Bill Black: Life Insurance Facts You Need to Know Now

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[Music]

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foreign

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with annuities where every single week I

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welcome a celebrity guest expert that

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can help you maximize chapter 2 of your

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life listen learn laugh and love every

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minute of the most unique Financial

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podcast on the planet let's get to it

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[Music]

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welcome to fun with annuities I'm your

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host Stan the annuity man America's

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annuity agent licensed in all 50 states

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as you always know I'm always you know

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pushing myself out there as the source

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for annuities and I consider myself that

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because I'm the brutal uh factual

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walking middle finger of annuity truth

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I'm proud of that but one of my longtime

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friends in the business is arguably the

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top

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life insurance expert in the business

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been doing it for almost 50 years even

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though it looks vibrant and young he's

1:03
been on the podcast before but he's it's

1:05
been a while because he's busy but I

1:06
wanted to get his Insight on what's new

1:08
in life insurance and have some

1:09
conversation welcome back to the program

1:12
the infamous six foot eight and a half

1:15
inch Bill Black

1:18
thank you for having me Stan good to see

1:20
you again that that's is that the best

1:21
introduction you've ever gotten it's one

1:24
of them one of the best if not the best

1:26
absolutely another fun fact about Bill

1:28
that I love is number one he he in

1:31
addition to being

1:33
what I consider just a just it's not

1:36
even arguable he is he is the in my

1:38
opinion the top life insurance expert in

1:40
the country he's also a triathlete

1:43
and he I know he looks a young

1:45
environment but he's he's getting up

1:46
there in life you're in chapter two

1:48
right Bill oh yeah yeah hard to believe

1:51
hard to believe are you staying

1:53
uninjured

1:54
yeah for the most part I got a little

1:57
bit of something nagging me right now

1:58
but for the most part I don't suffer

2:00
those injuries like a lot of other

2:02
people because I I'm careful about it

2:04
yeah you're flexible you're flexible man

2:07
that's good

2:08
um

2:09
like I said Bill's been doing this life

2:11
insurance gig for a very very long time

2:14
and Bill if you you were looking at

2:17
today at the time of this taping people

2:19
look at the date

2:20
um

2:22
what's what's getting your attention or

2:24
is it just the same old same old what's

2:25
going on out there yeah you know what

2:27
what's getting my attention is life

2:30
insurance well you know somebody told me

2:32
one time not too long ago that everybody

2:35
uses their phone for everything but

2:37
talking

2:38
right you've got your music on your

2:41
iPhone you've got your texting on your

2:43
iPhone you've got email on your you've

2:44
got shopping on your phone right sure

2:46
life insurance is kind of gone the same

2:49
way and so what's happening is you have

2:53
these different life insurance policies

2:55
now you still have term insurance you

2:57
know that covers the risk for the

2:59
smallest outlay you're renting insurance

3:01
and there's not a doggone thing wrong

3:03
with that nope you got it you got a A

3:05
need you wanna cover that's temporary

3:08
term insurance is the way to go don't be

3:10
buying the high cash value stuff

3:12
but what has happened is interest rates

3:16
have been in the floor right how do we

3:18
improve this well one of the ways to do

3:21
it is with these indexed policies and so

3:24
people are buying life insurance

3:26
policies

3:28
where the value that goes into it the

3:31
premium goes into a cash value that is

3:33
credited with let's say the standard

3:35
Imports 500 Index or another index do

3:37
you like these Bill I know they're

3:39
oversold and Miss sold and properly in a

3:41
lot of cases but on Surface

3:43
if you're telling people the truth about

3:45
them you're okay with them so here's

3:47
what happens you've got to buy the right

3:50
policy so you've got uh what I call

3:53
institutional policies you've got retail

3:56
policies in a retail policy you hope

4:00
you've got a cash value a year from now

4:02
or two years from now you pay a premium

4:04
of for every dollar you pay in premium

4:07
you might in the first year have a 20

4:09
cent cash value yeah where's the rest of

4:12
it going loads and fees and costs well

4:15
for those that are in business for

4:18
themselves right there are institutional

4:21
policies you can buy and when you hear

4:23
and it's it's something that might be

4:26
beyond the scope of our podcast today

4:28
but when you hear that these New York

4:30
Stock Exchange listed companies are

4:32
paying their uh

4:34
Executives right 20 million dollar

4:37
pensions and all that you know it's

4:38
really not a pension plan it's done with

4:40
life insurance and you know these

4:43
companies you were in

4:45
um you know the stock market long enough

4:47
you know that if they pay a premium and

4:49
there's no cash value they take a hit to

4:51
earnings and earnings per share Drive

4:54
the value of the stock they can't do

4:55
that so you're going to either have

4:58
let's say just to use a round number ten

5:00
thousand a hundred thousand in your bank

5:02
account or you have ten thousand a

5:04
hundred thousand in the life insurance

5:05
policy do you care it's liquid either

5:08
way right so right now in your checking

5:10
account or your bank account what are

5:12
they paying it

5:13
10 basis points 10 percent of one

5:16
percent it's an insult some of them are

5:18
some of them yeah if you can shop it but

5:20
some of them if they can get away with

5:21
it they pay that yeah so in these life

5:24
insurance policies you've got cash value

5:26
that's virtually equal to what you've

5:27
paid in premiums now because you wrap

5:31
something around to call the life

5:32
insurance policy in many states that

5:34
asset is now protected from the claim

5:36
adjustment creditors right because of

5:37
the way federal laws work it's now

5:39
actually working and growing for

5:41
somebody without current taxation now

5:44
you can access the money in a quote loan

5:46
so you don't have to pay tax on it and

5:49
let's start right there let's start

5:50
right there that's where the fraud

5:51
starts coming in from the sales pitches

5:53
because a lot of Agents will say you're

5:54
going to get tax-free income and this is

5:56
how the Rockefellers did it that's the

5:58
nonsense out there right on how bad it

6:00
is

6:01
that is the partial truth yes now let's

6:05
talk about why it is the partial truth

6:07
yeah I want to hear that yeah so when

6:09
you borrow money I don't care if you

6:11
borrowed from your policy of the bank

6:12
it's not taxable but it's free but it's

6:16
not free right and so you've got to pay

6:18
the cost or that loan well what people

6:21
aren't told is when that they borrow

6:24
from the cash value the policy you know

6:27
they never told you need to pay the

6:29
interest in cash every year so they

6:31
don't think they're paying anything yeah

6:33
but that interest is being paid out of

6:35
the cash value of the policy so if these

6:38
policies get overwhelmed in other words

6:41
the principle that one is borrowed plus

6:44
the interest on that loan exceeds the

6:47
cash value of the policy which it can

6:50
and sometimes pretty quickly

6:53
that becomes a forgiven loan because the

6:55
policy collapses under its own weight

6:57
well what does that mean so what right

6:59
well wait a minute

7:01
for given loans are taxable as ordinary

7:04
income

7:05
ouch in the year of that

7:07
forgiveness

7:09
so if we had borrowed

7:11
five hundred thousand a million dollars

7:13
out of this policy over a number of

7:14
years and the accrued interest could

7:16
double that right all of a sudden you're

7:20
going to get a 1099

7:21
for a number that you were never

7:24
explained right and that's where that's

7:27
where the nonsense comes in on this and

7:30
a lot of people

7:32
that are pitching these don't really

7:34
give that full explanation where yeah

7:36
it's tax-free yeah it's a loan but you

7:39
know what if we don't manage this right

7:41
if it gets overload

7:43
you know some of these policies that

7:45
have an overload protection right or on

7:48
them but still you got to be very

7:50
careful yeah with these some of these

7:52
policies they show you that the premium

7:55
is guaranteed and as long as you pay the

7:58
premium and this and that the policy is

8:00
guaranteed it's not going to collapse

8:01
but if you read the fine print it says

8:03
if that premium is paid as Illustrated

8:06
so let's say that you're paying I'm just

8:08
going to use a number it's a five

8:10
thousand dollars a year every year

8:12
on the premium due date

8:14
well let's say I don't pay 5000 this

8:17
year but I pay ten thousand next year or

8:19
I don't I pay 10 000 this year because I

8:21
don't want to pay 5 000 next year right

8:23
well that's not really as Illustrated

8:25
and that policy can lose all its

8:28
guarantees because of that one wow

8:31
ambient payment yeah so not all of these

8:34
policies are that way but some of them

8:35
are so you got to be really careful

8:38
when you're looking at this but you know

8:41
go back to you know life insurance is

8:43
being used for a lot of reasons other

8:44
than life insurance this is where

8:47
um you could start to do some things

8:49
that are beneficial but at the same time

8:52
you know you make sure you do it right

8:54
with the right structure so you're not

8:56
just buying some retail product off the

8:58
street that is a a round Peg and a

9:01
square hole or a square peg and a round

9:02
hole as the case may be because

9:04
sometimes people advisors agents

9:07
whatever you want to call them we'll

9:08
just take the highest commission product

9:09
off their stealth and that's what always

9:12
great to me is they're looking at you

9:14
know where am I going to make my most

9:15
money what you want to look at is what's

9:17
going to solve the clients

9:19
need and solution and that's the reason

9:23
that bill Black's the only person I even

9:25
Point anyone to life insurance he's my

9:27
sole referral source because I know him

9:30
you know we've been on the speaker

9:31
circuit together a long time ago

9:34
um he just he just shoots it straight

9:36
you know he's one of those guys and and

9:38
he's going to have you know you can go

9:40
to my site after and look at uh Bill's

9:43
bio and we're going to put up you know

9:45
all of his um links Etc so that you can

9:48
contact him and what he does which I

9:50
think is cool is he'll take a look at

9:51
the policy you have currently and give

9:54
you an honest non-sales pitchy

9:56
non-agenda truthful factual brutal

9:59
assessment of what you have tell you if

10:03
you need to keep it or tell if you can

10:04
upgrade it

10:06
um you know in a in a moral and ethical

10:08
fashion if you can he can do it

10:11
but that's the reason I bring Golan a

10:13
lot of my clients a lot of people that

10:14
listen to the podcast of my videos you

10:18
know they need life insurance advice and

10:21
he's kind of like me he represents all

10:22
carries he has no bias on like he

10:25
there's no skin in the game he's not

10:26
going on some you know trip to Bora Bora

10:28
if he sells enough of something he's

10:30
looking at at what is best for you and

10:34
even if you need it you know in a lot of

10:37
cases um and even if you're being

10:38
pitched to sell your policy life

10:41
settlement type stuff he's an expert

10:43
on all of that

10:45
um bill I have a question I was I'm done

10:47
I was dying to ask you this because in

10:49
our industry just to give you some

10:51
people some background

10:53
the index universal life space and the

10:56
index annuity space

10:57
a lot of the bad sales pitches revolve

11:00
around what's called back tested numbers

11:02
in English they'll say Well Mr Jones if

11:04
you'd owned it 10 years ago you would

11:06
have gotten this look at these

11:07
incredible returns Mr Jones or Mrs Jones

11:11
well that that that that dog does not

11:14
hunt obviously as they say in the South

11:17
and we're having some issues in the in

11:19
the industry which is good of saying

11:21
should we do that in my opinion we

11:23
should not do that or there should be

11:25
regulations on how those numbers are

11:27
shown

11:28
explain to people that side of the life

11:32
insurance side and I'll I'll finish my

11:35
little comment with this and then throw

11:37
the ball to you

11:38
as I say to people all the time in the

11:39
annuity industry and it does dovetails

11:42
into life insurance if it sounds too

11:43
good to be true it is okay so don't be

11:46
falling for the sales pitch so what's

11:48
your take on the back tested number

11:49
argument going on right now in the Life

11:52
Insurance side

11:53
yeah it's like it's like the annuity

11:55
side you know historical returns have

11:58
nothing to do with future expectations

12:01
and and amen amen and one of the things

12:05
that you've got to be careful about is

12:08
the indices that are being used for

12:12
example some people will put in overseas

12:15
indexes those indexes haven't done

12:18
anything for the last 10 years right

12:20
yeah the other thing is

12:22
these are often point to point and so

12:26
and what that means to people is like

12:28
that means contract anniversary day to

12:30
contract anniversary right that's you in

12:32
other words

12:33
364 days a year you can't do anything

12:36
but on that 360 365 you can lock it in

12:40
that can be both good and bad so that's

12:42
what point to point means that's exactly

12:44
where I was going and so that's really

12:47
what but but you know here's the other

12:48
side of it too they're good in the

12:51
respect that you don't have to worry

12:52
about what to buy and when to buy and

12:53
what to sell and when to sell correct if

12:55
you have the type of policy that had

12:57
other type you know and then today

12:58
interest rates are so low that it's like

13:01
okay what am I going to do let them pay

13:02
me two percent so there's there's good

13:05
and there's bad right there's on the

13:06
silver bullet isn't everything but the

13:08
other thing that you've got to be

13:09
careful about is how that index is

13:11
measured I had a policy come across my

13:15
desk that it really you would think hey

13:17
this is great it was a daily

13:21
point to point

13:22
um

13:24
in 10 years from 2008 to 2018

13:29
that policy earned zero now stop and

13:32
think about that 2008 was the bottom and

13:34
that market tripled since then right and

13:37
just because of the way that index was

13:39
the the policy earned zero and you stand

13:43
back and you go wait a minute what and

13:46
and so these these things have to be

13:48
looked at carefully sure but the the

13:51
other thing is you let's stop right

13:53
there because what people people say

13:55
wait a minute that makes sense a lot of

13:57
times with these policies both on life

13:58
insurance and the index annuity side

14:00
they'll have a cap on the upside but no

14:03
cap on the downside there you go and and

14:05
the cat the no cap on the downside is

14:07
the part that most agents either don't

14:09
know or forgot to tell you but that's

14:12
the reason that the monthly sum on the

14:13
index annuity never works because the

14:16
caps on the upsides three but no cap on

14:18
the downside same reason for the life

14:21
insurance side as well you've got to

14:23
have experts involved in the process if

14:26
you're buying these types of products to

14:28
explain the good and bad limitations and

14:30
the benefits there's reading bills on

14:31
the program is because don't just buy

14:34
what what they're saying at the sales

14:37
pitch okay uh or at the seminar at the

14:40
chicken dinner seminar you've got to dig

14:42
in and you've got to have someone really

14:44
weigh in on what you're buying so keep

14:46
going

14:47
yeah so that's that's very uh prescient

14:51
because it is exactly that you're

14:54
digging out of a big hole when they're

14:56
not camping the downside and they're

14:59
limiting the upside to three four five

15:01
even sure 12 you know when you when you

15:04
got it down year that's 20 or 30 yeah

15:06
you gotta you gotta earn 40 the next

15:08
year to break even right so so there's a

15:11
lot of different things here that have

15:13
to be kind of measured and when you're

15:15
looking backwards

15:17
okay so the last 10 years who cares last

15:20
15 years that doesn't mean what's going

15:21
to happen in the next 10. so one of the

15:24
things that happens to people as you see

15:26
is they've got a life insurance policy

15:29
and for whatever reason they bought it

15:31
that need doesn't exist anymore I'm

15:34
working with a client right now that had

15:36
a 20-year level premium term life

15:38
insurance policy and they don't need it

15:41
anymore right what are you going to do

15:43
with the term policy you're going to

15:44
walk away with it okay so I I paid you

15:48
know this this particular client paid

15:49
two thousand dollars a year for a

15:52
million dollar policy they sell that

15:54
puppy you've told you've taught me that

15:56
exactly what we're doing so what are you

15:58
going to do have all those years where

16:00
you pay those premiums to get nothing

16:01
back the insurance company keeps all

16:03
that money what we did is we said okay

16:07
let's see if there's a value in what is

16:09
known as the life settlement Mark sure

16:11
and so what we did was we took it and we

16:15
valued it and we are getting him cash

16:18
for that policy now how in the world

16:20
does that work well you've got these big

16:22
institutions like hedge funds as an

16:25
example and they want non-correlated

16:27
assets what does that mean something

16:28
that's not correlated to the stock

16:30
market oh right you know you know Stan

16:32
you should diversify your portfolio and

16:34
consumer goods and energy and blah blah

16:36
blah when the market goes down

16:38
everything goes down right absolutely

16:39
and so these guys take part of the hedge

16:43
fund and they buy life insurance

16:44
policies because mortality is

16:46
independent of the stock market and so

16:49
what they do is they collect the clients

16:52
medical records they determine an Le or

16:55
a life expectant say they look at what

16:57
the premiums are that they've got to

16:58
carry and they're going to come back

17:00
with one of two things no offer because

17:03
you know what your cash value is as good

17:05
as you know or they're going to offer

17:08
you a value in excess of the policies

17:10
current value right you can't do worse

17:13
you know the worse you can do is what

17:16
you have today but you know when one's

17:19
life expectancy is is you know now this

17:23
particular client's in his 60s okay and

17:26
uh what is it what is the buyer going to

17:28
have to pay in premiums what is the

17:30
expected return life expectancy and it's

17:33
just a present value calculation and why

17:36
not put money in your pocket instead of

17:38
just surrendering

17:40
and what Bill Justice described and he

17:43
yeah we're out for dinner a while back

17:45
and he goes Stan in essence these are

17:47
called Death bonds they're buying I mean

17:49
they're death buns they're they're

17:51
they're calculating your death they're

17:52
paying the premium and they're going to

17:54
collect the uh the the death benefit

17:56
it's a that's the reason that you see a

17:59
lot of commercials on TV people wanting

18:01
to buy your policies and they're singing

18:03
and there's opera singers singing and

18:05
I'm not going to give them the the the

18:07
air time because they you know they have

18:09
enough money

18:10
but that's the reason they're buying it

18:12
they're buying the death benefit and as

18:14
Bill black said a long time he said two

18:17
things for me to me that I've never

18:19
forgotten I've repeated many times the

18:20
first one is

18:21
one out of one of us is going to die

18:23
which is one of the more

18:25
um motivational things I've ever heard

18:27
and then the second one is

18:29
life insurance is the best return on

18:31
investment you'll never see because

18:33
you're dead

18:34
yeah but I thought those are true

18:38
um and it kills me

18:42
it kills me when people say you know I

18:45
just I just got to get my arms around

18:46
the ROI on the ROI you know there's no

18:49
Roi until you die but as Bill always

18:51
says that Roi when you die is really

18:53
really good and and when your

18:55
beneficiaries and family members run it

18:57
they're gonna man boy we hated him or

18:59
her but man were they Savvy yeah well

19:02
you know life insurance is liquidity

19:04
right and I don't care if somebody's

19:06
worth you know five dollars or 500

19:08
million dollars most people don't have a

19:11
lot of liquidity it's in real estate

19:13
it's in right the value of their

19:15
business Etc and um you know the

19:18
liquidity is what the life insurance uh

19:21
gives us and and but there are times

19:24
that come when the you know that

19:26
particular policy one has they just need

19:28
don't need or want anymore or let's back

19:31
up a second you got a policy like you

19:33
were talking about a moment ago where it

19:35
wasn't fully explained and now all of a

19:37
sudden the premiums are starting to go

19:39
up wait minute no no I bought this

19:41
policy with a 10 20 30 000 annual

19:44
premium what do you mean the companies

19:45
coming back to me now and they want 60

19:47
or an 80 or 90 000. no yeah that's the

19:52
policy wasn't explained to the buyer

19:54
properly and yeah the premiums are

19:55
escalating it yeah it's unaffordable now

19:58
those we sell all the time and the

20:01
institutional buyer will get it now you

20:03
see these advertisements on TV

20:06
you got to be careful yes they are

20:08
legitimate buyers but when you're not in

20:11
competition when these buyers know that

20:13
you just call them off their 800 number

20:15
they will give you a lowball offer

20:19
yeah and well yeah I had one of these

20:22
guys tell me oh yeah people take fifty

20:25
thousand dollars more than cash value

20:26
and think they got a deal when in

20:28
reality the value in that policy was

20:30
hundreds of thousands wow above cash

20:33
value right so

20:35
well we are as Brokers as we can go out

20:38
there and Shop all of what are known as

20:41
the funders or the buyers for these

20:43
policies and and we will get an offer

20:46
and then we'll bid that against other

20:48
buyers oh you know what you offered me X

20:50
well I just got X plus 10 can you step

20:53
up to the table uh yeah well we'll give

20:56
you X plus 12 then you know we we go

20:59
back and forth and bid it up to the you

21:01
know highest number we possibly can so

21:04
you know yeah call those call those

21:06
numbers on the top call Bill Bill you've

21:09
been doing this 45 years

21:12
45 years next year in February it'll be

21:16
40. 45 years

21:18
of on the ground

21:21
experience in the Life Insurance game

21:24
not only has he seen it all he's

21:25
forgotten more than most agents will

21:27
ever know so if you're looking for 45

21:30
years of experience to review your

21:34
policy

21:36
to a person that doesn't need to make

21:38
another penny in his life like me we're

21:41
just doing it out here because we're

21:42
good and we like doing the right thing

21:45
then you need to connect with Bill I'm

21:47
telling you I mean every single person

21:50
that I referred to bill has been happy

21:52
I've not done and I and I refer mean

21:55
people to Bill sometimes

21:57
so I mean they all have been happy

21:59
because they all have been told the

22:01
truth

22:02
about their policy so if you have

22:03
policies if your family members have

22:06
policies you want to review if you're

22:08
thinking about it been pitched something

22:10
that really sounds too good to be true

22:12
you do need to run it past bill because

22:13
one of the things about life insurance

22:15
if you do I mean if you buy the wrong

22:17
product and you buy it based on a sales

22:19
pitch you might beat yourself

22:22
um

22:23
tell me about life expectancy tables

22:25
we're coming out of covered me and you

22:26
are healthy hopefully

22:28
but what did covet do

22:30
what's the what's the lingering result

22:33
in the Life Insurance business about

22:34
with covet well some of the things that

22:36
are happening is life and life

22:38
expectations believe it or not are

22:40
starting to back up a little bit back up

22:42
made it higher or lower lower and so

22:44
instead of people you know every decade

22:46
think about the 50s within the 60s in

22:48
the 70s and the 80s in the 90s right

22:50
every decade life expectancy stretched

22:53
out a little bit cost of insurance went

22:55
down you're going to live longer yeah

22:58
you know you can collect less every year

23:00
to pay the same claim the insurance

23:01
companies are holding on to the money

23:02
longer they don't have to charge as much

23:04
but recently life expectancies have been

23:07
kind of shortening up a little bit is

23:09
that because of I mean you're a

23:11
triathlete but and you probably you know

23:13
flying on the same Airlines I am is that

23:15
because of the Obesity issue in our

23:18
country and the diet and the fact that

23:19
people I mean what's 40 of the country

23:21
is obese

23:23
you know it's a little bit of everything

23:24
you know you've always heard medical

23:26
breakthroughs are making us live longer

23:28
but now you know the question is what

23:31
are we eating right so no doubt I I

23:33
heard that when we pass now a lot of

23:36
people don't I don't know if this is

23:38
good to be talking about on this podcast

23:40
but don't decompose this quickly because

23:42
all the preservatives in our body are

23:44
yeah it's kind of more I thought the

23:46
flame would be higher because there's so

23:48
many chemicals in there no so we're just

23:51
we're smoldering is what you're saying

23:53
yeah and then and then yeah how many

23:56
people that we see that are diabetic

23:58
they have multiple meds that they're on

24:00
yeah so it's it's uh it's one of those

24:03
things so

24:05
um and it's just kind of crazy and the

24:08
other thing that's happening in life

24:09
insurance is there are fewer and fewer

24:11
people in the business now all life

24:14
insurance really is is two things one is

24:16
sharing risk okay some people say you're

24:20
betting I'm gonna die and I'm betting

24:21
I'm going to live that's not it at all

24:22
when you pay the premium on your car

24:24
you're betting you're going to wreck it

24:26
no you're throwing X dollars into the

24:28
pool and the person that wrecks the car

24:30
and that you know it's a sharing of risk

24:32
right so so is life insurance and so

24:35
when how do you price a life in

24:37
insurance policy yes it's the present

24:40
value how many years do I have to

24:41
collect the premium before the person

24:42
dies but one of the reasons or factors

24:46
that they use in discounting it is I

24:48
don't have to collect 100 cents on the

24:49
dollar because I'm gonna have earnings

24:51
on my money

24:52
well when our interest rates went down

24:54
to zero or close to it yeah believe it

24:56
or not a lot of companies just got out

24:58
of the life insurance business and they

24:59
just said you know what we're just not

25:00
going to offer uh the guaranteed premium

25:03
Universal Life policies anymore we're

25:05
going to have to raise our term rates a

25:07
couple of companies just wholesale got

25:09
out of the life insurance business and

25:12
it's like wow and it's almost like the

25:15
Great Depression area where the premiums

25:17
you know if you have a 10-year life

25:19
expectancy you're gonna you know collect

25:21
one tenth of the premium because there's

25:22
zero earnings on it so that's another

25:25
thing that's been happening the life

25:26
insurance business hence the reason to

25:28
go from interest uh sensitive policies

25:31
as they're called to the hybrid policies

25:34
where they are

25:36
the indexed type Etc you know more

25:39
Market based and what you're doing with

25:41
those type of policies sadly is you are

25:45
taking the risk and putting it on the

25:47
policy holder so back in the day when

25:49
you had a whole life policy that premium

25:52
was guaranteed and that Survivor benefit

25:54
was guaranteed and that's because a

25:56
carrier knew you know how to measure the

25:58
risk now when interest rates are zero

26:00
it's like okay well here's how we can

26:02
make keep the premiums in line we got to

26:03
shift a little bit of the risk to the

26:05
client and that's now these market-based

26:07
type of of

26:10
policies shifted the risk so that's why

26:12
you've got to be real careful

26:15
with what it is that you have and and

26:18
how to manage it which goes to another

26:20
thing that kind of grates me a little

26:22
bit

26:22
is on these type of policies you're

26:25
you're shown all these wonderful

26:28
beautiful huge cash values yeah based on

26:33
a hypothetical rate of return that means

26:37
non-guarantee to all you people in the

26:39
Hinterlands out there

26:41
guaranteed non-guaranteed and so what

26:45
what happens is twofold one what you

26:47
look at are the guarantees is not very

26:48
pretty and on the non-guarantees let's

26:51
say you've got a million dollar policy

26:52
and a six hundred thousand dollar cash

26:54
value wonderful cash value right

26:57
when you pass away you get a million

26:58
dollars okay I'll solve that problem

27:00
I'll borrow out the six hundred thousand

27:02
okay we pass away million dollar policy

27:05
oh well wait a minute you already

27:06
borrowed 600 here's 400 net to your

27:08
beneficiary what good is my cash value

27:11
right so one of the things we say is

27:14
life insurance really is not necessarily

27:16
an investment

27:18
and I know it's talking about it an

27:19
alternative earlier and in some cases

27:21
okay there's a fit but for the most part

27:24
when you're talking retail type of

27:26
policies and you're buying it for risk

27:28
coverage and liquidity you want to pay

27:31
the thinnest smallest premium to get the

27:34
most coverage you know I always say I

27:36
want to pay a dollar to get a million

27:38
dollars worth of coverage and you know

27:40
the other people are going oh you want

27:41
the big cash value so okay to pay a

27:44
dollar or a million dollar pop million

27:46
dollars on a million dollar policy you

27:48
know I'm just thinking extremes right

27:49
well neither one of them is realistic so

27:51
pare it down to where I want to pay the

27:54
smallest premium possible to get the

27:57
most coverage so keep my cash value Mr

28:00
insurance company give me the thinnest

28:03
premium I can you know what I'm going to

28:04
do I'm going to take that premium

28:06
savings

28:07
and invest it over the side in let's say

28:10
an annuity so now when I pass away

28:12
somebody get my million dollar Survivor

28:14
benefit plus the value in the annuity

28:17
for the same dollar Outlet so my

28:20
beneficiaries are going to get more I

28:22
got my insurance covered and then if I

28:25
have money in let's say an annuity and I

28:27
access that

28:29
I'm not reducing my survivor's benefit

28:31
so you've got the money over here in the

28:33
annuity structured where I've got a

28:35
return on the money my beneficiary is

28:38
going to get that when I pass away plus

28:41
the cash in the policy all for the same

28:45
dollar Outlet so what really when you

28:47
stop and think about it is that cash

28:49
value doing for you the other thing when

28:51
you apply these policies

28:52
that have non-guaranteed super wonderful

28:56
High cash values is you start to look at

28:58
it there's a premium load on those

29:01
policies of five percent you better

29:03
believe how many people are buying a

29:04
light a mutual fund with a five percent

29:06
loan no most people don't want that so

29:10
why are we doing that with a life

29:11
insurance policy oh wait a minute

29:13
Stan that's that's the premium expense

29:15
life insurance isn't free there's also a

29:18
mortality cost

29:20
etc etc etc so when you really start to

29:23
look at I pay X and how much of X is

29:25
really going to the bottom line you

29:26
start to back up and go hmm wait a

29:29
minute now and so this goes back to what

29:32
you're saying is yeah it all sounds

29:34
wonderful but let's drill down a little

29:36
bit and let's see what we're really

29:38
buying and you know what what are we

29:41
really trying to accomplish that's

29:43
that's where we always have to start

29:45
what do you want to accomplish yep why

29:48
and now let's do it at what's right for

29:51
you not the insurance company and you

29:54
know Bill I I've always said you know

29:56
you own you own an annuity for what it

29:58
will do not what it might do you fall

29:59
under that same thing you own a life

30:01
insurance policy for what it will do not

30:02
what it might do and

30:04
that's where people make the mistakes

30:06
it's really really that basic

30:09
um and if you can just stay in that lane

30:11
and then you know talk to people like

30:13
Bill and I that that we're going to

30:15
shoot it straight and tell you where the

30:16
where the pitfalls are where the

30:18
limitations and the benefits of the

30:21
policies are then you're going to be

30:22
able to make an informed decision the

30:25
other thing too and Bill and I this is

30:26
what bill and I really agree upon

30:28
there's never an urgency to buy a policy

30:30
annuity or life insurance the urgency is

30:33
for you to understand what you're buying

30:37
you don't buy the 30 000 foot view sales

30:40
pitch you buy the contractual guarantees

30:43
of the policy and if that means you

30:45
reading a specimen policy then we'll

30:47
provide the specimen policy just like

30:49
Bill will provide the specimen policy

30:51
what I want to do I mean the reason I

30:53
like having bill on is is he's like me

30:55
it he just strips away all the nonsense

30:58
of people out there pitching life

31:00
insurance in his case minor case

31:02
annuities and I you know I always say

31:04
that the majority of the people are

31:06
selling annuities I have cowboy boots

31:07
older than they are and there's a lot of

31:10
young Young Bucks out there selling life

31:11
insurance they have no clue what they're

31:12
doing I mean you you've got 45 years of

31:15
experience they're not even 45 years old

31:16
yeah so let me let me switch gears a

31:19
little bit and you asked in the very

31:21
beginning what is new okay yeah what is

31:23
what I said what I said was it's just

31:26
like your phone you're using it for

31:27
everything to talk right you're buying

31:29
music on it you're listening to you blah

31:32
blah blah okay well what is one of the

31:34
biggest problems we've had in the

31:36
overall insurance industry in the recent

31:38
past just long-term care insurance okay

31:41
oh my gosh the Baby Boomers are getting

31:43
older

31:45
and things are starting to happen things

31:47
are starting to fall off as the

31:49
expression goes right well

31:51
with long-term care insurance you can't

31:54
really measure

31:55
actuarially mathematically price that

31:58
policy because every year we get older

32:00
we need more help and costs go up and

32:03
you don't know how fast medical costs

32:05
are going to go up and so what do they

32:07
do that they being the insurance

32:08
companies come back to you and say hey

32:10
you know what

32:11
we got to raise our rates this year what

32:13
I thought this is a contractual policy

32:15
no it's not you know read the fine print

32:17
and so the the they're either going to

32:20
raise a rate or you don't want to write

32:22
you don't want to change your rate then

32:23
we're going to lower your benefits

32:24
neither one of them is pretty okay

32:27
so where do you go where you don't have

32:30
that nonsense a hybrid life insurance

32:33
policy huh okay wait a minute Bill life

32:36
insurance for long-term care what are

32:38
you talking about exactly right so let's

32:41
talk about how this works let's say we

32:44
buy a life insurance policy for five

32:46
hundred thousand dollars Survivor

32:47
benefit

32:48
if I never use any long-term care

32:52
my beneficiary gets the survivor's

32:54
benefit

32:56
that's very probate-free just let's

32:59
throw that right now the other thing I

33:02
left out with a long-term care policy if

33:04
I pay the premium and I never need

33:06
long-term care all that money's out the

33:07
window

33:08
by hooking it to a life insurance policy

33:10
if I don't use long-term care my

33:12
beneficiaries gets income and probate

33:14
free income tax free and probate free

33:16
the proceeds of the life insurance

33:17
policy but wait a minute you know what I

33:19
need long-term care

33:21
I can get as much as up to two percent

33:25
of the value of that policy for 50

33:28
months

33:30
so five hundred thousand dollar policy

33:32
two percent of that is ten thousand

33:34
dollars a month tax-free

33:36
for 50 months which is over four years

33:38
statistically people last what three

33:41
years when you can't do two of the six

33:43
daily functions of life I think it's

33:45
right the average is three and the

33:46
maximum seven which means you're gonna

33:48
die in five which oh ironically they

33:51
price it right there there you go and so

33:53
what happens is you get that two percent

33:55
for 50 months tax rate but wait a second

33:58
you don't need the whole two percent you

34:00
don't need the whole two thousand you

34:02
can take less okay and then that just

34:04
you know makes it last longer right so

34:07
if you take six percent instead of ten

34:08
percent you get the idea it's gonna and

34:10
so last 48 months it'll last longer

34:12
anyway and so if we

34:15
um take that it's a fixed premium a

34:17
fixed cost they can't raise the rate on

34:20
you if you buy the right policy you get

34:22
that long-term care benefit and what

34:24
we've taken in long-term care benefits

34:26
reduces the survivor's benefit right

34:28
right so if we take ten thousand dollars

34:30
a month for ten months we've taken out a

34:31
hundred thousand dollars and in this

34:33
example the survivor's benefit drops a

34:35
hundred thousand to four hundred

34:36
thousand and it's still a lot better off

34:39
and you know how much more it costs not

34:41
much not much no I I think these these

34:45
policies are great because you can in

34:47
essence kill two birds with one stone

34:49
exactly

34:50
um which leads me to my next question

34:52
involves underwriting

34:55
um you know annuities are guaranteed

34:56
issue life insurance

34:58
um there's some form of underwriting

34:59
tell me about that has that gotten more

35:01
stringent or is it is it kind of the

35:04
same yeah it's actually getting more

35:06
interesting and it's a little bit easier

35:07
now right why is that well because we

35:10
have all of the electronics you've got

35:13
the mold um MIB or medical information

35:15
Bureau where every time you apply for

35:17
insurance there's a note put in there

35:18
you have script check so now when you

35:21
apply for life insurance they can go and

35:23
see what medications you're on nice okay

35:25
Stan's not on any meds oh well the

35:28
spoiler alert Stan is on this okay well

35:31
you know what what if you're on meds and

35:33
it was only an antibiotic well okay no

35:36
high blood pressure no diabetes you know

35:38
blah blah blah right so they they get a

35:40
feel from that and then they order

35:43
medical records from your doctor because

35:45
everything's in there so you know we're

35:48
going eventually

35:50
to a point where you're going to take a

35:52
blood test and that's going to be about

35:54
it yes still you have the nurse so it's

35:56
going to it's going to interact and

35:58
connect with everything out there

36:00
digitally confidentially hopefully and

36:02
then you're going to get so so that

36:04
process is going to speed up that's what

36:06
you're telling me yeah it's getting less

36:08
less and less cumbersome less and less

36:10
cumbersome because you were in the days

36:12
of no FedEx fax machine you've gone

36:15
through all machinations of Technology

36:16
you've seen it all man

36:19
oh yeah it used to be that if you went

36:21
over a certain amount you had to have a

36:23
chest x-ray and a treadmill and all of

36:26
this type of stuff so it's not really as

36:28
bad as as invasive as it was at one time

36:32
so you know because of our um

36:34
information is so you know widespread

36:37
now it does make it a lot easier does

36:40
blockchain help with that uh well it

36:43
helps keep you right now I'm talking

36:45
about the blockchain does that help with

36:47
the records

36:49
um and what's being kept record-wise so

36:51
that it's accessible quicker blockchain

36:54
technology yeah nothing's accessible

36:57
without your signature authorizing the

36:58
release

36:59
the carrier is going to protect that

37:02
from being not exposed sure good point

37:04
you know one one of the things I say to

37:06
a client is you know do you want the the

37:08
you know the new Modern Insurance or the

37:10
old style insurance and they go well you

37:12
know I want the new Modern Insurance

37:14
well a lot of clients have just a death

37:16
benefit only insurance and you can

37:18
exchange that policy tax free for a more

37:22
modern type of policy with the long-term

37:25
care feature well how do you do that

37:27
well you apply let's say you've got

37:29
policy a you apply for policy B same

37:32
survivors benefit with a long-term sure

37:34
and then you just tax-free exchange

37:36
there's a section of Internal Revenue

37:38
code called 1035 and you exchange your

37:40
old policy for the new policy now the

37:43
new policy has a long-term care writer

37:45
on it and because we transfer the value

37:47
from the old policy to the new policy uh

37:50
there's very little change in the

37:51
overall premium very little well that's

37:54
that's worth a review of your policy

37:56
right there oh yeah and you know you

37:59
know how we work we say look this is

38:01
your Premium schedule now this is the

38:02
way it would be here here's the

38:03
difference make a business decision on

38:05
what's right for you it's just make a

38:07
decision on the facts of the policy

38:10
right because the math of the policy I

38:13
mean Bill's a math guy I'm a math guy is

38:16
this isn't this isn't anything fancy I

38:18
always say my newest saying bill is that

38:21
and I I put Financial Services as the

38:23
category but life insurance there's

38:25
nothing fancy or complicated about let's

38:28
just say life insurance and annuities

38:31
what's complicated are the people that

38:33
are selling it they make it complicated

38:36
this is the most basic decision whether

38:39
you're buying an annuity whatever type

38:41
or life insurance whatever type

38:43
it's simple if you're looking at just

38:46
the contractual nature of the policy

38:49
yeah it's gets complicated when the

38:52
sales pitch starts coming in there's no

38:54
sales pitch it's numbers it's like Bill

38:57
just said here's the difference here's

38:59
the number does it make mathematical

39:01
sense yeah it's your money make your

39:03
decision there's no sales pitch there's

39:05
no urgency there's no timing none of it

39:07
none of it one last question we got to

39:10
wrap it up

39:11
you know there's 12 000 Baby Boomers

39:13
hitting age 65 every single year I mean

39:16
every single day excuse me so 12 000 and

39:18
Counting baby members hitting 65.

39:22
that demographic tidal wave we've

39:24
discussed in the past off air as we're

39:27
you know

39:28
trolling around Florida eating at

39:30
barbecue restaurants that we do

39:32
sometimes

39:33
um

39:34
does that demographic tidal wave of

39:36
people looking for guarantees and

39:39
looking for legacy and looking for these

39:42
types of transfer or risk or shared risk

39:44
products

39:45
is that pushing

39:47
the life insurance companies to be more

39:50
Innovative and the reason I bring that

39:51
up is Goldman Sachs just did a a survey

39:54
a study about

39:56
potential new products coming on the

39:58
pipe you are the guy in the Life

40:01
Insurance world what are you hearing

40:03
what are you being whispered to about

40:06
yeah so what happens

40:09
fortunately is what consumers are are

40:12
calling for as a significant effect on

40:16
the way policies are structured so when

40:18
you have a client uh or policy you know

40:22
that just won't sell anymore and it

40:25
won't sell because interest rates are so

40:27
low and premiums are so high that they

40:30
have to come up with a solution hints uh

40:33
the indexed policies hence to the other

40:36
type that are Market based because they

40:38
have to do something to keep rates

40:42
reasonable so yes it does the the

40:46
consumer does have a say in in the way

40:48
this this works and what I always want

40:52
to do though is kind of like you're

40:53
doing is find what's right for the

40:56
client and not the type where the risk

40:59
is shifted to the client the insurance

41:01
company is offering insurance and what

41:04
back in the day they used to call

41:05
assurance and we want that the the

41:08
insurance and Assurance company to be

41:12
shouldering that risk I want to pay the

41:14
smallest frame you might can to get the

41:15
maximum return if I'm just buying it for

41:17
the protection and most of the time you

41:20
can do that with term insurance unless

41:21
you got a need that's longer than 10

41:23
years or 15 years or 20. then you got to

41:25
buy the permit what's that for well you

41:27
know what estate taxes right remember

41:30
back in the day when anything you owned

41:32
over a million dollars the government

41:34
was going to take 55 of it well okay

41:36
thankfully they changed that but now

41:39
that law is going to Sunset and we're

41:41
going to go back to a pretty hefty

41:44
estate tax and so one of the ways to

41:47
provide the liquidity as I said earlier

41:50
most people don't have a ton of their

41:52
value in cash it's in it's in uh hard

41:55
assets is life insurance provides a

41:58
liquidity for your heirs to pay that tax

42:01
and yeah so let's say that you owe just

42:04
to use round numbers a million dollars

42:06
in estate tax what do you want look a

42:09
million dollars and pay it or what if

42:10
you instead bought a life insurance

42:12
policy where that premium was maybe

42:14
eight or ten thousand dollars twenty

42:16
thousand a year you gotta live a long

42:18
time you'll never pay in premiums what

42:21
you're going to pay in the survivor's

42:22
benefit number one and number two you're

42:25
going to stretch it out over such a long

42:27
period of time those premium dollars

42:29
that it's a lot better than waiting for

42:31
yours because it's like I was liking it

42:33
to a toll to cross a bridge right you

42:35
want to inherit those assets okay pay

42:37
the tax first oh you didn't pay it in

42:39
cash in nine months well interest is

42:41
going to start to accrue to the treasury

42:42
all these are ugly realities and so this

42:45
is a way uh for us to uh you know to to

42:49
to solve those family problems and and

42:52
anyway as I tell people all the time you

42:55
know one of the things that I tell

42:57
people is

42:59
you might not consider yourself rich but

43:01
you probably are and especially in the

43:03
eyes of a politician in DC you are rich

43:05
now a lot of us and most of us didn't

43:07
grow up rich so there's a transition

43:09
you're going to have to make in life to

43:12
start acting rich and when acting riches

43:14
doesn't mean that you wear an ascot and

43:16
drive around in a Bentley

43:17
what that means is is you put people

43:20
around you that are experts that have

43:23
your best interest at hand and that you

43:26
can go to for sage advice without having

43:28
to learn to learn that

43:30
category okay and that's where Bill

43:33
black that's the reason I keep having

43:35
him on occasionally is because he needs

43:39
to be your go-to person in the Rolodex

43:42
for life insurance whether you bought it

43:45
from him or not he needs to be that

43:46
person he needs to be that person that

43:48
your kids call that your spouse calls

43:51
that whoever your executor calls that

43:54
you proactively call to look at what you

43:56
have and to assess your needs and to see

43:58
if a life insurance shared risk type

44:01
policy makes sense for you

44:03
but that's the reason I have him on

44:05
that's the reason I have Jack lindenberg

44:07
on for for Pure long-term care stuff

44:09
that's the reason I have people on that

44:11
I trust has been doing this for decades

44:13
that need to be in your inner circle in

44:16
essence your board of directors for your

44:19
retirement Bill Black's that person now

44:21
he's a personal friend of mine I trust

44:23
him I trust him implicitly period he's a

44:26
good person

44:27
but I'm going to encourage you to

44:29
contact him for review of your policy or

44:32
if you just want to spitball some ideas

44:34
past him I mean he Geeks out on

44:37
insurance if you didn't hear the passion

44:39
in his voice I mean this is what he does

44:41
man I mean when he probably even thinks

44:43
about life insurance when he's on his

44:45
bike on a triathlon I'm assuming but um

44:48
any last words for the consumer out

44:50
there bill either either

44:52
positive or watch out for this and then

44:55
we'll close this thing up yeah you know

44:57
how we work with your client Stan is

44:58
they're welcome to call us we'll give

45:01
them a complimentary review of their of

45:03
their coverage we're not going to charge

45:05
for that analysis uh we'll show them

45:07
what they have and and straight up you

45:10
sent me uh a lady not too long ago and I

45:13
told her you know what what you have is

45:15
fine stay with it if there's a way to

45:17
improve it you know we demonstrate that

45:20
mathematically on paper and the only

45:23
thing we ask is if we bring you a

45:25
solution we'd like to be the one to to

45:27
implement that solution but other than

45:30
that you know we look at those

45:33
analyzes we're not going to charge for

45:36
the analysis we're going to do that for

45:37
your clients

45:40
to bring them the value

45:42
that's my guide Bill black he's based in

45:45
Winter Park Florida which is um the

45:47
nicer section of Orlando yes um he's in

45:50
Winter Park Florida but he's National so

45:52
regardless of where you're sitting and

45:53
listening to this I mean just give him a

45:55
call he can he can work with you and he

45:57
is a he's definitely a straight shooter

45:59
so I appreciate everybody in all the

46:00
major podcast platforms for listening to

46:02
fun with annuities and the aggressive

46:05
people out there for watching bill and I

46:06
on the fun with annuities YouTube

46:09
channel thank you for joining us we'll

46:11
see you next time

46:17
[Music]