The Power Of Insurance As Protection For Yourself And Your Family
Most people think that insurance is just something that gives you money in return if something happens. Looking deeper into its technicalities, you can understand how it can be a protection for you and your family by taking advantage of its different types along with its different policies. Debbie Bloyd then talks about the information you should be getting from reputable financial advisers. She discusses the four financial quadrants that can help you segregate your finances for a better understanding. Furthermore, know what to watch out for if you have seniors in your family. Debbie explains why you need life insurance, not for yourself, but for your family and what it can do for them in case something unfortunate happens.
Listen to the podcast here:
The Power Of Insurance As Protection For Yourself And Your Family
Behavior Of The Economy
We talked about money and finances, and we’re going to talk about what the talking heads talk about, that is pullbacks in the market. What does that mean? Let’s get some perspective on this. The stock market, I know if you’ve been looking at for any length of time, it goes up and then it goes down. It’s going to go right back up again and then it’s going to go down again. It’s done this since it started in the ‘20s. We gain perspective by considering the S&P 500 Index. When we do, we see that a majority of the declines fall within the first 5% to 10% range with an average recovery time of one month. That means that the stock market will decline by 5% to 10% and it’s going to take about a month to recover. The tricky question is, when is that going to happen? The declines that happened between 10% to 20% occurred about every three years with an average recovery period of approximately four months.
If you get out when the market starts going down to 20%, you’ve got to be in it four months for it to crawl back up. You just don’t get out and stay out. That’s never the intent. They can be emotionally unnerving for most people and I know it is, you’re not going to generally undermine a well-diversified portfolio and we don’t want you to think this is the signal to panic. Even more severe pullbacks can happen between 20% to 40% and the recovery time is only fourteen months. You could lose 40% of your money on what this article is talking about in the stock market and you’ll head back to recovery on the way up in fourteen months. That’s huge. In contrast, pullbacks of 40% or more, while they occur less frequently, it takes a recovery time of 57 months, and that can potentially compromise your financial plan. It’s fine if it takes six months but what if it takes 57 months? That’s five years. Do you have five years to wait? “I do. I’m not going to retire for another twenty years,” but do you?
Those pullbacks above 20%, even the ones that are 40%, which have registered the longest recovery periods have been associated with economic recessions. When evaluating a potential market pullback, the probability of a recession is the key insight factor to consider when determining whether or not to simply reduce your equity exposure. When the market dropped, everybody freaked out and I had all my people stay in. Everything is fine because there’s not a recession looming. We got the tax reductions. The S&P 500 are stocks of companies. They’re not how we, the people, feel. They’re how the companies feel. The companies are investing money, buying more stuff, expanding, and they don’t think a recession is coming. That’s why we have to pay attention to what the businesses are doing, not what you and I are doing. They got a big tax rate cut and they said they’re going to bring money back from overseas at a reduced price. Yay for corporations. That means they’re not looking like it’s all doom and gloom out there, so they’re still going to be doing fine.
Let’s talk about market investments. Equity and fixed income markets continue their strong performance as spreads on most fixed income sectors tightened further. The Dow Jones Industrial Average and the S&P 500 Index are up 18.5% and 14.5%. The market performance reflects a number of important dynamics, including strong corporate earnings, accelerating economic growth, still accommodative monetary policy, and robust consumer and business confidence. That’s all great news. When you’re listening to the news every day and you’ve got the talking heads turned on, please realize that it’s not all doom and gloom out there. Call me if you have questions about what’s going on in the news and what that means because the headlines are misleading. I don’t want you to get all frightened when the stock market is doing what the stock market does. Have a great day.
Women And Life Insurance
We’ve talked to life insurance before, but new information keeps coming out. I feel like I have to keep repeating myself and update because you don’t hang on my every word. You’re not reading every episode so you might have missed this. Four reasons why women need life insurance. Typically, you have thought about life insurances, whether it’s a man or the woman. Men usually need life insurance if they’re the ones working or have a bigger salary. It’s hard to juggle being a single parent. It doesn’t matter if you’re male or female. To get the kids to school, get all their stuff done, go to all their events, and keep a full-time job, you need help. I can’t tell you how many stories I hear. That’s why I bring up all this stuff because it’s real-life. It’s clients that are here locally that have had issues with a husband with a stroke. Maybe he needs disability insurance or long-term care. They never thought about it, who thinks anything is going to happen to them and their world gets complicated when 1 of the 2 members of the team is not there, especially if they need extra medical attention.
Our focus is on life insurance. It doesn’t matter if you’re a male or a female in the marriage. You’ve got a single parent, you cannot stretch yourself that thin. You just need extra money to make the world go to get extra help there. This is why you need to talk to your financial advisor, someone like myself, someone that sells you insurance, which I do that as well. I can help you decide not only how much you need, but if you need it at all based on your assets. I don’t want you to over-insure yourself and you’re not going to need it in the end. What I want is that you say, “That was the smartest thing I ever did. Who knew that I would need it?” Now more than ever, women are redefining roles in and out of our home. We have more options than ever. We have full-time careers outside the home, home as a career, full-time homemakers with stops nearly everywhere in between.Financial aspects, as critically important as they are, become almost footnotes to the real issues of retirement. Click To Tweet
Life insurance needs to be discussed for women. While other types of insurance such as health, auto and homeowners are the top of the mind, according to some studies, 48% of women are without any type of life insurance. While this number has risen about 5% in recent years, it still isn’t high enough. We are missing an opportunity to help our families. Here are four key reasons why you should understand and look for life insurance if you’re a woman. Number one, the financial gain and value regardless of employment or marital status. Many women make more money than their spouse or they’re working as a single parent and they’re head of the household. For stay-at-home moms, estimates valued their contribution at approximately $120,000 a year. This is everything from childcare, cooking, housekeeping, studying with kids, running kids around and chauffeur. If you had to pay a college kid, especially in this town, $10 to $12 an hour to run your kids around and do all these things, could you afford it?
Number two, life insurance replaces income because contributions bring value and that value needs protection. According to the Insurance Information Institute, if a stay-at-home spouse dies, male or female, the family would need someone to handle the household duties. That’s no small task. The cost would be substantial and a life insurance policy would help cover those expenses. If one’s income helps support the individual, their children or a partner, a life insurance policy will provide financial support for them in case of that individual’s death. This can not only help cover the cost of the funeral and anything related to it, but also cover everyday expenses and paying off a mortgage. Of course, it’s unpleasant to think about a plan for one’s own death, but it’s going to happen.
Number three, life insurance protects one’s interest. If the woman is single and doesn’t have any children, she might still need life insurance. If she carries a high amount of debt, has a cosigner for a loan, has a mortgage or takes care of an aging parent, an ill parent or a family member, having life insurance will help protect her estate and cosigner or those she cares for. Don’t think of it as just a one size fits all. It’s not. If you were to be gone, how are we going to replace your income in whatever situation you’re at? Another idea is if she doesn’t have insurance but does have debt, typically, the executor of the estate will sell whatever they can to pay off those debts when she dies. If there’s a cosigner and a loan, however, that person will be responsible for repaying it. If these scenarios do not apply, you might want to put off purchasing life insurance temporarily but keep in mind, it’s less expensive to purchase a policy when one is young rather than old.
Life insurance premiums are priced largely according to the average life expectancy for gender and age. As you know, women pay less than men because men have a shorter life expectancy than women. In fact, women on average outlive men for about five years. What I see in doing all the mortgages and financial advising that I do is that because the men pass away first, the wife often has to liquidate IRAs retirement plans to nurse him through his last years of life. You typically just don’t drop over quickly. We may have lingering health problems, a lot of medical expenses, and long-term care assisted living that can deplete your assets quickly. If you don’t have long-term care disability insurance, it’s going to suck out whatever assets you have. What happens after the man dies? The woman is left maybe with the house that she hasn’t had to mortgage, but she’s liquidated a lot of her money. What does she have left to live on for the rest of her life?
If you’re wondering how much and what type of life insurance is needed, here’s a tip. Multiply income from 3 to 15 times to arrive at the amount of life insurance when considering buying. I know that seems a lot. For example, if you’re a 40-year-old woman making about $50,000 a year, you might want to look at buying a policy that’s worth about $750,000. That’s going to carry you for the rest of your life. The general rule of thumb is it does vary by age, so you need to go to a professional person that looks at insurance and shop lots of companies that are writers, co-spouses on things and kids. You want to make sure you’re being insured properly. Depending on the type of insurance you choose, the amount your clients are going to purchase are going to depend on their goals, needs, budget and a family situation. Go to someone that’s a fiduciary. That means that they’re licensed to do insurance products, but they’re going to do what’s in their best interest of you rather than the best interests of commission for them.
The bottom line is life insurance is a key part of one’s financial success and security unless you’re going to self-insure. Self-insure means that you’ve got plenty of cash. If anything happens to you, you’re going to be spending your cash down. Maybe you don’t have a lot of estate to leave to somebody and you don’t have anyone to leave anything to. That’s one thing but if you deplete all your assets, then you go on Medicaid. You don’t get choices on where you stay for long-term care. You lose your choices for a lot of things and I don’t want that to happen to you. If I can help you, talk to you about insurance and products, different things, different riders, and how much coverage you should have, please give me a call. I’m here. I’m helpful and I will give you a lot of information to study up on before you make a decision. I want you to make an informed decision, specifically for you.
Four Financial Quadrants
I see customers every day in my business where I do loans and I talk about long-term care, life insurance, and health insurance. We also talk about property and cashflow. We talk about every kind of financial dealing that you’d ever want to talk about. I made a chart that I can go through with every person. If this interests you and this is something that you want a copy of or you’d like more information or you’d like me to sit down with you and go over the basics of financial advising, this is it in a nutshell. This is what I do with every customer. Some people are scared often to come in and talk to a financial advisor to think we’re trying to sell you something or we’re going to cost you a lot of money. The opposite is true. If you’re talking to a reputable financial adviser, our job is to take a look at your overall financial world and see if there’s anything that you don’t like about it that we could maybe help you fix.
Imagine this if you want to draw this out if you’re at home. Make a big plus sign and you’re going to have four quadrants of space, upper left, upper right, bottom left, bottom right. On the top left-hand side, you’re going to write the word “cash” and on the top right-hand side, you’re going to put “investments.” On the bottom left-hand side, you’re going to put “car” and on the bottom right-hand side, you’re going to put “home.” These are the four quadrants that I think about when I talk to people and go through with you and walk through what you have. If you talk to people on a general basis, they would say, “I might have enough for retirement.” “I don’t know if I have enough for retirement.” Let’s find out. I’m going to walk you through this. On the “cash,” the upper left-hand side, this is where you list out what you have in CDs, your checking account, savings accounts, and maybe you have mutual funds. This is where all that money goes, the liquid money that you have.
On the right-hand side, you’re going to put “investments.” This will be your 401(k), maybe a pension if you have it, 403(b), teacher retirement salaries, and anything that is going to be paying you over time as an investment. Depending on what life insurance you have, if it’s paid for, it goes in one place. If it’s not paid for and you’re paying on it, it goes to another place. It’s a long-term investment though. That’s the way we look at life insurance. On the bottom left-hand side, you put your “car.” This is where you detail if your car is upside down. That means, are you paying more for it than its worth? You write down the insurance you have on your car and anything else that we need to know about your car. On the bottom right-hand side, you write down stuff about your home. You put your insurance for your home. How much is your home worth? How much do you owe on your home? What’s going on with your home? Do you need money from somewhere to fix up your home? These are the quadrants that we’re working with.
As a financial planner, I’m going to go through each of these quadrants with you and say, “In the cash area, do you have money that is not performing the way you want it to perform?” You say, “Debbie, it’s cash. Cash doesn’t perform. It just sits there.” No. You have lazy money. Lazy money is that CD that’s making 0.001% in the bank but there are other ways for you to make money off that cash that’s safe and has a better return. I can get you almost 2% on that money on some long-term investments. A lot of times, we’re going to sit down with this cash. How much do you need now and how much do you need later? Not everybody has mutual funds that they need right this moment. Some people have mutual funds that could be over on the investment side because they’re not trying to touch that money. The investment side of the equation, we talked about your 401(k) and rolling those over if you haven’t rolled them over to an IRA where you have more freedom to invest differently. I’ve rolled over all my old jobs and I have one IRA for all of it. I have a performance that I want that money to do.People, as they age, are susceptible to all kinds of get-rich-quick schemes. Most often than not, it’s by their family. Click To Tweet
When we sit down and talk together, it’s like that. “What do you have? How is it performing for you? Is there something that I might know of that could perform possibly better for you?” It’s just in that quadrant. We don’t have to mess with anything else. The same goes true for your car. Do you need a new car? Do you need to fix your car? Do you need some money to work on your car? How is your car insured? If you have your house and car with different companies, you’re not taking advantage of the insurance system. The way insurance is packaged is if your home and cars are together and then you have investment properties, if you can put those all under one company, you’re going to save yourself a lot of money on premiums. If your insurance agent hasn’t told you that, they are not servicing you correctly. They’re not sitting there doing the best job for you. If you’re a landlord with lots of policies, there’s a policy that can have one deductible for all of your rental properties. You need to call me and let me explain to you the product, what it has, what it doesn’t have and what’s best for you.
If you have an investment property that’s not perfect and it’s got a lot of issues, then maybe you need a different policy than what you have. Maybe you’re paying too much for coverage. I’m with Rollo Insurance and I’m looking at insurance policies for landlords and homeowners every day. One of the biggest questions is, “What do you want this to do for you? If your house burns to the ground, do you want actual cash value minus depreciation or do you want to replace this house like it’s brand new? It’s two different policies and two different prices. Not everybody wants top dollar and then some people have a policy that does give you a cash value. That’s minus depreciation. If you have an older house, then you’re not getting what you think you need for it. You’re going to be upset when your insurance doesn’t pay. A lot of these companies have new and improved policies. MetLife, Travelers, and Safeco have amazing policies where you package some of your products together and they give you a bunch of stuff for free. If you don’t have one of these major companies, call me. Let me shop for it. Let me see if I can do a better job, give you more insurance for less money, and make the money up in your left-hand corner, the cash, go up some.
We look at your home in the bottom right-hand corner. Tell me about your home. Do you still owe money on it? What’s your interest rate on that? Would it make more sense to take cash from the upper left-hand side and pay off your home? Is your home at a low-interest rate and you can make more on your cash and mutual funds than you can own your home? I have seen some people with interest rates still in the 6% and 7%. That is insane. You need to know what your note rate is and let me refinance you out of that and save you money. The money that you don’t spend on your mortgage payment, you can put in mutual funds. What I see with most people is you don’t need to make a whole lot more money. You need to change the money that you have. Maybe you’re expending more money than you need to.
Insurance is expensive. A lot of this stuff sounds great in theory. You watch the infomercials and you decide you need it, but that’s not for everybody. Can you afford it? What if you have a life insurance policy? Do you want to change that life insurance policy from a term life? When you get to be 70 and you have not used up that life insurance policy and you’re still alive, that has not paid off. Do you want to turn that into an annuity before you can’t anymore and let that money come back to you and your heirs? Talk to me about that. If you have a term policy, let’s find another use for that. Let’s take care of it before that money goes away and you don’t have it anymore. There is a point in life where you become uninsurable. I saw an infomercial one time. “If you’re 75 or older, call today. You can’t be turned down.” No, but your premiums are expensive. Are you sure you can afford it? Let’s sit down together and go over what you want, what you can do, and what you can’t do with your money based on what you want that money to do.
If any of these quadrants have problems and you have questions about your home, your car, your 401(k) money or about the money that’s up in cash in that top left-hand corner, give me a call. Let me sit down with you. There’s no obligation, and of course, I have the credentials to talk to you about all of these things. If you don’t have a will, we’re going to cover that too. That doesn’t fit in one of the quadrants but it’s important. Do you have a policy that takes care of you when you get old? Do you need one? Can you self-insure for that? There are lots of questions we can go over. My name is Debbie Bloyd. I change names at the end of the year. That’s a new name and my website that you can find me on every day is MoneyStrategiesWithDebbie.com. Email me at [email protected] or call me. My direct phone number is (979) 220-3018. I do financial advising and I’ve been in the mortgage business for many years. I’ll be more than happy to bring in professionals to talk to you about the importance of a will and all the information that you need to have handy on that top 25 list.
I can’t tell you how many people emailed me, saying, “Give me those top 25 documents that I need to have my hands on again.” I reproduce that and email that to people every single day. If you need that list or any other list that I have or you want to come in and sit and talk to me. It’s no obligation. You can also just call me. We talk on the phone. I know I’m in several cities with this radio show so I get people calling me from every city. I’m not in every city every week. Call me and let’s talk. It’s a free consultation. We can spend 30 to 45 minutes and I’m going to ask you questions about your life, where you’re at in your life, and about your health. We’re going to cover how is your mortgage going to be paid for? Are you going to be mortgage-free by the time you retire? Do you have enough for your family to get by if something were to happen to you, if you were to have a heart attack, stroke or cancer? I have to answer to my clients every single day of ideas that I have for them to make their money stretch.
My job is to make sure everybody has enough money to do what they want. However, I’m not a miracle worker. It’s not magic. You have to start young and save up money. A lot of people come right before they retire and that puts us in a tough position or situation where we have to look at all the choices and we’ve got to go through everything, your home and your work. Do you need to go back to work after you retire as a second career? How is this going to impact where you live? Do you need to do a reverse mortgage on your house to free up some money because you don’t have enough? Reverse mortgages are great for that. It’s no longer the “bail me out, I have nothing” loan. It makes money inside of a reverse mortgage. It produces income for you. That way, you’ve got the cost of living increases and you’ve got your money going up there if you don’t take it all out at the closing.
Let me give you some diagrams and show you what I can do with your money. I am a fiduciary. I have to put you in a better position or I can be sued, and I don’t want to lose my license. I’m going to talk to you about your house insurance or car insurance. What kind of umbrellas do you have? Do you need that? Do you need life insurance differently than what you have? Do you need disability insurance and critical care coverage? Do you have a term policy that needs to be updated to a new term policy that will pay you when something bad happens before you have to die? That’s called a death policy. That’s what most people have. I know this is a lot of information and you can’t take it all in at the same time. You might want to do an annual checkup with me. You might want to come in and there’s no charge to that. Sit down and talk about what your plans are and where you’re going. Let’s find some holes that we need to fill or make sure, “You’re doing an awesome job. There is nothing you haven’t thought of.” That’s usually not the case but I would love for that to be the case. I would love for you to have everything done. I could just sign off on it and go, “Great job. Well done.” Please call me at (979) 220-3018.
What kind of things do you go to your financial advisor with? Is it, “How am I going to have enough money for retirement?” Are you asking more personal questions like, “What do I do with my parents?” If you’re like, “My parents recently passed away. My father was 89,” you, too, might have an aging parent. Not only am I planning for my financial future, but I’m planning for their financial future as well because people are living longer than ever. A financial advisor like myself is going to become more of a therapist than anything in the years coming up. If you’re not working with someone that takes your calls, listens to your concerns, can help you plan and be more like a therapist, then maybe it’s time you change financial advisors. People are getting older and healthier, and they are living longer than ever before. Only in your 70s, you’re still having to worry about your aging parents, maybe in their 90s.
Financial aspects, as critically important as they are, become almost footnotes to the real issues of retirement, helping clients deal with problems of aging, both with their own challenges and dealing with aging parents. I see people getting older, living longer, and outliving their benefits in a lot of cases. Adult children in their 70s are worried about having to take care of their mom that’s in their 90s. You go out to dinner with people at the age of 70 and by the time they are talking about the main course and it sits down in front of them, they’re talking about their aging parents. What do you do with a mother that won’t go into assisted living and you’re too old to take care of her? This is the reality for many of my clients.
All throughout history, no one knew what Alzheimer’s was, but it was there only and no one lived long enough to get it. Half of Americans at the age of 85 get the disease. This is just one aspect of how I’m going to be dealing with my clients as they age. You’re going to get the calls about, “What do I do with my dad that doesn’t have enough money? I can’t talk him into selling that rental property to pay for assisted living.” These are the questions that I get. “I have an aging grandmother over 90 and she has property, but she doesn’t want to sell it because she says she’s going to move back there and live there by herself.” You and I both know she’s not. How do we talk with someone of her age and mindset into giving up money with a property that could pay for her to have extra help in the home?It's unpleasant to think about a plan for one's own death, but it's going to happen. Click To Tweet
These are things that you need to be able to talk to your financial advisor about before they come. Before your mother hits 90, maybe in her 80s, you need to have these talks. You can’t let it go forever and ever. I got a call one time from a reverse mortgage client that had sold her house and moved in with her kids. These kids in their 50s are trying to talk her into buying an over $800,000 home so the kids can live in the neighborhood and send their kids to the schools they want to. They’re using my client’s assets to better their lives without any regard to my client having that money accessible for her old age.
They’re using her and I had to call my client back on a different line that her daughter couldn’t get on and say, “Why are you letting these grown adult children live off your assets when you need them?” She’s in good health. She just fell once and they got scared. I’m beginning to think that they told her that she had to move in with them so they could get the use of our assets. This is going to start happening more often than not and it’s what I fear. Clients, as they age, are susceptible to all kinds of get rich quick schemes and people selling them out from under their assets, but it’s not what you think. It’s their own kids and grandkids, not strangers.
If you have questions about your financial future or your parents’ financial future and you want some options of how they can hang on to their money yet, utilize it for maybe some home healthcare and maybe they need to go into assisted living. Do you want to know how to provide for that? Please give me a call. I’d be happy to assist. I work with families every day trying to figure out how to stretch grandmother’s retirement and maybe some of her assets in order to pay for her, so it doesn’t become a strain on her kids and grandkids. Let me give you an email address to get ahold of me anytime. It’s [email protected]. I look forward to all your emails. I’ll be happy to answer all the questions. If I don’t know the answer, I’ll find it out for you.