Episode 39: True or False Insurance Questions
Segment 1 (Show Open):
Good afternoon, everyone! Welcome in. Welcome to Coasting in Retirement! That’s. Right. Thanks for joining us today, we’re excited to have you! Josh Null here, Michelle is off this week so we welcome back one of our regular co-hosts, Mr. Jay Stubbs, the Director of the Gulf Coast for Providence Partners, the sponsor of this show. Jay, how are you doing? Great. We are back again in Coastal College’s recording studio, beautiful downtown Fairhope, ready to put together another a great show for those of you tuning in!
Listeners: Jay and I are here today to discuss financial topics relevant to those of you in or near retirement, living your best life along our part of the gulf coast. Here’s what we’ve got in store for you today: First segment – deep dive on our topic of the day. 2nd segment - at about 25 minutes past the hour - “News Headlines of the Week”. Then at roughly 45 minutes past the hour, stick around for our 3rd segment, we call it” Josh’s Crystal Ball and Big Mouth”. We’ll see what Jay’s crystal ball has to to say about a couple of financial topics.. So buckle up, we’ve got a lot to get to!
Quick background on me for those new to the show. Again, my name is Josh Null, I am a fee-based financial advisor, I hold my FINRA Series 65 securities license, and I am the owner of Gulf Coast Financial Advisors, we are an independent investment management and financial planning firm with offices in Fairhope, Orange Beach, and Mobile! You can find more information on me and Gulf Coast Financial Advisors by visiting our website gulfcoastfa.com, or feel free to give us a call at 251-327-2124. If you missed that contact info, do not worry, we will repeat our contact info several times throughout the show!
Back to the show. Jay, for listeners that are not familiar with you, pls briefly describe your role at Providence and your experience: Jay answers. Josh, also be sure to point out Jay’s role with GCFA and the fact that Providence Partners sponsors the radio show.
And regular listeners will know that I started my financial services career back in 2009 on the insurance side of the business, so I have, what is that 15 years of experience, actually 15 years this month!
So Jay and I thought we would test each other’s insurance knowledge and hopefully shed some light on common questions, sometimes common misconceptions, about insurance. Specifically, life insurance, disability income insurance, and long term care insurance. We’re going to challenge each other to a true or false quiz. I’ll start with an easy one to get us warmed up:
Josh: Jay, true or false?: term life insurance provides coverage for a specific period, after which the policy expires. Jay answers.
Jay: Josh, true or false?: Whole Life insurance builds cash value over time. Josh answers.
1. Life insurance premiums typically decrease as you get older.
2. Universal life insurance offers flexible premiums and death benefits.
3. Only individuals can purchase life insurance policies.
4. Life insurance policies are typically non-transferable.
5. You can usually change the beneficiary of a life insurance policy at any time.
6. Life insurance premiums are generally tax-deductible.
DI:
7. Most disability income insurance policies cover pre-existing conditions.
8. The waiting period for disability benefits is typically 30 days.
9. Disability income insurance is often considered a type of life insurance.
10. Social Security disability benefits are typically enough to cover living expenses.
11. Disability income insurance premiums are generally tax-deductible.
12. Most disability income insurance policies have a maximum benefit period.
13. You can usually purchase disability income insurance through your employer.
14. A rider is an optional feature that can be added to a disability income insurance policy.
15. Disability income insurance is typically more expensive than life insurance.
LTC:
16. Medicaid covers everyone who needs long-term care: False. Medicaid eligibility is based on financial and functional needs criteria, and financial eligibility varies by state.
17. Medicare covers the cost of long-term care: False. Medicare only covers skilled nursing care after a qualifying hospital stay and for rehabilitative purposes.
Very good. I didn’t keep score but I’m pretty sure Jay scored higher than I did, which makes sense, my world is mostly consumed with financial planning and investment management these days, and regular listeners will know that with Jay serving as the Risk Management Strategic Consultant to my firm GCFA, I typically turn clients’ insurance needs over to him.
Listeners, if you would like to chat with us, then please feel free to reach out! You can start the conversation by calling 251-327-2124, or you can reach me through my website gulfcoastfa.com. One our site, you can choose to send us a direct message, or you can click on the blue button in the upper right-hand corner to set up a 15-minute introductory phone call on my calendar.
Alright folks, coming up next - There’s always a lot going on in the world! Particularly the world of finance, investments and money. Every week we scour the internet for financial articles related to our topic of the day, especially articles that pertain to those in or near retirement. Join us after the break to hear Jay and I discuss this week’s relevant headlines in our “News Headlines of the Week” segment. Stay tuned!
Segment 2 - News of the Week:
Josh: “Welcome back to Coasting in Retirement, your host Josh Null here! As we discussed before the break, every week we scour the internet for financial articles related to our topic of the day, especially articles that pertain to those of you in or near retirement. Our job is to help you all understand how these headlines impact you, especially when it comes to your money! Note – if you want to read our referenced articles yourself, we also include the links in our show transcript, which you can find on our website gulfcoastfa.com under the podcast tab. We upload our episodes every Monday after the show airs on Sunday. With Michelle playing hooky on us this week, I’ll be the one reading the headlines, so let’s get after it with our , “News Headlines of the Week”!
1. Josh: Alright Jay, let’s go right to the biggest financial news we have going right now: the Fed’s recent half point interest rate cut, or 50 basis points in industry speak, the first such cut since March of 2020. Now you can find news articles about this rate cut on just about any news site, but I used CNN Business because their website is easy to use and has no pay firewall. The article is titled “Key takeaways from the Fed’s decision to deliver a jumbo-sized interest rate cut”. I found a couple of things interesting from this article, Jay. First, it was the first time since 2005 when an interest rate decision wasn’t unanimous. I also found it interesting that the Fed specifically pointed to the labor market as its primary reason for the aggressive cut, my gut tells me they know more about jobs than they are telling us yet. And finally, I find it interesting that just like with everything else, politics appears to be in the mix with these decisions. What was your takeaway from the Fed’s recent rate cut?
https://www.cnn.com/2024/09/18/economy/interest-rate-cut-decision/index.html
2. Josh: Next up Jay, since our main topic today is insurance, I wanted to find an article that discussed how the recent interest rate cut would impact insurance companies. I found what I was looking for on an industry facing site called Insurance Newsnet – have you ever heard of it? The article is titled “Insurance experts see good news after Fed cuts rates by a half-point”. The basic premise of this article is that interest rate cuts are a net-positive for insurance companies, particularly when holding long duration, fixed interest securities, but there was a dissenting voice in the article, a CEO that was quoted as saying "Lower interest rates can compress investment returns on the reserves insurers hold to pay future claims, potentially leading to higher premiums or more conservative underwriting practices,". With your 25+ years of experience in the insurance industry, you’ve seen all kinds of interest rates and different products, so what’s your opinion?
https://insurancenewsnet.com/innarticle/insurance-experts-see-good-news-after-fed-cuts-rates-by-a-half-point#:~:text=%22Lower%20interest%20rates%20can%20compress,underwriting%20practices%2C%22%20he%20explained.
3. Josh: Our next article is from a site we reference often on this radio show, Kiplinger. Jay, you’re a little younger than me, and probably have already had better taste in music than I did, so I doubt you remember the 80’s hairband Winger? It would have been one of the countless terrible band names that started with W. Anyway, Winger’s lead singer was Kip Winger, and I used to reference that when Michelle would bring up the Kiplinger site, but audience research showed that no one knew what I was talking about, and it wasn’t that funny anyway. Anyway, Kiplinger has a recent article titled “Four Common Misconceptions About Life Insurance” and I thought it was a good companion to our true or false discussion, particularly the section in the article that discussed how some people don’t believe in life insurance. I get it – our industry often shoots ourselves in the foot – but can you discuss how life insurance works as a shared risk, how it potentially leverages up the premium payer’s individual dollar to a larger amount, and how most insurance carriers honor their claims?
https://www.kiplinger.com/retirement/common-misconceptions-about-life-insurance
4. Josh: Last article of the day Jay, I wanted to give listeners interested in learning more about you and Providence Partners a site to visit, so I pulled up the “Resources” landing page on your website providencepartners.org. Now I know this site is geared towards producers in our industry, and those people certainly listen to this radio show, but I think this page could also be useful for consumers. For example, you have current MYGA rates available, you have an annuity decision flow chart and a life insurance needs calculator, just to name a few available tools. What’s your thoughts on the highlights of your Resources landing page?
https://www.providencepartners.org/resources
Josh: Listeners, I hoped you learned something from our discussion around these recent financial headlines, these are all important pieces of information that impacts those folks in or near retirement! If you would like to continue the conversation with us, then why don’t you give us a call at 251-327-2124 to talk to me or to set up an appointment, or you can always reach out to us via our contact page on our website, gulfcoastfa.com. Don’t forget to click the blue button in the upper right corner to put a 15-minute introductory phone call on my calendar!
Alright folks, coming up next: Josh’s Crystal Ball and Big Mouth. What have been some of my predictions? Have I been right? Was I ever wrong? How wrong? What do I think is going to affect investors in the near future? We talk about all of these things and poke a little fun at my big mouth. Stay tuned!
Segment 3 – Josh’s Crystal Ball and Big Mouth:
Welcome back! Your host Josh Null here, alongside co-host Michelle. So, I am opinionated, I have strong opinions at times, I would say a radio show host that isn’t probably wouldn’t be very interesting to listen to. And I am paid in my profession to offer professional guidance and opinions to my clients, otherwise what use am I? Just replace me with AI. Sometimes I feel so strongly about something that I talk about it publicly, sometimes I’ll even make predictions, and while I usually proved right, there are times I swing and I miss. Want to hear me eat a little crow? Then let’s get at with Josh’s Crystal Ball and Big Mouth. Alright Michelle, what’s first?
1. Michelle: So Josh, in case you haven’t heard, we have a presidential election coming up soon. I know you have clients that are concerned about the outcome, even expressing a desire to exit the stock market entirely depending on the outcome. I think the word extreme volatility is being used when referencing this particular upcoming election. But you have always held that investors should be political agnostic, especially in the long run. So what proof do you have that investors should not make their decisions based on whomever gets elected to be President of the United States?
Josh: Oh my gosh, I love this question. And I have a totally unexpected answer for you Michelle. So we referenced a financial advisor hero of my mine earlier in the show, Josh Brown of Ritholtz Wealth. Well, Josh recently posted a study regarding this topic that I find fascinating. Let me walk the listeners briefly through the main point of this post. An analyst did a study of stock market performance using which party held the office of President over the past 70 years, starting with Eisenhower’s election in 1953. But instead of just saying how did the market did under the back and forth in-power party during the 70 years since then, he framed his study this way: if an investor put in $1000 in 1953, and only stayed invested in the market during his or her’s party affiliation, going to cash when the other party was in power, what would happen with that $1000?
According to the study, if you only invested when a Republican was in power, your investment would now be worth $27,400 today. Not bad, right? But if you flipped the script and only invested in the market while a Democrat was president, that same $1000 would be worth $61,900 today! That goes totally against the common perception that Republicans are more business friendly, right? Now, stay with me listeners, I may be slow at times but I ain’t stupid, and I know that many of our listeners lean right. So here’s the really fascinating part Michelle. If that same investor had invested $1000 into the stock market in 1953, ignored whoever was in power and stayed in the market, do you know what the value of that account would be today? $1.69 MILLION DOLLARS. I don’t know how more clearly I can demonstrate that it’s all about time IN the market, not TIMING the market.
https://www.downtownjoshbrown.com/p/dont-get-political
2. Michelle: Alright fair enough. So with that said, who do YOU predict will win the Presidential election this November Josh?
Josh: HA! I ain’t touching that one. It will be close. But more importantly to you listeners, you investors, is 2 things: first, we’ve just demonstrated that you should ignore political outcomes for going into or out-of the market. Second, as far as I have heard, neither one of them is making the federal deficit an issue, which means that the US Govt will have to print more money and issue more debt to finance our federal budget deficit, and money is like water – it wants to flow somewhere. So as long as our monetary policy stays the same, more and more dollars will be flow into various financial instruments, including the stock market. Doesn’t mean the market will go up forever or not experience some turbulence, but it’s something to consider. Monetary supply means more than you realize when it comes to the performance of your investments.
Listeners, want to learn more about how we incorporate monetary supply into our investment philosophy? Then we invite you one last time to reach out to us. Call us anytime at 251-327-2124 to make an appointment or find us at on our website at gulfcoastfa.com.
Folks, that’s it for us this week here at Coasting in Retirement! I want to give a huge thank you to my lovely co-host, Michelle Lee Melton, thank you to our show sponsor, Providence Partners, thank you to our awesome radio station FM Talk 106.5 out of Mobile, many thanks to the provider of our show music, local band Sloth Racer, huge thank to the show producer, Mr. Chaesare Gray, and as always my sincere appreciation for all of your out there that have been listening and joining us on this journey. We would love to be a part of your journey as well! Until we talk again next Sunday, have a wonderful and productive week. This has been Coasting in Retirement with Josh Null!
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