Winning in Retirement

Do You Need Life Insurance?

• Akers Financial Group

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Brian Akers and Jeff Akers, Certified Financial Planners, discuss the importance of life insurance in financial planning. They explain different types of life insurance: term, whole, and universal, highlighting their features and costs. They emphasize the need for life insurance to cover debts, replace income, and fund future goals. They also discuss the use of life insurance for long-term care and estate planning, including tax-free inheritance through irrevocable life insurance trusts. The conversation underscores the importance of understanding why life insurance is needed and how much is required, tailored to individual financial situations and goals.

Unknown:

The following is a pre recorded Show. Welcome to winning in retirement with your host, Brian AKERS, Certified Financial Planner, professional and founder of AKERS Financial Group now helping you win in your retirement. Here's Brian AKERS,

BRIAN AKERS:

welcome to winning in retirement. I'm your host, Brian AKERS, president and founder of AKERS Financial Group. Here with me today is vice president of AKERS Financial Group, Jeff AKERS. He's a Certified Financial Planner practitioner, just like I am, indeed, indeed, I did not hire you on indeed. I hired you because you are related to my father, and then he also is talented and skilled and all that. All right. So welcome to our show. We've been putting together a show that we want you to sit back and listen to it's going to be real simple. Do you need life insurance? That's that's a really important question, right? Do you need life insurance? And the answer is, it always, yes. Jeff, no, it's not always. Don't tell the answer. Oh, well, how are they going to stay the whole time and listen?

Jeff Akers:

Because they want to know whether they're on the yes side or the no side. All right. So

BRIAN AKERS:

answer your question. Answer it again. Do you need life at Do not you just in general? You not general, right to you, or we the all need life insurance. Maybe, okay, is that better? Find out more on winning a retirement There we go. All right. So this radio podcast put on by AKERS Financial Group, we are financial advisors, and we've obviously Lutherville and varsity. What we try to do through all this is really, truly sit down and talk with you about your planning. Do what we need to do. But one of our key ingredients is this. We need to make sure our plan is for the worst case scenario is handled, and then we want to enjoy and invest and do that as if we might live forever, right?

Jeff Akers:

You know, one of the first things I go through with folks when I first meet them is kind of a hierarchy of financial planning. And the first step in the financial planning process is about protecting the family.

BRIAN AKERS:

Absolutely that first thing is insurance. Do we need insurance? So we love the concept of why, why would you need insurance? And then we figure out, does it fit? And if you do need insurance, let's buy the right kind. So this show is going to be trying to explain the basics of what life insurance is, and going from there, all right, Jeff, I was going to ask crazy question, okay, what's life insurance?

Jeff Akers:

Well, in simplest terms, it's something that you buy so that when you die, your beneficiaries get money, yes, kind of the simplest form.

BRIAN AKERS:

It's like a basically, it's like a trade off. Someone says to you, hey, if you pass away this year, I'll give your family a million dollars, right? And all you gotta do is give, me, say,$2,000 right? And if you die this year, I'll give your family a million bucks. It's tax free. And then basically you say, Do you want to make that it's almost like a bet,

Jeff Akers:

right? Do you want to make that deal? Yes or no. Now that's only one year at a time. Yeah, we can do it more than for one year at a time. We can absolutely so

BRIAN AKERS:

what I described is something called term insurance. Term insurance is where you buy something for a term, and that quick little example was a one year term, which we can't really buy, right,

Jeff Akers:

right? I don't know of anyone that offers that, because that's kind of what sort

BRIAN AKERS:

of annual renewable term, where your price goes up every year, I'm sure. And that's really not most people don't buy that anymore.

Jeff Akers:

Do? You could buy term insurance for a longer period, but once you stop paying the premium, insurance goes away.

BRIAN AKERS:

I'm sorry, I got to go off subject for a second. Okay, what hit my brain was this, life insurance for marketing purposes. They call it all kinds of things, all kinds of things. They call it, they might call it mortgage protection, mortgage insurance. And the thing is, this, all of that is usually term insurance. It's just a matter

Jeff Akers:

of price, price and duration. In

BRIAN AKERS:

duration, meaning number of years you lock in a guarantee. Is that correct? Jeff, yes, that is correct. All right, so let me give an example. Somebody's 30 years old, two kids, wife, one dog, one cat. Pick a fence. Life Insurance need? How much do they

Jeff Akers:

need? Well, one it comes down to purpose. So I don't want to hold calculation, but the first purpose, or actually the second purpose I think about, is debt and mortgage Absolutely. So how much is the mortgage? That's the first answer to how much life insurance you

BRIAN AKERS:

need, absolutely. Because what happens is this, we basically are buying life insurance on someone, and then we are looking at, if they die tomorrow, what is the financial need for that family to stay the same status quo, the same house, the same ability to pay their bills, the same schools, the same goals, how much money now, old school financial planning might say 10 times your income is a good number, especially when you have a larger family, right? Or even more, depending on how much

Jeff Akers:

debt you have and what you're going to use it for, yeah, but just going back to your example of the husband and wife and the mortgage, one dog, one cat, yeah, one dog, one cat, two kids. I don't really. Well, I'm not a pet guy, but we'll leave that alone. So yeah, so there's no insurance need for the dog and cat. No, if, if everyone passes away the dog,

BRIAN AKERS:

you obviously have never paid for pet food, that's true, and then the dogs need some specialized food.

Jeff Akers:

But even between that husband and wife, the life insurance need isn't necessarily the same if the husband works and the wife stays at home with the kids. Well, if he passes away, they're not going to be able to pay the mortgage anymore. So you've got to have enough to pay the mortgage if, if he were to pass away, but, but if she passes away, he can't afford he's got to pay for daycare. Now, daycare, everything expensive. It's a lot more value than people ever think, right? It's more than you would expect, but it's not necessarily equal. It's

BRIAN AKERS:

getting close, though it does close, and you start daycare for somebody under two years old, is a lot of money. Yes, it is a lot of money. And that's, yeah, just put it that way. So life insurance is something that pays a death benefit when you pass away. Now some life insurance might be accidental death. It might be for certain purpose, a certain reason, if you die based on this, then they pay. We do not recommend any of that. It should simply say, you passed away, right? We pay the death benefit claim.

Jeff Akers:

Yeah. I don't think keep it simple. I don't think anything that says you have to die this way is really life insurance. That's the accidental death,

BRIAN AKERS:

yeah. And they check the boxes a lot when they're sort of upselling you, and they put these add ons, especially through work cheap. It's cheap, but it's a waste of money, right? Unless you have an accident, right? And you die and the death certificate says accident, right? Which, I think we've had one in my

Jeff Akers:

career. Yeah, it just doesn't happen very often. So it doesn't happen very

BRIAN AKERS:

often where someone has checked the box and had an accident, right? Yeah, all right. So the idea is this, we haven't gone off, off the script a little bit, but life insurance comes in different versions. Term insurance is the easiest one to understand. We are buying a for a period of time, a death benefit. You, the person who's being the insured is basically saying to the insurance company, hey, I think I might die in this year. Here's my money. And then they say, yes, we'll take that action with and then they guarantee you a death

Jeff Akers:

benefit. Or at least, I want to protect against me dying during this period of time. Oh, you don't like my example. Yeah, I don't like, like saying I think I might die during this time. I'd rather say, just in case. I just want to protect my family, just in case.

BRIAN AKERS:

That's a kinder way of putting it. So term insurance would be considered a pure charge for death benefit. There's no extras, no bells and whistles, no like, if you go out and order pizza. You ever order pizza? Joe, Oh, yeah. Do you get toppings? Yes. What toppings do you buy? I like pepperoni, mushroom, sausage. Do you order that as a package, like the meat lovers? Or to you order it one at a time.

Jeff Akers:

Usually I do the package. So this is cheaper, right? You get a discount for that.

BRIAN AKERS:

That's I thought you would do. All right. So the hardest part is sometimes my wife and I order pizza cut in half. I get my certain things. She gets her pineapple on her side. I just get two pizzas. Well, that's you spending more money than I thought, but the idea is that the toppings cost extra money. Yep. So anytime we talk about life insurance and you're adding other benefits, other guarantees, taking that term to make it last as long as you do that's more permanent life insurance, okay? Permanent life insurance costs more money. Yes, it does, because it's permanent. All right, so let's talk about the basic long term. And since the 70s, even before that, that the whole life has been a type of policy that's out there. It's still out there today. Explain the basics of whole life.

Jeff Akers:

So all of the permanent policies have a cash value. Term insurance that we just talked about does not have any cash value. So in whole life, everything is guaranteed. You're guaranteed to pay a certain amount per year. It's guaranteed to be a certain cash value at certain stages, every stage, as long as you pay those premiums and you've got a guaranteed death benefit, there's a guaranteed interest rate on that cash value. Everything is locked in in whole life. It encompasses everything.

BRIAN AKERS:

And depending on the design of the company, what you end up might have, what you might have is interest on the policy and then also dividends, right? If it's a way, depending on if it's designed as a stock company, you would not get it. If it's a mutual company, there's a dividend that could be added to inside of there, and generally, the whole life would then have a pretty good growth rate for on the conservative side,

Jeff Akers:

yeah. Just so you know, a mutual company means that if you own a life insurance policy, you own part of that company, that

BRIAN AKERS:

insurance company. That's the way they all used to be, right? And most of them are not anymore. Yeah?

Jeff Akers:

Now they're stock companies where there's stockholders that own the company, and you just have a policy from them, yeah?

BRIAN AKERS:

So basically dividends and an insurance company is the return of an overcharge of premium, which is profit. Wow, how about that one?

Jeff Akers:

Yeah. So you're getting some profit back on your own price. Premium is so

BRIAN AKERS:

depending on your age, whole life could cost four to six times what term would cost. So term costs 2000 a year. You paying 8000 a year for whole life. But Whole Life means guaranteed

Jeff Akers:

for your whole life, right? Everything's guaranteed. You're buying, you're not renting. If you buy

BRIAN AKERS:

the policy at a set premium for life, the numbers are projected out and a guaranteed level. You pay that premium, you get the coverage, no matter what age you are. When you pass away, that money will be the

Jeff Akers:

death benefit will be there, right? The death benefit goes to your beneficiary. So that's whole life.

BRIAN AKERS:

That's whole life. Then in the 80s, they started changing, because interest rates were going up in the early 80s, and so whole life, we couldn't compete with higher interest rates. So they designed what kind of policies, Jeff, it's called Universal Life. Universal Life. What's different between universal life and whole life?

Jeff Akers:

So the one difference is that the interest that you earn on that cash value can vary. You can go up and down. They also have something called a flexible premium, so you could pay more or less. It's not locked in for the entire life of the policy.

BRIAN AKERS:

So in the high interest rates of the 80s, they design policies with 12% even higher interest rates on universal life policies set a premium based on that which was low, because if your money's making 12 or so, you don't need to put that money much money in right as interest rate lower, universal life policies sort of implode it and did not do well,

Jeff Akers:

yeah, they start sending you letters saying, hey, you need to send in more premium because you didn't earn enough interest in the policy.

BRIAN AKERS:

And we're flying through this this quarter here, Jeff, we've gotten so far just term whole life and a little bit about universal life. We have so much more to talk about. Our show today is called, do you need life insurance. Jeff and I are really going to dive deep and try to explain to you what they are, why you need it, how it works, how it's tax free. Why to have it? Or maybe, why not? Because Jeff gave us the answer of maybe now AKERS Financial Group, we're local. We're independent. We don't report to a big company on Wall Street. We report to you. We do have offices in Lutherville and far so clients all around the mid Atlantic region, even some all around the country and in few around the world. It's so easy to begin winning in retirement. Just give us a call and schedule your free meeting with one of our team of advisors. Call 833 win retire. That's 830 3w. I n, r, e, t, I R, E, we'll give you a call on Monday to schedule a free in person meeting. Go to AKERS financial group.com or call us at 833-946-7384, to start planning for your retirement. Now, what is the smartphone of financial tools? We will explain in a moment.

Unknown:

You're listening to a pre recorded show, welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS indeed.

BRIAN AKERS:

Welcome back to winning in retirement. I'm Brian AKERS from AKERS Financial Group. Here with me today is Jeff AKERS. We are both certified financial planner practitioners, financial advisors out through AKERS Financial Group. All right, Jeff, second quarter, all right. Now I have a hard question for you, and that is this, what is a smartphone of financial tools, and what does that have to do with our show?

Jeff Akers:

Well, I'm just going to talk about the whole phone thing for a second. Oh, yeah. I remember when I was a kid that I had a phone on the wall with a cord, and if I wanted to call someone, I call their number, had to dial them. I had to remember their number, and I'd call that number, and then they had to be near their phone at home with a cord attached to it, and we could talk. And that was a phone,

BRIAN AKERS:

can I tell you mine? Okay, I was dating a girl who became my wife. Yeah, I remember from my house, yeah, as long distance, yes, it was so I'd have to drive to your house or the grandmother's house or a pay phone, or you'd call me, yeah, yeah, and you call her, yeah, just so that we wouldn't pay over the long

Jeff Akers:

distance charges. I talked longer to her than I did to you.

BRIAN AKERS:

Well, she's nice. She is, all right, sorry, shows, well, all right. So back to the smartphone example, yeah, so

Jeff Akers:

that's old phone all the all you people under 30, maybe even under 40, you're like, What the heck are they talking about? But it existed. You can see a phone in a museum somewhere. Well, now we carry around these phones in our pockets, and we can call people, but I don't know anybody's number, because I just flip through to their name and send do the call?

BRIAN AKERS:

You flip. We don't flip on phones anymore. I flip. How old are you?

Jeff Akers:

Jeff? I scream. Okay, all right, so I say call Brian AKERS, and it just calls Brian, and

BRIAN AKERS:

that's, that's how we do it nowadays. Okay. Well, it's the Jetsons. This is the

Jeff Akers:

Jetsons. But I can also look at my my phone, my smartphone, and say, take me to AKERS Financial Group. And it'll map how to get the AKERS Financial Group. I can say, What is life insurance? And it'll go to the. Internet and bring up what life insurance is. So we still call it a phone, but it does a whole lot more than what the phone did when I was a kid with that cord attached to it, and it even had a rotary dial where I had to dial numbers. So that's kind of the progression of phones, and then they got so smart that we called them smartphones. And we were just talking this morning with Brian son, and we're like, Well, what do they call it now? He said, Well, we just call it a phone. So, so we call it the same thing, but it does so much more than it used to do years ago,

BRIAN AKERS:

I mentioned the Jetsons. Do you remember the Jetsons? Oh, I remember the Jets Yes. You saw the reruns. That was set for what year in the future? Do you remember? I don't. It was set for 2062 really, it's like halfway there The Jetsons were 1960 with two as original first. So it was 100 years out, yeah, 100 years out, but we're halfway there, and we're doing a lot of stuff, like the video camera, all those things you said, I just think Jetsons. I think it's fun. I

Jeff Akers:

didn't even mention the camera. Oh my gosh. How did I forget that? So the reason we say

BRIAN AKERS:

that is that life insurance can be used for many reasons. Now, some of these reasons are done for marketing purposes and trying to make sales. We want to make sure everyone understands that life insurance should be bought with a purpose and for a reason, and it has to be tied to the advantages of life insurance, and it does not fit everyone. Nope, it fits the proper reason. So be very cautious on buying life insurance, thinking that it's going to cover everything like a smartphone, right? It will cover many things, and can be used when done properly and designed properly,

Jeff Akers:

it can do more than just provide a death benefit to your beneficiaries, but that's still what it does

BRIAN AKERS:

best, right? But inside of life insurance policy, you're going to have cost of life insurance, and that's, that's called death benefit, or mortality charges, right? You're going to have insurance company charges, right? You're going to have taxes inside your policy, about 6% which then goes to the state that you bought the policy through, okay? And then, depending on the design earlier, we're talking about term, right? We got into whole life and universal life. We started doing that, and they have different ways of investing the money. Well, there's different fees for that too. Yes, there are all of that's part of the cost inside of policy, and that's why you have to put more and more money in, depending on what you're trying to accomplish,

Jeff Akers:

right? If it's okay for me to go to the next The last type of life insurance. It was variable, Universal Life, which introduces another cost to

BRIAN AKERS:

it, right? Which variable uses mutual fund, like sub accounts, which has managers and another layer, and then you have to add other fees, fees inside of there.

Jeff Akers:

Right now you've got costs to pay those managers inside as well, right?

BRIAN AKERS:

So whenever you're designing or thinking about life insurance, always think about why, what's going on. So right now we talked about term, terms like the pure way of buying it. The problem with term is that at a certain period of time it ends, right? So let me give an example of my life. I bought a million dollar term when my my second child about when that I bought for 20 years, so when they were out of college, it would be gone, because that was the high years of my life that I had a responsibility to provide for two kids. And so that million dollar term came and actually went. I won, the fact that I'm still alive, right? But I lost because I pay 20 years of premium, right? Did I die? How do you feel? Did I really lose Jeff? Or was I cautious?

Jeff Akers:

No, I think you were wise, because you provided for if you died, the mortgage would be paid off, and they could still go to college. So you put them on a trajectory, sure to have a positive life. But then you lived, and you got to do all that stuff anyway, right?

BRIAN AKERS:

So hindsight, if I was going backwards and say, Oh, I'm going to live, I'm going to pay extra. And the problem with life insurance, you got to see how much can we afford to buy. And so sometimes we'll buy what people can afford. We buy some term and we buy some what we call permanent life insurance that'll last a lifetime. And the reasons people could have life insurance during retirement are for their many fold, right? Jeff, oh yeah,

Jeff Akers:

life insurance, when you have a cash value, one of the things you can do is take loans against that policy. It's almost like your home equity loan, and you can take it out, except with the life insurance, you can take these loans and not pay them back, as long as the policy still has enough cash in it, and it lasts as long as you do, then that money you've taken out as loans is tax free.

BRIAN AKERS:

Yeah, they add interest inside and eat away the cash value which the loan gets paid off upon death. So there are a lot of complex complexities to that. We got to understand how it works, but that's a way of. Making Life Insurance be tax free. Now the life insurance investment bucket, that piece can be invested, and like whole life invest guaranteed by the insurance company. Universal Life has a portfolio rate that changes variable. Universal Life has things that have sub accounts that could be a stock or anything like that. And then they came out probably later 90s index Universal Life, which is tied to in like fixed indexes, which has no downside, some of the upside. Then there's other variances of how they invest that money besides that,

Jeff Akers:

right, they're always creating new ways to make the money inside

BRIAN AKERS:

grow, and as interest rates lower the last decade, they had to be more and more creative to make these policies sort of be something that you would want right right now, life insurance, there's many cases we can talk about about the use of life insurance when it comes to to delivering a death benefit check, and the impact of delivering a death benefit check in a family's life after a death in The family to give them a tax free check and then tell them that they're okay is a very good thing. As a financial planner, you've had that experience. Well, I felt, as a friend of mine that then his wife, I was there at the hospital when he died on a Sunday afternoon, Monday morning, she called and said, Brian, what am I going to do? Am I going to be all right? Can I? Can I stay in the house? All these just some rapid question? I said, let me come over. And I went there. Oh, that day, it was raining that day, and of course, a leak in the roof that day, just sort of pointing out that her husband wasn't there anymore. But I we went through the financial plan, and I said, this is what we know, that that was provided. We wrote it all out. This is the plan. This is the insurance we bought. This will come in two weeks to help you pay off your all the mortgage that's here. You'll have very little bills. We'll have this other money for bills. Then you get decide what you want to do. You don't have to make any quick decisions, right? And then ultimately, a lot of decisions were made. But ultimately that life insurance is designed to deliver death benefit whenever it's needed, right hopefully it's not needed until way down the road. Right. Now, I think life insurance is extremely valuable, and most people that have family and kids and debt should have life insurance beyond what they get from work, right?

Jeff Akers:

Yeah, that's another kind of life insurance that group life insurance that as long as you're working there, you can have it

BRIAN AKERS:

some tricks of group benefit life is that it's usually done on every five years pricing, right? It's a unisex rate normally, which means that females pay extra because you grouped with the males, yep, and then pay less, pay less than the female. They pay the same, but they pay less than they should, less than they would have, just based on being but every five years, it jumps up. And if you look at their chart at 4045, 50. Now I gotta tell you worst case scenario. Jeff, all right. New client comes to me, and he talks about his wife who had cancer and passed away. The company plan, the only life insurance they had was group benefit life insurance. And I said, Well, what happened with that? And he goes, Well, once you got a long term disability with her cancer, they canceled her oh no on the group benefit. I said, well, didn't you fight for portability and all the other options? I didn't know about that, but it was already too late for us to go back and fix but the group benefit was tied to the job, right? And disappeared after, in that case, two years of group of long term disability cause she had cancer, which led to her death, right? And that's just a horrible situation. Of the only life insurance they had on her was through her work,

Jeff Akers:

and you mentioned portability, that's just the idea that you have it while you're at work, but when you leave that job, you can port it over to become an individual policy for yourself where you're paying the true premium for it, but at least you get to keep it

BRIAN AKERS:

absolutely so what we're talking about is this, do you need life Insurance? Now, we believe that there are many cases that you do and then what we do for a living, Jeff and I as financial advisors. We if we sell life insurance as a insurance broker and we shop around for the policies, we do make a commission, but we enjoy helping people decide why they need life insurance, how much they need, and then how to pay for it, and what to design. And design a policy that fits you for the now and fits your family for the future. Life insurance is a love purchase. Yes, you love and care for people, and that's why you buy it. So life insurance is something that we can guide you through as part of a good financial plan. This is what we like to do. Let us do the work for you. Don't just call a number and just buy, buy like a commodity something. Make sure you're buying the right amount, the right way, so it's it's right there for you. Remember, it will help us make sure it's taken care of for that's planned for, and that when something happens, we know that it's been planned for, that you're going to be okay. So at AKERS Financial Group, we want you to understand that you can win an. Retirement years, and you can help your family win if you're not there. So give us a call at 833 win retire and schedule an in person meeting with one of our team of advisors. That's 830 3w, I n, r, e, t, I R, E is 833-946-7384, or visit our website, AKERS, financial group.com or scroll down to the bottom of our homepage and schedule a meeting right there. Call 833 win retire or go to our website, AKERS, financial group.com Why? How, and how much is the question. We will reveal the answer when we

Unknown:

come back. You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833 win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS,

BRIAN AKERS:

welcome back to winning in retirement. I'm Brian AKERS from AKERS Financial Group. We welcome you back to the winning retirement podcast put on by AKERS Financial Group. And we brought Jeff AKERS from AKERS Financial Group. Good morning, Brian. I said that in the high spell, AKERS, Jeff, a, k, e, r, s, then you have to figure out how to spell financial, which is always hard some days that one's in the dictionary, absolutely. So what happens is this, we put on a radio show, and this radio show is something where we designed it based on what's going on with our clients, what we're doing day to day with our clients. What we want to do today is answer a simple question, do you need life insurance? And that's the name of the show. We're here in the second half, and we're here to the core thoughts that we have on life insurance, and that is this, why, how and how much is the question? We will reveal the answer. Ooh. All right. So Jeff will reveal the answer. All right. So do you want to know why? How and how much? What is that about? Can you explain that? Then that help people understand why we think it's important to know those three things when you're when you're doing

Jeff Akers:

things well, we need to know why we need life insurance. We've talked a little bit about it before, but there are several reasons we want to be able to pay final expenses. We need to pay off debt, we might need to replace income. We might want to fund our kids college if we pass away in an early so there's a lot of wise to why you might need. I got more wise nice wives, why there's no v all. Right, so one,

BRIAN AKERS:

all right. So why? So people, I use life insurance for charity. I use life insurance for we give taxable money to charity, and then I do the life insurance through a wealth replacement trust back to the family. So legacy to be tax free. Legacy is a great idea for life insurance. Life insurance as a way that it could deliver long term care benefits while you're alive, death benefit when you pass away. It's a combo expensive internally policy, but for a purpose. Could be the right. Could be an answer. Life insurance could be a retirement plan if you can't save, if you can't save more at work because you make too much money, right? You got to find another way to save right? Life insurance could be another way, but the policy has to be designed properly, right? Yep,

Jeff Akers:

it does. Otherwise, it's you can create some tax problems. Yeah. So

BRIAN AKERS:

why? Why about life insurance? Do you need life insurance? Well, first of all, why? Who are you responsible for? What are you responsible for? And if you're not here tomorrow, what

Jeff Akers:

happens and what goals can you achieve with a life insurance that you don't have another way to achieve?

BRIAN AKERS:

Is it? Is it nice? It not nice? Is it generally, we're selling, like, 1 million, 2 million, 5 million, larger term policies than we've ever had be based on incomes and long term needs.

Jeff Akers:

Right? Incomes are higher, home values are higher, so that the value of our life is higher as a result. And that's what we're insuring.

BRIAN AKERS:

That's inflation, right? Yes, it is, yeah. So you bought terms insurance 20 years ago. It's probably not enough, if based on whatever, wherever you are in your financial plan, right? If it's level term, alright? So we're talking about why. Let's talk about the question about why not? So we have the show is called, do you need life insurance? So you said the word maybe in the first quarter. But what if the answer is, No, you don't need life insurance. And the why, the answer is why you don't need it. What's some reasons people don't need life insurance? Jeff,

Jeff Akers:

you might not need life insurance if you don't have a mortgage, if you've got enough saved that when you pass away, your family is going to be okay. You're financially independent. Is that what you're trying to say, hey, that's the magic word financial, and that's our goal, for every client, is to be financially independent, and then the life insurance absolute need is probably down to zero. Then we have to think

BRIAN AKERS:

of another reason if we need it at all right?

Jeff Akers:

And maybe that exists, and maybe that doesn't. Maybe it's important to you. Maybe it's not so,

BRIAN AKERS:

all right, so I gotta be nosy. Did you buy life insurance before you had kids or after you had

Jeff Akers:

kids? I actually had life insurance right out of college. Yeah, I had this pushy cousin that just,

BRIAN AKERS:

yeah, certain advisor had you set up early so you could buy it cheap way as a young and healthy one, are

Jeff Akers:

you gonna let me tell my story about that is okay. You've heard it a million times. I. Heard it. Let's let everybody else hear it. Okay, so I bought it. It was just a small variable, universal life policy. I paid 50 bucks a month for it, and then 10 years late. Well, it wasn't 10 years later. I got married. I got married about five years later, but 10 years after I bought the policy, my wife and I are adopting. It's like, how are we going to pay for this? We got to pay for adopting these kids, and one of the things I could do was take a loan from the life insurance policy to help pay for the adoption, and then instead of paying a premium after that, I was repaying the loan. Once the loan was paid off, then I went back to paying the premium. So it ended up not costing me any extra, and I had extra money that I could use towards the adoption. So all tax free, too. All tax free, not even reportable, right? And have to do anything special. And so here's something that I bought before I ever knew what the use was going to be, and it worked out when the time came. So,

BRIAN AKERS:

yeah. So what happened in that case was a single gentleman named Jeff, he had extra money. And so we put money in different buckets, money for short term, money for long term, money for medium term. Medium term is money like money for a house and money that to buy insurance. At a younger age, you lock in really cheap

Jeff Akers:

prices. I was much younger and much healthier at the time. You get these super

BRIAN AKERS:

Preferred rates. It's cheap, and it's usually you don't think about it because you're super, super healthy, right? But you can buy 30 year term, all these different kind of policies at it and get it lock in cheap rates, and that's not a bad thing for a younger person to consider,

Jeff Akers:

right? And I really like the permanent insurance at the younger age, because you keep that lower rate all through your life. Yeah, it's just at the time, I didn't have a job, so coming up with the $50 a month was a little bit of a okay. How am I gonna Yeah, you were working. It's, well, yeah, I was still getting ready to go back to school. So

BRIAN AKERS:

yeah, he ended up going back to graduate school and worked a hybrid thing, but so generally, idea when it comes to life insurance, the why is it a part of your long term plan, or is it part of your short term plan? Now what happens is this life insurance, especially term insurance, I treat like a commodity, and that means, if you haven't shopped your term life insurance in the last 10 years, you'd be amazed that even at older age, you could find possibly cheaper. Now you're living longer, right? Interest rates are higher than they were 510 years ago. Sometimes term insurance could be cheaper if you want to shop

Jeff Akers:

around, right? So it's not a bad idea just to look, I've had term

BRIAN AKERS:

insurance approved within from applying in the morning, approved in the afternoon for a younger couple, younger person, and they came out and said, Hey, do you want more seriously? And then I went back to them and said, they're offering more at this really low price per 1000. And they said, let's get some of that so it fit into the plan. It's a different it's a different life insurance industry than when I started back in 1987

Jeff Akers:

Yes, yes. Back to the phone. The phone has changed since 1987 Well, the life insurance

BRIAN AKERS:

policy has changed, and you really need to know what you're buying. Don't just buy because of sales and illustrations. Understand your why. Then you need to understand how much you need. We can do calculations on how much you need and then how to buy it, like, what type of policy? These are all pieces of that. Why? How much should I get, and how to buy it,

Jeff Akers:

and how to pay for it? Yeah, sometimes we have to figure out, how's this going to fit in the budget. Yeah,

BRIAN AKERS:

you were saying you didn't have a job. When I got you that policy, I was feeling bad. Yeah, well, but

Jeff Akers:

it's one of those things where you start paying$50 a month. Nowadays, $50 a month, you just, you don't even think about it, but at the time it was, it was actual money.

BRIAN AKERS:

So very true. But it became something to use. And do you still have it today? I do, and so do I. And I don't even think about paying $50 I use mine to buy one of my houses, and then I paid it back. So it's fun.

Jeff Akers:

So there are a lot of purposes that life insurance can be used for, and some of them, when you buy the policy, you don't even realize what your you might end up using it for,

BRIAN AKERS:

absolutely so what happens is this life insurance is a purchase that's made a lot of times out of love and caring for your family, and that might be the reason why, then you have to calculate, how much do I really need to provide for them. Now you might think a little negatively. You might say, Hey, I'm not making the next person rich, like the next spouse rich. If I'm gone, you've heard that, haven't you from someone?

Jeff Akers:

Oh yeah, if I die, she's going to remarry. I don't want to make him

BRIAN AKERS:

rich, right? Then the comment, then we go back to the beginning, the love part, right? Is there? Is there love there, or what's going on? So the idea of the need of life insurance is based on the providing beyond you. Now you can set up trust. The life insurance can go into a trust for your kids and not for the next spouse. Us to enjoy, right, right? Yeah, restricted, yeah. So there is handcuffs to a future in an estate plan. So when you're thinking about life insurance and wills and estate planning, that all ties into the concept of, what if I pass away tomorrow, and I want to provide for my family, and I want them to reach their goals and take care of them, and that is a reason why. And also I call it a love purchase, right?

Jeff Akers:

It is a love purchase. I love my wife, therefore I have life insurance to take care of her if I

BRIAN AKERS:

die, absolutely Now, the thing is this, as you as you outlive the life insurance, term insurance disappears when the term is over or they jack the prices way up. Yeah. Whole Life, universal and variable life, it depends on the design you got to track them, make sure you're properly funding them. For them to last, you got to watch them imploding with not enough premium. Make sure you're picking the right investments inside all kinds of things you got to do, making keeping track of that policy. Yeah, we

Jeff Akers:

talked about Variable universal life a little bit ago, and in the 90s, that was very popular, because the stock market was going wild, and so they had really low premiums, and then we got to 2000 and the market crashed, and people started getting letters saying, Okay, send us a check, because there's not enough cash in the policy.

BRIAN AKERS:

Yeah, the 2000 2010 was a negative decade for the s and p5 100. It was made barely universal life difficult, because if you lost money, then there's not as much money in there to pay the price and the cost, the cost of the insurance, a lot of these variable and universal life the death benefit costs go up every year. Internally, it costs more and more every year. It's not a flat charge, right? All right. So as we're talking about all these things, we're talking about, do you need life insurance? The fact that, do you need life insurance is up to you and your situation. That's financial planning, right?

Jeff Akers:

We call it a financial fingerprint. And you are unique. You know, your situation is unique, so we need to figure out your situation,

BRIAN AKERS:

yeah, and that takes information. We need to know about your kids, because Social Security will pay money to your kids if you pass away, as long as they're still in, like school or high school, they'll pay money. So that's part of the the plan of what comes in if you passed away too young, right?

Jeff Akers:

Yeah, you've got to have something to take care of that that family.

BRIAN AKERS:

Absolutely, as you get older, the kids grow up, you might not need it for them. Might need it for being short on retirement saving. We love retirement saving, because we all know the best part of retirement is getting your time back, where you decide how to use it. Before retirement, your time is tied up with other commitments. Oh, you know, mainly your job. A lot of that goes away in retirement, your time is now consumed by things that you want to do. It's so easy to begin winning in retirement. Go to our website at AKERS financial group.com scroll to the schedule and meeting section and let us know you'd like to schedule your free consultation with one of our team of advisors. That's AKERS financial group.com or you can call us at 833 win, retire. That's 830 3w. I n, r, e, t, I R, E, we'll give you a call on Monday to schedule your free in person meeting. Go to AKERS financial group.com or call us at 833-946-7384, to start planning for your retirement. Now, how do you guarantee a tax free inheritance to your family? The answer may surprise you. We'll explain in just a moment.

Unknown:

You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS,

BRIAN AKERS:

welcome back to winning in retirement. I'm Brian AKERS and Jeff AKERS here from AKERS Financial Group. We invite you to go to our web page at AKERS financial group.com, how do you spell that?

Jeff Akers:

Jeff, that's a, k, e, r, s, again, and financial you can find that in the dictionary.

BRIAN AKERS:

Financial Group. Calm. Now Jeff AKERS and Brian AKERS have been working together for over 25 years. Wow. How about that? Jeff, that's that's a long time. I mean, you were younger than I when we started. Now you're so much older,

Jeff Akers:

and you're still older than me, but that's the way it goes.

BRIAN AKERS:

Yeah, Jeff likes to joke that I'm his cousin. I take it seriously, more seriously than he does.

Jeff Akers:

Well, work is serious. This is something that I started doing because Brian asked me to, and I've grown to love it

BRIAN AKERS:

over the years. So Jeff has a master's degree in what Jeff marriage and family counseling. Do you ever use that in life insurance sales? Oh, in

Jeff Akers:

life insurance sales specifically, yes, in financial planning in general, all the time.

BRIAN AKERS:

Yeah. So it's an interesting thing on the education and Jeff's desire to help people. Planning is truly helping people, and we've found that life insurance is the ability at the worst day in a family situation. We can provide the financial help if we've done the plan, implemented it properly, we can delay. Deliver that check at the right time,

Jeff Akers:

right when life insurance is useful? It's not because things are great. They just died, passed away, and the family is going through a grieving process at that point. And so if the life insurance can provide one less thing for them to have to worry about, yeah, then that's good. Yeah.

BRIAN AKERS:

So this quarter, we're covering, how do you guarantee a tax free inheritance to your family? And now what we want to do is try to explain how life insurance can do that for you. So

Jeff Akers:

life insurance and tax free, that sounds amazing.

BRIAN AKERS:

Well, tax free is income tax free. So if you get a life insurance check as a beneficiary, is going to be income tax free. It means no federal or state income tax on it.

Jeff Akers:

Okay, that sounds really good. So if I've got a million dollar death benefit and I die, my wife gets a million

BRIAN AKERS:

dollars, a million dollars right now, how you own it will dictate if it's inside of your his state estate and have any inheritance tax, anything like that. Well, estate tax anyway, yeah, so Estate Tax Federal has been bumped up to 15 million and made permanent at 15 million. So only above that would there start that 40% federal tax that we used to worry about a lot, many years

Jeff Akers:

ago, right? So estate for the estate tax, you're thinking about everything you own, your house, your 401 Ks, your IRAs, all of your investments and life insurance, death benefit, absolutely.

BRIAN AKERS:

Now, life insurance in the state of Maryland, if you are giving it to your beneficiaries, your niece and nephew, actually avoids a Maryland inheritance tax because it's life insurance. There's a special exemption in Maryland. That's just a fun fact, right?

Jeff Akers:

In Maryland, there is an inheritance tax that if, like Brian mentioned, if you're given the nieces and nephews or just cousins to the family or cousins, then there's an inheritance tax. Except life insurance, death benefit,

BRIAN AKERS:

absolutely. So the use of life insurance can really help you accomplish your goals. So the idea of this a tax free inheritance to your family. So let's talk about examples of that. So how do I put it? Life insurance is a something that can be put into trust. Yes, and we can use specialized trust that are irrevocable. Irrevocable. Life Insurance Trust when the estate limit was hot, was lot lower, right? We used to do more of these, right? Irrevocable life insurance trust. Eyelet is a letters right that you put money in. It's like in a lock box. It's over there in the lock box four beneficiaries down the road, that's outside of your estate. Once you fund it properly, and then the estate there's no estate tax, no income tax. It's a way of getting a money set aside to the next generation in a very efficient

Jeff Akers:

way, right? And so just, just so you recognize this, you might be the one that's insured in that life insurance policy, but you're not the owner, and you're not the trustee of that irrevocable life insurance trust. For I was

BRIAN AKERS:

going to say about the Forbes family. The Forbes family maintained their wealth through the years through properly drawn trust and life insurance to fully fund each generation, to try to avoid that 40% and higher tax where that would that actually did occur, but the life insurance fully funded, the need give it back right earlier, I mentioned the concept of, you can give IRAs and beneficiary be a charity, but then you say, Well, I don't want to give all my all my savings to the charity. I want my family to have something right. And then what we do is we replace that wealth with life insurance, and there's trust that are we there for purposes of explaining, we'll call it wealth replacement trust, okay? Are designed to hold the policy, deliver it to your family, all tax free, and so that the charity gets it, the life insurance goes your family, and the only one cut out is whom? Jeff, uncle, Sam, yeah, in that case, right? If it's properly designed, it does take people who are really committed to the family and the charity for that purpose,

Jeff Akers:

right? And I've done this before, where traditional IRAs that's going to go to charity, Roth IRAs that's going to go to kids. And life insurance. We actually have a irrevocable life insurance trust set up so that the kids will get money from this life insurance policy, but it'll be spread out over time.

BRIAN AKERS:

And for those that live in Maryland, we have a federal limit of 15 million, but Maryland's only 5 million, right? And so there's a reason, if you're over 5 million of net worth, to consider things like this, and having 10 million, if there's a spouses, is another thing to think about,

Jeff Akers:

right? So we've got to be well, we have to know the rules, and we have to know what we're we're doing. That's why we're here.

BRIAN AKERS:

So life insurance check, if, if your uncle gives you a check after he passed away, his life insurance, it's income tax free. It might be subject to an estate tax or inheritance tax for whatever state he died in. Yes, that varies. Yeah. So like, just some, just something to think about. It comes to life insurance, how do you get guaranteed tax free inheritance to your family? We just walked you through the basics. It would take hour and a half, probably in a meeting, to go through more than basics, all of the details and specific to your case, probably three months to implement with lawyers and a team.

Jeff Akers:

It does take time. Yeah, there's no no getting around that. It does take time,

BRIAN AKERS:

but it's a great thing to do for your family, for the long term plan,

Jeff Akers:

and once it's done, then you don't have to worry about

BRIAN AKERS:

it all right, so as we close up the show for today, about do you need life insurance? Jeff, there's this one type of policy that's become very useful life, long term care. Can you explain it a little bit to me and explain it to everybody about why it's something that people should look into?

Jeff Akers:

Yeah, so long term care insurance is expensive to start with, just on its own, but life insurance gives you the death benefit. Some policies have this ability, this rider, where you can use your death benefit to pay for long term care. So one of the the complaints about long term care insurance was always well, what if I don't need it? And now I paid all this money to cover my care, and now it's gone, and the premium keeps going up. Well with life insurance long term care, if you don't use it for long term care, that death benefit is still there for your family, so it's not lost, and there are policies that have a premium that does not change, and so your long term care can be covered, or at least part of it covered, through this and at the same time, you're not feeling like you're throwing money away if you don't end up using it.

BRIAN AKERS:

Yeah? So old school Long Term Care, there's lots of pricing increases, yes, like a lot,

Jeff Akers:

yeah. Like companies asking the state for 45% and the state says we'll give you 15. They just keep coming back year after year and getting

BRIAN AKERS:

50. And so that kind of life insurance, I called that health long term care. Yes, it then that's not really a viable option anymore.

Jeff Akers:

It's less viable. They've restricted the benefit quite a bit now,

BRIAN AKERS:

yeah, less viable to a point of no, not for me, right? Sorry. So clients, as we get ready to retire, is the time to think about this or prior based on when you're still healthy, because you got to qualify for mortality, life insurance and morbidity, which is long term care, right? What does

Jeff Akers:

that mean? Jeff, but what morbidity? Sure. Well, that's a hard word. It's a big word. I can do it if you want me to. Well, that's going to be things like, Do you have something that's going to make you need care. You're

BRIAN AKERS:

using a cane in a wheelchair. If you have osteoporosis, you have other issues, right and since, and they'll deny you right there, and they'll deny you so mortality and morbidity to get a policy means you got to qualify under both in those policies, so if you wait too long, you won't be able to

Jeff Akers:

get it right now, I said before that, I like getting permanent insurance for young people. You don't necessarily want to get life long term care when you're young, because it's more expensive than than regular but you don't want to wait so long that you're not healthy enough to qualify. You have to qualify for it.

BRIAN AKERS:

I have two cases where I differ from you on that really. I had two ladies that were later 30s, early 40s, and their concern is they married an older husband. Okay? Is they're gonna be alone, and that they wanted to be provided for, no matter what happens later in life, sick, not sick, all that. And so there are policies that have riders who use the death benefit for for things like this. And so for younger people, in those two cases, it was a perfect fit for them, so you insured them, not their husbands, not the husband at all, just them. The husband is going to buy one later. But there's an age difference in marriage, once 15 years, once 12. So there's an age gap. And there was this genuine concern on the why, the whole why was I want insurance in case I'm alone and I have no one to take care of me, and so we took that worry away at a younger age, because they had the ability to save, ability to put money, and we're gonna buy life insurance anyway, for a little bit more, we got ones with the riders that allowed for it, so that fit. Okay, so it's a little different. So that a blanket statement of weight to retirement. I didn't mean to say it that way. What? What I'm saying is your why could then dictate what you need to buy. So understand that, do you need life insurance? We think you should think about it. Understand the roles of life insurance. Don't be sold life insurance. Understand your why before you buy, right?

Jeff Akers:

There has to be a purpose. Absolutely. Understand your why before you buy. Yeah, I wish I

BRIAN AKERS:

had a drum, understand your why before you buy that. So it sounds simple, but it makes sense on life insurance. Well, I we've had many cases people bought life insurance from a salesperson, yeah. And we say, why, right? And the answer, they can't answer us,

Jeff Akers:

why, what's the purpose? What are you going to use this for? Yeah, and they don't know, right?

BRIAN AKERS:

And then the design was. Wrong. We had to redesign the policy and fix it. Sometimes that happens. Oh, it does, but, but the idea is this, do you need life insurance? Well, this show's been all about that. If you missed any of it, go to our website, AKERS, financial group.com, and the radio podcast tab right there. Listen to our past shows, or go to any other podcast place to listen that. All right, so Jeffrey, thank you very much for a good show my pleasure. I appreciate it, and we do. Thank you for listening today. We do look forward to meeting with you. We want you to win in your retirement by taking this opportunity to begin planning with us at AKERS Financial Group to schedule your free meeting with one of our team of advisors. Go to our website at AKERS financial group.com, scroll to the schedule meeting section and let us know you'd like to schedule your free meeting right there. That's AKERS financial group.com or you can call us at 833 win retire. That's 830 3w, I n, r, e, t, I R, E, we'll call you on Monday to schedule your free in person meeting with one of our team of advisors. Start planning for your retirement now. Go to AKERS financial group.com or call us at 833-946-7384, thank you for listening. I'm Brian AKERS from AKERS Financial Group, and we want you to be winning in

Unknown:

retirement. You've been listening to winning in retirement with your host, Brian AKERS of AKERS Financial Group. AKERS Financial Group offers securities through arcadios capital and SIPC and FINRA member firm. Advisory services are provided through arcadios wealth AKERS Financial Group and arcadios do not share any common ownership. Neither arcadios nor AKERS Financial Group provides tax or legal advice. Advice given on winning in retirement is general in nature, and one should seek further advice from their financial advisor, broker, attorney andor tax accountant before investing, be sure to read each prospectus carefully to understand all the risks associated with each investment. Examples and scenarios shared are meant to be for illustrative purposes only past performance is not indicative of future results.