July 4, 2025 • 6 mins
“Hey Mike, can you explain what you mean by “self-insuring?” Discover what it means to “self-insure” and when it may make sense.
Text your questions to 913-363-1234.
Request Your Wealth Analysis by going to www.yourwealthanalysis.com
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mike (00:05):
Welcome to How to Retire On Time, a show that answers
your retirement questions. Myname is Mike Decker. I'm the
founder of Kedric Wealth. Andjoining me in the studio today
is my colleague, mister DavidFranson. David, thanks for being
here.
David (00:15):
Glad to be here. We're gonna be
Mike (00:16):
taking your questions. Text them right now to (913)
363-1234. Again, that number,(913) 363-1234. Let's begin.
David (00:26):
Hey, Mike. Can you explain what you mean by self
insuring?
Mike (00:30):
Yeah. So self insuring is basically saying that you have
enough assets to be able to takecare of the insurance risk that
others might purchase. So as ageneral rule, insurance is not
an investment. Have I said thatbefore? Have I said that enough?
David (00:46):
Sounds semi familiar. Sure.
Mike (00:47):
I I wanna buy a billboard. It just that's all it says.
Insurance is not an investment.Yes. There's nothing on there
other than insurance is not aninvestment.
And then we'll, like, put somearbitrary w w w dot some some
long domain just for fun. Butthat's the truth. Okay? So let
me use long term care as that'smost often what I talk about
(01:10):
when it comes to self insure. Solong term care is transferring
the risk of needing long termcare assistance early in
retirement.
It's not buying long term carecosts for twenty to thirty years
from now. It is you buy longterm care, so you'll put in
50,000, 100,000, whatever it is,into a long term care policy so
(01:32):
that if you were to need longterm care for the first ten,
twelve years of retirement, thatit doesn't destroy your
portfolio. K. The problem,though, is if you need long term
care, you probably can't affordit. And if you can afford it,
you probably don't need it.
Because dollar for dollar, ifyou just put the same dollar
amount into the market, let'ssay a general $60.40 split stock
(01:56):
bond fund portfolio, veryboring. Maybe it's averaging six
to 8% growth year over yearbecause we're reasonable about
those expectations because weknow flat markets exist because
we know the market cycle. Thatdollar for dollar after twelve,
thirteen, fourteen years or so,you might have more money to
work with to pay for thosemedical expenses than you would
(02:20):
a long term care policy, becauseit's not an investment. You're
taking basically the risk ofearly long term care needs and
kicking off to an insurancecompany who knows that in this
pool, very few people willactually need the benefit, and
the rest of them, it won't bethat much of an ROI, return on
investment, because it's not aninvestment. Now you'll still get
the benefit, and if you don'tneed the benefit, let's say you
(02:42):
peacefully die in your home, younever need a long term care
insurance, then great.
You'll get the originalinvestment back, but it isn't
worth nearly as much because itdidn't really grow, and
inflation eroded it. So, youknow, you put in a 100,000 in
today's dollars in the future,it might be worth 25,000. So or
50,000. Depends on inflation. Soself insured just basically
means you have enough in yourinvestable assets that if you
(03:05):
were to get sick, you can justspend down those assets a little
bit faster knowing that you'rekind of on your way out.
You've got not twenty yearsleft, but three to five years
left, and that's okay. But selfinsured is people who say, I'm
willing to take on the insurancerisk, because when I do an
apples to apples comparison, Iunderstand that maybe the self
insure option is something I'mmore comfortable taking. There's
(03:27):
no such thing as a risklessretirement. You've just gotta
understand which risks are youwilling to take, and which risks
are you not willing to take, andare you okay paying the premiums
or the additional whatever costsassociated with not taking that
risk? And it might be insurancepremiums as the cost.
It might be an opportunity cost.So to hedge against market risk,
(03:48):
you go to, like, CDs ortreasuries or these other
markets. But if the markets goup, you didn't make as much
money. That's opportunity risk.So you can't have your cake and
eat it too.
You've gotta understand whatyou're giving up to receive
something. It's all aboutbalance. And the problem is a
lot of these pitches, a lot ofthese dinner seminars, a lot of
these workshops, these freeworkshops are intended to sell
(04:10):
you something, and they make avery convincing argument to one
specific outcome, which is whatthey what they get paid on. I I
have no prob I'm licensed tosell long term care insurance.
I've never actually sold apolicy successfully because
everyone that's come to me andasked for the policy didn't
qualify for insurance.
They got denied because there'sa reason why they wanted the
policy. They knew they weregonna get sick. They knew they
(04:32):
had health conditions. And foreveryone that was healthy,
they're like, I I don't thinkI'm gonna get sick, and I have
enough assets to pay for it if Ido, so I'm good with the self
insure option. As in, you're notan insurance company.
You have enough assets to takecare of the various potential
needs.
David (04:50):
And those needs would be like, I need to be in a memory
care
Mike (04:53):
Hospice. Yeah. You've got in home care. I mean, there's a
number of different versions ofwhat it could be. But it's just
the flexibility of paying foryour needs, how you wanna pay
for them.
Mhmm. I mean, my grandma, shenever went to hospice. She just
had someone that came in everynow and then to help out. It
worked. She didn't need longterm care for that, though.
She had assets to pay for it.
David (05:13):
Assets to pay for those people to come in and help her,
like, whatever, clean the houseor go shopping or whatever?
Yeah. Okay.
Mike (05:19):
And then we also helped out. Mean, it it was a family
conversation of what is rightfor everyone. Yeah. But what you
don't wanna do is you don'twanna make an emotional decision
because of fear based argumentof, oh, well, this is this is
what everyone does. No.
It's not. Everyone doessomething different. What is
right for you? That is theultimate question. And when I
say that's the ultimatequestion, what I really mean is
what is right for you as aprocess to figure it out?
(05:41):
You don't probably know what isright for you yet. What is right
for you is to explore the risksyou may or may not know exist,
so that you can say, I'm willingto do this. I'm not willing to
do that, so that you can figureout the right plan, the right
strategy, and the rightportfolio for you. That is the
goal. That's all the time we'vegot for the show today.
If you enjoyed the show,consider subscribing to it
(06:03):
wherever you get your podcast.Discover if your portfolio is
built to weather flat marketcycles or if you're missing tax
minimization opportunities thatyou may not even know exist.
Explore strategies that may beable to help you lower your
overall risk while potentiallyincreasing your overall growth
and lifestyle flexibility. Thisis not your ordinary financial
(06:25):
analysis. Learn more about YourWealth Analysis and what it
could do for you regardless ofyour age, asset, or target
retirement date, go towww.yourwealthanalysis.com today
to learn more and get started.
Welcome to How to Retire On Time, a show that answers
your retirement questions. Myname is Mike Decker. I'm the
founder of Kedric Wealth. Andjoining me in the studio today
is my colleague, mister DavidFranson. David, thanks for being
here.
David (00:15):
Glad to be here. We're gonna be
Mike (00:16):
taking your questions. Text them right now to (913)
363-1234. Again, that number,(913) 363-1234. Let's begin.
David (00:26):
Hey, Mike. Can you explain what you mean by self
insuring?
Mike (00:30):
Yeah. So self insuring is basically saying that you have
enough assets to be able to takecare of the insurance risk that
others might purchase. So as ageneral rule, insurance is not
an investment. Have I said thatbefore? Have I said that enough?
David (00:46):
Sounds semi familiar. Sure.
Mike (00:47):
I I wanna buy a billboard. It just that's all it says.
Insurance is not an investment.Yes. There's nothing on there
other than insurance is not aninvestment.
And then we'll, like, put somearbitrary w w w dot some some
long domain just for fun. Butthat's the truth. Okay? So let
me use long term care as that'smost often what I talk about
(01:10):
when it comes to self insure. Solong term care is transferring
the risk of needing long termcare assistance early in
retirement.
It's not buying long term carecosts for twenty to thirty years
from now. It is you buy longterm care, so you'll put in
50,000, 100,000, whatever it is,into a long term care policy so
(01:32):
that if you were to need longterm care for the first ten,
twelve years of retirement, thatit doesn't destroy your
portfolio. K. The problem,though, is if you need long term
care, you probably can't affordit. And if you can afford it,
you probably don't need it.
Because dollar for dollar, ifyou just put the same dollar
amount into the market, let'ssay a general $60.40 split stock
(01:56):
bond fund portfolio, veryboring. Maybe it's averaging six
to 8% growth year over yearbecause we're reasonable about
those expectations because weknow flat markets exist because
we know the market cycle. Thatdollar for dollar after twelve,
thirteen, fourteen years or so,you might have more money to
work with to pay for thosemedical expenses than you would
(02:20):
a long term care policy, becauseit's not an investment. You're
taking basically the risk ofearly long term care needs and
kicking off to an insurancecompany who knows that in this
pool, very few people willactually need the benefit, and
the rest of them, it won't bethat much of an ROI, return on
investment, because it's not aninvestment. Now you'll still get
the benefit, and if you don'tneed the benefit, let's say you
(02:42):
peacefully die in your home, younever need a long term care
insurance, then great.
You'll get the originalinvestment back, but it isn't
worth nearly as much because itdidn't really grow, and
inflation eroded it. So, youknow, you put in a 100,000 in
today's dollars in the future,it might be worth 25,000. So or
50,000. Depends on inflation. Soself insured just basically
means you have enough in yourinvestable assets that if you
(03:05):
were to get sick, you can justspend down those assets a little
bit faster knowing that you'rekind of on your way out.
You've got not twenty yearsleft, but three to five years
left, and that's okay. But selfinsured is people who say, I'm
willing to take on the insurancerisk, because when I do an
apples to apples comparison, Iunderstand that maybe the self
insure option is something I'mmore comfortable taking. There's
(03:27):
no such thing as a risklessretirement. You've just gotta
understand which risks are youwilling to take, and which risks
are you not willing to take, andare you okay paying the premiums
or the additional whatever costsassociated with not taking that
risk? And it might be insurancepremiums as the cost.
It might be an opportunity cost.So to hedge against market risk,
(03:48):
you go to, like, CDs ortreasuries or these other
markets. But if the markets goup, you didn't make as much
money. That's opportunity risk.So you can't have your cake and
eat it too.
You've gotta understand whatyou're giving up to receive
something. It's all aboutbalance. And the problem is a
lot of these pitches, a lot ofthese dinner seminars, a lot of
these workshops, these freeworkshops are intended to sell
(04:10):
you something, and they make avery convincing argument to one
specific outcome, which is whatthey what they get paid on. I I
have no prob I'm licensed tosell long term care insurance.
I've never actually sold apolicy successfully because
everyone that's come to me andasked for the policy didn't
qualify for insurance.
They got denied because there'sa reason why they wanted the
policy. They knew they weregonna get sick. They knew they
(04:32):
had health conditions. And foreveryone that was healthy,
they're like, I I don't thinkI'm gonna get sick, and I have
enough assets to pay for it if Ido, so I'm good with the self
insure option. As in, you're notan insurance company.
You have enough assets to takecare of the various potential
needs.
David (04:50):
And those needs would be like, I need to be in a memory
care
Mike (04:53):
Hospice. Yeah. You've got in home care. I mean, there's a
number of different versions ofwhat it could be. But it's just
the flexibility of paying foryour needs, how you wanna pay
for them.
Mhmm. I mean, my grandma, shenever went to hospice. She just
had someone that came in everynow and then to help out. It
worked. She didn't need longterm care for that, though.
She had assets to pay for it.
David (05:13):
Assets to pay for those people to come in and help her,
like, whatever, clean the houseor go shopping or whatever?
Yeah. Okay.
Mike (05:19):
And then we also helped out. Mean, it it was a family
conversation of what is rightfor everyone. Yeah. But what you
don't wanna do is you don'twanna make an emotional decision
because of fear based argumentof, oh, well, this is this is
what everyone does. No.
It's not. Everyone doessomething different. What is
right for you? That is theultimate question. And when I
say that's the ultimatequestion, what I really mean is
what is right for you as aprocess to figure it out?
(05:41):
You don't probably know what isright for you yet. What is right
for you is to explore the risksyou may or may not know exist,
so that you can say, I'm willingto do this. I'm not willing to
do that, so that you can figureout the right plan, the right
strategy, and the rightportfolio for you. That is the
goal. That's all the time we'vegot for the show today.
If you enjoyed the show,consider subscribing to it
(06:03):
wherever you get your podcast.Discover if your portfolio is
built to weather flat marketcycles or if you're missing tax
minimization opportunities thatyou may not even know exist.
Explore strategies that may beable to help you lower your
overall risk while potentiallyincreasing your overall growth
and lifestyle flexibility. Thisis not your ordinary financial
(06:25):
analysis. Learn more about YourWealth Analysis and what it
could do for you regardless ofyour age, asset, or target
retirement date, go towww.yourwealthanalysis.com today
to learn more and get started.
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