127: The Life Insurance Mistake Almost Everyone Makes

Life insurance is one of the most misunderstood parts of financial planning.

In this episode, Jessica and Brandon break down what life insurance is actually meant to do and why most people think about it the wrong way.

Instead of treating life insurance like an investment, it should be viewed as income protection. If your income disappeared tomorrow, would your family still be financially secure?

We cover:

• Who actually needs life insurance
 • Why term life insurance works for most people
 • The real difference between term and whole life policies
 • How much life insurance you should consider
 • Why waiting to buy a policy can cost you more
 • Why life insurance through work usually isn’t enough

If you have a spouse, kids, or anyone financially dependent on you, this episode explains why life insurance is one of the foundational pieces of a solid financial plan.

Subscribe to The Sugar Daddy Podcast newsletter

Explore The Sugar Daddy Podcast Stan Store — Downloadables, tools, and more to level up your money game together!

Head over to our YouTube channel to catch this episode in full video form.

Apply to be a guest on the show.

You can also email us at: thesugardaddypodcast@gmail.com

Connect with us on Instagram
We’re most active over at @thesugardaddypodcast

Chat with Brandon
Want to work together? Learn more about Brandon

Book a free 30-min call to see if it's a fit.

Show us some love, hit subscribe, leave a five star rating, and drop a quick review!

Money, relationships, and the mindset to master both. Hosted by financial advisor Brandon and his wife Jessica, The Sugar Daddy Podcast breaks down how to build wealth, unpack old money beliefs, and have real conversations about love and finances. Their mission? To help couples and individuals grow rich in every sense of the word: emotionally, relationally and financially.

...

Transcript

Why Life Insurance Matters Now

Jessica 0:00

Imagine if you and your income disappeared tomorrow. What would happen to your family? In today's episode, we are having the hard conversation about why you need life insurance and why life insurance is income protection and not an investment. Hope you'll stay tuned.

SPEAKER_02 0:17

Sugar Daddy Podcast, yo. Learn how to make them pockets grow. Financial freedoms where we grow. Smart investments, money flow.

Jessica 0:28

Welcome to the Sugar Daddy Podcast, where we help you build a clear financial plan so you can feel confident and in control of your money. If you are an OG listener, thank you for being with us and welcome back. And if this is your first episode with us, we hope you'll stay to the end and join us every week because we drop episodes every Wednesday. Babe, what are we talking about today?

Brandon 0:52

Today we are having that fun conversation that everybody loves to talk about life insurance.

Jessica 0:59

Okay, I feel like we're just complete weirdos because I really like talking about life insurance because I am a planner and I like having a plan. But I understand why it's difficult for people to have this conversation and to plan for really what the worst case scenario would be. Like some people are just so avoidant that they literally just don't want to have the conversation. And I'm like, no, no, we're gonna talk about all the hard things because you don't plan for the emergency in the middle of your house spurning down. You plan for it while everything is still intact and calm and peaceful.

Brandon 1:36

Yeah, I would say it's a couple, there's a couple of reasons why people are kind of hesitant to have the conversation. I think one, like you said, some people like literally think that, like, oh, if I talk about death, like superstitious, something's gonna happen to me because I'm talking about it, which you know we don't subscribe to that. Yeah. And then also on top of that, like to be honest with you, the insurance stuff is a necessity. I 100% hard stop. If you're an adult and you have certain responsibilities, you need life insurance. However, it's not the fun part because the idea is that, like, you know, you're putting money into these different types of insurances, well, that's even just like your car insurance, disability insurance, health insurance, stuff like that.

Jessica 2:13

Your Apple Care insurance. Yeah.

Brandon 2:14

But you're hoping that you never actually have to use it. So people are like, oh, well, I'm throwing away money. And I'm like, I can understand where you're coming from because I don't like necessarily paying for my insurance, but I've seen what happens on the other end when you don't have those things in place.

Jessica 2:28

And I mean, throwing away money is a little extreme because they're protections, right? You hope to not have to use your car insurance, but in the event that you do, whether it's your fault or somebody else's, you're glad that you have it because it will cover the things that you need fixed. It'll cover your rental car, it'll give you that peace of mind to know that you know you're not going to be without a car for a certain amount of time. This is the same, but like to the nth degree.

Brandon 2:54

Yes.

Jessica 2:55

Right?

Brandon 2:55

Yes.

Jessica 2:56

I mean, I I have a sense of peace thinking about the insurance policies we have in place. And that's the goal. They give me peace.

Insurance As Risk Mitigation

Brandon 3:07

That's the goal. Like, so you use insurance policies as a form of risk mitigation. So, what are the risks that we're actually trying to cover in the scenario? So, you know, for today's episode for life insurance, the main risk that we're talking about is someone passing away prematurely. Now, this is, you know, for example, like just use like just Nye's example. If I was to pass away tomorrow, obviously that's like the worst thing that can happen, but you also don't want to add a financial burden on top of your family because the income that you otherwise would have been bringing in is no longer there.

Jessica 3:38

Right.

Brandon 3:38

And that's the purpose of life insurance in regards to what we're talking about today, mainly.

Jessica 3:43

Well, and I know that we're gonna get into it, but also not necessarily thinking about it as like the paycheck that's gonna be missing. But I like to think of it in a way of in the worst case scenario, trying to keep our life as normal as possible, especially we have children, but this episode also applies if you do not have children. But you're you're not gonna rush back to work, right? You're not gonna resume your nine to five if something tragic happens and unexpected happens to your partner.

SPEAKER_03 4:15

Yeah.

Jessica 4:16

And and even, you know, there are we have so many examples of people in our lives getting diagnosed with things that are unexpected and could be terminal. And so putting life insurance in place, hopefully while you're young, hopefully while you're healthy, that's the best scenario because you save the most amount of money.

SPEAKER_03 4:35

Yes.

Jessica 4:36

Um, but it's it's one of those things where you need to keep your life as calm and peaceful as possible in the chaos and thinking about like the life changes that you would potentially have to make if you didn't have that income coming in or you didn't have that protection to say, you know what, I'm not gonna go back to work for the foreseeable future and I'm gonna work on my mental health. I'm gonna make sure that me and my kids go to therapy, I'm gonna take care of the estate, you know, so to speak. I mean, there's so much that goes into handling somebody's passing. You can't just go pick up and go to the grocery store and like have a normal life after that. You just don't. Not for a while, anyway.

Brandon 5:18

And the thing is, you like what I try to do for people is paint a realistic picture when we're talking about putting life insurance in place and how much you should have. Because when you're just talking about numbers, that doesn't really, you know, hit with people. Like, oh, a million dollars in coverage, two million dollars in coverage. What does that no? I need to talk about what it's gonna actually look like in the event if, you know, say you're a family of four and one of the uh spouses passes away. What does that look like? You know, so say you have two individuals, a husband and wife, that are making$150,000 each. All right. So they're we're equal on paper when it comes to income. Like just said, one of them passes away. Do you think they're gonna turn around and just continue working? Because I've heard people say to me, like, oh, you know, if one person passes, they still make$150,000. You know, that should be, you know, a decent amount to help out with, you know, paying bills.

Jessica 6:04

And I'm like, there's a lot of money missing.

Brandon 6:06

One, it's half the income missing, but then also not even that. Like, you think that your spouse is really gonna go to work the next day.

Jessica 6:12

And that your kids are gonna be okay to go to school and that life is just gonna keep going. Yeah.

Brandon 6:17

That's the idea is that like in this scenario, you would want to be able to afford a surviving spouse the time to mourn and also take care of the kids without having to rush back to work because of fear of m not having money.

Keeping Life Stable After Loss

Jessica 6:30

Right. And even if there are no children, take take care of yourself.

Brandon 6:36

Yes. Even if you've I said to uh to a dual-income household with no kids, take care of yourself, take the time that you need. And then even just like some of like the detailed stuff. Let's say you have a mortgage and the mortgage is in both of your names, you could potentially lose your mortgage because you are no longer you may not no longer qualify for that mortgage as an individual.

Jessica 6:55

Yeah, there's so many nuances to losing somebody unexpected that you really have to think about. And this is for the long term, right? If you have, again, let's use the$150,000 income example. If you have young children, the idea is how much income would that person have brought in over the next 10, 15, 20 years? It's not just let me get through the next year.

SPEAKER_03 7:26

Yeah.

Jessica 7:27

And so it's really important, and I know we're gonna get into it, but it's really important to also think about the longevity of what that money can do over the years.

SPEAKER_03 7:37

Yeah.

Jessica 7:38

So and we've had we've both had very recently had people pass away that are our age, unexpected, and have left families behind.

Brandon 7:49

Yeah.

Jessica 7:49

You know, and did not have life insurance in place.

Brandon 7:53

And that's everyone thinks they're invincible until you're not.

Jessica 7:57

And it honestly causes a burden. And you putting term life insurance, all we're talking about today is term life insurance, putting that in place.

Brandon 8:06

Well, we are going to define the two different kinds, but the main one we're talking about is term.

Jessica 8:09

Yeah. But having that protection is loving the people you care about.

Brandon 8:15

Yeah.

Jessica 8:16

Hard stuff.

unknown 8:17

Yeah.

Brandon 8:17

So kind of go into it, you know. The first thing that people always want to wonder is who actually needs life insurance? You know, for the most part, here we're talking about income protection. And, you know, this is for any person that has any form of responsibility or somebody dependent upon them. So for example, easiest one to think of is like Jess and I were parents. So if something were to happen to us, you we want to make sure that our kids are taken care of. But then also, as you said before, you know, if you are married or with a partner that you guys are financially dependent upon each other, you still need it in that scenario, even if you don't have kids. Um, now, one thing that you know is kind of can be up and for debate is when you should get it. Because think about someone who's maybe 25 years old, single, doesn't have kids. And let's just say they don't have any debt, nobody's financially dependent upon them. Then what you're actually thinking there is like, well, what kind of life do you want to live moving forward? So if you're someone that's like, hey, I do want to get married in the future, uh, you know, with maybe the next five years, I do want to start having kids maybe in the next, you know, five to 10 years, then it can be very beneficial to go ahead and get a policy in place today. Reason being is that in order to get a life insurance policy, first you have to be eligible for one, you have to qualify for it. So they're gonna take into account your age and your health mainly.

Jessica 9:31

Yeah.

Brandon 9:31

Now, one thing that we know is as we get older, we can't predict the future. There are things that can happen from a health standpoint that could possibly make you ineligible for a policy or significantly increase the cost. And then also as you get older, it doesn't matter how healthy you are, the older you are, the more a policy costs. So the cheapest policy that you're going to be able to get is literally today.

Jessica 9:53

Right.

Brandon 9:54

As an individual.

Who Needs Coverage And When

Jessica 9:55

Well, and I want everybody that's listening to pause and just think about your circle, your family, your close friends, and the things that have happened as you've aged. I mean, I can say just for myself, right? I mean, we got our policies and then I had my thyroid removed. Then I had two C-sections. Now I've got, you know, some autoimmune things. We know people who've been diagnosed with lupus, with MS, with um, you know, autoimmune things. And it kind of, you kind of wake up and it came out of nowhere. And once you have that on your record, getting that life insurance policy is going to cost you more. So yeah, when you're 25, the last thing on your mind, unless you've been having these conversations with your family, is I want to spend, you know, 30 or 40 extra dollars a month on life insurance, whatever it might cost based on that age and your health rating. But that's really the best time to get it. Because listen, shit happens when you get older and like your body is not the same. And we all know people who have had even cancers pop up. You know, I know several people with thyroid cancer. I know several people who've gotten breast cancer before they turn 35. I mean, y'all, we all know somebody. Okay.

Brandon 11:11

So it's also very affordable when you're when you're younger. When you're young and healthy, it's very affordable. Yeah. Now, the key is, like I said, making sure that you have the right kind of policy. But the idea is that you want to try to put these things in place when you can and not necessarily waiting until you need them because at that point in time, it may be significantly more expensive or you may not qualify because of things that have happened from a health standpoint.

SPEAKER_03 11:33

Right.

Brandon 11:34

Now, one thing also, for example, like we have policies on our kids. Now, the reason that we have policies on our kids is because it has a writer on it, which is an additional feature of the policy that allows them to get additional life insurance as an adult without having to go through medical underwriting. So we've already ensured that they're going to be able to get a certain amount of life insurance regardless of what happens to them from a health standpoint.

Jessica 11:58

So it ensures their insurability.

Brandon 12:00

Correct.

Jessica 12:00

Right. Which is another form of protection because again, we cannot predict the future and heaven forbid something happen, and then they, you know, have a spouse and get and have children, et cetera. We want them to have these protections in place. And so it's it's the really thinking about the long term while also understanding that life happens, it's unpredictable, and we need to put these protections in place when we can. I mean, I was even talking to my brother about it, uh, because I know that he doesn't have life insurance. And, you know, he's kind of of the mindset of, well, I'll just wait. I'll wait until I'm married. I'm wait until I'll have children. And I'm like, Boo-boo, you are about to be mid-30s. Like, get it now because you're just getting older. Get it now while you're healthy. Get it now while you're lean and fit, you know, get it now before you have something that pops up. And, you know, he tried to battle me on it, but hindsight is always 2020. And we know plenty of people that are like, man, I should have done this five years ago when I you've had people that have gone through underwriting. They have reached out, they're like, we're ready, they've gone through underwriting, have gotten, I'm assuming, you know, good ratings, maybe a good price, and then never moved forward and then came back, you know, four or five years later, and now the policy is two, three times, or they've had some sort of health issue, and now it's like, ooh, this is gonna cost you a lot.

Brandon 13:33

Yeah, because I mean there's a lot of things that, you know, I don't think a lot of people realize. Like the biggest aspect of the cost for life insurance policy is the medical underwriting. And that could be from like your current, you know, physical shape. It can also be from different medical things that you've had happen in the past. I mean, even now, you know, from like, you know, things are showing up in regards to mental health aspects as well. So you know, even just things like ADHD, you know, showing up on life insurance underwriting, and you know, make that that could be a reason for different cost when it comes to certain individuals. So that's why I'm saying, like, normally as you get older, you don't necessarily get healthier per se for most people.

Jessica 14:14

Yeah.

Brandon 14:14

So it's like go ahead and put it in place, you know, while you can.

Jessica 14:17

Well, and even if you do, right? Like if you're like on a health journey and you've lowered your cholesterol, you're, you know, you had high blood pressure, now you don't, or you've lost weight. Like those are all positive things. But guess what? You can't change your age.

Brandon 14:31

Yeah.

Jessica 14:32

It's only going to go up. And that's automatically.

Health, Age, And Underwriting Realities

Brandon 14:34

And to be honest, like, you know, like there's a difference that kind of jumps for you know normal intervals. So like in your 20s, going through your 20s one year, two years in your 20s isn't a huge difference. Makes a difference like when it hits the 30. Then, like the few years in between in your 30s, not a big deal. Then you see a jump at 40.

Jessica 14:50

Yeah. So get it before those miles.

Brandon 14:53

Now, somebody, like for example, someone who doesn't maybe need life insurance, if you're wealthy. So like you could technically self-insure if you're wealthy. Yeah, but the wealthy still use life insurance.

Jessica 15:06

Yeah. Okay. So I was gonna say, because it's literally a way to pass down wealth.

Brandon 15:10

I'm just saying, like, you know, from a monetary standpoint, as far as like somebody being dependent upon, um dependent upon you from a financial standpoint, if you have enough wealth to leave behind, you don't necessarily need one. But like I said, they still have life insurance policies for specific reasons.

Jessica 15:24

Yeah. But I mean, for the for the normal person, and if we're thinking about black and brown communities, a lot of times that's where the generational wealth is lost, right? You have somebody, maybe they were first-time homeowners in their family, somebody passes away, the mortgage was set to auto-pay, nobody has access to it. Now we can't cover it because we're missing one person's income. And then now that house is in for foreclosure, right? Yeah. I mean, there's so many like things that can be going down a different path when you're talking about. Well, but but I'm what I'm saying is if you're really thinking long-term and trying to also help set your family up.

Brandon 16:03

But we want to stay on. You're going deep down towards more like estate planning, legacy planning, stuff like that. We're just gonna stay on the high-level aspect of life insurance. I hear you.

unknown 16:14

Okay.

Jessica 16:14

I'm just listening no more GoFundMe funerals.

Brandon 16:18

Yes, I agree with you.

Jessica 16:20

No more. Like, enough. Stop.

Brandon 16:22

Yes.

Jessica 16:22

Stop. Get your life insurance. Okay, next.

Brandon 16:26

But um the next thing that people kind of go into is what type of life insurance do I actually need? And this is where it, you know, life insurance gets a bad rap.

SPEAKER_03 16:37

IULs.

Brandon 16:38

Just any all right, so there's two main different types. There's two, you know, term life insurance and permanent life insurance. And then there's various types of permanent life insurance where like most people heard it, it's referred to as like whole life, like you said, IULs, VULs, there's a bunch of other ones out there, okay? But as a high-level overview, as far as the term insurance, term insurance is exactly what it says. It is put in place for a certain term period. That could be 10 years, 20 years, 30 years, whatever it may be, but it's designed to replace your income in those high-risk years, which is like your prime earning years where you haven't maybe acquired a bunch of wealth because you're still in your, you know, early stages of your career, maybe, or middle stages of your career. But the idea is that it's either use it or lose it. So you have the policy in place for say a 20-year term and you're paying for it. And the amount that you're paying for those 20 years is the same every year. And the idea is at the end of the 20 years, you hopefully didn't use it, obviously, but you don't have anything left over.

Jessica 17:36

Which is why people are like, then I just threw my money away.

Brandon 17:39

It's kind of like you're rent, you're it's kind of like you're renting.

Jessica 17:41

Yeah.

Brandon 17:42

It's the equivalent of renting. But the idea here is that it's a very low-cost way to cover a high risk because term insurance costs significantly less than permanent life insurance. And most people should just have term insurance insurance, to be honest with you. Most people should have term insurance.

Jessica 18:00

Well, and you would say that if you're looking at getting one policy, it should be like your first policy should be term insurance.

Brandon 18:06

100% should be a term insurance policy. And that's where the issue comes because then on the opposite side, you have permanent life insurance or a whole life insurance. And it's just like it sounds permanent. It is something that's going to be with you through the rest of your life. And at the end of the day, when you do eventually die, your beneficiaries will receive a payout as a death benefit from your policy. Now, while you're alive, a permanent life insurance policy, like a whole life policy, does actually grow a cash value in it that you can't access while you're alive. But the biggest thing I want to, you know, kind of put a disclaimer on is that too often the issue is that whole life policies are sold to individuals who need a term policy.

Jessica 18:45

Which is where the scammy part and the bad reputation comes in.

Brandon 18:48

Yes. And I see it all the time. And that's where the you know, that's where people get upset because, you know, I've seen people that are, you know, 30 years old and they have a$200,000 whole life insurance policy when really what they should should have gotten is a million-dollar term policy. And that's where people are like, oh, whole life's a scam, whole life this and that. Then also it's also often portrayed as an investment. And it's not. It's not an investment. You do not use a whole life policy as an investment.

SPEAKER_03 19:16

Okay.

Kids’ Riders And Insurability

Brandon 19:16

And that's the issue that I think most people run into is that whole life is not, it's not a scam. You just use the wrong product in the wrong situation.

Jessica 19:26

And that's Well, but is that because people get paid more? The person selling gets paid more selling a whole life policy than a term policy.

Brandon 19:36

Yes.

Jessica 19:36

And we've said this on a ton of episodes.

Brandon 19:38

But I'm going to preface this is that I think also too is that you have individuals that maybe don't have enough knowledge and understanding. So they're being taught this thinking that they're doing the right thing. So it's not always not always that the person's trying to scam you over and make more money. They may genuinely think that they're helping you and they just don't have enough knowledge to understand that what you actually really need. Now, also, sometimes people come to you and just say, I want this. I've had people come to me and say, Hey, I want this. I want a whole life policy. I want this.

Jessica 20:07

I read about this. My cousin told me.

Brandon 20:08

I don't, I was like, that's not what you need. Well, I want this. I'm like, I'm not going to give you that because that's not what you need. And I've had to do that. But like, I have a little bit more knowledge. It could be both ways. It could be both ways. It could be someone who's just trying to make more money. And it could also be someone who, you know, just doesn't have enough uh knowledge and understanding.

Jessica 20:25

Yeah. Well, and just for anybody listening, two things that I'll say on this. And we've said this before. Anytime you're working with a financial advisor, somebody who's selling you insurance, you should always feel comfortable asking what you're making on this. So if you're considering a term policy and a whole life policy, you should feel comfortable saying, hey, what's your commission going to be on this policy versus this policy? And if the person that you're working with is not willing to give you that information, that's a red flag, first off. Second of all, any insurance product that you have, somebody's getting paid commission. So your car insurance, your homeowner's insurance, your valuable property insurance, anybody who's selling insurance is making a commission. What I will tell you is that we are not keeping our lights on with your term life insurance.

SPEAKER_03 21:17

No.

Jessica 21:17

So if you are concerned about like lining somebody's pockets because, you know, that's how they No, you're you are not keeping our lights on with your term life insurance that you need to get for your family. So I don't even get that out of your mind.

Brandon 21:31

I don't even really track that. Like as far as like when I'm taking into account my income, like I don't that's not what I'm tracking because it's not it's not a ton.

Jessica 21:38

Right. So just, you know, if you are if you're a person for some reason, whatever trauma you've had in your past with money, you need to get that out of your mind because nobody is driving around in a Lamborghini off of your term life insurance policy. So Yeah.

Brandon 21:54

And like I said, often the problem is with that is that the whole life policy is sold to someone instead of it actually. Of being what they really need. Now, like I said, there are definitely scenarios where a permanent life insurance policy 100% makes sense. But for the vast majority of people, a term policy is what you need.

Jessica 22:11

And don't in most cases, because I know you love it, depends, but in most cases, you don't need to get a whole life policy before you have a term policy.

Brandon 22:19

Correct.

Jessica 22:20

So also the order of operations matters.

Brandon 22:22

You should definitely get a term policy beforehand for most people.

Jessica 22:25

Can we just briefly go back and talk about underwriting? Because I think that might be, you know, you see a lot of commercials right now of like you can get this much insurance for$30 a month with no medical exam. Is it one of those like you get what you pay for? Well, it's not even that. Like it's what would you say?

Ads, No-Exam Myths, Real Costs

Brandon 22:43

It all depends like one, it depends on age, um the amount that you're applying for. And then also they're gonna pull your medical history first.

Jessica 22:56

So if they see something in your medical history, even though it says no medical exam, they're still gonna pull your medical.

Brandon 23:01

No medical exam means that they're not gonna, you know, do so what we consider a medical exam is that they're not gonna necessarily have you draw because sometimes you have to have a um somebody come out and draw blood and take a urine sample. But they're saying no medical is that they're gonna still pull your medical records because the company, but y'all have seen the commercial still applying for a life insurance policy. Yeah. So they're going to pull your red, that's they're going to pull your medical records. Fair minimum, they're gonna see that. 100%.

Jessica 23:33

Well, that I think that's a good call out because I don't know that most people would have assumed that. They see, oh, I can download this app, apply for life insurance, it's gonna cost me$30, you know, a month, and I'm gonna have the protection that I need without a medical.

Brandon 23:48

And like I said, I mean, like the way that they're basing it off of is for the most people, for the majority of people that are looking to actively get a life insurance policy, they're not gonna fall in that bracket.

SPEAKER_03 23:57

Right.

Brandon 23:58

Because they're normally quoting someone that's probably like they're basing that probably off of someone in their early 20s who's a completely healthy fit.

Jessica 24:04

But the people in the commercial look like they're mid-40s.

Brandon 24:07

It's I can tell you, like, I'm telling you, like, as a like, you know, has this, like, you know, it does this for a living. If you're in your 40s, and even if you're the fittest, healthiest person, and you're looking to get a million, two million, it's not gonna be 30 bucks.

Jessica 24:21

Right. Okay. Well, I think that's a good thing.

Brandon 24:25

But also, like, they could also be misleading. They could be saying that it's a 10-year term.

Jessica 24:28

Yeah.

Brandon 24:29

So, like I said, you got to take some nuance there in regards to what it actually is that's your they're specifically selling to you, because you'd be very surprised that once you go through some of those, you're like, oh, I have all these additional requirements now because you don't fit into that box that they were talking about. That it's gonna be the easiest way to do that.

Jessica 24:44

And then you're like, wait, they said$30 on the commercial and now it's 160.

Brandon 24:48

Yeah, you're not. I mean, like I said, like if you're my someone that's my age, 42 years old, about to be 43, and you could be the top, you know, 1% of health-wise, and you're getting, say, a million, two million dollars, and you're gonna probably get it like a 20-year term. It's not gonna be 30 bucks.

Jessica 25:06

Yeah.

How Much Coverage To Get

Brandon 25:06

I can tell you that already.

Jessica 25:07

Well, let's talk about the 1 million, 2 million. How do you decide how much life insurance you should have? And and I know we've talked about this, but go ahead and address the people who are like, Well, I'm already overinsured.

Brandon 25:21

Well, okay, so first of all, you can't be overinsured. It's literally impossible. Reason being is that an insurance company at the end of the day is still a company trying to make money. And they're not going to insure you for more than what they deem you to be worth.

Jessica 25:35

Worth.

Brandon 25:35

And your worth for in their eyes is based upon mainly age. So you have life expectancy and current income. So, you know, that's what they're gonna base it off of. So they're not gonna like if they deem you to be worth, you know, two million dollars, they're not gonna give you a policy for four.

Jessica 25:51

Right.

Brandon 25:52

That's not just not how it works.

Jessica 25:53

Yeah.

Brandon 25:53

So you can never be overinsured.

Jessica 25:55

But people say that.

Brandon 25:56

Now you could be more insured than you care to pay for.

Jessica 25:59

Oh, sure. Okay.

Brandon 26:00

And that's really what it is.

Jessica 26:02

Yeah, like I don't want to pay for this policy, so I'm gonna get less than what's recommended.

Brandon 26:05

Yeah. So, like, and there also could be some nuance in regards to it. So, for example, like um, what are your actual financial responsibilities? You know, having one kid as compared to having four kids, it's gonna make a difference in regards to maybe what the amount of life insurance that you need. So, there is some individual aspects there. I would say for like, you know, say your 30-year-old who's not married, doesn't have kids starting out with, maybe you're looking at 10 to 12 times your income to start out with.

Jessica 26:32

Okay. All right. That's kind of like the base level of like 10 times, 10 to 12 times.

Brandon 26:36

However, at that age of 30, you could technically, depending on like your income and your situation, you might be eligible for up to like 25 to 30 times your income.

Jessica 26:45

Oh, which if you can get that while you're young and healthy, again.

Brandon 26:50

But it also depends. So you and the thing is like you can't just take life insurance in one silo. Okay because you want to do the financial planning aspect and look at everything else. So for example, like think about it this way if you most people are on a fixed income, a fixed budget. So if you're allocating all this excess, so let's say you have your this 30-year-old who's not married, doesn't have um kids, and they're trying to get 30 times their income, which they could be eligible for. Do they necessarily need it at that point? Because maybe that money that they would otherwise be allocating towards that life insurance policy, some of that would be better investing more into their 401k plan or an IRA.

Jessica 27:22

Okay.

Brandon 27:22

So just because you're eligible for it based upon your situation doesn't mean you necessarily need it.

Jessica 27:26

Okay. Which is why it is important to talk to somebody about which you're probably not gonna get when you sign up for uh life insurance through an app.

Brandon 27:36

I honestly I've never gone through one, so I'm not gonna like get on this soapbox and say that it's incorrect. I don't know.

Jessica 27:42

But maybe talk to somebody.

Brandon 27:43

Yeah, I think I think it's worth having a conversation because as I said before, like I when I put life insurance in place, I get a commission from the life insurance company. So I don't get any money per se from you sitting and talking to me about it. Now, like I said, you have to be with a reputable person who's you're really looking to do and put in place what's best for you. Right. But you can 100% benefit from talking to an individual that has the expertise.

SPEAKER_03 28:05

Yeah.

Brandon 28:05

Because, you know, and that also, like I said, it changes with your individual situation. So, like, say the 30-year-old, now moved you up to 40 and you're married and you have kids, you might be you're still eligible for possibly, you know, 20 times your income. And that might make sense in that scenario because you have more people that are financially dependent upon you. And also you might be bringing in more money, you have more responsibilities. Now you have a mortgage, you might have, you know, other, you know, still student loans and stuff like that. I mean, student loans would go away, but uh but it's one of the, you know, the death that we always just pop in our mind. But um you have a mortgage and everything else that you have to help out from a financial standpoint. So it really depends. But 10 to 12 times your income is like where it starts. And then the nuance comes as you as an individual, what your specific needs are.

Jessica 28:49

So, and what I'm hearing there is you might need to look at your life insurance and your coverage as your life progresses.

Review Policies As Life Changes

Brandon 28:58

Oh, what oh, it's yeah, it's that it's never something that you're just gonna set in place to like 30 and forget about and be done. Because you're gonna have to, you know, reassess your situations as you progress through the different stages of life.

Jessica 29:08

And potentially your beneficiaries. We just released something about, you know, hey, maybe you were married, now you're divorced. You might want to update that beneficiary, or you went from not owning a house to owning a house. Well, that's a much bigger expense. You might need to increase your life insurance then, going from one child to multiple children. All of those life stages warrant a review.

Brandon 29:33

And also, here's the thing, too, is that like, here go where it can be beneficial, where you actually have someone like a financial planner, life insurance agent that you build a relationship with, and they actually keep in contact with you because they also know when you have these stages change. So, for example, I have, you know, friends of mine that have gotten divorced multiple times, and I know this obviously because they're friends of mine, and I'm like, hey, we need to change our beneficiary. You're no longer married to this person.

Jessica 29:56

And though they would not have thought about that.

Brandon 29:58

Exactly.

Jessica 29:59

Yeah.

Brandon 29:59

So it's helpful sometimes to have someone that is reaching out to you with those touch points to make sure that, you know, do we need to update anything? Has anything changed?

Jessica 30:08

Because your income, right? Like as we're aging, we obviously in most cases hope that our income is also increasing year over year. And so if you put a policy in place in your late 20s, early 30s, and now you're mid forties and you've, you know, increased your income significantly, that matters. Yeah. And so all of those things need to be taken into account when you're thinking about, you know, when to put it in place and then when to update it. And that's not to say, I mean, you're not recommending that people update their life insurance on an annual basis or anything. No, no, no, no, no.

Brandon 30:43

Not making necessary changes to your life insurance, but just making sure that changes that there's there's nothing we do need to change. It's like for example, like, you know, as I said, like having one kid and say you're renting. Now a year passes or a year and a half passes, now you have an another kid on the way and you just bought a house.

Jessica 30:59

Yeah.

Brandon 30:59

You have more of a f financial responsibility.

Jessica 31:03

Yeah. Okay. I think too, one time you and I feel like this kind of pulled on the emotional heart strings of the reality of what could happen in the event that you don't have life insurance, right? So if we're thinking about maybe a stay-at-home mom, usually the mom is the one who stays at home if you're in like a a singular income household, the husband unexpectedly, you know, passes away. There's no life insurance. So how do you afford where you're living? Now you might need to change where you're living. That's going to then potentially change where your children are going to school. Now they have to not only grieve the loss of a parent, now they're having to assimilate into a new environment, meet new teachers, make new friends.

Brandon 31:54

Like, I mean, you might have a completely different life. Say these kids are involved in activities that cost money, now they're no longer a part of the soccer team. They're no longer they're no longer a part of the dance team.

The Hidden Cost Of Waiting

Jessica 32:02

Like those are, I mean, and and I don't think that most people think about those details. But if you can the point is, if you cannot afford your life the way it is right now without life insurance, then you need life insurance.

Brandon 32:19

Well, like that's it. Obviously, outside of me not being here and having to deal with that, I don't want anything else in your life to change.

Jessica 32:30

Right. Unless I want it to. Yes. Yes. Absolutely.

Brandon 32:36

Yeah. Now, kind of moving into, we also like to like I like to point out with individuals the hidden cost of waiting. Because that's the biggest thing. People want to wait, wait, wait. If I can go back in time, I and I got and we got our policies. I was in my early 30s when we got our uh our larger ones. And I would go back, I mean, I wish I would have gotten, you know, even a few years earlier in my, you know, mid to late 20s.

SPEAKER_03 32:59

Yeah.

Brandon 33:00

And the like I said before, waiting costs more. Even if you're healthy, it's going to cost more. Now, for example, if you're 27, you wait to 28, is it going to be a significant difference just from an age standpoint costs? No. But technically it is going to cost you more. And then you also living up open the possibility of anything that changes in your health that could potentially increase the cost or make you ineligible altogether.

Jessica 33:24

Mm-hmm. Well, and thing, y'all, things happen, right? You know, these autoimmune things pop up. You could be, I mean, even getting into an accident, having, you know, surgeries, things like that are all going to weigh into your overall health rating or eligibility.

SPEAKER_03 33:41

Yeah.

Jessica 33:42

And so those are the things, you know, every every day that we make it another day, something terrible could happen. And that's just the reality. I mean, gosh, I saw something, you know, we had this like Snow Mageddon. I saw an article in from Charlotte where dad was sledding with his kids and got like run over by an A T V. Like accidents happen. You know, like you don't think that you're gonna go out with your kids and go sledding during like a a snow storm or whatever. It wasn't a snowstorm, but you know, like we were all out for shift.

Brandon 34:16

And that's what I want to point out. The term insurance is not because you died of old age. Right. It is the premature death. Yeah. That's what the main thing that is covering. It's not covering the 87-year-old man who passes away. No, that's not what we're talking about. We're talking about the 45-year-old dad who was in a car accident. We're talking about, you know, the 35-year-old mom who same idea.

Term vs Permanent: What To Choose

Jessica 34:40

I mean, and that's the reality. And no, we don't want to pay for it, but when, if and when that policy ever needed to be enacted, I know that we nobody would ever regret whatever the cost is to then get an influx of money that can give you and your family peace and support to handle what you need to with the time that you need.

Brandon 35:03

And also at the end of the day, like the way that life insurance fits into your bigger financial picture is that it's honestly the foundation of it. Majority of anything else that you're doing from a wealth building standpoint is a long-term play. It's not going to be tomorrow, it's not going to be next week, it's not going to be next year. It's going to be years in the making. However, these things can completely demolish that financial plan, can happen today, can happen tomorrow. And that's the idea behind, you know, life insurance that you're putting in place. It's a foundational block. And to be honest with you, if you are an adult with certain responsibilities and you don't want believe in putting life insurance in place, I don't want to work with you. I strongly dislike individuals that don't take care of their family and the needs that come with that. If you don't want to take care of that responsibility, don't have kids. Don't have a wife. I'm I've just I've Yeah, you get very fired up.

Jessica 35:58

Because I've met Which Brandon doesn't get fired up about much.

Brandon 36:01

Because I've had a few encounters with, you know, um men. And it's not really, I've normally it's not women, it's men who are like, oh, you know, I don't, I'm, I'm just gonna get this small policy, or I don't, I don't I don't need anything at all. She'll be fine. And I'm like, I'm good. We're not working together. You can get a policy through somebody else. Because like, that's just irresponsible and selfish.

SPEAKER_03 36:20

Mm-hmm.

Jessica 36:21

That's really sad. Like, if you, as a spouse, as a parent, the one thing you should always want to do is to make sure that if you are not around, your family is still taken care of.

Brandon 36:32

Now, there's something completely different if we look at the numbers. And in your financial situation, you can't afford the full amount that you probably should have. That's a different scenario. I'm talking about better to have something than nothing. But I'm talking about, yes. And that means even more so that you need the life insurance in some aspects. Exactly. Because you, you know, but I'm talking about people where we've looked through the numbers. They I've gone through their entire budget. They have the money to put towards it, they just don't believe in doing it. I'm like, I can't, I can't understand that.

Jessica 37:01

Let's talk about people who get life insurance through work. Typically, those are, you know, maybe one to three times that person's salary.

Brandon 37:11

It's a good start, never enough.

Jessica 37:13

Okay. So even if you have it through work, you should have a supplemental well, because once you leave, most of the time, I mean, maybe you can port that policy, but most of the time it's like you leave the company, you leave the policy.

Brandon 37:25

So I one, I would always say like most employers have one times your salary as the base, and you don't even have to pay for that. So you should 100% take advantage of that because you're not paying for it. Yeah. Now, sometimes they allow up to three times. Um I've even seen up to three times your base and not at the pay for that.

Jessica 37:40

Well, sometimes it depends on what level you are in the company.

Brandon 37:43

Correct. So But often it's either, you know, completely uh paid for or highly subsidized. So I always say, like, hey, let's go for like the place where we can get the least expensive first. Let's start there. But three times your salary, even five times your salary is not going to be enough normally.

SPEAKER_02 37:59

Right.

Brandon 38:00

So that's a good place to start. And as just pointed out, like it is a policy that's tied to your employment. Now, sometimes if you were to leave that employer, it can be called what's called portable, but then also the price increases with that.

Jessica 38:12

Because it's no longer subsidized by your employer.

Brandon 38:14

Correct. So it might just be, you know, go ahead and get the policy that you have through your employer, but then also have an individual policy that has no depending upon where you're employed and it's your own policy.

Jessica 38:23

Yeah.

Brandon 38:24

You can also also do a lot more customization on individual policy. A policy through your employer is the vanilla basic, and everyone's getting the same.

SPEAKER_03 38:31

Yeah.

Brandon 38:32

You can do a lot more customization, a lot more additional features on the term policy when you have an individual policy.

Jessica 38:38

Yeah. Okay. All right. So get what you can through work, but it's not enough. So definitely supplement with an outside policy. There is a cost to waiting, so don't wait. And really the call to action is if you do not have life insurance, you need it.

unknown 38:59

Yeah.

Jessica 39:00

So, you know, you could reach out to Brandon.

Brandon 39:04

And like I said, I mean, e reach out, you could reach out to me. And I mean, even bare minimum, I don't care. Hop on the website so at least like um one of the websites that give you a quote so you can at least get an I start to get an idea. Like even bare minimum of that, I think it could, you know, be very beneficial to reach out and talk to an individual. But sometimes that could be the barrier for people. Like they're just nervous to talk to a person and they much rather do it online. I'd much rather you get something than nothing.

Jessica 39:27

Do you have any suggestions on where if somebody's not gonna like reach out to you to do it?

Brandon 39:32

Ethos is the one that you know most people are familiar with. Now I've never-commercials. No, I've personally never gone through it. So I'm not this is not an advertisement for ethos, is we're not getting paid from them. I've never personally done it. I've never personally done it, but they are one of the major ones out there where you can hop online and you kind of find that out. And honestly, what they're doing is they're getting your information and then they're just connecting with other carriers. Yeah, they're carrier. They're connecting with other carriers. That's really all they're doing.

Jessica 39:57

Oh, yeah. Okay. Okay. So you might as well just reach out to Brandon.

Brandon 40:01

Yeah, because Ethos themselves is not a life insurance company.

Commissions, Conflicts, And Red Flags

Jessica 40:03

Oh, interesting. So they're a broker. Yeah. Oh, interesting. Okay. Well, thank you for having the hard conversation with us today. We know some of these necessary conversations are not comfortable for many people to talk about, but they are necessary. It's part of adulting, it's part of taking care of your responsibilities. And so look at the policy that you might have through work, but understand that that is not enough. And reach out to Brandon, take a look at Ethos. And if you don't have life insurance, let's make sure that that is something that gets added to your to-do list and is at the very top because it is important and it is the right thing to do. All right, share this episode with a friend. If you have not yet left us a rating or review, please do that. It helps other people find the podcast. And we know you're listening. We get the stats, y'all. So thank you for being here, but also leave a five-star rating and a review, please. It means so much to us, and we read every single one of them. We will talk to you soon. Don't forget, Benjamin Franklin said, an investment in knowledge pays the best interest. You just got paid. Until next time.

SPEAKER_02 41:17

Sugar Daddy Podcast, yo. Learn how to make the pockets grow. Find news of freedom, split a week, bro. Smart investments, money flow.

Jessica 41:27

Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review, and share this episode with your friends, family, and extended network. Don't forget to connect with us on social media at the Sugar Daddy Podcast. You can also email us your questions you want us to answer for our past the sugar segments at thesugardaddypodcast at gmail.com or leave us a voicemail to our Instagram.

Brandon 41:56

Our content is intended to be used and must be used by informational purposes public. It is very important to do your own analysis before making any investment based upon your own personal subject standards. We should take independent money to advisor from a line of professional and connection with or infinity research and verify any information you find in our podcast and which rely upon whether for the purpose of making an investment decision or otherwise.