Life Insurance in Retirement with Sheryl Moore

Speaker 1 (00:00):

Welcome, everybody to the Retirement Power Hour podcast. My name is Joe Allaria, I'm your host, and today we're gonna be joined by special guest Cheryl Moore. We're gonna be talking about does life insurance make sense in retirement? Cheryl, thank you so much for coming on the podcast today. You

Speaker 2 (00:17):

Bet. Thanks for having me, Joe.

Speaker 1 (00:19):

Now, the reason I didn't quite say who you're with and what you do is because I wanted to explain that, give it a little bit more context, I had to have an entire phone call with you to make sure that I got this right, because you do so many awesome things and you've got, you got a lot going on. So I thought, you know what, why don't I just ask you a little bit and have you share that and kind of give your background because, uh, I think it's, I think it's very intriguing. What, what I'll say is for those that are listening that, that maybe don't know Cheryl, a lot, a lot of consumers may not have heard of you, but in the space, in the financial industry, the insurance industry, one of the most well connected, well-known, most respected people in the industry, one of the most unique, uh, people I would say in, in terms of what you do. So if you're tuning in or you're watching, stay tuned, you're gonna want to hear everything Cheryl has to say. But Cheryl, tell, tell us a little bit, what, what exactly do you do?

Speaker 2 (01:14):

That's a good question, Joe <laugh>, and I will tell you, you're not alone. It's probably the most difficult question that I get asked even for me to answer. So, um, I started off working in a life insurance company 23 years ago and worked my way up until I was an executive at the insurance company. And then, um, I decided to start my own business. And when I started my business, really what fueled me was, um, having an experience where someone in my family did not have proper life insurance coverage and also did not know about annuities. Mm-Hmm. <affirmative>. And so having that personal experience in my family and thinking, gosh, you know, I work for an insurance company, how can my family not know about this really motivated me? And it made me realize that there are a lot of consumers who don't have all the facts when it comes to life insurance and annuities. Sure. I'm, I'm sure you're familiar with that. So, um, I started a business with the intent of educating people about life insurance and annuities. Now that's the part that I don't get paid for. Um, I do a lot of other things that help make up my income so I can do those things that don't pay the bills. So

Speaker 2 (02:30):

Really what I do today is I go to insurance regulators offices and pull the filings for life insurance and annuities, read those contracts, and then break 'em down into easy to understand terms so that financial professionals can come to my website and say, I don't have time to read this 300 page document. Right. Let me read the three page CliffNotes version, <laugh> of what this is

Speaker 1 (02:56):

<laugh>. I've only had one person in my entire career read an entire insurance contract, really? For, for better or worse, I think, um, which to me is not surprising. Do, does that surprise you?

Speaker 2 (03:10):

I'm surprised that you had one who did, to be honest. Oh,

Speaker 1 (03:13):

<laugh>, right? Yeah. Um, yes, I did. Uh, wonderful client and she, uh, she read it and, you know, so I knew, I know that because she asked me, Hey, on page 56, line three, I noticed it says this, you know, so we both got to, you know, have some fun and dig in. But yeah, they're, they're very complex. Um, so you are, so you, is that wink wink intel.com? Is that the business that you founded first? Okay.

Speaker 2 (03:41):

Yep. That is the business that I founded 17 years ago. And just basically it's a product resource for people who need information on life insurance and annuities.

Speaker 1 (03:49):

Awesome. Yes. Uh, I, I would highly encourage those listening to go to wink intel.com, and there, there are analysis tools on there, annuity specs, life specs, uh, different reports, just really good information. I, I'm glad that I came across this, Cheryl, because I think I might use it in the future. You know, sometimes clients will bring products in, you know, when, when we begin a relationship and they already have those products. So I'm not necessarily an expert on every, you know, every single product that's out there. And you're right. It is really hard to get unbiased information from third party. Yeah. You know, if I go to, I won't name any companies, but if I go to an insurance company to ask about their products, that may or may not be the best, best place, you know? 'cause you're gonna get a little bit of biased information. Mm-Hmm. <affirmative>. Uh, but you also are the president founder of more market intelligence. So tell us a little bit about that, if you would.

Speaker 2 (04:51):

Yeah, so more market intelligence is a company that I started to help with, um, competitive intelligence. Mm-Hmm. <affirmative>. So assisting insurance companies and making their product offerings and their marketing more attractive versus their peers. Yep. Um, I'd like to say I'm an insurance spy. That's the sexy way of putting it. <laugh> <laugh>. Um, but I just basically spy on insurance companies using public information. Yep. Um, no espionage or anything like that, <laugh>, but, um, it helps my clients to make their product offerings more competitive.

Speaker 1 (05:26):

Awesome. So insurance companies are coming to you to consult about how they should go about running their business.

Speaker 2 (05:33):

Right. Exactly. Awesome.

Speaker 1 (05:36):

And again, you're member of the Forbes Finance Council. I, I could go on and on and on about all the wonderful things that you do, but again, I, I just so appreciate you coming on to talk about some of these things today, and I highly value your input. So let's just jump in if we can to, uh, you know what, again, I I wanted to mention this too. Um, you said you had a family member that, um, that wasn't insured. And you also told me a story about your grandpa, which I think was, was, is that, I don't know if it's the same story or, but if you could share a little bit of that with the audience where you were there that, I don't wanna take away the story, but you were there when, uh, with that, uh, claim check.

Speaker 2 (06:19):

Yeah. So, um, my grandparents had visitation of my brother and I the first weekend of every month, my entire childhood. Yeah. And so my grandparents had a large hand in raising us. Sure. And I will tell you, I was probably about eight or nine years old Mm-Hmm. <affirmative>, um, when this event happened. But I knew that my grandfather was a life insurance agent, um, for a big insurance company. Right. And I didn't really know what that mean or what it meant, except for when somebody dies, you get money. Yep. That's what I thought it was. Yep. So, um, I remember grandfather being gone most of the weekend, this one weekend that we visited, and then coming in late one evening, and I had the opportunity to listen to him talk with my grandmother about where he'd been the whole time that we'd been there. Mm-Hmm. <affirmative>. And he said he'd had to make his first death claim.

Speaker 2 (07:19):

So one of his clients had passed away and he had to deliver a check to the widow. And he was explaining to my grandmother how this woman had held his hand throughout the whole funeral service and was just getting to points where she was like almost leaning on him because she wasn't able to stand on her own. Right. And he's talking about this in a way that's very, um, emotional. I mean, even as a kid listening to this, I have a lot of empathy. So I was almost crying listening to how touching this was that he's being there for her. Right. And me knowing that's not his obligation, you know, he didn't have to do that, but listening to him relay this story. Right. And, um, when the time came and the funeral was over and he gave the check to this woman, she broke down crying and said that she was so grateful to my grandfather because she'd had a discussion with her husband prior to him passing, um, right after their first appointment with my grandfather.

Speaker 2 (08:26):

And in the meeting she had kind of objected to the sale of the life insurance because she said it was too expensive. Yep. And, um, after my grandfather left, they had a discussion, the husband and wife, and really it ended up where the husband just kind of put his foot down and said, you know, I respect what you're saying, but we're purchasing the life insurance. Sure. And she broke down crying, telling this story to my grandfather because she said, I told him not to buy it. I told him not to buy it. And it's only because he put his foot down over the things that you had said when I said, it's too expensive. He had overcome her objections with several rebuttals. Right. And those things were enough to convince this gentleman that he should purchase the life insurance. Sure. And he died less than a year later after purchasing it. Wow. So that was really my first impressions of life insurance. Right. Um, Des Moines, where I live, is the insurance capital of the US and so there's tons of insurance companies that are located here. Yeah. But that was my first experience, and when it came time for me to get a career, that actually was a very foundational piece of my upbringing that made me realize, you know, my grandfather was a really important person, he helped people and I like helping people. And so I think I wanna do this too.

Speaker 1 (09:53):

Yeah. And that's, I wanted to ask, because I think insurance sometimes, like in your, like in this example with the, the wife, she didn't wanna buy it. There was some sort of maybe negative connotation, or she viewed it as purely an expense. And I, I don't know what it is, but don't you feel sometimes that there are these, uh, negative connotations to, to insurance products and that sometimes we can just only have our focus there, but kind of forget sometimes why you get the insurance and Yeah. You, a lot of times you, you're, you're, you're not hoping that those events happen. You know, you hope that the, the term life insurance never pays out. Right. Right. 'cause that means you didn't die, you know? So, um, you hope that you don't have to go make a claim on your car insurance or your health insurance or whatever, but how impactful is it when it's actually there for you, when you know when you need it? So I, I, I thought that was a great story. 'cause it just shows the other side of insurance and some people out there really do need a life insurance. And we'll talk about that a little bit. But I wanna, I'm gonna jump in, um, to talk more on the consumer side of, of life insurance a little bit, if I could, and ask you your thoughts on where do you think consumers are missing it right now? Or why, why do you think people shy away from purchasing insurance and then especially near retirement?

Speaker 2 (11:29):

So I really think that, um, one of the biggest reasons people don't buy life insurance is that consumers don't want to face their imminent death. And buying insurance means I'm going to have to deal with the fact that at some point I will not be here anymore. And so that aversion to death, I think is one of the primary reasons I don't do market research, um, with consumers. Yep. But everything that I've read suggests that that is probably the biggest reason that consumers don't buy life insurance. And how, probably how sad, you know, because, um, everybody dies. And you made kind of a point without pointing it out here, just a second ago when you said making a claim on your house insurance or your auto insurance, like yeah, you're required to have those kinds of insurance. Right. But you're not required to have life insurance, which is crazy to me. Right. Because everybody's definitely going to die. You won't necessarily have to make a claim on your homeowner's policy or on your auto insurance policy.

Speaker 1 (12:36):

Sure.

Speaker 2 (12:37):

So,

Speaker 1 (12:38):

Well, I think it's the same reason why people don't plan for retirement sometimes is that it just kind of means, man, I have to talk about Medicare now and social security and that means I'm getting older and I don't want to get older. 'cause after my work life and, you know, as my retirement, but after my retirement is, you know, the end of my life, death, and Right. And I don't wanna talk about that. You know? Right. It's just more comfortable keep doing what you're doing. So, you know, the psychology of money, the psychology of retirement, the psychology of insurance, it is a real thing. And it's not always just crunching numbers and, you know, and all that. It's, it's the emotions of, of this and the emotions of planning and the things you have to think about. Yeah. But, um, what, you know, one of the things that I get posed this question quite a bit is, do people even need life insurance if they have enough money to retire? You know, and, and so I would post you like, what, what are the reasons that someone might want some coverage in retirement? You know, if you, if you've got enough to retire, you don't really need coverage to, you know, pay off the mortgage or whatever. Mm-Hmm. <affirmative>. 'cause you've got, you've got enough to stop working. So if you've got that covered, are there any other reasons that you might want or need life insurance?

Speaker 2 (13:58):

Well, how about to leave a legacy if you want to, um, leave money to your loved ones? Or maybe you have a charitable organization that is near and dear to your heart that you want to benefit. That's one reason to buy a life insurance policy. And I think it's a huge one. It's one that I believe in, um, the Shriners Hospitals for children have helped my oldest child to have dozens of surgeries and to thank them. I wanted to make sure that they received a sizable gift. And Yeah. You know, my money goes to purchase or leverage the amount that they receive on my death. So yeah. I purchase life insurance on my life so that when I die, they will receive a million dollars.

Speaker 1 (14:43):

Wow. That's awesome.

Speaker 2 (14:45):

Yeah. Yeah. But that's, that's just one reason, you know, I, I think that so many people just think of, of life insurance as, oh, it pays my family when I die. Yeah. And they don't think about some of those other creative reasons why you might wanna use life insurance. You had a great story, Joe. You relayed a story about one of your clients who, um, had to pay estate taxes upon the passing of their parent and Yeah, that's a great example.

Speaker 1 (15:14):

Yeah, so, exactly. So here in Illinois, we have an estate tax exemption amount of $4 million per person. The individual estate tax exemption amount is over 12, uh, over 12 million at the federal level. So at this point in time, you have to have over 12 million per person, or over 24 million as a married couple to pay estate tax or death tax. And so, you know, a lot of people that doesn't apply to, but here in Illinois it's only 4 million per person. So you might not owe federal estate tax, but it's, it'd be a lot easier to, to owe Illinois estate tax. And most of our clients are what I would say are the next door millionaire type of people where, you know, I, I kind of consider them normal people, even though I tell them, Hey, you're still, you're in the top 1% of the population, no doubt.

Speaker 1 (16:09):

You know, if you have enough money saved up to retire, you know, 750,000 to 2 million, which a lot of our clients are in that range, you're in the top 1%. Um, don't quote me on that 'cause that, that statistic is a little bit made up by me. But you know, in my mind, I know the how behind Americans are in retirement, and so they're in the top, you know, top few percent if, if nothing else. But, uh, but yeah, you don't have to have that much to owe a state tax in Illinois. So one of my clients, uh, one of our clients, he passed away and, uh, he had about 4.4 million all told in his estate, which is, which is a good size estate. Um, and his son or his, you know, his beneficiaries ended up having to pay about $400,000 in taxes to the state of Illinois just in a state tax, not income tax that's totally separate.

Speaker 1 (17:09):

Mm-Hmm. <affirmative>, this is a tax for dying with too much money and it was over $400,000. And so you might use life insurance to cover some of that bill if you know you're gonna be over that amount, you know, that you could estimate how much you're gonna, your beneficiaries might owe, and you could get insurance to cover that. You could get insurance to hedge on your, your life expectancy. You know, if you, if you live, uh, if you live a long time, um, and you, and you purchase life insurance, the, you keep paying your premium, the insurance company wins in that case. Right. You're paying your premium for a long time, but if you don't live a long time, well now, okay, you didn't win finance, you didn't win, uh, in terms because maybe you passed away prematurely. So you had a shorter lifespan, but financially you won big because the rate of return is gonna be enormous. And that's something that a stock and a bond portfolio that it cannot provide. Right. That, that can't provide that hedging. So sometimes people do that with life insurance and annuities hedge on both sides, you know, just to, to make sure you're spreading your risk out. Um, so there are a lot, a lot of reasons, Cheryl, and a couple of good ones that you mentioned. Another potential benefit would be long-term care. Um, and, and you can have long-term care that is attached to a life insurance product. And so in your

Speaker 2 (18:34):

Oh, I love those.

Speaker 1 (18:35):

Yeah. So talk, talk a little bit about maybe how those work.

Speaker 2 (18:38):

Yeah. So, you know, I think long-term care is one of those types of insurance that really gets a bad wrap. Um, it's something that everybody needs, but we hear about rate increases or people not using it. And that's a huge objection because if you think about how expensive it is, relatively speaking to purchase long-term care insurance Yep. You don't wanna pay all that money in, and then if you don't get confined to a nursing home, you don't have the opportunity to benefit from it. Right. You know, if you die prematurely, it's just money wasted. Yep. And so one of the great things about having a long-term care feature that's combined with your life insurance is that you lose that use it or lose it mentality. Right. Um, you definitely get to use it. And if you don't, then you still have the death benefit coverage. Correct. So this is, um, what we call riders or optional benefits that would pay out in the event of, uh, critical illness, chronic illness or terminal illness, and advance you, your part of your death benefit effectively while you're still living to pay for some of those nursing home expenses or some of those hospital bills that you maybe couldn't afford to pay for without that coverage. I, I personally just love the fact that you don't have to use it or lose it. That's my favorite part, Joe.

Speaker 1 (20:02):

Yeah. There's, there's two benefits. It's, you know, it's a one person ex explained it like a pool of, of money that, that you can use. You know, it's, it's one pool of money that can be used for multiple things. And yes, I've heard the same thing. The biggest concern about long-term care insurance is that I never get to use it. Well, that may or may not be a good reason to not get it. Yeah. And it all starts with a, with a plan, a retirement plan, um, a financial plan to see if you really do need it, you know? Yeah. And what we do is we show people this is what it would look like to fund a long-term care. Stay yourself if you have enough money. So when we show that scenario, again, we have to use averages, average stays, average cost, we don't know if it's assisted living or if it's advanced, you know, memory care, which the cost range pretty widely between those as well. So we just show them, here's what it looks like if, if you were gonna fund an average stay yourself, and it's, if it takes too big a chunk out of the portfolio and or gets, makes the portfolio go to zero, well then you might want to get some insurance to, to help fund that potential stay, you know, if that does happen to you. Yeah.

Speaker 1 (21:24):

So another good, another good reason. I wanna, if I can, I wanna switch over to the, to talk about the insurance industry and insurance agents. 'cause those, you do a lot of work with both. And so I wanna start more on the industry, if you will, and talk maybe a bit about where's the, how's the insurance industry doing? You know, are they, is the insurance industry missing it? Or how, how has the in industry improved in terms of products and things that you've been helping companies on over the last, you know, five, 10 years?

Speaker 2 (22:03):

Well, really, I'm disenfranchised a little with the life insurance industry just because we do such a bad job telling our story and getting credible information out in front of consumers. And there's a lot of politics involved in that. But effectively what it comes down to is life insurance companies pay organizations as subcontractors to handle the marketing for them. Yeah. And then the, the marketing firm promotes things to the individual insurance agents or advisors, and nobody's out here marketing directly to the consumers because that costs so much money. Right. And so that's one of the things I get the most frustrated about is that we're doing a bad job of advocating for ourselves and helping consumers find the credible information.

Speaker 1 (22:56):

So, so boom, you've, you've recognized that and, and here you are. And that's what you said before we started recording, um, that, you know, and I asked you why, or, you know, how can we help you? How can we help you? And you said, don't need any help. I'm just here to help educate consumers. You know, if I, if if people can, can hear this message and it helps, you know, one or one or two people, then that, that's enough for me. Yeah. And that says a lot about you, what you do. That's why I'm so excited to have you on, because we too are, we're living our lives. I I do this podcast for consumers. I don't do it for myself. Yeah. You know, I'm trying to get the good word out. There's, there's so many bad places you can go and get information.

Speaker 2 (23:40):

Oh, yeah. And it's even scarier in the financial services industry, Joe, because yeah. There are bad actors out there. It's not like there's a ton of 'em, but there's a few bad apples out there, but it's your money. Right. And so you wanna feel secure in that I'm working with somebody who I trust, or I can feel confident about this information. Yeah. And that's why I think it's even more important. But I personally live my life in a way that I just do what's good and what's right. And I always know that it'll come back around to me, just like you were describing. You do.

Speaker 1 (24:15):

A hundred percent. Yeah. We, we do our best to, um, to be the best, the best news source, the best information source, definitely for our clients. And obviously this podcast is open to the public, so we're trying to start there. And like you said, this is free. You know, the people can turn this on and it's completely free. But hopefully, you know, some of the listeners out there that, you know, maybe that don't work with us directly or don't have an advisor will take some of this information and it'll help them get in a better situation. Yeah. You know, make, make better decisions. Because I've had, I mean, I've had friends, I've had loved ones that, uh, you know, I wasn't always a financial advisor, you know, and, and not every family member wants to, you know, hire a, a family member, financial advisor as well. So I've heard stories of people I really care about. Like you said, it's like, oh gosh, why did you do that? You know, <laugh>,

Speaker 2 (25:08):

Oh. Like the people who use GoFundMe as the new way to hedge your bets when there's an unexpected death. I look at things like that and it makes me think I'm not doing my job well enough because people are relying on GoFundMe instead of life insurance.

Speaker 1 (25:23):

Yeah. Talk through that a little bit if you would. 'cause I, we had, we didn't talk about that before, but I think that's interesting. 'cause I've seen that. I think you know what you're talking about, but can you elaborate on that and what people are doing? Yeah,

Speaker 2 (25:34):

Joe, so I've seen, and this is something, if it dates me any on my Facebook feed, <laugh>, but I,

Speaker 1 (25:42):

That's all I use. Facebook and LinkedIn is all I use. Yeah. <laugh>,

Speaker 2 (25:45):

Same here. So I've seen, um, a lot of people over the past few years passing on or forwarding, uh, GoFundMe campaigns where Yep. Yep. A family member passed away or a child unexpectedly died and they didn't have life insurance. So they're asking for crowdfunding to help offset their burial expenses, funeral expenses, medical expenses. And Joe, I, I lost a child. I don't remember if I shared with you, but my son killed himself almost nine years ago. Yeah. And so I've had a personal experience with life insurance and it's just frustrating to me when it's so easy to buy life insurance and on kids, it's so cheap. Yep. It's really inexpensive. Right. And then you see people who, for whatever reason, don't make that choice and decide that crowdfunding is the way that they wanna manage their expenses. Right. I don't think that that's a viable solution. And it's definitely damaging to our society if we're going to reinforce that kind of behavior.

Speaker 1 (26:54):

Yeah. Well it's, it's no guarantee that you're gonna get what you need and Right. It's definitely, definitely taking a risk and doesn't mean it's bad to support campaigns, you know, but again, it's, it's, uh, it's definitely reactive and instead of taking, taking charge, taking control, being proactive, taking $20 a month, you know, or something very minimal Yes. And covering that, but, you know, it's no different when you're heading into retirement. There's, there's risks, you know, we talked long-term care, there's still, your spouse might have income replacement needs, you know, potentially. 'cause when one spouse passes away, you're gonna, you might lose a pension, you might lose social, you're gonna lose one social security benefit. Um, so there are, there are things to consider there. Um, and, and I want to talk too about, and, and kind of not only about the industry, but about insurance agents and, and practices.

Speaker 1 (27:49):

And one thing that I was very intrigued by whenever we spoke, I think, um, quote, you know, every Mm-Hmm. <affirmative>. So yeah, you've got, you've got temporary insurance, which is term, and you've got permanent insurance, which is permanent. And it doesn't mean it's whole life, but, you know, whole life is one type, universal life variable, universal life index, universal life. There's all these types that are permanent. They're designed to, to stay in existence for the life of the insured. And again, it's term quotes very straightforward. Right. 20 year it's a commodity. 20 year it's a commodity 20 year term. Okay. What's, what's it cost? And I, if I go in and look at five different quotes or illustrations on term coverage, and they're all 20 year term, you know, I, I don't have a lot of things to evaluate. I'm pretty much looking at the price, I'm looking at the strength of the insurance company. But when someone looks at a permanent insurance product, I think that that notion of it's, well, it's, you know, it's kind of the same. I just need to look at the price.

Speaker 2 (28:53):

Oh, that's a mistake.

Speaker 1 (28:55):

Yeah. It all, it all comes down to the illustrations. Mm-Hmm. <affirmative> that are run by the agents. So I'm gonna tee that up for you. Talk about the pitfalls of what happens in that illustration phase.

Speaker 2 (29:09):

Yeah. So for those who are watching and are less familiar, an illustration is just a, um, paper document that kind of projects what your policies, cash values, and death benefits Right. May look like in the future. Yep.

Speaker 2 (29:26):

But the pertinent word that I said is may look like <laugh>, um, because you have to make assumptions. Right. The, the interest rates that are in effect right now may not be in effect next year, or certainly not 20 years from now. Yep. And insurance companies have the ability to change what amount they're charging for the insurance within certain, uh, variables that are approved by insurance commissioners. So there are several things that could change from the point that you purchase the life insurance until the point where you need to take money out for retirement or certainly until you die. And so these projections are made with certain assumptions that usually, honestly, Joe, I'm gonna keep it real, are best case scenario. They best case scenario,

Speaker 1 (30:18):

A lot of times they are. Yeah. Yeah.

Speaker 2 (30:20):

And so when you get it and you see that best case scenario, and you don't have a great understanding of how complex this product is, right. You get that piece of paper and you go, okay, I will file this away. I know this is how my policy is going to perform, and that's all I need to know. Right. And unfortunately, that can lead to a lot of pitfalls. And I would even suggest you need to be reviewing your life insurance probably annually if you own some kind of permanent insurance, just to make sure that those variables haven't changed. Because the only thing that an illustration does is prove that ink sticks to paper

Speaker 1 (31:01):

<laugh>. And I love that, that phrase, I'm glad you said it again. Uh, we talked, you know, the other day about that. And, uh, I'm gonna have to write that one down to remember that because that's so true. You know, and two things that you just touched on there. The first one is the agent or the advisor is the one who gets to ultimately choose what's, what assumptions are used. Yeah. And the insurance companies will just run current assumptions. Like if you don't tell them, they'll just say, oh, well, the current interest rate is four and a quarter. I mean, I'm making up a number. Uh, so yeah, right

Speaker 2 (31:38):

Now it's 2.9.

Speaker 1 (31:39):

Yeah. <laugh>. So, yeah. So, so we're gonna run it at 2.9. Right. Well, if you don't say anything, they won't do anything else. So what we do is that, just like in our retirement planning, we always wanna take a conservative assumption. So take the, the current environment, make it a little less favorable in our assumption, and then use that in the illustration. Because what that does is it says, okay, if things get a little bit worse from where they are today, then we we're still gonna have enough premium dollars running going into these policies so that they can stay in effect. Because I'm sure you've had, you've heard stories of this, Cheryl, but what happens if you assume, you know, too high of a rate of return or whatever it may be inside the policy, what happens if you don't review it and you, you know, time goes on, uh, some, there's, there's an event that happens, you get a letter in the mail. What does that letter say? <laugh>?

Speaker 2 (32:38):

Okay. So I, this is actually the situation that motivated me to start my own company and educate people about these products. Yeah. Because my job, when I worked for an insurance company, my very first job was to work with policy holders who had their agent pass away or get out of the business or disappear for whatever reason. Yep. And at that time, you had a lot of people who had purchased universal life insurance policies that assumed that the credited rate would be 12%, but the insurance company really had the ability to change that rate all the way down as low as 5%. Now, I'll tell you, 5% is a lot better than what you can get today, but that was worst case scenario back then. And what happened was interest rates came down big time. The insurance companies adjusted what they were crediting to those policies.

Speaker 2 (33:32):

And so people were getting five instead of the 12 that they thought they were gonna get when they purchased the insurance. And what happens with a permanent type of life insurance where you have a change in those assumptions is that I had policy holders who were calling me saying, I just got this letter that says I have to pay $20,000 a year, or I'm gonna lose my life insurance. I'm on a fixed income, what do I do? Wow. You know? And so, and what you don't realize is that these little old ladies or old gentlemen, they're now uninsurable Sure. They have chronic health conditions, which would make it so that they couldn't get life insurance.

Speaker 1 (34:14):

Right.

Speaker 2 (34:15):

And so that exposure to consumers and those experiences is really what motivated me to do what I do today, just because people don't understand what they're buying so often. Right.

Speaker 1 (34:28):

Yeah. So you, you need to, I think, you know, you need to understand the assumptions that are used and the possibilities, you know, that could happen. And, and then, you know, you said it, and I get it, you said for you insurance policy owners, you need to review your policies annually. Well, most people are not doing that. And so I as an advisor say, your advisor should be doing that for you because you don't know how to do that. I mean, most people know no clue where to start. Your advisor or the agent should be doing that. And whenever we get, you know, new, new client relationships and clients have these products, those reviews are not being done. Um, I had, I had one, you know, recently where, ran into the exact same thing and looked at all the, the insurance policies and actually found out that the person wasn't even paying any insurance premiums.

Speaker 1 (35:25):

That they had a, they had a cash value that it was, they were just using the cash value. And guess what? It was on schedule to lapse. There was multiple policies on all on schedule to lapse within a 12 to 24 month period. This person was in their, in, you know, in their sixties. So that, that's a lot of money that again, and there, there was still over a hundred thousand dollars of cash value, you know, in, in the policies. So that just boom, would evaporate be gone, uh, because the, the annual review just wasn't being done.

Speaker 2 (36:02):

Yeah.

Speaker 1 (36:03):

So it's up to the advisor, the agent, we do that in-house. We, you know, many of our clients may not even know that we do this because, you know, it's a, it's a back office sort of thing. But we, we track the original illustration with the current cash value and then make sure that it's on track. And then, because if it's not on track, it's much easier to make a slight adjustment now. Mm-Hmm. <affirmative> rather than get that letter in the mail that says, you know, by the way, you owe $20,000 to keep this policy in enforced, if you don't pay it, then it, then it's gone. You know, then it, it lapses.

Speaker 2 (36:34):

Yeah. Yeah. And you know, back when interest rates were in the double digits, there were so many life insurance policies that were sold making the assumption that you only have to pay for 20 years and then you don't pay again. Right.

Speaker 1 (36:48):

Right. Exactly. But

Speaker 2 (36:49):

That was an assumption that was made assumption by the insurance agent. You know, there's still insurance charges that come out every year no matter what the type of permanent life insurance is. Yeah. And so, um, you're right. There's a lot of people who might think they're paid up and going to get an unwelcome surprise in their mail before too long.

Speaker 1 (37:08):

Well, it happens with a lot of products that are sold as guaranteed, but they're not guaranteed. Yeah. You know, and, um, I'm not, I'm not for or against, you know, I can't, I can't throw a blanket statement and say all whole life or all universal life or whatever. But, you know, I think, I think sometimes, you know, like whole life, for example, I think is consumers think, well, no, this is, it's guar, you know, sort of guaranteed can't, can't fail, can't blow up. That's not true. You know, so you just, it just needs to be reviewed and really your advisor needs to do it for you. You know, we would do that if, if you're out there listening and you have a, a policy you don't know, you know, you're hearing what we're saying, you're like, I have no idea what they're talking about, uh, then just reach out to us and we're, we'll be happy to review those for you, Cheryl. Um, I, I just noticed the time and I wanna be sensitive. I, so I have one more question for you, and we kind of already touched on it, but where can, if someone's out there listening and they do wanna evaluate for themselves, how can they best use your, your site@winkintel.com to look up things like annuities, life insurance, and to really evaluate them, how can they best do that?

Speaker 2 (38:24):

Well, thanks Joe. I appreciate that. I'll tell you that there are several ways that one can educate themselves on life insurance and annuities on the Wink Intel website. Um, first of all, there's a tab at the top that says industry news that, um, has every article that I've written, and I think I've written over 500 articles over the past 17 years, um, to educate people about these products. So anything under the, you know, Cheryl's articles tab would be a credible source of information because I don't endorse any company or product. Yep. Um, another good place is just, um, the annuities 1 0 1 and Life Insurance 1 0 1 that I created on the website under, um, the basics. Yep. And those are just areas for me to educate people on at a high level, what are these products and how do they work? But honestly, Joe, I have a lot of consumers who contact me through the website and just email us and say, I have this, I don't understand it. Can you help me <laugh>? Um, it happens more often than not, and I'm always happy to help people if I can.

Speaker 1 (39:31):

Yeah, that's awesome. Now, again, it's wink intel.com. Definitely Go there and check it out. I'm, I'm going to use your website, Cheryl, uh, undoubtedly in the future, whenever I come across a new product I'm not familiar with. 'cause you have some analysis tools on there as well, where I think you can actually look up product information specifically, right?

Speaker 2 (39:54):

Yeah, I do. We don't make it available to consumers just because compliance people would have a fit with it. Gotcha. But it is available for financial professionals, so. Awesome. You know, if some, if somebody's working with a financial advisor who doesn't use it, <laugh>, they might suggest that they use

Speaker 1 (40:11):

It. Absolutely. Well, thank you again for your time, Cheryl. This is something, you know, I understand why people get overwhelmed when they're getting into retirement because this is one topic, and I could talk on this topic. Um, you and I could sit here for hours, upon hours, upon hours. You, you know, life insurance, annuities, there's so many layers to that. It's just one topic, you know, there's so many things that retirees are faced with and, you know, we're doing our best to get the information out there. But I think, you know, if you're out there and you, you're unsure, I think you just, you need a plan. You need someone that can help you, um, to sort through all this. You can certainly keep tuning into the retirement power hour and maybe after a period of, you know, 8, 9, 10 years, you get enough, enough information where you feel more confident.

Speaker 1 (41:01):

But it's just so difficult with all the things that are out there. I just did a, a recording earlier today on a, you know, on a different topic. And it's hard, it's hard to do these interviews in a short amount of time. But, um, but I, we, we covered a lot of good ground. Cheryl, I don't know if we answered the question, does life insurance make sense to retirement? I think it could definitely. And you, you brought up some good points too, but it's all about evaluating, getting good information. Any final words, Cheryl, that you'd like to leave our listeners with?

Speaker 2 (41:30):

No, I just wanna thank you, Joe, for doing what you do, because I have run across some bad actors in this business, and certainly, as I said, there aren't a ton of 'em, but I'm grateful for the people who do act in their client's best interest and really wanna help people. So thank you so much for what you do.

Speaker 1 (41:47):

Well, I appreciate that, and, uh, I cannot take credit. We have a great team here and a lot of those practices around insurance. Yeah. I learned from my, my partner Scott Carson, who, you know, many of our listeners and clients will know. And, uh, I've been fortunate to have some really good mentors. So I, um, again, I, I have to give credit to where credit's due for all of them as well.

Speaker 2 (42:08):

That's awesome.

Speaker 1 (42:09):

Everyone listening, if you're watching on YouTube, you can check us out on Spotify, on Apple to listen to the podcast. And same way, if you're listening to the podcast, we have videos on YouTube. We have other videos on YouTube that, that cover additional topics that you won't hear on the podcast. So check that out or go to carsonallaria.com for more resources. Thanks to Cheryl Moore. Thanks to everybody for listening. That does it for this episode of The Retirement Power Hour podcast, where we help listeners invest wiser and retire better. Until next time, take care.