RJS 10-4-25

Episode Transcript

Speaker 1 (00:00):
Good morning to all. Craig Shillig here and this is
Safe Money. I'm here every Saturday to talk with our
listeners about financial strategies we use to manage and protect
the assets safely. I've been an insurance agent for over
twenty four years. During that time, I've learned a few
insurance strategies, like using annuities as safe money harbors or

(00:22):
using cash value life insurance to supplement retirement income. Just
a reminder, you can call our office at five six
three three three two two two zero zero if you'd
like to enroll into one of my virtual Medicare community
meetings I give two every month via zoom, or you
can email me at Craig at Craigshilig dot com and

(00:46):
that's my name, cr Aig at cr AI G S
C h I L l ig dot com. Today I'd
like to continue my talk about life insurance and then
I'll touch briefly on October being National Financial Planning month.

(01:10):
Time to tackle one of the biggest barriers keeping families
from getting the coverage they need. Misinformation, Google and social
media are large contributors to this issue. It's an affordable
means of financial stability that people think they can afford,
when most actually can. What is it? It's life insurance.

(01:35):
The twenty twenty five Insurance Barometers study, research that life
Happens in Limera have conducted for fifteen years, shows that
about three quarters of adults overestimate the true cost of
life insurance. Since the studies inception respondents to self assess,

(01:57):
to self assess their health, and then to estimate what
a term policy would be for themselves at their current age,
and even the youngest, those thirty five and under and
the healthiest overestimate what life insurance would cost them by
seven to twelve times the actual price. Adults thirty five

(02:20):
years age and under who say they are healthy overestimate
the cost of life insurance by seven to twelve times.
Life insurance ownership half of American adults fifty one percent
say they own life insurance. They may have it through
their employer, twenty six percent they may have an individual

(02:43):
policy they own fifty five percent or a combination of
the both, and that's about nineteen percent. Interestingly, sixty one
percent who do of those who do not have life
insurance say they need it, plus nineteen percent of those
who do have some coverage say they need more. In addition,

(03:07):
given that this is a consumer perception study, there is
likely a percentage of those who do not have life
insurance and say they don't need any who in actuality
do have a need for coverage. Overall, the life insurance
need gap means there are about one hundred million Americans

(03:28):
who are in the market for life insurance at this time.
This need gap is highest among households earning over fifty
thousand dollars a year of annual income, consumers who identify
as Hispanic, Latino, or black, all generations younger than baby boomers,

(03:49):
representing eighty one million adults, and more importantly women. Sixty
one percent of those who don't have life insurance say
they need it. Let's talk about five myths and misconceptions
around life insurance and why they prevent people from protecting

(04:10):
what matters most. Let's break down some of the most
common myths and uncover the reality behind them. Myth one,
life insurance is too expensive. The reality most people drastically
overestimate the cost of life insurance. According to Limras twenty
twenty four Barometer report, consumers think coverage costs nearly three

(04:34):
times more than it actually does. In fact, a healthy
thirty year old can secure a twenty year quarter of
a million dollar term policy for around sixteen dollars a month.
That's less than many spend on streaming and subscription services

(04:55):
in any given month. The takeaway from this life is
insurance is often more affordable than people assume, and positioning
it against everyday expenses can make that value more clear.
Myth too, I don't need life insurance because I'm single
or young. The reality life insurance isn't just for parents

(05:17):
or married couples. Young professionals often have student loans, credit
card debt, or co signed obligations that can fall on
loved ones. Plus, buying a policy early locks in lower
premiums for life, an advantage that disappears with age and
or health changes. I'll add one thing to that. Okay,

(05:39):
you're single, and let's say you have no debt. If
you die tomorrow, you still have a debt because they
have to pay for funeral expenses and to bury you.
It doesn't matter if you're being buried or cremated. That's
still a cost item, and that cost is thousands, not hundreds.

(06:00):
The takeaway from myth Okay, let's see the takeaway from
this is the long term care, the long term costs
and financial responsibility benefits for younger clients even if they
don't have dependence. Myth too, only the breadwinner needs coverage.

(06:21):
The reality unpaid caregiving has serious economic value. The value
of a stay at home parents work around the value
of a stay at home parents' salary is around the

(06:41):
sixth figure mark in recent reports. A stay at home
person who watches just one child should be paid one
hundred and eighty four twenty dollars in a recent write up,
even without a paycheck. Losing that role creates major immediate
car us for a family. I mentioned before, a lot

(07:03):
of my clients pay as much on their mortgage as
they do on their childcare. Let's see if a caregiver
we're gone tomorrow, who covers childcare, transportation meals, and household management?
And what is that cost? Next? Myth my employer coverage
is enough group life. The reality of that is group

(07:27):
life typically equals one to two times your salary and
often isn't portable. That rarely covers income replacement debts, childcare,
and or college funding, especially after a job change. And
the big issue here is if you quit that job.

(07:47):
That policy goes poof, you can't take it with you,
so keep that in mind. Workplace coverage is a starter
layer is fine, but an individually owned policy provides stable,
portable bade most families actually need. Next myth, life insurance
is only a death benefit. Reality, modern policies can include

(08:11):
living benefits. Example, chronic critical illness writers and some designs
can build cash value for flexibility. A standalone long term
care insurance policies are still highly craved and wanted, but
the costs benefit analysis of those contracts are less than desirable.

(08:32):
Long term care writers and or a chronic conditioned writer
within a life insurance contract is better use of dollar
value to incorporate coverage within a permanent life insurance contract.
Simply put, we both know you're going to die at
some point in life, and the odds are one in
two that you will need some sort of long term

(08:54):
care coverage before death. Remember this will help keep you
out of the nursing home. If you don't have a
plan for long term care scenarios, then you will go
to the nursing home. The takeaway from this permanent life
insurance is a Swiss army knife of financial products. It's

(09:16):
a multi purpose planning tool that supports both today and tomorrow. Now,
I know you don't want to talk about nursing homes.
The nicest nursing home on the planet isn't a place
you want to go, and while it will be necessary
for some, the vast majority of extended care takes place

(09:39):
outside of the nursing homes. There are roughly one point
two million people in nursing homes in the US today,
but more than six million receive care at home. Did
you know that As of May twenty twenty four, home
health and Personal Care AIDS made up the largest with

(10:00):
over four million workers. You are far more likely to
receive care outside of a nursing home than in one.
It's almost certain that at least one person of a
couple is going to need extended care at some point
in their life. You should have a plan to help
keep you in your home as long as possible and

(10:23):
to take the burden off of each other and the
kids or other family members. The vast majority of long
term care services, even in nursing homes are custodial care,
which has helped with daily activities like bathing, dressing, eating,
and supervision. Because of a cognitive impairment. This type of

(10:49):
care can be provided at home in many, and if
not most cases. Again, the downside, unfortunately, is that in
the absence of a formal plan for care, the vast
majority of these services are provided by informal, unpaid caregivers,
almost always family members, And while the financial impact is

(11:12):
a concern, it's not the biggest concern. Much more important
are the physical and emotional consequences to their loved ones.
How the healthy family member is affected by the one
receiving care via both emotionally, mentally and physically home care options.

(11:34):
It's undeniable that family caregivers are at high risk of
mental and physical health issues, so the question becomes why
not just hire a paid caregiver. Per a twenty twenty
four Trans America study, two of the top retirement fears
are declining health heading leading to long term care, and

(11:56):
running out of money before I die. I give you
an example. When Kyle needs care, they're experiencing the former,
and if Sarah starts spending five thousand a month bring
it to bring an outside care, they're living the latter.
The end result is that even when the money is
there to pay for extended care services. Clients are often

(12:19):
reluctant to spend it on something as erroneous as long
term care services. Home care is always preferable and usually
most affordable, but not inexpensive. If a client uses just
six hours per day of home health aid services five

(12:39):
days a week, the national average is thirty four dollars
an hour. That's fifty three that's fifty three forty bucks
for one year. Of course, home care can become outrageously expensive.
A client that needs twenty four to seven paid care
at home can easily spend more than a nursing home
would cost, which is why they may consider the other

(13:02):
option that's still far more attractive than a nursing home.
Assisted living a nursing home alternative. Most clients don't need
someone at their side twenty four to seven, but they
may need to know that help is write down the
hall when needed. Assisted living communities are typically very nice places,

(13:24):
offering homelike settings, numerous amenities, various opportunities for social interaction,
transportation services, and usually cocktails at three o'clock. In many cases,
the healthy spouse will move into the community with the
impaired spouse. Prices vary greatly. Across the country, but they

(13:47):
offer a far less expensive option than round the clock
home care and provide much needed relief to this spouse caregiver.
Proactive planning focused on care in a community setting is key.
What does this planning consist of? First, it's a review
of potential needs. What's the client's current health? Are there

(14:12):
any obvious risks that may put them in a care
situation At a younger age, they don't need to be
sick to need care, but those with chronic illnesses are
likely to need care sooner. Next, when someone needs care,
who will be best positioned not to provide the care

(14:34):
but to manage it? Would you rather have your wife,
daughter or son give you a sponge bath and address
and dress you, or do you want to pick up
the phone and make sure that the home health aid
is scheduled for that given week. Having a plan to
pay for formal outside care providers is certainly desirable. Of course,

(14:59):
then your client and has to pay for it, So
how will that happen? They may be in a position
where self funding is realistic, and if so, your client
should identify the money that's designated for care now and
segregate it from their general portfolio. If not, they may
be reluctant to spend it when care is needed. Another

(15:22):
option is transferring some or all of the risk using
long term care insurance or a hybred life insurance contract
with a long term care rider of some kind. This
is often a necessity for middle class earners and can
still be an excellent strategic planning tool for wealthier clients,

(15:42):
regardless of which path they take. The point is you
need to decide now how to fund this type of care.
Have everything in place, Be sure your estate planning or
elder law attorney knows your wishes and helps you with
any legal maneuvering such as advanced directives, healthcare and financial

(16:05):
powers of attorney, etc. A change in both health a
change in health may leave you unable to do this. Finally,
clients must talk about their LTC plan with their loved ones.
If the children don't know what you want, you can't
expect them to figure it out themselves. Communicating your wishes

(16:27):
and plans to your family crucial step in the long
term care planning process. Clients need to plan for long
term care. The best way to start that process is
to understand that long term care equals a nursing home.
Nursing homes are the option of last resort and are

(16:48):
typically used for one of two reasons. First, the actual
care needs are such that they cannot be met in
a community setting. In second, the client is run out
of money and is relying on medicaid financial assistance. We
have no control over the former, and we clearly want

(17:09):
to avoid the latter. We can help prepare for the
most likely long term care scenario, care in their own home.
Another myth, I can get coverage later, so there's no rush.
The reality waiting to buy life insurance is risky. Life changes,

(17:29):
health issues, new debts, marriage, or kids can make coverage
more expensive or even unattainable. According to Forbes, premiums rise
with age in any new health condition can limit your options.
The takeaway from this is secure coverage sooner rather than later.

(17:51):
Locking in a policy today protects them against future cost
increases and unforseeable health changes. Life insurance isn't about fear,
It's about financial confidence. The truth is coverage is affordable,
valuable for families of all income levels, and most effective

(18:12):
when purchased early. I recommend to all my clients at
any age you can get a twenty or thirty year
convertible term contract doesn't cost that much, but you lock
in your current health eligibility now so that you could
change it to a permanent product down the road. Now understand,

(18:34):
the premiums will go up as you age, and if
you don't change the plan until the future, but all
you have to do is write a check, you won't
have to qualify medically. That's a great strategy to use
because if a term contract today it costs one dollar

(18:55):
a month, a permanent product is probably going to cost
three dollars a month. However, that three dollars a month
policy will be three dollars forever. It'll never change. That
one dollar premium will change after whatever that period contract
timeline is. Additionally, that three dollars contract of permanent insurance

(19:19):
will go up every year on the death benefit. It
will stay ahead of inflation. The term contract will not. Okay,
so keep that in mind. It's consumers think it's that
you can just buy this information in a vending machine
by going to Google. Google doesn't give you the full story. Okay.

(19:42):
October is a national financial planning month. What is the
purpose of a financial plan? A financial plan should help
you make the best use of your money and achieve
long term financial goals such as investments, sending your children
to college, buying a bigger home, leave, having a legacy,
or enjoying a comfortable retirement. Take the opportunity to develop

(20:06):
a financial plan that you can check your round to
be on top of your money situation heading into the
holiday season. Financial Planning Month reminds you to keep our
spending in check and prepare our budgets. Don't rely on
credit cards to do the Christmas shopping for you. A

(20:29):
big key indicator there is I saw a market analyst
report today. He's in London actually, and he showed consumer
buying over the last five years. It goes back to
like twenty twenty and one of their holdings is Visa

(20:50):
and the spike in the US economy for visa debt
between July June and now it's just staggering. So Americans
kind of quit buying stuff in May June, then in
July going into August, kids are going back to school,

(21:10):
it like spiked and they're kind of worried about what
outstanding debt's going to be in about six months, so
keep that in mind. October is also Medicare season. Lots
of changes are on the horizon for twenty twenty six.
Part B deductible and premium amounts are gonna go up,

(21:30):
that's guaranteed. I just don't know what they are. I
haven't heard the new amounts yet, but they're usually announced
in early to mid November. Currently, on Part B you're
paying one to eighty five a month now, but understand
that probably will go up in twenty six. Normally one
of my clients tells me what the new premium amounts

(21:52):
are before I'm actually officially notified as an advisor. Rumors
of some parts Medicare advantage plans terminating in areas I've
been hearing those costs are going up on standalone prescription
drug plans. I saw one from well Mark that basically
doubled the premium this year is like fifty two a month,

(22:15):
and it's going to be like one oh three in January.
Commissions to agent brokers are not being paid on drug
plans and some MAAPD plans. Now. I hope that changes
come first of the year, but please keep this in mind.
This is very tricky for brokers to weigh and help clients,

(22:36):
especially if they're trying to help clients on products they're
not being compensated for. I'll know more in about a
week if what products will still be compensated which ones won't.
But yeah, right now, that's kind of a dicey situation.
Changes are inevitable, and I always get questions about irma

(22:58):
ire mma, MAA, And I'll have more information on the
Medicare subject matter in my next couple of shows for
October and November. Don't forget. I give monthly virtual meetings
regarding Medicare for two different companies every month, and one
meeting I will cover Medicare supplement plans with a standalone

(23:19):
drug plan. That meeting sponsored by well Mark My so far,
my upcoming dates are going to be for meetings are
going to be October ninth and October fourteenth. At this date,
I don't have additional dates. I think I will by

(23:39):
next week. Companies have been slow to give us what
the new pricings are, and I may have a new
product or company be a sponsor, so I'll know more
about that probably next week. United Healthcare as a sponsor.
For the other virtual meeting that I do, I focus

(23:59):
on Medicare advantage plans known as Medicare Parts C, and
then I cover the benefits of that platform. Know on
Medicare advantage plans that copays max out of pockets and
or if you have a deductible those will probably go
up for twenty twenty six. I'll know more about pricing
next week and I'll probably talk about whatever the new

(24:24):
hottest plan for twenty twenty six is subject to what
your prescriptions are, because that's usually a big factor that
gets thrown in there. You can call our office at
five six three three three two two two zero zero
for the zoom meeting codes and additional dates and times.
You're also welcome to email me at Craig at Craigshillig

(24:46):
dot com and that's my name, c r ai G
at c r ai G S C h I l
l ig dot com and I be happy to send
you the virtual zoom link meeting codes and additional dates
and times. This is Craig Chillig with Safe Money.