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welcome to the best interest podcast
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where we believe Benjamin Franklin's
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advice that an investment in knowledge
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pays the best interest both in finances
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and in your life every episode teaches
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you personal finance and investing in
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simple terms now here's your host Jesse
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Kramer hey guys what's up welcome to
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episode 50 of the best interest podcast
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my name is Jesse Kramer it's kind of
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funny we're bombarded all the time with
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insurance advertising right every day
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just ask uh you know Jake from State
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Farm Insurance is an important personal
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finance topic it's not one that I tend
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to spend much time on and maybe that's
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just because I'm not at a point in my
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life where I've had to buy that much
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insurance yet I've bought some but then
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I thought you know what what a great
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topic to cover answer some questions so
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let's give a quick primer on insurance
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today I'll tell you some stories I'll
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give you some of my opinions
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and then we're going to bring in an
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outside expert Brock buckles who owns BC
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brokerage to give you some of his
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Insider knowledge so first and foremost
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I'm going to quote Ben Carlson here
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great writer if you're a fan of the best
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interest odds are you've seen me talk
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about Ben Carlson before and Ben has a
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good quote about insurance that I 100%
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agree with the idea is quote Insurance
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protects wealth it doesn't grow wealth
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end quote so let's break that down the
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first part Insurance protects wealth
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right the fundamental idea behind
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insurance is that it protects you from
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Financial downfall that you couldn't
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cover yourself with the assets that you
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have okay so for example could your
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current assets cover a 50 or
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$100,000 medical bill and only the
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answer for me is no and for that reason
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it makes sense for me to have
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catastrophic medical insurance that can
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cover a bill like that if my house burns
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down could my current assets cover the
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whatever $200,000 replacement cost again
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the answer is no so in that case
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Insurance protects my wealth by
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providing me the funds needed to replace
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or to fix whatever problem life has
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thrown my way of course there's a
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tradeoff there right insurance has a
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cost insurance has usually monthly
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premiums something like that maybe an
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annual premium this bill that you have
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to pay where you're trading some money
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right now for protection against some
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big risk but there are some cases where
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doesn't make sense to have certain types
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of insurance so I'll tell you a quick
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personal anecdote Kelly and I recently
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cancelled our dog sades pet insurance
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now some of you might not even know that
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pet insurance exists it does and for a
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while we were paying about $45 a month
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for pet insurance that basically would
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cover any sort of vet medical bill
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except for there was a $1,000 deductible
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so if you do the math we had to pay
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roughly 600 bucks a year in premiums and
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then we'd have to pay the first ,000 of
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medical bills and after those first,
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Insurance could kick in so I kind of sat
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there and I asked myself what kind of
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risk am I protecting against here if
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let's say STI had something bad happened
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and she needed a $33,000
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surgery I could cover that with my own
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assets I wouldn't necessarily like it
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but I'm not sure it's worth spending
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$600 a year to protect myself from a
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risk that I could pay for anyway so
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that's the kind of calculus that goes
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into Insurance math and granted I just
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read an article because I was curious
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some of you pet owners will find this
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interesting I'm not sure everyone will
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but I thought to myself what if stie had
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something really bad happened to her
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what if it was a $10,000 surgery I hate
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to say it but there does come a point
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with pets where even though you love
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them and they might consider them part
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of the family you have to ask yourself
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doesn't make sense to pay for this at
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all right okay that's gets into a
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philosophical conversation there and
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maybe if you're the kind of person who
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would pay anything to keep your pet
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alive maybe it does make sense for you
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to have pet insurance because you might
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be protecting yourself against a 105
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$20,000 stay at the Vets office but if
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you cut the line a little bit lower then
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pet insurance might not make sense for
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you again simply because those expenses
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are things that you might be able to
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cover out of pocket cars is another good
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one I know some people who they have the
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car insurance that protects other people
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on the road right Most states if not all
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states I think they mandate that you
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have insurance that can protect other
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drivers in case you're at fault and you
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need to pay for someone else's car
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replacement or you need to pay for
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someone else's medical bills from an
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accident that you costed but you don't
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have to have insurance on your own car
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for your own car's replacement value and
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I know many people out there they don't
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have that kind of insurance cuz they say
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you know what if I get in a car crash
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and I need to replace my car just going
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to do it right I'm just going to Pony up
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and pay for a new car that way so that's
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how Insurance protects your wealth but
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then the second part going back to Ben
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Carlson's quote is that insurance
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doesn't grow your wealth and some of you
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actually might not understand where that
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part of the quote even comes from like
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why is that necessary to say of course
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it doesn't grow your wealth all the
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examples that Jess's talked about right
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here involve paying premiums which are
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expensive and they only help you if
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something bad happens to your life how
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could Insurance ever grow your wealth
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and the answer is there are some
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insurance products out there that we
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might get into later with Brock one
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example is is a whole life insurance now
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this is an insurance product life
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insurance is a great one we haven't
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talked about that yet so let me talk
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quickly about life insurance and then
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I'll talk about whole life insurance
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life insurance of course protects your
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loved ones in case you die that's what
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it's there for a good example might be a
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young parent with a mortgage on a home
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and if that parent were to Die the
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question is how much money would the
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family need today to replace that
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parent's future income and another very
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smart question to ask is how much money
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would the family need today to perhaps
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pay off the mortgage on the house right
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to pay off the debts that that the
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family has so term life insurance is a
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life insurance policy that all that does
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all it does is you pay in a monthly
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premium and it pays out in the event
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that you die simple very simple and
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straightforward but then there's a
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product called whole life insurance and
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the way whole life insurance works is
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yes it has that feature where there's a
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payout if you die but what whole life
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insurance does it says you know what
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we're going to take some of your monthly
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premium and we're actually going to
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invest that on your behalf so that by
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the time you're older let's say you pay
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insurance premiums from the time you're
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25 till the time you're 60 and you live
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that whole time you never die so you've
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paid all this money in but you've never
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actually used the insurance agreed and
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by the time you're 60 you might look
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yourself in the mirror and say you know
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what I don't really need life insurance
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anymore my kids are out of the house
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college has all been paid for my wife
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and I have this really comfortable
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retirement Nest Egg I don't really need
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life insurance I don't need to protect
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myself against that risk what whole life
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insurance has done is they said great at
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that point in your life you can actually
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withdraw money from your insurance
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policy because we've been investing it
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on your behalf and some of you right now
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are listening and saying to yourselves
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that sounds pretty good however the math
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behind the scenes tells a much different
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story whole life insurance charges you a
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very high monthly premium and the
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investing side of the product isn't that
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good you'd be much better off if you
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bought a term life insurance policy for
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much much cheaper and then simply
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invested the difference in monthly
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premiums off on your own you don't need
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a whole insurance policy to do your
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investing for you you should separate
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your insurance and your investing
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function
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insurance through a cheap Term Policy
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and then investing somewhere else
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through say a lowcost Index Fund or a
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diversified
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portfolio Okay so that's why getting
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back to Ben Carlson's quote he says
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Insurance protects your wealth but it
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doesn't grow your wealth right what he's
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saying there is that products like whole
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life insurance or universal life
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insurance it goes by a few other names
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annuities are a version of an insurance
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uh investment product these products all
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have
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substandard investment sides to them and
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therefore they don't grow your wealth in
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an effective manner so some of you
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listening might own whole life insurance
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or annuities I don't mean to offend you
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some of you might even sell whole life
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insurance or annuities I don't mean to
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offend you either I'm just here to
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explain the math and the math is very
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straightforward and it says that these
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insurance policies that claim to have
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Investments tagged on to them they're
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suboptimal okay so that's a bit of a
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Spiel on insurance now there are many
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different types of insurance a lot of
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them you've heard of some of them we've
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talked about today some of the more
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important ones life insurance right if
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you were to die and you were to leave
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your loved ones in Lurch you might need
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life insurance you might need insurance
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to replace your salary for a number of
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years you might need insurance to pay
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off your home like I already mentioned
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now you can do a lot of this math on
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your own own you can do some rough
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estimating on your own if you have a
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trusted adviser of some sort it could be
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an accountant it could be a cfp
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financial planner or a wealth manager
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financial adviser it could be the
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insurance salesperson themselves if you
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trust them ask them through their
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opinion on how big of a policy you need
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it's important that you don't undercover
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yourself you need to have a big enough
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policy to actually cover your Financial
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Risk but yeah lean on some experts in
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your life for that auto insurance very
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straightforward like I said before you
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can buy insurance you need insurance
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most likely to protect other people on
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the road right because that's a pretty
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big risk and and you need to many states
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say that you need to protect other
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people on the road through your
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insurance policy and you might choose to
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protect yourself as well homeowners
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insurance renters insurance in my
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opinion a great idea renters insurance
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sometimes it's mandatory sometimes it's
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not meaning legally that is and whether
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you actually need it from a mathematical
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point of view it kind of depends on your
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asset base I could see a situation where
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a $110,000 renters insurance policy
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doesn't really make sense because you
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have $100,000 in cash in your bank
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account and you can just cover that
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expense if something bad were to happen
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I get it health insurance pretty much
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mandatory very few people have the kind
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of asset base where it makes sense for
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them to self- insure and you'll hear
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that term I don't know if I've used that
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term yet today I should have used it by
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now self-insuring is this idea of just
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saying listen I've got a lot of money in
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the bank I don't need outside Insurance
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my own nest egg can cover me for that
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Financial Risk the next two one is
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long-term disability insurance now
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that's an interesting one that I haven't
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really dug into too much I think the
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need for long-term disability insurance
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which again it protects you against the
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risk of not dying but getting in some
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sort of terrible accident where you are
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disabled long term and I really think
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it's a function of who your dependent
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are you know if you have young children
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if you need to pay off a mortgage if if
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these things are going on it might make
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sense for you to have long-term
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disability insurance the next one
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long-term care insurance this one
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applies mainly to older listeners people
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who are approaching a age where they ask
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themselves am I going to go to a nursing
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home who's going to pay for that how do
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I pay for that it's interesting I'm not
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an expert on long-term care insurance
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but of the reading that I've done my
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understanding is that it can be
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difficult to actually enact your
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long-term care policy meaning you can
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own the policy you can pay your monthly
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premiums and then when time comes for an
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owner an insurance policy owner to say
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hey I need $115,000 a month for this
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nursing home it doesn't always work out
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and that is kind of one of the scary
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things in my opinion about all Insurance
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in general is this idea that the
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insurance company they do have a
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financial incentive to very carefully
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understand whether your claim is
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legitimate right I'm paying this
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insurance company $100 a month for
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homeowners insurance let's say and then
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when the time comes when my home burns
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down and I need $300,000 from them they
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have a really strong incentive to say
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wait a second Jesse let's really make
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sure that that your house did burn down
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let's make sure that it truly was an
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accident let's make sure that the value
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of the home was indeed $300,000 and
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that's what we should pay you there's
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often some friction when it comes time
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to make a claim and get paid on your
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insurance policy in general I mean
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that's one reason why sometimes the
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cheapest Insurance isn't the best you
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should try to do some due diligence do
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some research and read up on if your
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particular insurance provider has any
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sort of history of making it difficult
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for its customers to actually make
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claims when needed okay little little
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aside there mainly because for long-term
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care insurance I have heard some horror
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stories from some clients of long-term
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care insurance essentially not working
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in the way that they were led to believe
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it worked I've seen some people talk
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before about Identity Theft Protection
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to be honest with you I don't know a lot
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about it I understand you know I think
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you probably understand at this point in
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the podcast too what Identity Theft
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Protection protects you against whether
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it's needed how it works what it costs
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I'm not sure all I know is that it's
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it's growing in popularity unfortunately
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right because it means identity theft is
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growing in
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popularity and then the last one that
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again is growing in popularity is
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umbrella Insurance umbrella Insurance
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like the umbrella over your head kind of
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has a wide area of protection and it's
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often purchased by people who need to
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protect their assets above and beyond
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what their current insurance policies do
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so for example if someone has
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significant savings or significant
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assets let's say someone has I don't
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know 5 million dollar from selling a
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business and they cause an injury in the
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other driver and that other driver maybe
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sues them takes them to the court and
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says hey you T-boned me at that red
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light caused me pain and suffering I'm
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suing you for a million dollars well
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there's a chance that if they win that
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suit our main character is going to have
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to pay the million dollars out of pocket
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because they cause an accident umbrella
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Insurance can help protect against that
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maybe you own a swimming pool maybe you
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own a rental property but there's some
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things you can do in your life
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that present a little bit extra risk and
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umbrella Insurance provides protection
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to your assets in case something were to
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happen where another person could make a
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claim against your assets for pain and
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suffering for an injury for whatever it
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may be a wrongful death something like
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that so umbrella insurance is certainly
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something that is growing in popularity
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and depending on your circumstances in
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life might be worth looking into okay I
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think at this point in the podcast we're
00:15:58
going to bring in Brock buckles so as I
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mentioned before Brock is a uh he's
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owner at BC brokerage meaning he he
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matches up his clients he understands he
00:16:07
gets to know their clients and figures
00:16:09
out what their insurance needs are he
00:16:11
then shops around on behalf of his
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clients to find the most competitive
00:16:15
rates the most generous coverages the
00:16:18
easiest insurance providers to work with
00:16:21
and then provides his clients with
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recommendations based on those kind of
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factors cost and coverage and and ease
00:16:27
of making claims so brocky is a a
00:16:30
Marketplace expert and works with people
00:16:32
every day with various insurance needs
00:16:35
so we're going to Pepper him with some
00:16:36
questions and lean on his expertise to
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guide us through this insurance
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[Music]
00:16:54
conversation hey Brock thanks for
00:16:56
joining me man how you doing doing well
00:16:58
Jesse it's h good to be here with you
00:17:00
man cool cool thanks for coming on the
00:17:02
best interest podcast and I figure Brock
00:17:04
I mean maybe a good place to start is I
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let the audience know a bit about who
00:17:08
you were but maybe you can give us some
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of your background what you do over it
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at BC brookeridge just so the audience
00:17:14
can get a feel for you know the kind of
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insurance the depth of knowledge that
00:17:17
you have and and what your background is
00:17:20
yeah for sure so for those of you
00:17:21
listening we're going to try to make
00:17:23
this interesting because I know
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insurance is not the first thing on your
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mind but yeah like Jesse said my name's
00:17:27
Brock buckles I'm based out of
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Indianapolis and I'm the co-founder of
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an insurance brokerage called BC
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brokerage we work exclusively with the
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only financial planners across the
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country to help their clients with
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insurance and you know I like to thank
00:17:41
Jesse that we're we're kind of the good
00:17:42
guys of insurance because it gets it
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gets a negative kind of nasty reputation
00:17:46
and everybody kind of thinks of these
00:17:48
whole life selling people that are going
00:17:50
to try to get you to buy products that
00:17:51
you know you don't necessarily need to
00:17:53
buy and so we take a lot of pride in the
00:17:55
fact that you know we Implement things
00:17:57
when it's necessary and we work along
00:17:59
with financial planners to make sure
00:18:00
that it actually is going to fit into
00:18:01
the financial plan long term so that's
00:18:03
kind of a general overview of who I am
00:18:06
and uh what we do awesome that works
00:18:08
really well Brock because the listeners
00:18:10
will have just heard me kind of sort of
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talk some smack some some objective
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smack about whole life but let's get
00:18:17
into yeah I mean what are some of the
00:18:19
kinds of insurance products that normal
00:18:22
everyday people need especially I'm
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thinking Brock some of you know most of
00:18:26
my listeners are probably say 25 to 4
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maybe with some young kids working
00:18:30
professionals what are some of the
00:18:32
conversations you're having with with
00:18:33
that cohort of people that's a good
00:18:36
question and the first thing that I
00:18:37
would say is you know make sure that
00:18:39
you're thinking about disability income
00:18:41
insurance and life insurance those are
00:18:43
the two types of insurance for young
00:18:45
people where it creates a lot of
00:18:46
Leverage it can create a lot of ability
00:18:48
to kind of keep the lifestyle that you
00:18:50
want so starting out with life insurance
00:18:52
right and I would say for close to 99%
00:18:56
of the time all you need is is just a
00:18:58
good term insurance policy and what you
00:19:00
need to be thinking about when it comes
00:19:02
to term insurance is paying off debt if
00:19:04
you have assets that you bought together
00:19:06
if you have a home that you bought with
00:19:07
your spouse you going to want to make
00:19:09
sure that's going to be paid off second
00:19:10
thing you're going to want to think
00:19:11
about is kids education a lot of people
00:19:14
want to fund their their children's
00:19:15
education some people had their parents
00:19:17
fund their education so it's kind of
00:19:19
their way of paying it forward and
00:19:20
continuing the process but one of the
00:19:22
things that I always like to touch on
00:19:23
this is a really good thing to think
00:19:25
about is the continuation of Lifestyle
00:19:29
that comes from from how much you might
00:19:30
need from life insurance so if you
00:19:32
weren't here anymore or your spouse
00:19:34
wasn't here anymore obviously that
00:19:35
creates some things maybe the bills go
00:19:37
up because you were paying medical bills
00:19:39
maybe there needs to be you know child
00:19:41
care that's paid for that wasn't
00:19:42
necessarily a concern before so that
00:19:44
last one continuation of lifestyle is
00:19:46
definitely something that would be
00:19:48
important to think about outside of just
00:19:50
paying off debt and kids education and
00:19:52
then you know with disability income
00:19:53
insurance I nobody wants to think about
00:19:55
disability so I always encourage people
00:19:57
to think about it as income protection
00:19:59
insurance and really making sure that
00:20:02
you're protecting your biggest asset I
00:20:03
have conversations with people often and
00:20:06
they say you know I say what's your
00:20:08
biggest asset and commonly they'll say
00:20:10
well my home or my car or my whatever
00:20:13
and I'll say well what if I talked to
00:20:15
you and and told you that your biggest
00:20:16
asset was probably your ability to go to
00:20:18
work and earn income because that's what
00:20:19
allows all of those other things right
00:20:22
and so you know a lot of people see the
00:20:24
premium on a Disability Policy and
00:20:26
there's kind of some sticker shock there
00:20:27
sometimes but it's usually about 1 to 3%
00:20:29
of your gross income to kind of protect
00:20:31
the rest of it so is it a little bit of
00:20:33
a a kick in the butt sure but it's worth
00:20:35
it gotcha so when you know I'm just
00:20:38
thinking of myself so I just got married
00:20:40
in September don't have any kids I was
00:20:43
living in a home that was very
00:20:44
affordable for one person we're now
00:20:46
moving to a home that's probably it's
00:20:48
only affordable with two salaries sure
00:20:51
but I don't have any kits when you hear
00:20:53
that that little story do you think both
00:20:56
term life and some long-term disability
00:20:59
insurance yeah I would say definitely I
00:21:01
mean let's get this out of the way your
00:21:03
chances of being disabled are
00:21:04
substantially higher than your chances
00:21:06
of passing away prematurely not to say
00:21:08
that that doesn't happen but
00:21:10
statistically it's much higher it's
00:21:11
actually about one in four which a lot
00:21:13
of people are dumbfounded to hear about
00:21:16
25% of people 25% of today's 20-y olds
00:21:19
will be disabled for at least one year
00:21:22
before retirement so okay yeah pretty
00:21:24
important to kind of look at so yeah
00:21:27
disability would be huge there and then
00:21:29
you know I would say it's all about the
00:21:31
plan right so people say how much life
00:21:34
insurance should I get I'm I'm 20 I'm
00:21:36
married we're buying a house but that's
00:21:37
really all we have to pay off right now
00:21:39
and my response to that is always you
00:21:41
know term is cheap right so plan for 10
00:21:44
years out don't plan for what you're
00:21:46
looking at right now because the biggest
00:21:48
thing that I hate having to talk to
00:21:50
people about and it's not because I hate
00:21:52
talking about it it's because I hate the
00:21:53
situation that they're in is when people
00:21:56
need more life insurance but they can't
00:21:58
get it because their health has since
00:22:00
declined or they've been diagnosed with
00:22:01
something so locking in that coverage
00:22:03
and getting a good affordable cheap term
00:22:06
life insurance policy when you're young
00:22:09
even for more than you think right you
00:22:10
could get a couple million dollars
00:22:12
sometimes for right around a hundred
00:22:14
bucks a month so it's it's not like
00:22:15
we're paying astronomical amounts and
00:22:17
then if anything does happen to your
00:22:19
health you've already taken care of the
00:22:20
coverage you already know that you have
00:22:22
it and so you kind of have gotten that
00:22:23
out of the way and people will kind of
00:22:25
say well but that doesn't make sense to
00:22:27
me you know I don't need it right now
00:22:28
it's like okay well you're kind of
00:22:30
betting on what your health is going to
00:22:31
look like in the future and that can be
00:22:32
a tough one gotcha so just out of
00:22:34
curiosity I mean what is the average
00:22:36
term what is the average length of a of
00:22:38
term life insurance policy is 10 years
00:22:41
kind of Fairly average no I you know I
00:22:43
would say it depends on age for people
00:22:45
that are in their 20s definitely most of
00:22:47
the time they're opting to do a 30-year
00:22:49
policy because that if you think about
00:22:50
it right if you're if you're 25 and you
00:22:52
buy a 30-year policy that's going to
00:22:53
take you to 55 right that's still pretty
00:22:56
young to not have life life insurance
00:22:58
unless you've just gotten to the points
00:22:59
to where you don't really need it you
00:23:01
have sufficient assets you've been
00:23:02
really disciplined about saving and done
00:23:04
some of those other things but if you
00:23:06
think about it you know a 25y old with a
00:23:07
10-year policy it's going to take you to
00:23:09
35 years old what if something happens
00:23:12
between 25 and 35 and you need more
00:23:14
Insurance you bought a bigger house
00:23:16
you've got three or four kids and then
00:23:18
now kind of up the creek without a
00:23:20
paddle so yeah 20 years is really common
00:23:22
for people that are kind of thinking
00:23:23
about buying it in their late 30s and
00:23:25
40s and you know if you're in your 50s
00:23:26
10e terms become a lot more common
00:23:28
because they just want kind of that
00:23:29
buffer to get them to retirement totally
00:23:32
makes sense so what other kind of Life
00:23:34
events Brock should get people thinking
00:23:37
that maybe they either have a completely
00:23:39
different Insurance need like a a new
00:23:41
style of policy or they need to increase
00:23:44
or lower their coverage for sure so
00:23:48
first one is when you're out you know
00:23:50
getting your first job I'd encourage you
00:23:52
to just get the Baseline package right
00:23:54
just get ahead of the ball start
00:23:55
thinking about it get some term get a
00:23:58
policy that's going to be good you're
00:24:00
going to start paying for it forget it's
00:24:02
there and and be on your way the other
00:24:04
thing is obviously getting married
00:24:06
that's a huge time to be getting more
00:24:08
Insurance because obviously you're going
00:24:10
to plan on doing things for each other
00:24:11
and you're going to make decisions that
00:24:13
you want to you know pursue with one
00:24:15
another down the road so you have to
00:24:18
take into account what decisions that
00:24:19
you guys are making together and if you
00:24:21
still want to accomplish those things if
00:24:23
one of you weren't here anymore even
00:24:25
though that's that's a little bit morbid
00:24:27
and so those those are a couple things
00:24:29
that you want to think about for buying
00:24:31
term insurance or are good times to buy
00:24:32
term insurance sometimes people are
00:24:34
buying you know term insurance down the
00:24:36
road when they're getting close to
00:24:37
retirement and then obviously if you get
00:24:39
into the bucket of permanent insurance
00:24:41
or long-term care or something like that
00:24:43
those are completely different kind of
00:24:44
time periods that you should be thinking
00:24:46
about okay got it well Brock so then you
00:24:49
know one thing I'm always weary of and
00:24:51
you know dealing with whether it's
00:24:53
clients here or readers of the best
00:24:55
interest or listeners is you know what
00:24:58
kind of insurance is overkill or or
00:25:00
maybe another way of saying it is like
00:25:01
what kind of insurance is a bad deal we
00:25:04
already kind of alluded earlier to that
00:25:05
whole versus term debate so maybe we can
00:25:08
start with that and see where it takes
00:25:09
us yeah definitely I mean listen I'm not
00:25:13
going to sit here and say that most
00:25:15
Financial products or types of insurance
00:25:17
or Vehicles don't have a place in the
00:25:20
marketplace or that no one needs them
00:25:23
right but I will tell you if it seems
00:25:25
like you're going to meet with your
00:25:26
financial planner and the focus of the
00:25:29
meeting most of the time is permanent
00:25:31
insurance or converting more of your
00:25:32
term insurance to permanent Insurance
00:25:35
may we just get a second opinion right
00:25:37
it doesn't hurt because I will tell you
00:25:38
you should be doing things other than
00:25:40
that and there are justifications and
00:25:42
purpose behind having whole life
00:25:44
insurance right but here are the ones
00:25:46
that I'll kind of lay out first one
00:25:48
estate planning right you come from a
00:25:50
wealthy family inherited money you build
00:25:51
a fortune you have a lot of money you're
00:25:53
over that federal or state tax threshold
00:25:56
and you need to offset some of of that
00:25:58
tax permanent Insurance can be a great
00:25:59
way to do that right setting up
00:26:01
something like an irrevocable life
00:26:03
insurance trust or an eyet to kind of
00:26:05
minimize the amount that can be taxed
00:26:07
from your estate great idea right so
00:26:09
that that one does make sense the second
00:26:11
one would be for special needs if you
00:26:14
have special needs planning that you
00:26:16
have to do right and so we can't bet if
00:26:19
there's a family member or a child that
00:26:22
has special needs that is going to have
00:26:24
to continue to receive some sort of care
00:26:26
down the road after their caretakers or
00:26:28
the parents pass
00:26:30
away permanent life insurance is a great
00:26:32
way to do that doesn't necessarily have
00:26:33
to be whole life insurance but it can be
00:26:35
permanant life insurance right the other
00:26:37
thing is is if you have completely run
00:26:39
out of everything else and other ways to
00:26:41
put away money right so you're
00:26:42
maximizing your 401k you're putting
00:26:44
money into taxable brokerage accounts
00:26:46
like you're doing everything that you
00:26:47
possibly can and if you don't start
00:26:49
putting more money somewhere else
00:26:50
basically it's just going to sit in your
00:26:51
bank account earning nothing we have
00:26:53
seen you know uses for it there people
00:26:55
do take advantage of it even the fee
00:26:57
only world but again that's once you've
00:26:58
literally maximized everything else it's
00:27:01
not what you should be doing from the
00:27:02
get-go by any means and then the the
00:27:05
last one that I always kind of talk to
00:27:06
people about is long-term care planning
00:27:08
so the vast majority of long-term care
00:27:10
policies are now built on permanent life
00:27:12
insurance chassis which is good for a
00:27:15
variety of reasons quick quick history
00:27:17
lesson here of the long-term care Market
00:27:19
but in the early 2000s basically
00:27:21
companies were coming out with long-term
00:27:23
care and you know they didn't know how
00:27:25
to price them they didn't know how long
00:27:26
to make the benefits anything like that
00:27:27
and so what happened was people that got
00:27:29
in early really great deal but then they
00:27:31
started writing in these Provisions
00:27:33
saying that they could increase the
00:27:34
premiums of the policies down the road
00:27:36
and so now you've got people that bought
00:27:38
policies in 2004 that are seeing 30 40
00:27:41
50% increases in their premium
00:27:43
year-over-year which is really terrible
00:27:45
and so these permanent life insurance
00:27:46
product hybrid policies that include
00:27:48
long-term care features have come out
00:27:50
and are better in a lot of ways one of
00:27:52
which is they can't just randomly
00:27:54
increase the pricing for you those are
00:27:56
kind of the the times where I believe it
00:27:58
can make sense to to use permanent life
00:27:59
insurance but the vast majority of
00:28:01
people don't need it gotcha and just you
00:28:03
know rough estimate Brock out of all the
00:28:06
conversations that you're having with
00:28:07
these fee only clients I mean what
00:28:10
percentage does that kind of whole life
00:28:13
conversation at least makes sense to to
00:28:15
bring up less than 5 per. yeah
00:28:19
okay less than 5% I mean really less
00:28:22
than 5% I I would say one but I want to
00:28:24
be careful there uh but but less than 5%
00:28:27
very lit I can say I can safely say that
00:28:29
for sure so
00:28:31
listeners keep that statistic in mind
00:28:33
yeah whole life insurance or or
00:28:35
permanent life insurance products
00:28:37
typically don't make sense for you yeah
00:28:40
and if you've got a guy that's trying to
00:28:42
sell it sell you life insurance as a
00:28:44
bank or infinite banking or some sort of
00:28:47
debt elimination platform or you heard
00:28:49
them on the radio run get out of there
00:28:52
like run to your bunker shut the door
00:28:54
watch a movie clear your head and then
00:28:56
just forget you heard about it because
00:28:58
I've met guys like that they're they're
00:29:00
like the same slickback hair fast
00:29:02
talking guys that you would think they
00:29:03
would be and so yeah stay away from that
00:29:07
agreed and this and it's not personal
00:29:09
and that's the thing it's one thing you
00:29:11
know I've I've come across in in my
00:29:13
career here in Rochester Brock and it's
00:29:15
it's not a personal indictment of who
00:29:16
they are as people I don't begrudge
00:29:18
anyone for trying to put food on the
00:29:20
table sure it really comes down to let's
00:29:22
look at some of the underlying math and
00:29:24
some of the numbers and the dollars that
00:29:26
come in versus is the protection that
00:29:28
the policy gives you or the dollars that
00:29:30
might come out it's just really hard to
00:29:32
justify these permanent Insurance
00:29:34
products in most cases exactly Jesse and
00:29:37
to kind of talk about it from the other
00:29:38
side if you just want to make it apples
00:29:40
the apples and this is why I'm either
00:29:41
the the light or the darkness for these
00:29:43
guys on the insurance side but if you
00:29:46
were to take
00:29:48
$112,000 or call let's call it $50,000
00:29:50
you were to take $50,000 from someone
00:29:53
and put that money into an investment
00:29:54
account you're going to be making very
00:29:56
little money on that right if you get
00:29:58
someone to put $50,000 a year into a
00:30:00
permanent life insurance policy the
00:30:02
first year that you did that the
00:30:04
commission of that is probably going to
00:30:06
be somewhere in the neighborhood of 25
00:30:08
to
00:30:09
$445,000 that goes to the the person who
00:30:12
sold you that product that goes to the
00:30:14
person that sold you that product so you
00:30:16
know you have to question where their
00:30:17
motivation lies if they're going to make
00:30:19
a hundred bucks off your investment
00:30:20
account or they're going to make $45,000
00:30:23
off your you know permanent life
00:30:24
insurance account you can't exactly be
00:30:26
uh completely unbiased I suppose if
00:30:29
you've got that on your plate right
00:30:31
absolutely absolutely I think I might
00:30:32
have used that stat before on the blog
00:30:35
of just how high those Insurance
00:30:36
commissions can be for some of those
00:30:38
products and absolutely Charlie Monger
00:30:40
said it show me the incentives I will
00:30:42
show you the outcomes yep absolutely
00:30:46
Brock I mean if anyone wants to get a
00:30:47
hold of you either to follow you on
00:30:49
social media they have a question for
00:30:50
you or maybe they even want to reach out
00:30:52
and kind of talk shop with you how can
00:30:54
they get a hold of you yeah definitely
00:30:56
so it's Brock buckles again Brock bcen
00:31:00
brokerage.com I'm on Twitter I think
00:31:03
it's Brock buuck and then you can look
00:31:05
at the website bcen brokerage.com I'm
00:31:08
always willing to take time talk to
00:31:10
anybody about any questions that they
00:31:11
have if I can save you from buying
00:31:13
something that you don't need you know
00:31:16
at least pointing in the right direction
00:31:18
that's I'm I'm more than happy to do it
00:31:20
awesome thanks brck we will throw all
00:31:21
that in the show notes listeners so you
00:31:23
can find it there and Brock thanks a lot
00:31:26
for coming on to the best interest
00:31:27
podcast thanks
00:31:30
Jesse thanks for tuning in to this
00:31:32
episode of the best interest podcast if
00:31:34
you have a question for Jesse to answer
00:31:36
on a future episode send him an email at
00:31:39
Jesse bestin interest. blog again that's
00:31:42
Jesse at bestin interest. blog did you
00:31:45
enjoy the show subscribe rate and review
00:31:48
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00:31:50
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00:31:53
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00:31:55
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00:31:56
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00:31:59
[Music]
00:32:01
podcast the best interest podcast is a
00:32:04
personal podcast meant for education and
00:32:06
entertainment it should not be taken as
00:32:08
Financial advice and is not prescriptive
00:32:10
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