Episode Transcript
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Speaker 1 (00:00):
Hello, everyone, Welcome to the Great Hicks Show. We're here
today giving you oodles of information and things in your
life that matter regarding financial planning, investing, insurance, life and
death matters, and oh, I mean, we just have a
popoerri of items that we do on our shows every week.
(00:20):
Greg Hicks, certified Financial Planner, along with Bo Nicholson's Certified
Financial Planner, and our female advisor, Wanda Cooper is on
Vaca Shine, so we'll miss Wanda. We'll miss the female side,
the female point of view, but Wanda will forgive us
for that because she's having fun, fun, fun with her grandkids.
(00:40):
So want to have a good VACA and we're glad
you're here joining us today and this weekend. If you're
on the radio shows, we're on at the Beach area,
Moorhead City, the Crystal Coast on Saturday morning at seven am,
Sunday afternoon at three pm, welcome. And then if you're
in Raleigh, the great expanding city of the South where
(01:01):
everybody's moving to, we're on two o'clock Saturday and two
o'clock Sunday, So if you miss our Saturday show you
can catch it Sunday at two we're also on podcasts
under the Greg Kicks Show banner. So anyway, glad you
joined us today. As you know, we change topics every
week if you're a regular listener, if you're a new listener,
we do change topics every week and we cover an
(01:23):
array of topics, fifty to sixty different topics per year.
And that's fun because it keeps us on our toes
and it makes for fun shows because we're changing topics
every week. But all of them apply to you, and
that's the important thing. If we can make your life better,
that's our goal. We also have clients that join us.
(01:45):
Our firm is Financial Resource Management and Raleigh, headquartered in Raleigh,
with offices in Atlantic Beach, North Carolina as well. But
we also love meeting clients, and so we'll give our
phone number out during the show periodically, and also our
website and our email address. But the number, so I
don't forget it, nine nine eight five six nineteen sixty eight.
(02:09):
That's the main number to call. You can leave a
recording by the way on the weekend or at night,
and we'll call you back usually the following day or
Monday if you call us on a Saturday, but anyway,
Bo and I and Wanda always open our show. The
first segment is always what is happening out there? And
(02:30):
something called my attention? This week, with the market just
creeping up to all time highs for the year, for
the year to date, the main indexes, the S and
P five hundred, Dow Jones and NASDAC and so forth
are all The only real important index the Russell two thousand,
which is a broad small company fund index, is actually
(02:55):
down for the year. It still hasn't recovered from the
great tariff crash of February second. But it is interesting
to look at what's not up this year. The healthcare
area is not up. Stocks in the healthcareer, energy, oil
and gas, things like that, they're not down very much,
less than two percent. And then consumer discretion area is
(03:17):
really down, so you guys must not beaten oreos and
cheese craft cheese. I don't know what's going on, but
that thing's down six percent, so maybe everybody's going on
the diet. I don't know the answer to that. And
then also keep in mind, you know, bonds are inversely
related to interest rates, and all the bond areas are
actually down slightly for the year. So holding bonds is
(03:42):
not a growth play. It's a safer play with an
income dividend usually in mind. So anyway, just a quick
summary of that and bo you have any comments on
the market, Yeah, I do.
Speaker 2 (03:52):
You know if you shut your eyes on January first
and just took an epic power nap and woke up Thursday,
because that's when I'm sorry, Wednesday, that's when we're courting
this week's show. The market is up three percent from
where it started the year, and you probably look back
and be like, man, what a boring year we've had
in the stock market. Well, obviously you missed a nineteen
percent almost bear market correction top to bottom with all
(04:13):
the tariff turmoil and everything else, and you know, it
kind of reminds me of the Lost decade. The Lost
decade was January two thousand, all the way to December
twenty eleven, the market was in the exact same spot.
The S and P five hundred had a total price
return of zero percent. Now that's interesting because you would
(04:35):
think over an eleven year period, almost a twelve year period,
that surely you'd make money in the market. Chances are
there's actually a ninety five percent historical chance that over
a ten year period you would make a positive return
in the market, because remember it's time in the market,
not timing the market. But here's the thing, zero percent.
(04:56):
But what if what if you invested money along away,
What if you were disciplined and had a good advisor
that said, all right, we're not just going to put
money in, shut our eyes and open them in twelve
years and hope that we made money based on statistics.
We're going to add a little bit to the portfolio
on a monthly basis, disciplined, much like you do in
your four oh one k at work, we're going to
(05:18):
do over here in your investment account that you have
maybe five hundred and fifteen hundred bucks a month, whatever
it is, if you would have invested each month, you
would actually have made an average annual return of six percent,
So you would have beat the market. You would have
also beat what cash was paying and what interest rates
were paying. And so I just think that that goes
to the importance of not trying to time the market.
(05:40):
The market is not the wild West. The market still works,
and having a disciplined plan where you're intentional about investing
money on a regular basis, it's proven that you'll do
better than if you just throw money in, shut your
eyes and wait. And so I think that's a good
takeaway from what the market's done so far this year.
Sure it's only up three percent, but if you would
(06:00):
have invested a little bit over time, maybe just daily,
if you would have invested daily, you would be up
significantly more than three percent at this point in time.
So important to work with an advisor who's kind of
coaching you through these kind of things. If you want
to sit down with us and talk about your plan
and just kind of what's happened in the market this year.
If you're concerned about the summer, the tariff thing is
(06:22):
not quite over yet, you're worried about volatility, you got
retirement around the corner, whatever it is. Let's make sure
you're not taking on too much risk and if a
dramatic pullback happens again, you're not going to fall victim
to that. Give us a call. We'd love to sit
down and talk to you. Nine one nine eight five
six one nine six eight.
Speaker 1 (06:40):
And you know, bo, it's interesting how analysts look at things.
I read a really interesting article a few months ago
that talked about this guy went back for thirty forty
years and he picked all the stocks when they first
you know, went IPO or went public and tradable, and
his conclusion was less than five percent of all stuff
ever have gone up significantly. A lot of them are
(07:03):
going to bankruptcy over time. And so his conclusion, this
is what happens when you look at one isolated and
analytical thing and then jump to a conclusion. He said,
the conclusion is the odds of you catching the rising
star that goes up like Costco for twenty five years
or Apple are like one in twenty or one in thirty.
(07:25):
But what he failed to mention was everything cycles. If
you didn't have cycles, no one would buy individual stocks
because it's like going to Las Vegas. The odds of
hitting it in the roulette wheel are pretty low. But
the thing is everything cycles. So what I mean by
that is like, for example, let's take one right now.
UPS is having a horrible years down to a four
(07:48):
year low or multiple year low. Anyway, has a very
nice dividend. But UPS, you know, if you'd have bought
it when they first came out, I mean they were
a private company until about twenty five years ago you
might be in real good shape. But but buying low
and selling high has more to do with cycles than
(08:08):
picking the IPO rising star. Now, mutual funds are also
the other way to diversify well, and like you said,
be disciplined dollar cost average every month or whatever in
a four oh one K. That's another way to not
worry about the rising star or the losing stocks that
go belly up. But so there's there's many ways to invest,
(08:30):
and all of them have merit. None of them work perfectly.
We are going to have losses. And this year when
when Trump did the tariff deal this year, the analysts
on Wall Street were saying, oh my gosh, we're going
into a recession. The world's coming to an end, and
it and it quit coming to an end three or
four weeks later. So yeah, yeah, So with that where
(08:52):
I didn't realize, we're up on our break, first break,
We're going to come back today. We're going to talk
about something that's critical for you, how to protect your
assets and your lifestyle and your income and expenses. So
stay tuned and welcome back to The Great Hicks Show.
Segment two. I'm here with Bo Nicholson. We are both
cfps pop quiz. What does CFP stand for? Certified financial Planner?
(09:19):
And I just read an article a couple of months
ago that now there are a little over one hundred
thousand cfps in the United States. So kudos to BO
and I right. It doesn't make us perfect, but we
do it does set a high standard for helping people
in their financial life. Wanda Cooper's not here today. She's
(09:40):
a financial advisor Party excellent. She's on vacation, which is
well deserved, and we hope she's having a blast in
this June month. June, by the way, is a show
where we just finished a long series of shows on investments.
And by the way, if you miss those shows, they
are our calved on our website. Our website is f
(10:03):
r m NC dot com. Those initials stand for the
Business Financial Resource Management North Carolina FRMANC dot com. So
you can go on there and click on the radio
button on the entry page and our shows are archived.
You can also hear them on podcasts. You can also
(10:25):
go back on the station in Raleigh, one of six
to one FM Talk and click on the Greg Hicks
show and just basically go backwards for four weeks and
you'll see shows on stocks, on bonds, on alternatives, on
mutual funds and ETFs and all kinds of stuff. In June,
we're talking more about family issues and how it relates,
(10:47):
how your financial life relates to your kids, your parents,
your spouse, financial issues, and marriage divorce. We're doing like
a series of about four or five shows on that
here in June. So next week we're going to talk
about choosing a financial advisor. We're going to talk about ourselves.
(11:07):
Isn't that something? But anyway, bo, let's talk about it. Well,
let's talk about insurance. Insurance can become a boring subject
except when you realize you need it and something happens,
and then it's like the greatest thing since sliced bread.
It's like it's like you don't you don't think you
need it until you need it. And I can tell
(11:27):
you this and we'll share some stories with you guys
on the show today. There are times when insurance became
the life saver that saved a family, and then there
are times where people who didn't have it it became
a disaster when something went wrong. So let's talk about
insurance kind of the whole area, and then we'll jump
into life insurance, and then later on in the show
(11:50):
today we're going to talk about something that's super critical,
long term care insurance.
Speaker 2 (11:54):
Well, yeah, life insurance is the big one, and most
people my age. I'm thirty seven, I have a two
year old and a four year old at home, I
have a wife, have a thirty year mortgage I'm maybe
six years into and so yeah, I went out and
I got insurance. And we'll talk about life insurance and
how that can benefit But obviously what it is is
it protects your heirs and the people you leave behind
(12:15):
if you die unexpectedly, Well, then these insurance companies you
have a contract with them that says, Okay, if bo dies,
my family's gonna get I think I got like three
million dollars of coverage or something, and so they're gonna
be just fine. I'm worth a lot more dead than
I am alive, and so I sleep with one eye open.
Health insurance that's another big one, and that avoids medical bankruptcy.
Medical bankruptcy is still the number one cause of personal
(12:38):
bankruptcy in the US, by the way, and so most
people out there have health insurance. Disability insurance is commonly overlooked.
So disability insurance. You think about that you're a if
you're a hand or or if you're a doctor or
a dentist, you have to have it on your hands
because think about if you, for whatever reason, are a
doctor and you get on a skateboard and you go
down a hill and you break both of your hands,
(12:59):
what are you gonna do for the next two months
three months while you recover. You need some disability insurance
in there that's going to pay the bills while you're
unable to work well. Same deal if you're in our profession,
or if you work in a corporate job. What happens
if you're in a car wreck and you go into
a coma or whatever happens. Disability insurance is important to
(13:19):
look at. Not everybody needs it, but everybody needs to
understand what it's there for and how it could potentially
benefit them. Long term care insurance. We're going to spend
an entire segment plus of this show talking about long
term care insurance because, as you can imagine, we work
with everybody. I have a lot of clients that are
my age, and we have a whole lot of clients
who are pre retirees. And post retirees, older people, and
(13:41):
for people that are fifty five to basically seventy years old.
These are the conversations we're having. Are you covered in
long term care insurance? You've got this old life insurance policy,
but you needed like I mentioned earlier, back when you
were young, thirty seven, had two kids at home, thirty
year mortgage. Now your needs have changed. You don't need
life insurance anymore. You've a masked some wealth, your debts
(14:01):
are paid off, your kids are out of the house.
Let's talk about the other insurance. You're more likely to
need long term care insurance, so stay tuned for more
on that in a little bit. And then there's liability coverage.
I remember my property and casualty insurance agent recommended to
me to get umbrella policies and earn umbrella policy And
(14:22):
basically what that is is if you have a trampoline
in your house, for in your backyard, for example, a
neighborhood kid comes over, they're jumping on it, they fall,
and they break their leg. Well, I'm sorry, but you're
liable if something worse happens to them in your backyard.
God forbid, you have a pool when somebody drowns well,
there can be significant lawsuits, they can come after your assets.
An umbrella policy is there to help protect you and
(14:43):
build a layer basically between any type of lawsuit and
your other assets. I mean, there's obviously the homeowners and
auto insurance, which I think everybody's required to have. So
there's tons of different kinds of insurances out there. But
the purpose of insurance is to give you peace of mind.
You don't get peace of mind and you have to
stroke that premium every single month or every single year.
(15:04):
You're like, oh gosh, this insurance company is in my pocket.
But like Greg mentioned earlier, when you need it, you're
so glad to have it, and when you don't have
it and you need it, you wish you did have it,
and then it's too late. So understand the purpose of insurance,
and also know that we're licensed in life insurance and
long term care insurance. We can help you in those
departments and as part of our professional team, as we've
(15:26):
mentioned several times on this show, how we've built out
a professional team and all these other facets of a
client's potential financial life. We have contacts in the property
casualty space, the disability space that we can help get
you in touch with. So call us nine one nine
eight five six one nine six eight of insurance is
kind of striking a chord with you.
Speaker 1 (15:46):
And to follow up on bo it's not just peace
of mind, it's financial protection. I mean, there's there's different
ways to avoid risk, and one of the ways to
avoid risk is insurance because it's pennies on the dollar
if something goes bad. So let me give you some
real life examples. Some of this stuff happened in my
client's situations. Like I met a lady one time. She
(16:09):
was forty eight, she had a kid getting ready to
go to a private college with a high tuition. Her
husband worked in a corporate business, and he decided that
since he was over fifty and had a great job,
that he dropped his insurance. He could have bought it
real cheap through his company, which a lot of people do,
(16:29):
which I recommend taking advantage of. And so he ended
up having a heart attack and she came to my office.
She had a two thousand dollars a month mortgage a
kid going to college. For this was like twenty years ago,
so the cost was twenty thousand a year, and now
would be about thirty five a year, and she had
(16:52):
been a stay at home mom, no income. So I said, well, okay,
the life saver might be the life insurance. How much
did her husband had have And he had like fifty
grand and that was part of his medical insurance at work,
So he had gotten real clever and dropped his insurance.
So she had bad choices. All of a sudden, just
(17:14):
like that, she gets a phone call, her husband passes away.
Two days later. What are you going to do? She
has to get a job where what kind of job?
Her kid maybe has enough money saved up for the
first semester of school, so does she not go to college?
It's going to happen in six months. So you can
imagine what was going through her head. And we did
(17:37):
a lot of gymnastics for her. She ended up having
to move and get rid of the big mortgage, ended
up figuring out how to get through college, how to
go to work, a lot of bad things. And let's
take that same example. What if the husband had five
hundred thousand or a million dollar life insurance. I've had
two cases since that case where my clients forty eight,
(18:02):
both of them had stay at home moms, homeschooling young kids.
But when they died, they both had one million dollar
term insurance, very inexpensive at their age. Thank god they
did because the moms didn't have to go to work. Uh.
Social Security actually kicked in a monthly income for the
(18:24):
Each of them had two kids, so the sociecurity income
helped defer some of the cost. But anyway, the difference
that a million dollar cash policy paid out tax free
to the to their wife made all the difference in
the world. They didn't have to change their lifestyle for
a number of years, still homeschooled, still had income. We
(18:46):
invested the money to create cash flow for them plus
Social Security, and it all worked out.
Speaker 2 (18:50):
It's not for you, it's for those people you leave behind.
Speaker 1 (18:52):
Right Yeah. Yeah, But those are real I mean, they
are examples of where insurance saved a family from a
train wreck and no insurance caused a train wreck for
a family. That is the emotional part, but it's a
financial part that some people never recover from. So this
idea that you don't need insurance and protect your risk
(19:16):
is crazy. And that's why we do a show at
least twice a year on insurance because people forget about that.
Speaker 2 (19:22):
And when you're young like me and you have a
family that you're just getting started, and you have a
life that you're just getting started that's oftentimes associated with
debts like a mortgage, you do need insurance. Insurance is
a very selfless thing to do. Canceling your insurance or
not getting insurance is incredibly selfish, particularly if you have
people that you're leaving behind, Because think about it this way,
(19:44):
what is your life, your wife's life, your kid's life
look without you and without your income a little different.
Can't pay the mortgage. If there's insurance there, it's a
game changer. So what kind of insurance do you need? Well,
you know the guy who you haven't seen since college
who calls you up and says, hey, bo, we haven't
(20:05):
gotten together in a while. We should go grab some lunch.
Next thing, you know, you're talking about a whole life
policy and how great it's going to be and how
you're gonna have risk free, tax free income later in life. Well,
I mean you should probably second guess that conversation. Okay,
this is why this guy's reached out to me. You
(20:25):
probably know what I'm talking about. I got reached out
to by about three or four buddies who basically did
the same thing, and I went and got lunch with
a few of them, and all they were trying to
do is sell me a whole life policy. I don't
necessarily believe in insurance as an investment vehicle in that capacity.
I think insurance should be plain vanilla when it serves
(20:45):
it's there to serve a purpose. We want the least
expensive option. We work through an independent insurance brokerage agency,
and basically what that means is we can take your situation. Okay,
this is Bob Smith. Bob Smith is forty five years old,
He's in good health. He wants one and a half
million dollars of insurance. Or we're gonna look at fifteen
year term insurance or thirty year term insurance. And we're
(21:08):
gonna look at all the options that are out there,
all these different companies, Prudential, John Hancock, Pacific Life, I mean,
you name it. We will get quotes from each of them,
and guess what will pick the cheapest. Because it's a
commoditized business, we don't really care about the bells and whistles.
Let's just get you covered. So anyways, that is my
little two minute snippet on life insurance. Y'all stick with us.
(21:29):
We're coming up on a break. We will be right
back to talk more about insurance and long term care.
Speaker 1 (21:33):
Welcome back to the second half at the Great Kicks Show. Today,
we're talking about avoiding risk covering risk with insurance, and
we're talking about multiple types of insurance and things that
apply to your life directly. But keep in mind that
we changed topics every week. Just want to give you
a heads up like I did earlier in the show.
Next week, we're going to talk about an interesting topic
(21:53):
that we're close to, choosing a financial advisor, and we
have a lot of people that meet with us from
the radio show. Some do have an advisor, and others
have an advisor already and they're just looking for a
second opinion, or perhaps there's an uneasy feeling about their
current advisor and they just want someone to look over
their shoulders. So that's a big, important show. And then
(22:15):
we have the fourth of July week coming up. We'll
do the best of the Greg Hicks Show, and then
we get into the family in early early July, blended families,
second marriages, loss of a spouse, financial issues in marriage,
No kidding, you mean you have financial issues in a marriage,
divorce and so forth. So we do a month of
(22:37):
family shows. And the thing about interesting I think about
financial planning and investing all those things is money and
emotions and people are all connected to the money. So
it's not just about money. You know that instinctively, but
a lot of times we forget that everything you do,
every decision you make financially affects a lot of people,
(22:57):
a lot of relationships, and it's very important. So that's
exactly why we change topics every week. You can catch
us on the podcast or on the weekend shows that
we do in Morehead City area, Crystal Coast area in Raleigh.
But also you can go to our website at frm
NC dot com, frm inc dot com. Check us out
(23:21):
biographical sketches of Bo and Wanda, myself, our office locations.
We even post our newsletters and invitations sometimes to events
for clients, like our shrending event when everybody's spreaded their
old tax returns. That's one of the happiest events we
have every year. Clients are so happy to unload those things.
(23:42):
But anyway, look forward to talking to you. Give us
a call you can call now, leave a voicemail. We'll
call you back next Monday for sure. Nine one, nine,
eight five six, nineteen sixty eight. So today we're talking
about avoiding risk using the tool of insurance. And the
next segment, by the way, will be on long term
(24:02):
care exclusively, because that's a big, big deal because it's
so expensive the costs of long term care. But a
lot of people ask questions like this, like do I
have enough insurance? I don't need insurance anymore. We run
into all kinds of just unique cases. So let me
give you just one example of a unique case where
(24:23):
like BO talked about, a young guy or a young
couple get whole life insurance thirty five years ago, and
they're paying one hundred dollars a month for thirty five years.
And they'll come into the office and they have one
hundred and twenty thousand dollars death benefit and seventy thousand
of cash value. And what I usually do in that case,
and let's say they're retired now, they're still faithfully paying
(24:45):
their monthly premium, and I'll say, you know, the insurance
company loves you so much, because when you die, your
spouse is going to get one hundred and twenty thousand
tax free, but seventy thousand of that is your money,
so they're only putting out fifty Why And then I'll
say key question, do you need life insurance? And if
they say no, then I'll say, well, why don't we
(25:07):
just transfer the money from the life insurance policy over
to an annuity that gives you a guaranteed income for life.
My bed is you probably need income right now more
than insurance right And they go yeah, so we turn
that on bo they get guaranteed income for life. Or
another one is a paid up policy where you quit
paying premium and your one hundred and twenty thousand death
(25:30):
benefit might go down to one hundred thousand, but you
don't pay any premiums anymore, so it saves you one
hundred dollars a month expense. So even in the insurance
world where you think there's not a lot of wiggle
room to effectively change goals and use that money in
a different way, there are many things like that that
(25:50):
you may have never heard of. So if you have
old insurance policies or old annuities, give us a call
at nine one nine eight five six nineteen sixty eight
and let us become creative with your situation.
Speaker 2 (26:04):
Yeah, it's a good point, and inertia. Inertia is a
real thing. It's the reason I still have a banking
relationship with the unnamed bank that I do. I hate them,
but I like their online app. And I just it's
been what I've done for forever and I haven't changed
it yet. So I fall victim to it too. And
I can't tell you how many people that Greg Wanta
(26:25):
and I meet with who come in and have these
old insurance policies. Like Greg mentioned that our whole life
that they're paying into unnecessarily and sometimes it's five hundred
dollars a month. Well, they're shifting into retirement. Every dollar
in matters, every dollar out matters. There's a way that
we can reduce that, keep the life insurance if it's
still necessary, or maybe reposition that money like Greg mentioned,
(26:46):
over into something else like long term care. And Greg
mentioned annuities too. A lot of clients have old annuities
with significant gains in them and they're just kind of
earmarking those for the next generation. I don't need that,
but I know if I take it out, there's going
to be a big tax. Well, guess what, there is
now a new tax code that allows you to take
that money that's in the annuity. Maybe you originally put
(27:07):
in one hundred thousand dollars, Now it's worth two to
fifty one hundred and fifty thousand dollars of gain. That
money's going to be tax at ordinary income unless you
take that and you move it over to a long
term care solution. And if you do that and you
spend that money down on long term care, guess what,
every single one of those two hundred and fifty thousand
dollars is tax free. So you've just legally bypassed Uncle
(27:30):
Sam and the irs by repositioning that money from an
investment into something and into an area where you're more
more than likely going to have a need. You're better
covered that way, you're paying less taxes that way. It
just makes sense. So kind of what we're shining a
light on is a lot of people out there don't
know what they don't know. Greg, Wanda and I we
love studying this stuff and finding creative ways that we
(27:53):
can legally obviously side step taxes and help clients reduce
risk in certain area that are maybe outside of the market,
like life insurance, like long term care insurance, because it's
all important, it's all intertwined, and it's all part of
a good plan. And so if you're working with an
advisor right now who does not have an all encompassing
plan and they're just instead moving a little bit of
(28:15):
your money from small cap to international and a little
bit from bonds over here to money market, that's all
well and good. That's an important piece of it, but
it's only a piece of it. You need a plan.
You need to understand what you have and why you
have it, and that's what we're here for. Nine one
nine eight five six one nine six eight. We'd love
to meet you. We'd love to hear your story, Greg.
(28:37):
How much more on insurance you want to do? You
want to shift over into long term care? A couple
more things.
Speaker 1 (28:41):
One we can well, just one more quick solution is
something called a life settlement. You may have an old
policy and you need income now. You don't need a
death benefit in one or two or three years. Maybe
your health is hurting a little bit, you can There
are companies out there that will buy existing life insurances
(29:03):
for cash, and of course their motive is they're gonna buy,
they're gonna pay you cash, and then if you pass
away in three or four years or whatever, they get
the death benefit. But a lot of people need cash really. Now.
Death benefit's nice, but they need money now because of
expenses and so forth. So it's kind of a special area.
(29:24):
But uh, we've done a little bit of that with
our clients who have those special situations, and they're called
life settlements. So but just work with a reputable company
and make sure you know what you're doing. But again,
it's another strategy that's not talked about a lot, but
it's out there and exists, and for the right person
at the right time, it's a grand idea to look at.
Speaker 2 (29:46):
That's a very good point I tell people all the time.
With life insurance, it's not needed anymore. The worst thing
you can do is contact the company and surrender that policy. Yes,
even if you don't want it, you don't want to
do a life settlement, maybe it's a term. Just let
them cancel it on you stop paying the premiums into it,
or change your banking information or whatever it is, and
(30:08):
they'll oftentimes give you two months free insurance. But if
you were to call them proactively and say I don't
want this insurance anymore and cancel it, and then you
get hit by a bus three weeks later. Too bad,
no insurance. If you instead stop paying the premium, they're
going to give you potentially another month of insurance and
maybe another month after that while they contact you, Hey,
this is about to expire. It's about to lapse. Doesn't
(30:31):
hurt your credit or anything. Just stop paying it and
you get a little bonus on the back end. Or,
like Greg mentioned, if you have a valuable whole life policy,
you're older. Maybe mom and dad have a policy they're older,
they could use the money. Now you can go to
a life settlement company which is going to give you,
oftentimes more money than the actual insurer would. So if
(30:53):
your policy is with John Hancock, for example, you can
contact them and say, hey, I know I'm a liability
for you guys. If I die, you got to pay
my kids a million bucks. What happens if I cancel
my policy? What will you give me? Maybe they give
you one hundred and fifty thousand. Life settlement company may
give you twice that. So it's important to explore all
the options that are out there so you're not leaving
money or opportunity on the table nine one nine eight
(31:15):
five six one nine six eight.
Speaker 1 (31:18):
Okay, and we and Bo mentioned long term care well ago.
With old non qualified non IRA annuities. There's a way
to do that, and it's actually something that just was
passed a few years ago. It's called a Pension Protection Act.
But that tax deferred money you've built up in that
old annuity can be used if you need long term
(31:39):
care and all the money comes out tax free. That's
a really amazing way to change your plans and cover
yourself in a cool way. But there's a lot of
things in long term care, long term care. We used
to have a show only on long term care. It's
valuable and a lot of people say, when do I
need long term care? The long term care purchase A
(32:02):
policy purchase today is interesting. It's right around age sixty,
so people in their late fifties forward and all the
way up to seventy five or so. They're very good
candidates for long term care because and here's why. The
average long term care cost and nationally is eight thousand
a month in a facility. And that's also, by the way,
(32:25):
the average cost in North Carolina, so do the math
in your head eight thousand times twelves ninety six thousand.
If you have saved the nest egg of five hundred
thousand dollars in an IRA or whatever way you did it,
it doesn't take but four or five years to burn
through that if you have a serious long term care problem.
And I've had clients. I've had a few clients that
(32:47):
literally I called it burning through the nest egg. So
a few years later, now the adult kids are like, hey,
we love mom, we just want her to be healthy,
but several things happened. Mom us to burn through it
to live. And number two, there's no inheritance for the kids.
And then when they run out of money, what do
you do. My grandmother ran out of money. She was
(33:08):
not wealthy, and so we ended up having to go
on Medicaid. Medicaid is kind of long term care for
people that don't have a lot of money, and the
care kind of drops a little bit if it's Medicaid
care versus private. So we're going to take our last
break and we're just setting you up. We're going to
spend the whole segment twelve minutes on long term care
(33:29):
and why it's absolutely critical for you to consider. Welcome
back to the last segment of The Great Hicks Show.
Just want to remind you if you want to call
me Bo or Wanda Financial Advisors in our business financial
Resource Management with offices in Raleigh in Atlantic Beach, North Carolina,
give us a call nine one nine eight five six
nineteen sixty eight. We can do phone appointments. We personally
(33:53):
like to meet you live. I mean, I think it's
better to meet a person alive as well, but if not,
we'll be glad to do zoom call or pune deployment
nine one nine eight five six nineteen sixty eight. Because
you may have a question. We're talking about insurance today,
but you may have a question about something else. Last
week we talked about taxes and real estate and alternative
(34:13):
investments and gold coins and all that stuff. This week
we're talking about insurance, protecting yourself. That's the way to
protect yourself. Is usually cheaper to do the insurance route. Okay,
So we're talking about long term care and we're going
to park on that because it's really expensive if you
need it. It affects mostly older people. But bo I
(34:34):
had an uncle forty eight that had a brain aneurysm,
and he was in a nursing home for like twenty years.
So occasionally it even affects younger adults, which is sad.
But if you don't have some kind of protection, let
me just kind of say this and then bo you
can go off on some of the areas of interest.
But a lot of people say, well, I've got Medicare
and Medicaan, I'm good. No, no, no, no. Medicare if
(34:57):
you're over sixty five, Medicare covers about the first twenty
days all of it. If you're if you go to
the hospital, doctor sends you to a rehab place or
a nursing home type environment, first twenty days is covered
by Medicare. The next eighty days is covered about eighty
percent by Medicare, So you're kind of covered a little
(35:20):
bit by the government stuff for about one hundred days.
But then after that it's five to ten thousand a month.
Who's going to pay that? Where's that coming from? So
that's when it gets absolutely critical. You can buy segments
of long term care. You can do it for one year,
two year, three or five year coverage. It's like buying
disability insurance. If you're in a long term care facility
(35:42):
or you have home care. So it's absolutely critical because
it will burn through your nest egg in a hurry
at eight thousand a month.
Speaker 2 (35:52):
So that's a good point about the one hundred days
basically covered by Medicare. To a degree because of that,
a lot of these long term care insurance companies did
their effectively deductible, which is the waiting period of ninety days,
So the insurance company knows that in a skilled nursing facility,
the government's going to pay a lot of the first
(36:13):
one hundred days of cost, so we're not gonna pay it.
We're not going to double dip and pay this client.
So just like your auto insurance has a deductible, you
get in a wreck, you got to pay the first
X amount of dollars, pretty standard with insurance. A lot
of long term care policies have that too. They say
you have one hundred day or you have a ninety
day waiting period. After ninety days of expenses, we'll start paying. Well,
(36:34):
guess what, most people start care in the comfort of
their own home. And I met with some clients this
week who are dealing with aging parents, and they have
four aging parents that are all receiving long term care.
Fortunately they have long term care insurance policies. But here's
what they realized the hard way. Not every day were
they get in care. So maybe mom had somebody coming Monday, Wednesday,
(36:56):
Friday to help out and qualified for long term care. Well,
the guess what, that's three days per week. Do the math.
That's three weeks to get to nine days. That's thirty
weeks to get to ninety days, and so that's a
thirty week waiting period in that instance that they're having
to pay the first thirty weeks of healthcare. We have
(37:18):
some solutions that have no waiting period for home health care,
and so it's important to understand these little nuances of
what might trip you up on the back end. A
lot of insurance policies out there will razzle dazzle you
on the front side. With the sales piece, we've analyzed
them because again, we are a independent brokerage from an
insurance perspective and from an everything perspective actually, but that
(37:43):
allows us to be totally product and company agnostic. We
look at everything that comes through our door and we
kind of check every box for is this in the
best interest of the client. Is there a better solution
out there? Is this in the best interest of the client?
Is there a better solution out there? We've got a
solution that has no waiting period for at home care,
which is where a lot of people like to start
(38:04):
their care. Greg mentioned also, most long term care insurance policies,
the classic ones, kind of have an expiration on how
long the benefits last. Typically it's around five to six years. Well,
what happens if you're one of eight Americans in the
US that's diagnosed with Alzheimer's and your mind goes but
your body stays healthy. You could need care for nine
(38:25):
ten years. Happened to my grandmother. I've seen it firsthand.
I think the odds in my family are more like
one in two than they are one in eight unfortunately,
So you better believe I'll be getting some long term care. Well,
if that happens, you want a plan that extends beyond
the six year five year mark. We've got solutions for
that too, that pay indefinitely as long as you need care,
(38:46):
there will be money there to go to your family.
And what about who's in charge of determining whether or
not you need care? Oftentimes these plans offered by publicly
traded companies well in a way kind of endowed to
their shareholders, and they might not want to turn on
benefits as easily as some other plans. So maybe you
(39:09):
know Company X, the doctor says you need care. Well,
Company X send somebody out to your house to confirm that,
in fact, your doctor's right about you needing care. Conflict
of interest, I think. So we have solutions where your
doctor is the only one in charge of writing the
letter on whether or not you need care. So there's
a lot of little considerations to make when deciding what
(39:30):
long term care policy to do. And then funding is
the big one here. Traditional long term care policies you
pay every month, you pay every year, and that money's
gone if you never need it. You're ninety five, you know,
you pass away healthy. That's what we all want. But
then you're on your deathbed doing the math in your
head on how much money you send to that dang
long term care insurance company you're never going to get back. Well,
(39:53):
there are policies now that have death benefits. They're kind
of life in long term care policy hybrids. They cover
you from a long term care perspective. If you don't
need it, that money is still there for your family.
But in the intermediate you were covered from a long
term care perspective.
Speaker 1 (40:08):
Let me park on that a little bit. So when
we a few years i'll say fifteen to twenty years ago,
there was no such thing as a hybrid plan. So
the number one excuse for not buying long term care
insurance was it cost too much, number one, and it
is a little pricing. But the second gripe was if
I pay it for twenty years and die, I've spent
(40:30):
eighty thousand dollars for nothing. So that is true. So
the hybrid stuff came along about fifteen or eighteen years ago,
meaning just what you said, it's a really nice solution.
If you don't ever need long term care and you die,
there's a life insurance policy built into the plan, so
you get most or all of your money back that
you quote wasted. Now. The comeback back then was, well, okay,
(40:54):
you could say that same thing on your house. If
your house never burns down or gets struck by lightning,
did you feel like you wasted all that premium? And
they will go, oh like that, yeah, But the difference
was the homeowner's premium was a lot less than long
term care. So I got that, but the hybrid became
a wonderful solution to that. And so that's kind of
(41:14):
the little historic background. And now Bo and Wanda and
I almost one hundred percent now do hybrid plans because
we don't want the client to ever lose money.
Speaker 2 (41:22):
Yeah, And I've had clients ask also, like maybe they
don't have kids and I don't need the death benefit.
Can I shop around and look at a pure long
term care insurance policy and just see if my dollars
would go further for long term care in those And
I say, absolutely, we can do that. But I will
tell you nine times out of ten, you're better off
even from a long term care benefit perspective, to do
(41:45):
the hybrid policy. It just somehow works out that way.
Also on your and your spouse exactly. It's your kids
certainly will think about it this way too. There's a
company called Jinworth, and this is I'm not singling out Worth,
but they made a splash about two years ago when
they did a premium increase across the board for all
(42:07):
of their insured. Everybody who had a long term care
policy now had to start paying more money. So you
think about someone who's eighty two years old, health starting
to get a little sketchy, maybe maybe long term cares
on the horizon. They've been paying into this policy at
five hundred dollars a month for twenty years now, then
they get a letter that says, hey, mister Smith, your
(42:29):
premium is going to go from five hundred to seven
hundred and fifty or maybe to eight hundred and fifty
dollars per month. Thanks for your business. Here's our way
of thanking you. You want to keep this thing in force,
you're going to have to pay us sixty percent more
on a monthly basis. That is a true risk of
buying a traditional long term care insurance policy, and so
(42:51):
we typically shy away from those, you know, the only
times that we would really use those or as if
a client asks for it explicitly, they don't have they
don't have a spouse or money to someone to leave
the money too, and so never say never. It's something
that we've done before, but oftentimes we will lead with
(43:13):
what Greg and I are talking about, the hybrid type
policies that have a desk.
Speaker 1 (43:16):
Benefit, right, And I've had two clients in the last
two years. They had that offer you can pay two
hundred and fifty a month more for the same coverage,
or your benefit was a five year deal for income
and that you can also pay the same premium and
drop that down to three years coverage. But they weren't
discriminating against the individual. But everybody in their book of
(43:37):
business got the same offer. So that's legal. And when
you pay these, when you do the hybrid plans, one
company particularly used we love because it's locked in for life.
The cost is forever, so you don't have to ever
get trapped. The other thing I'll mention too that again
inherently people don't realize. Some people say, well, I'm already
(43:59):
on healthy I might not qualify for long term care.
Because every insurance in the world has some kind of
underwriting due diligence process where they figure out is it
an can the company afford the risk to cover this person.
There is a company that does annuity care and what
that is. You don't have the same underwriting health issues.
(44:23):
If you're not healthy, you can you won't get life
insurance coverage, but you can use an annuity to generate
a long term care benefit should something happen to you.
We've done two or three of those policies in the
last few years. One lady we did about ten years ago.
Sure enough, she went into long term care and the
(44:46):
annuity was worth maybe one hundred and twenty thousand, but
she ended up burning through the one twenty and then
they added like another one hundred thousand dollars on top
of that. So you don't have to be in PERFEC
help sometimes to have a solution for long term care.
So in what we're encouraging you to do, if you've
(45:06):
been thinking about this is one of the things on
your mind. If you're over fifty five, you've been you're saying,
we need to do that, honey. You know you're listening
to this show right now. We need to do that, honey.
We'll give us a call. We can give you multiple
ideas and strategies and one of them's likely to fit you,
and you can maybe do more than you ever imagine
you could to cover your self for long term care costs.
(45:28):
So guess what I'm getting the red light we got
about twenty to thirty seconds ago. Thanks for listening today.
Give us a call at nine nine eight five six,
nineteen sixty eight, and our show next week is one
of our favorites. Choosing a financial advisor. What a great
topic for us to give. Remember this, it's your money,
(45:48):
it's your future, don't blow it.
Speaker 2 (45:51):
Advisory services through Couple Investment Advisory Services LLC. Security is
offered through Capital Investment Group Bank Remember Finra and SIPIK
one thousand six Forks Road, Raleigh, North Carolina, nine D
three one twenty three seventy. Past performance is not indicative
of future results.