Money Moves: Life Insurance: Past, Present, and Your Future

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Nobody brags at a dinner party about buying life insurance, but when life takes an unexpected turn, it's the safety net your family will be grateful you had in place. In this illuminating conversation, host Steven Killfoil and financial expert John Ezell strip away the complexity and confusion surrounding life insurance to reveal why it deserves your attention.

The journey begins with a fascinating historical perspective—from ancient Roman burial clubs to London merchants protecting ship crews in the 1600s—showing how life insurance evolved from covering funeral costs to providing comprehensive family protection. Ezell masterfully breaks down the four main types of policies using accessible analogies: term life is like renting an apartment (affordable, temporary), whole life resembles buying a house (costs more but permanent), while universal and variable policies offer customization with varying levels of risk.

Most revealing is the discussion around timing—how purchasing in your 20s or 30s can save you from premiums that might triple by your 50s or 60s, if you can qualify at all. The hosts dismantle common myths, emphasizing that life insurance isn't about you—it's about who you leave behind. As Ezell brilliantly summarizes, it's not a "get-rich product" but a "keep-from-going-broke product" for your family.

Whether you're single, married with children, or supporting aging parents, this episode provides the clarity needed to make an informed decision about one of the most loving financial choices available. Take control of your family's financial future today by understanding the protection options that fit your unique circumstances.

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Episode Transcript

Steven Killfoil (00:28):
Crossroads Podcast welcomes you to Money
Moves for those who want to bein the know.
Good morning Crossroads.
Welcome back to Money Moves.

(00:49):
I'm your host, stephen Kilfoyle, and today's topic well, it
might make some people squirm alittle bit we're talking about
life insurance.
Now, don't hit skip, becausewhile it may sound boring, it
can actually be one of the mostimportant financial decisions

(01:10):
you ever make.
To help us untangle the history, the different types and
whether you even need it, I'mjoined by my friend and
financial expert, john Ezell.
And financial expert John Ezell.
John, welcome to the show.

John Ezell (01:26):
Thanks, steve, happy to be here.
You're right, life insuranceisn't the sexiest topic.
Nobody brags at a dinner party.
Hey, guess what, steve?
I just bought a 20-year termpolicy.

Steven Killfoil (01:41):
Yeah, that's not going to impress anyone, but
when life hits unexpectedly,it's the safety net your family
will be thankful for, absolutelyOkay.
So, john, let's roll back theclock.
When did life insuranceactually start?

John Ezell (02:01):
That's a great question, as always, Steve.
It's rather ancient and startedin the time of Rome, and
soldiers had what were calledburial clubs.

(02:23):
They'd all contribute to a fundso if any one of them died the
family had money for a properburial.

Steven Killfoil (02:26):
So even back then people knew funerals were
expensive right?

John Ezell (02:31):
Exactly, you know.
If you fast forward then to the1600s London, merchants started
pooling money to protectfamilies of ship owners who died
at sea and their crews.
By the 1700s, formal companiesin Europe and US began offering

(02:55):
life insurance contracts.
In fact, most people have heardthe term Lloyd's of London and
that was a variety of coverages,but that's just a point of
London.
And that was a variety ofcoverages, but that's just a
point of reference.

Steven Killfoil (03:07):
So those guys were actually the first
organized.
Not that the Romans weren'torganized, they were, but the
first modern medieval lifeinsurance company.

John Ezell (03:21):
Exactly right

Steven Killfoil (03:22):
Wow! So it started as make sure they can
bury you and grew into make sureyour family can eat after
you're gone,

John Ezell (03:33):
Absolutely.
So, it shifted from funeralcosts to income protection and
over time, products have evolvedand got more complex, sometimes
too complex.

Steven Killfoil (03:48):
Yeah, which is why we're here, so listeners
don't get lost in the jargon.
All right, john, hit us withthe big four Term whole life,
universal and variable.

John Ezell (04:05):
You know on the surface.
Each of these certainly need tobe explained In a follow-up
later, after we've exposed these.
As far as what they are, theactual name will make more sense
.
So, for example, in the case ofterm life insurance that's the

(04:27):
first one we're going to talkabout this is the most
straightforward.
You decide what the time frameis that you're trying to protect
, in other words, from an incomereplacement standpoint, and
it's either 10 years, 20 yearsor 30 years.
There might be a 15-yearprogram, but you get the idea.

(04:48):
If you die in that window oftime, your beneficiaries, almost
always your family, get thepayout.
If you outlive that time framethat you've selected, the policy
ends.
Now it's inexpensive in termsof cost, but it's great for

(05:12):
young families and the obviousreason for that would be low
cost and you're trying toprotect the income of one parent
or both if they're working, forthe future benefit of the
dependents.

Steven Killfoil (05:31):
Absolutely.

John Ezell (05:32):
So the second one is whole life insurance, and this
lasts guess how long.

Steven Killfoil (05:39):
Your whole life .
Premiums are higher than terminsurance, but it builds
something called cash value,which is not applicable in term

(06:08):
and basically part of yourpayment goes into be until the
policy is paid in full.
The third one is going to beuniversal life insurance.
Think of it as whole life, withflexibility.
Now imagine it's more universal, right Multiple areas it covers

(06:36):
.
You can adjust your premiums orthe death benefit as life
changes.
As life changes, it also buildscash value.
Sometimes it's linked tointerest rates.
The fourth one, and this is themost uniquely different of all
of the four, is variable lifeinsurance.

(06:59):
This combines insurance withinvestments.
Your cash value goes into, forexample, the equities or
financial markets.
Now, that might be a stock, itmight be a bond, it might be
mutual funds, it could be a lotof things.
If the financial markets dowell, you gain a lot, and if the

(07:29):
financial markets don't do well, well, your policy can shrink
in value.
Okay, so let's put it this way Term life is
like renting an apartment cheapand temporary.
Whole life is like buying ahouse.

(07:49):
You pay more, but you own itforever.

John Ezell (07:50):
It's actually a perfect analogy.
Steve and universal andvariable are like those, I don't
know, custom homes maybe, um,where you can move walls around.
Put in some other riskyupgrades.

Steven Killfoil (08:07):
So basically know what you're getting into
before you sign the papers.

John Ezell (08:14):
Absolutely.
In fact, I would remind yourlisteners that whenever a policy
is issued, they have somethingthat's built into the agreement
called a 30-day free look.
So let's say you sign thepapers at a later date, before

(08:35):
the 30 days is over.
You look over the documentsthat you maybe didn't look at
enough in detail or maybe youdid and there was something you
couldn't remember that seemedodd.
You can actually cancel withinthe first 30 days by exercising

(08:56):
that free look period.

(10:39):
Another good question.
So the younger a person is andthe healthier they are, the less
expensive the premiums, inother words the costs to
maintain the policy.
So ideally people should belooking at policies in their 20s
and 30s, and especially oncethey become married or incur

(11:04):
debt through buying a house,let's say, or maybe they're
still renting an apartment butthey have kids.
Again, you're trying to replaceincome.

Steven Killfoil (11:15):
Right.
So in other words, don't waituntil your hair is gray and your
knees pop when you stand up,exactly.

John Ezell (11:25):
And in your 50s and 60s.
It doesn't mean that youshouldn't initiate coverage if
you haven't yet.
However, the cost can be asmuch as three times more.
So that's the idea aboutstarting earlier, or it's
possible, steve.
Some people don't qualify atall because they've had health

(11:47):
issues as they got older andtherefore they can't get insured
.

Steven Killfoil (11:54):
Right Now some listeners are probably thinking
I'm single, no kids, do I evenneed life insurance?
Good point.

John Ezell (12:05):
If nobody depends on your income or replacing your
income should something happento you, then you may not need
much.
You might only need somethingsmall so that it will actually
cover the funeral expenses orcosts, so that your loved ones
aren't stuck with a big billcosts, so that your loved ones

(12:27):
aren't stuck with a big bill.
Hmm.
Yeah, but you know, if you havedependents a spouse, kids, even
aging parents- life insurance iscrucial, right Absolutely,
because it ensures your familygets to keep the house, pay the
bills and stay afloat house, paythe bills and stay afloat, so

(12:52):
life insurance isn't reallyabout you.
It's about who you leave behind.
Absolutely, it's one of themost loving financial decisions
someone can make during the timethat they have the ability to
make it while they're on thisearth.

Steven Killfoil (13:06):
So it's definitely not a
get-rich-product.
It's more of akeep-from-going-broke product
for your family.

John Ezell (13:14):
That's a great way to put it.

Steven Killfoil (13:15):
Oh, wow.
Well, hey, I did have.
I finally got one in an emailquestion and it, ironically, is
about life insurance.
It's from a gentleman namedI'll just say jp, and he wrote
into the show and he says dearsteven, my wife and I both have

(13:40):
life policies that are attachedto annuities with a company and,
and the death benefit for mineis $150,000 and $100,000 for my
wife.
We've been told that it'searning 12% this last year.
And his question is do youthink we have a good policy?

John Ezell (14:04):
That's a really good question.
Without knowing more details, Iwant to give you some general
statements though.
So first of all, this return12%, let's assume that's correct
.
It's possible if it's investedin the financial markets.
They've done well, they've donewell.

(14:33):
However, that doesn'tnecessarily mean that the return
to you, as the policy owner,was 12%.
Here's why.
There's a cost for having theinsurance.
It might be 1%, 2%, 5%, 8%depends on the mortality expense
associated with the policy anda whole bunch of other numbers
that aren't always disclosed,but they certainly exist.

(14:57):
So I don't want to say theydidn't earn 12%.
I would say that it's likelythat there are some other
expenses that haven't been takeninto account when that number
was mentioned.

Steven Killfoil (15:14):
Okay.
So if JP wanted you to look atthat policy a little more
detailed, how could he reach outto you?

John Ezell (15:26):
He could.
If he was comfortable withemailing, he could email the
declarations page, the quarterlysummary that he got, because
that sort of a strategy is goingto have a quarterly statement
at a minimum statement.

(15:52):
At a minimum, a true lifeinsurance product by itself has
an annual statement.
So the way he could do that ishe could email me.
Or if he's uncomfortable withemailing and he would rather fax
, I can provide my fax number aswell.

Steven Killfoil (16:06):
Okay, well, I'm pretty sure he's listening,
because I got this just in themail the other day, so why don't
you give him your email and faxand your phone number direct?
And JP, you're listening outthere.
This is your chance to dialdown and get more detailed
information on that that wereally cannot address right now

(16:28):
on the show.

John Ezell (16:29):
Yeah, so tell, and it's not because we don't want
to, but we have limitedinformation right so the I'll
start with the fax number,that's going to be
1-888-712-6003.
And I'm going to repeat thatagain in a minute.
The email address is john withan H, j-o-h-n.

(16:53):
At.
And then I'll give you someletters C as in Charlie, p, as
in Papa R, as in Romeo W, as inWhiskey M, as in mikecom.
So fax number again1-888-712-6003.

(17:15):
Or you can email me at theaddress, john with an H at
cprwmcom.

Steven Killfoil (17:25):
Great, that's perfect.
All right, jp, if you heardthat the ball's in your court
now, I'll let you reach out tothem.
Well, hey, before we wrap up,let's bust a few myths.
Okay, true or false.
Life insurance is only for oldpeople.

John Ezell (17:47):
That's false, Steve.
It's cheaper and smarter to buyit when you're young and retain
it through the time where youare aging.

Steven Killfoil (17:58):
Okay Now, if you're healthy, you don't need
it.

John Ezell (18:04):
Well, that's false too, because if you're healthy,
you're still going to die oneday, and the insurance is really
about a what-if scenario,because none of us know, when
we're going to breathe that lastbreath, what's going to be
happening that will cause us toend our life on this planet.

(18:24):
And so You're healthy now, butagain, the insurance is for the
what-if cases because it'sunpredictable.

Steven Killfoil (18:33):
Okay, and myth number three term life is a
waste because it doesn't buildcash value.

John Ezell (18:42):
I would say that's also false, and the reason is
because life insurance is notmeant to be an investment.
That was not its origin.
Today, in the marketplace, youmight hear people talk about it
as an investment, however,technically it's not.
It's protection, and mostpeople that is what they need

(19:05):
protection.

Steven Killfoil (19:07):
All right, Love it so, John.
The final checklist for ourlisteners.

John Ezell (19:14):
I think the first thing I would say is you need to
know your why.
In other words, why do youthink you need life insurance
coverage or a death benefit at afuture date?
Death benefit at a future date.

(19:34):
Second point would be startyoung if possible.
The third would be to keep itsimple.

Steven Killfoil (19:44):
Term life fits most families and review
coverage as life changes,because things always do.
Okay, man, that's so very true.
Thank you so much, John, andlisteners, don't forget to
follow, rate and share MoneyMoves.
Until next time, I'm StephenKilfoyle.

(20:06):
Stay smart, stay covered andwe'll see you soon.
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(24:18):
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