question. Yeah, So that would be what
we call it permanent policy technically. Okay, so you're going
to be hard pressed to find a policy out in
the marketplace for longer than thirty years at a time.
So most of us purchase like in our thirties, we
would typically recommend if you're starting a family. And by
the way, to be clear, life insurance isn't for everyone.
If you don't have people who depend on you financially,
(05:56):
you might not need life insurance like it might not
be something you should consider really first and foremost, if
you're buying any type of life insurance policy, whether that's
permanent or term, you should have some type of need
for the actual life insurance for that death benefit because
somebody or an organization something relies on you for income
that would be lost if you were to pass away.
(06:16):
So when you ask, can I buy one for one
hundred and twenty years to we see like on a
permanent policy where it's like a fully paid up permanent policy,
that's a different type of policy, and a permanent policy
can take many different varieties. But to your question, yes,
you can buy a policy that lasts as long as
you pay the premiums that policy is always enforce Now
(06:37):
you're going to pay significantly more for that type of
policy than you would for one of the term policies
I suggested, but it's definitely a solution that some people need.
I often ask is this a policy you're going to
need for a certain number of years, do you already
have an idea of what you're looking for, or is
this a policy that you would want to be in
place long term, maybe for state planning purposes or maybe
(06:58):
a business need that would require that, or you want
to gain some cash value out of that life insurance policy.
Say you never used it and you don't like the
idea of just throwing money away if the policy was
never utilized, you can build a permanent policy. People have
probably heard of whole life or universal life policies. These
are permanent policies that you pay premiums into, just like
(07:19):
you would a term policy, but you build up a
cash value that you can take out of that policy
and maybe never use the death benefit or have a
reduced death benefit at some point because you've taken money
out of the policy. But that's two different types of
policies really for two different purposes.
Speaker 2 (07:34):
Let's go through the different kinds.
Speaker 3 (07:36):
Because I've heard the phrases like term life versus, whole
life versus universal I've heard these things, but like, it
doesn't mean a whole lot to me.
Speaker 2 (07:46):
Let's make them make sense.
Speaker 3 (07:47):
So what are the different kinds and who is each
one good for?
Speaker 4 (07:51):
Yeah, so I'm always real careful to say who is
something good for because there's no standard. This policy is
for this type of person or this situation. There's a
number of factors, but I'm going to try to give
you the simplistic version of when people are thinking about this,
what should I be looking at? Now? I mentioned term insurance.
Term insurance is the lowest, cost, most effective way to
(08:12):
cover the risk of needing a financial provider who has
died prematurely and unexpectedly. For those that are left needing
the money that they brought in from their career, their job,
however those dollars came in. A term policy is really
for that base level coverage, so that you know you're
protected in the event of death. I would typically say
(08:33):
use that as a starting block. We've got a great industry,
But like in any industry, there are people who really
just want to sell something sometimes, and that happens in
life insurance, and so sometimes someone will get sold a
permanent policy first, when really they didn't necessarily need that
as their first layer of protection. So I usually say
start with term insurance. You can always cancel the policy.
(08:54):
If you end up getting a permanent policy that's going
to meet your needs for the death benefit, but get
the term policy in place just for the death benefit
and lock that in. And so if you're in your thirties,
I think a twenty or thirty year policy is great.
Maybe you've got kids, and you've got a mortgage to
pay off, you've got some big expenses that you know
are going to come up in the next twenty or
thirty years. Really look at those and think about how
(09:15):
much you would need to protect not only the income
for your surviving loved ones that they might need, but
also those expenses that you're going to need to pay
off or that they would need to pay off. And
they've been into your death. So term is good for
pretty much everybody who's got someone who counts on them
for income. A permanent policy is really more of a
planning tool. As an example, we'll use a permanent policy
(09:38):
like you might have heard of a universal life policy
or an indexed universal life policy. What that is is
a type of policy that you are paying annual premiums into,
but it's going to build up that cash value that
you may want to take out on a tax favored
basis out of the policy at a later date. Indexed
(09:58):
universal life policy, I would say, you really should only
be looking at if you're already maxing out other retirement
vehicles like a four to oh one K and IRA
whatever you have access to you on a what we
call a qualified tax basis, so four to one K
typically we're putting dollars that would be taken out on
a tax deferred basis out of our fourrow and K
(10:19):
or an ERA. Once you've hit your limits with those,
you might be a candidate for something like an index
universal life policy because what you can do is you
can put dollars now it's going to be after tax
dollars that you're putting into that policy, but in an
index universal life policy, you can actually pull those dollars
out later on a tax free basis as loans from
(10:40):
the policy. And the reason that that's attractive to some
people is a they want that tax favored basis to
pull out the dollars, but it also that term index.
Typically you're tying it to an index like the S
and P five hundred, similar to maybe something you might
invest in like a four to one K or something
you're tying those dollars that you're putting into an index,
and it's going to grow over time. But you really
(11:01):
want to have a long term time horizon for a
policy like that, because you're not going to just put
money in for a few years and expect growth, just
like you're not going to put money in your four
own K for a few years and expect growth. So really,
if you have a long term time horizon and you've
already maxed out your other retirement vehicles, you might look
at an index universal life policy is one way to
(11:22):
get that tax advantage retirement income later on. And in
the middle, I would say, is like a whole life policy.
Whole life policy is going to be much more conservative
than an index universal life policy, And maybe a whole
life policy would be good for somebody who really does
like you said, what if I want that death benefit
until I'm over one hundred, Well, a whole life policy
(11:42):
would probably be like the first go do solution for that.
If you're like, hey, I'm not worried so much about
building up the cash value, I want to know that
death benefit is going to be solid, it's going to
be there. A whole life policy is kind of a
more conservative version of a permanent insurance policy. So that
kind of gives you, like the policy for everybody, the
term the policy for usually folks that are earning more
(12:03):
and so are able to put more away in their
retirement plan already and a're maxing those out, maybe looking
at an IUL. And then in the middle somebody who
just wants a long term policy to last as long
as they're going to last a whole life. Now, those
aren't the only reasons to use any of those. There's
multiple reasons. So what we usually would do, and when
we were talking to somebody who handles life insurance, you
(12:24):
really want to tell them what you're trying to accomplish
and really let them ask you the questions, because they
should really guide you and say, hey, let me make
sure we have the best tool. And life insurance may
be a solution, but it may not be. Life insurance
sometimes gets over sold as the solution to lots of
financial problems, but first and foremost, it is a risk
protection product. That's what it is. If people are thinking
(12:46):
of it as an investment tool but they don't really
care about the death benefit, I'm usually like, hey, life
insurance probably isn't the best use of those dollars because
you're always going to pay for the life insurance component.
It's always built into whatever premium you're paying death benefit.
And if you don't need a death benefit, or you've
already got that covered somewhere else, then life insurance may
not be the best tool for you.
Speaker 3 (13:07):
This brings me to my next question, which is who
needs life insurance? So I am a single person, I
have no children. My plants rely on me, but I
think they'll maybe be okay without me. But I also
want to know, like maybe I want my family to
have the money to take my ashes and spread them
in Italy or something. Who is somebody who needs life insurance.
Speaker 4 (13:26):
You bring up a great point, So that purpose that
you just described is a reason to maybe purchase a
small life insurance policy. If you're telling me, look, I
have nobody that relies on me for income that if
I were to pass away, no one would rely on
me for that income. But I do want my family
to not have to worry about how to handle my
final expenses and maybe help clean up my estate or
(13:47):
whatever assets you do have. Life insurance is a great
tool for that. Normally, what we do is we'd say, okay,
how much do you make today per year? And then
we're going to extrapolate that out over the course of
your career to like, let's call it age sixty seven,
and we're going to say, hey, just with like a
three percent cost of living increase, what's the total income
that you're going to make to that point in time?
And then what are some expenses that you have coming up?
(14:09):
But for someone like you, with what you've just described,
and again we're not doing a full analysis here, but
just to give you an idea. If that's all we
knew about you, and that's all the information we had,
then I would probably say, okay, well, if you think
about your family and what they would need to clean
that up, what kind of number would you need to
get there? And you might want to purchase a small
life insurance policy with one of your family members, or
if you set up a trust for your state, that
(14:29):
money would go into the trust and then you have
an executor that the trust would be the beneficiary and
they could disperse those funds. But really that's the point
of a life insurance policy for someone like you, just
from what you've told me, probably ask a lot more
questions if I want to get too personal on this podcast,
but basically, if you don't really have that driving need
for those dollars, I would say, well, is your family
in a financial position where they would just take care
(14:51):
of it anyway, or would you want to make sure
you left some money behind so that they could use
it for these purposes and maybe something else?
Speaker 3 (14:59):
What do we talk when it comes to cost here?
Can you give me like a little bit of a
range or just an idea of what something like this
might cost.
Speaker 4 (15:07):
Yeah, I'm always hesitant to do that because life insurance
is going to be fully medically financially and lifestyle underwritten,
so they're going to look at everything now. No, oh no, yes, right,
And I should say, with the caveat that, there are
some life insurance companies that, let's say you're asking for
a million dollars in life insurance or less, there are
(15:28):
accelerated underwriting programs where you can answer some questions. They're
probably still going to maybe pull like a medical record
report or something, but they're going to do it on
an automated basis. But beyond that, typically you're being asked
for medical records, a paramedical exam, where they're going to
come out to your home or office and they're going
(15:48):
to collect blood and your br and they're going to
do your blood pressure. These are pretty standard practices and
life insurance. So when you ask how much does it cost, well,
you know, a very healthy early thirties wants one to
three million dollars in life insurance. Probably under one thousand
dollars a year is my ballpark? Guess that's not a quote.
This is not an offer of insurance, but generally speaking,
(16:10):
and people can see this online. I just challenge people
to be careful, Like when you go online and you
start quoting life insurance, hopefully they'll ask you a few
risk questions before they even provide you a quote. So
what I do is I do a pre screening with
somebody and it's very private and personal, but we ask
a few personal questions about health and lifestyle because we
want to understand what rating they're going to get. So
when you ask about what is the cost, I'll just
(16:33):
give you the standard kind of range of underwriting, not
necessarily what the cost is. But know that when an
underwriter looks at a life insurance case, if they're going
to make an offer of insurance on the person. They're
going to rate it based on a variety of categories
all the way from what we call preferred non smoker
to standard non smoker, and then preferred smoker standard smoker,
(16:59):
and then we we also have table ratings beyond that,
and of course they're also preferred plus rates for people
who have great health histories, and a lot of folks
can actually qualify for those rates, but an underwriter is
going to assign one of those classes. They vary a
little bit insurance company to insurance company, but those are
the basic classes. So when you ask what's a quote, well,
if we're talking preferred plus non smoker versus a standard smoker,
(17:23):
those rates can be ten x difference from each other.
They can vary wildly, So a always be really honest
even when you're just getting a quote, because it's all
going to come out in underwriting. So if you want
a realistic quote, either whether you're doing that online or
doing it through a person to person life insurance agent,
tell them, yes, I'm a smoker, Yes I've had these
(17:44):
chronic illnesses. Yes I take these prescription drugs. Because that's
how we as life insurance agents can do our best
job for a client, because just to be clear, as
a life insurance agent, I don't go and just send
that information off to the insurance company. I provided anonymously
to a number of insurance companies sometimes and say, hey,
this is the risk we're looking at. What's the offer
(18:06):
you think based on what you know, what's the best
offer we could probably get. And they'll give us stilligious
an indication because we haven't gone through full underwriting. But
then we can come back with an indication and say, hey,
based on what you've shared with me, I've shared it
with a couple of different insurance companies anonymously, so they
don't know what's you here's the offer we think we
could get, and I think our best bet is this
insurance company. Do you want to proceed forward with an application?
(18:29):
So now I'm getting into like what's the process. And
if they say yes, then we go through an entire
application process that you know it's going to be basic information,
all the personal information you expect it to cover. And
then depending on how much insurance they're asking for and
what medical issues or lifestyle issues we've already identified, more
questions may come. It may just be a Q and
A with the person. We have tele underwriting where they're
(18:50):
actually just doing it over the phone, or it may
be a full medical record poll with an attending physician statement,
or it may be, as I mentioned, a paramedical exam
where they're going to come out to your home or office.
I can share one story because it's me. Yeah, I'm
fifty one years old. I just re upped my term
life insurance policy for me and my family because I
bought a twenty year policy in my thirties. I have
(19:11):
other life insurance as well, but I think I want
to keep a stable term policy. I had some heart
palpitations in the past couple of years that turned out
to be no big deal. Of course, I didn't like it,
and so I talked to my doctor about it. That
goes in my medical record. When I went through underwriting,
they noticed, Hey, you complained of heart palpitations. Yeah, but
(19:31):
my doctor said, nothing to worry about. Guess what. That
wasn't good enough for the underwriters because they're not really
worried about am I going to have a deteriorated life.
They're worried about me actually dying. So you have to
also remember that stuff that your doctor even is telling
you is no big deal that you don't have to
worry about. Is a big deal to an underwriter, because
it's really binary for them. Is this person going to
(19:52):
pass away within the term of the policy. They're making
a bet that you're not ye right if they're offering
you life insurance. So I was required to go back
and do a full stress test and ECG at CO
cardiogram at my own expense, which I went and did,
and guess what I ended up with the non smoker
preferred plus rating. You know, I don't even know in
that case if they would have made me an offer
(20:12):
of life insurance without doing that, but I know that
I wouldn't have gotten a preferred plus rating if they
even were going to offer. They were probably going to
offer me a substandard rate of some type because they
just didn't know. But what I always tell people is
from an underwriter's perspective, they don't like any gray areas.
They're not trying to not cover you. They're trying to
make sure that they don't get in trouble for covering
somebody who had something that they didn't notice. And in
(20:35):
my case, it probably saved me in the order of
magnitude of thousands of dollars a year for me to
go and spend the two hours out of my day
and my fifty dollars copay or whatever it was to
go get these tests done.
Speaker 3 (20:48):
It's kind of like the car insurance thing where it's like, well,
do you drive a sexy red convertible or do you
have a very solid Honda. They're figuring things out based
on that, and so congratulations for being a sensible.
Speaker 4 (21:00):
Yeah, exactly. Yeah, And in the end you're just hoping
and braining they don't find something, yeah, which is also
you know, I have those conversations with people a lot
is they don't want to get the extra test done.
And sometimes because I've been doing this for over twenty years,
I've had those experiences where they've actually caught things earlier
than maybe they ever would have because someone had that
blood test of the paramedical exam because you know what,
they hadn't even been for a checkup in the last
(21:22):
ten years. So that's a byproduct of the process, but
it can be helpful.
Speaker 2 (21:30):
We'll be right back after a quick.
Speaker 1 (21:31):
Break and we're back with more grown up stuff. How
do I don't.
Speaker 3 (21:45):
You are supposed to if you have like a life change,
update your policy then, is that correct?
Speaker 4 (21:52):
Yeah? For any of the big life changes, marriage, divorce,
new kids, whether or not you update it as a
standard practice, check your beneficiaries. A lot of us have
life insurance through our employer as well. Right, same thing
there where you have a beneficiary that you've assigned. So
I always encourage people like check your beneficiaries. You think
of it at open enrollment because you're re upping all
your benefits. Make sure you're checking it once a year,
(22:14):
and that hopefully will trigger people to to their personal
life insurance policy, which their employer has nothing to do with.
You may update your beneficiary at your work policy, but
not update your personal life insurance policy, and the two
aren't going to match, and so those benefits are typically
just going to be paid to whoever the beneficiary lists
on that policy when you ask about updating the policy.
(22:34):
In general, if you had a two million or three
million dollar policy, is that enough? We've got more kids,
or maybe we had a windfall inheritance and maybe we
don't need the level of policy that we have. So
any big life changes, it's always a good idea to
just kind of reassess do we still have the type
of policy that we need.
Speaker 3 (22:51):
What's a beneficiary because I've heard rumors that it can't
be a pet, But what would an appropriate beneficiary be.
Speaker 4 (23:00):
Well, I haven't heard of it being a pet or
not being a pet. I can't answer that question.
Speaker 2 (23:04):
I've seen it on TV. I've seen it happen on TV.
Speaker 4 (23:07):
But I love the idea. I haven't even been asked
that question before on the pet thing. So typically with
just a standard life insurance policy, you're going to name
a beneficiary. That could be your spouse, your kids. If
you don't have a spouse or kids, it could be
a friend. Now, if you're buying a policy, let's say
you're asking for anything over a million dollars, and you're
naming someone a beneficiary who, from an underwriters standpoint, they
(23:28):
don't really understand why they would have what's called an
insurable interest in you. But the other thing is, in
a life insurance policy, you have three components. You have
the insured that's the person that if they pass away,
the death benefit goes somewhere. You have the beneficiary that's
who gets paid the death benefit. But you also have
the owner. The owner does not have to be the insured,
and the owner does not have to be the beneficiary.
(23:49):
So I mentioned this because often what we're doing is
with businesses, even small businesses. Perhaps it's what we call
a key person life insurance policy, and the beneficiary is
the business. Let's say your VP of sales brings in
a lot of money for the company. If they were
to pass away unexpectedly, that would be a financial burden
on the company, and they have an insurable interest in
(24:10):
the life of that key employee. So the company may
be the owner of that policy. The key employee is
the insured, but the company is also the beneficiary of
that policy, not an individual, but the company, like the
LLC or the corporation themselves. That's really common. I do
probably more of that than just about any type of
life insurance these days. But I just mentioned that because
(24:32):
that's one of those nuanced situations when you ask who
can be a beneficiary. There's lots of options for beneficiaries,
but really what we need is if this person passed away,
why would it matter to this beneficiary? And if we
can't answer that question, then underwriters are going to start
to ask some more questions. Even in the case of
that business that I described, you can't just go get
key to personal life on all your employees. But you
(24:55):
can say, hey, this is a founder, this is a CEO,
this is a VP of sales, or they hold certain
relationships with clients and customers that would be almost impossible
to replicate. Those are all reasons that you would assign
maybe a beneficiary that isn't just like a family member.
Speaker 2 (25:10):
Right, somebody you really know.
Speaker 3 (25:12):
Okay, so I'm ready, I'm going to go buy some
life insurance. And also I do want to clarify something
that you said too, So it's important to have both
the life insurance that my job gives me and also
my own life insurance as well.
Speaker 4 (25:25):
Yeah, two reasons. One is, typically policies range from an
employer paid policy to twenty five thousand dollars benefit. For
lack of a better term, we might call out a
burial policy kind of what you described for what my
family maybe need up to maybe one time salary or
two times salary. As a life insurance policy. A couple
of things with those is one, those are tied to
(25:45):
your employer, so there may be portability or conversion options,
and you always check with your employer like is this
a policy I can somehow take with me if I
were to leave. Generally speaking, even if that's available, most
people don't do it because they get and also typically
those policies are what are called convertible, meaning they can
(26:06):
convert to a permanent policy, and they're going to be
much more expensive than maybe someone would want to pay. Now,
if someone leaves and they have maybe a chronic illness
or even a terminal illness, they really should look into
whatever policy they had if they leave that employer, because
it's very likely they have a mechanism that they could
take that policy with them. Even if it was expensive,
it might be worth it because they know they really
are going to need that. But when you ask the
(26:28):
question should I have a personal policy and my employer policy,
the answer is usually yes because that personal policy sticks
with you no matter what you do, and that personal policy,
while it's not going to be cheaper probably than the
free policy or employer gave you, or the minimal amount
you might pay for some buy up option, in that
employer based policy, it is going to be less expensive
(26:49):
than if you were to take that one with you.
Usually this is pretty knowable. It's something that you could
ask your employer. Just want to ask, is this policy
convertible and or is portable, and then how do those
options work? But I would never say, like, rely just
on your employer policy because if you're not there anymore,
it's just as a layer of complication that does exist
(27:10):
with your own personal policy.
Speaker 3 (27:11):
Yeah, I mean, even thinking about having to find the
email of like benefits at company dot com to like
figure out who to ask about this as a challenge,
but we will do that.
Speaker 2 (27:19):
It is worth it.
Speaker 3 (27:20):
But Okay, I'm going to do my personal policy. Now,
what are some of the things that I should know
when I'm going to go and I want to find
someone who's going to help me get my policy?
Speaker 4 (27:31):
Sure, I mean I think that really depends on what
the purpose of the policies. I'm always a fan of referrals.
Ask your friends or family members, Hey, do you have
somebody who specializes in life insurance? That is I would
say the one key if people already have a financial
advisor you work with. I know a lot of financial advisors,
and there's a real mix of whether they do life
(27:52):
insurance or not, but they probably have somebody that they
refer I think those are great places to start if
you don't have that. I mean look at I think
sometimes when we have a specialized knowledge base, we can
maybe sound more condescending than we mean too when we're
talking to somebody who's brand new to it. And so
I want to delineate kind of between like, Hey, you
(28:12):
might have a really smart, good person that's your life
insurance advisor, but they don't have the best bedside manner.
I would say, be careful, don't let that stop you,
as long as you can ask them questions like push through,
because you do want somebody that's smart and knowledgeable. And
if they're like really friendly and easy to talk to,
but you can tell that they maybe don't know that
(28:33):
much or they haven't done that much in this space,
that might not be the first person that I would
want to work with, even if they're really kind. Yeah,
now I will be honest. For a basic twenty year
term policy of a million, two million, three million dollars,
if you're not literally looking for advice around it, you're
just I just want to go and get quotes. I
already kind of know what i'd need and I just
want to take care of it. Most agents that kind
(28:54):
of work in that space can probably help you with that,
and you could probably even go on Google now, and
that's not what I'm recommending. I'm certainly an advisor, and
I want people to do your research, ask questions, and
do your research and talk to a person. We are
in an age where yes, you can go get quotes
and go through the application process online. The problem with
that is, and what I see regularly in my own practice,
(29:16):
is even with a person involved, a lot of things
are online, but as soon as there's a problem, you
can't really talk to a human being. A lot of
times at the insurance company unless you're working with an agent.
And by the way, in general, you won't pay more
to work with an agent. You haven't asked the question,
but agents are paid commissions from the insurance companies that
are already built into the rates. And you don't really
(29:38):
need to get competitive quotes from different agents because they
should be exactly the same from different agents if they're
quoting the exact same thing. So the long way of
answering your question is really find someone you want to
work with, and if they're independent. That's the other thing
to look for is are they an independent agent. In
the industry, there are called captive agents and independent agents.
(29:58):
Now there's nothing wrong with the agent, and they may
have a great policy for you, but they don't necessarily,
by virtue of their captive relationship, have access to the
entire rest of the market. Okay, I want to be
careful because I want to say one's better than the other.
But if you really want to shop the market, make
sure you're going to somebody who has access to multiple
insurance companies and make sure that's what you're looking at
(30:20):
versus whatever else. But find something you trust and want
to work with, and then let them proceed.
Speaker 3 (30:25):
Yeah, are there any red flags that we should be
aware of when we're shopping for this or talking to
different agents and things?
Speaker 4 (30:32):
The one thing I mentioned, and I would say it's
more of a yellow flag. Be a curious consumer, really
be your own advocate. If someone's recommending a permanent policy
to you as your first life insurance policy, ask them
the simple question, why would you recommend this over a
term policy? Now, they may have a very good reason,
but I would say that's the most common thing I see,
(30:55):
And like, there's a lot of great quote unquote influencers
out there different types of insurance policies as a financial strategy,
and so if the conversation veers into some type of
financial strategy, then I would be questioning, well, if I
came to you because I need a death benefit for
my family, this is a risk protection. Why are we there, Like,
(31:18):
you really have to make a good case for why
we're doing that. If the main reason you bought this
is for a death benefit, what happens when you pass away? Yeah,
I should be able to explain that very simply, and
what you're paying for it, and if you're paying more
for that than you would just from a term policy,
I better be able to explain what those extra dollars
are for, how they're working for you, and what additional
benefit you get that you've expressed, like I actually want
(31:41):
those additional benefits. And here's why it makes sense.
Speaker 3 (31:43):
You have to understand it because then you've got to
go tell your beneficiary what is happening. So you got
to be able to pass that on. We did an
episode earlier this season about taxes, and they gave great
advice of like, if you're looking for an accountant, find
somebody who you feel comfortable asking questions too. And from
what you're telling me, I'm handing over urine and blood
and all this information it needs to be somebody I
(32:05):
feel really comfortable asking questions of like, I'm so sorry,
I still don't get this, explain it to me so
and thank you so far for being that person. You
have done an amazing job of explaining this to the
point where I'm like, I think I might be able
to go into the world and know something about life insurance.
Speaker 4 (32:21):
So good, good, Well, I think that was the goal
of this conversation.
Speaker 2 (32:24):
It was the goal.
Speaker 3 (32:26):
Well, Dennis, this has been amazing. Before we let you go,
is there anything that we didn't cover that you think
it's important for people to know about life insurance, or
any big misconceptions out there that you want to correct,
or anything that you want to leave everybody with so
that they go out and that they and their families
are covered and feeling good about it.
Speaker 1 (32:45):
Sure.
Speaker 4 (32:46):
I think one of the main things that I'd want
to make sure people understand is one it's best to
start early. So for most of us, we're probably never
more ensurable than we are today. Now that said, you
may have something going on today, a medical condition that
would get you a lower rating, that's going to resolve
and you could go back and get re underwritten, But
(33:08):
for most of us. When you're young and healthy, that's
the best time to buy a term insurance policy because
you're going to lock in those rates for whatever term
you purchase. And I think that's what gets missed a
lot is people think, oh, that's something i'll need later
in life, so I won't purchase a policy now. And
if you're gonna think that way, remember that I'm fifty one.
When you start to get into your forties and fifties,
(33:29):
things start to change, right your health things start to change.
You might have heart palpitations or something else that makes
it a lot harder to get insurance than it was
in your thirties. So that's the main thing I would
say is just getting a policy in place when you're
young is a great building block. And the other thing
that I'll mention we just didn't talk about is when
you're buying a term policy. There are term policies with
(33:52):
conversion privileges and without and a conversion privilege. All that
means is at the end of the term, or at
some point during the term, you could convert it to
a permanent policy if you wanted to, and that is
usually you pay a little bit more premium to have
that option in your policy. But it really can be
worth it because you might find out in ten years
that you're going to need more insurance, or you want
(34:13):
this insurance to last longer than the next ten years.
Maybe it's a twenty year policy, and you may want
to look at that conversion option. And if you bought
a policy that's just a straight term policy with no
conversion option, at the end of the term, you literally
won't have a policy anymore. And at least with a
conversion option, it'll tell you when you buy the policy,
you can convert this to a permit policy through these years.
It'll give you some schedule. There's lots of different writers
(34:36):
and different thousand whistles you can add to a term policy.
But I like that conversion privilege because it just gives
you optionality later on.
Speaker 3 (34:43):
Nice and also stop smoking so you can save money
and be a better candidate.
Speaker 4 (34:48):
So yeah, stop smoking, stop with us in the nicotine. Yeah,
all of it. I mean, this isn't about judgment. This
is just about what makes financial sense. Underwriters prefer that
you lay off that stuff, and usually they want at
least three years tobacco free to really give you that
full non tobacco rating, different insurance companies, a different underwriting guidelines.
But I get after that a lot. Hey, I stopped
(35:10):
smoking six months ago. Now I'm a non smoker. Well,
you're not in the eyes of an underwriter. Remember, they
think about things differently than you and I do. Yeah,
but those are great questions. Ask those questions. Be your
best advocate.
Speaker 2 (35:21):
Yeah.
Speaker 3 (35:22):
Well, Dennis, thank you so much for all of this
amazing information. We really appreciate you joining us today and
may your policy last for hundreds of years.
Speaker 4 (35:30):
So yes, it's been a real pleasure. Really appreciate you
inviting me on. Thank you so much.
Speaker 3 (35:41):
Okay, Matt, as always, what is something that you're taking
away from this conversation?
Speaker 1 (35:46):
Be careful what you tell your doctors, Yeah, because that
stuff stays in your permanent record and they will use
it against you in the form of premiums. And so
I'm really regretting this because if you listen to our
previous episode about a Sober Curious lifestyle, you'll know that
I was telling people that I was having like two
(36:06):
or three drinks a week. I really hope that that
doesn't come back to haunt me, especially now that I
don't drink anymore.
Speaker 3 (36:11):
Well, that's a good thing that you can update your
doctor and your life insurance policy with that information. Similarly,
I learned and feel very smug about being a non smoker.
It's always good to not be smoking. That includes vaping,
because then it will save you money in the end.
Speaker 1 (36:30):
That should tell you everything that you need to know
about smoking, is that life insurance predicting how quickly you're
going to die has an entire category just for you. Yeah,
if you are a smoker, preferred or not. Not really
sure what the distinction is there, but uh, it's not good.
You're premium going to go up, up up, So maybe
think about quitting and or lying to your doctor about it.
Speaker 3 (36:50):
The quitting is a win win for everybody, and the
lying is a lose lose for everybody. But sure.
Speaker 1 (36:55):
But the thing that I found most fascinating and really
really pertinent because of my own life situation is his
recommendation to go outside of your employer. Currently, my employer
is the only one that I have right now, And
basically you're talking about how if you could terminate it
or you leave your job, then it doesn't always carry over.
But what I've found from some research is that you
(37:16):
do have thirty one days after your employment ends to
have a conversation with your company about conversion, right, so
meaning taking your policy and converting it to a personal
or portability which, as Dennis discussed, would allow you to
continue on the group rate that you have, but make
it your own account. So there's a lot to consider
there in terms of expenses, and it's a whole process
(37:38):
to go through, but it is really important that in
most every state you do have those thirty one days
to figure it out. So consider getting your own so
you don't have to worry about this if you ever
do end up losing your job, but definitely take advantage
of those thirty one days to get your ducks in
a row, especially if you do have dependence.
Speaker 3 (37:56):
Thank you so much for doing the extra research on that.
Speaker 1 (37:58):
Now I was more just worried about me.
Speaker 2 (38:00):
Yeah, I got it. I got it because I'm worried
about me too.
Speaker 3 (38:03):
When I see these numbers, I'm like, hello, my life
is worth one billion times that of course, but thank
you for doing that research. We are going to take
that information, put it in our pockets, and until next time,
good luck being a grown up.
Speaker 1 (38:17):
This is a production of Ruby Studio for My Heart Media.
Our executive producers are Leopaul Mary and Matt Stillo.
Speaker 3 (38:25):
This episode was edited and engineered by Sierra
Speaker 1 (38:27):
Spreen and we want to thank our teammates at Ruby Studio,
including Sarah You, Ethan Fixel, rays One Krasnov, Lydia Kim,
Abby Aguilar, Harbert, Wayne Selia, Verplu, Deborah Garrett, and Andy
Kelly
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