Today's guest is Bruce Weinstein, aka "The Plan Man." We're talking health insurance, life insurance, and the importance of being financially prepared for unexpected events. Throughout the conversation, Paula and Bruce share stories and insights to emphasize the significance of insurance in people's lives.
Bruce Weinstein, as a financial advisor with decades of experience, provides valuable information about the different types of insurance, emphasizing that insurance is about assigning risk to someone else to protect against financial vulnerability. He stresses that certain insurance needs, such as auto insurance and homeowner's insurance, are mandatory, while others like health insurance and life insurance are somewhat discretionary but vital depending on individual circumstances.
They also touch on the affordability of insurance, particularly term life insurance, and how it's often a cost-effective solution to provide financial security for loved ones. Bruce highlights the importance of budgeting and making informed financial decisions, such as prioritizing insurance over certain discretionary expenses like dining out or leasing expensive cars.
Paula and Bruce discuss the significance of financial literacy and the need for people to understand the mechanics of various insurance options. They stress the importance of seeking help and not attempting to navigate complex insurance decisions alone, as professionals like Bruce can provide valuable guidance.
Towards the end, they mention Bruce's podcast, "Ask the PlanMan," which focuses on finance, insurance, and education, with the aim of providing information to help individuals make informed financial decisions.
Overall, the conversation between Paula and Bruce emphasizes the critical role that insurance plays in safeguarding financial stability and highlights the need for individuals to be financially literate and proactive in securing their financial future.
Bruce's Website and Podcast: https://asktheplanman.com/
Bruce's email: bruce@asktheplanman.com
Bruce's Phone Number 844-PLANMAN
Find Paula Christine at paulachristine.com or email her at paula@paulachristine.com.
Paula Christine: Hi, and welcome to Beyond the Paycheck. Today we're going to take a deep dive into the world of insurance. We're going to talk a little bit about health, life, and everything in-between. I've asked Bob-- Bob. Where did I get that from?
Jon: Because you just emailed a guest named Bob right before you hopped on with Bruce.
Paula: I did. I've asked Bob-- did I go again? [laughs]
Bruce Weinstein: Let me get Bob on the line. Hold on.
Paula: See, we're going to start it with laughing. I've asked Bruce Weinstein to join us today to talk about everything about insurance. Welcome, Bruce.
Bruce: Thank you so much. Your name's Pam, right? It's Pam?
Paula: Yes.
Bruce: Pam and Bob show?
Paula: Yes
Bruce: It's the Pam and Bob show.
Paula: Are you going to take that? He's going to take those Bobs out.
Jon: Because Bruce made the joke. I'm going to leave it in now.
Paula: Then you can leave all the laughing in that goes on after that too. This is Pam. Welcome, Bob. Tell me, how did you get into insurance?
Bruce: Oh my gosh. I started as a financial advisor in 1986 with Merrill Lynch and we were required to get our securities license as well as our insurance license. It was just mandated to us. Then over the years as I got more and more into problem-solving with people, the necessity for insurance counseling and financial planning just kept evolving to offer more and more services. Not just investment-related, but also insurance-related.
Paula: Insurance has a tough subject I think for most people because they don't want to pay for it even though they need it. How do you deal with that with your clients?
Bruce: There's committed expenses and there's discretionary expenses. With insurance, there's committed insurance needs that you kind of have to have, like your auto insurance is mandated. You can't legally drive without it. Then if you have a mortgage on your home, you have to have homeowner's insurance to protect the bank's liability. The other side of the equation, health insurance, life insurance, disability, long-term care, that's somewhat discretionary.
Depending on which one of these we're talking about, they have different needs in somebody's personal situation. Then it's a matter of what happens if you don't have it? What kind of financial exposure are you dealing with? Then simply the word of insurance is assigning risk to somebody else. You don't have the money to take care of that vulnerability. You're assigning it, you're asking somebody else to take care of it for you.
Paula: I know it's really difficult because when you think about everybody's expenses, and if you have a limited dollar amount, and you have to earmark stuff for disability or health, or life insurance, it's one of the things like, do I have to have it? Do I not have to have it? I'm healthy, do I really need it?
Bruce: You brought up a good point. That's people's budgets and whether or not they're in tune to and know what their budgets actually are. Then candidly giving them a coming to Jesus conversation of, where is your money going and why aren't you taking care of the things that you need to be taking care of? If you're a 25-year-old single person, your only real responsibility is yourself. You die, God forbid, what are you obligated to take care of? If that 25-year-old has three kids and a mortgage, now what happens? That scenario looks a lot different than somebody who's single with no kids.
The life events, that's what we like to talk about, is as people get their life events and grow, mature, their needs, their dependence, whatever that changes over time, their responsibilities are going to change. It's very hard to convince a 25-year-old why they need health insurance. They think they're omnipotent and they don't need it. Unless their employer's giving it to them, why should they bother? That same 25-year-old's not saving for retirement either.
They're not thinking about a 401(k), they don't realize there's a match at their job that they're missing out on, and that's a lot of free money. A big part of why I have my podcast is financial literacy promotion, is people just don't understand the mechanics of a lot of these things, where it ties in. I'm 60. The benefit of starting at 25 or 22 financially saving and preparing, and putting money aside, a 60-year-old can't catch up to what a 25-year-old can do. It's all about time. Time's your biggest ally.
Paula: Yes, compounding.
Bruce: Yes. From an insurance standpoint, you have to educate people on what's out there. There's a lot of changes that have gone on the last couple years with the Affordable Care Act, also known as Obamacare or the marketplace, or the exchange, are all synonymous. Depending on your income, there's a lot of free health insurance that's now readily available.
What you don't know can hurt you and leave you a vulnerable. We had a 22-year-old female client come to us last year that somehow had some rare, or was stricken with some kind of heart ailment, had no health insurance 'cause most 22-year-olds are not going to have health insurance. She had bills of upwards of $300,000 and had to file for bankruptcy to protect herself.
Paula: Wow, that's horrible.
Bruce: You wouldn't think a 22-year-old is going to be facing a crisis like that. One of the biggest reasons for the amount of bankruptcy out there that goes on is medically related because people are uninsured and they're getting caught with very expensive bills. At the end of the day, the hospital wants to get paid at some point. What are you going to do about it?
Paula: I think it goes down to a lot as a lot of people, even though it's in the news, it's talked about a lot, especially when the Affordable Care Act came out, people still don't realize that if you're under a certain income, it can be very inexpensive.
Bruce: It's obviously going to depend as you just said. First and foremost, if you have a pre-existing condition and you don't have a group health insurance plan provided to you, your only real option is Obamacare. Next, if your household income is within 400% of the poverty line, I don't know what the poverty line is today, there's federal subsidies available for that individual. We see families of four with a six-figure income still get subsidies. A family of four could still make $100,000 and qualify for some federal subsidy on their health insurance on the marketplace.
Jon: The 2023 poverty line for individuals is $14,580. For a family of four, your point, $30,000. That would go up to $120,000 if you're talking 400% of it.
Paula: Wow.
Bruce: Thanks for checking that.
Paula: Thank you, John, for being on the spot there.
Jon: Thank you, Dr. Google.
Bruce: A family making $120,000 is still going to qualify for a federal subsidy. Why do without? Do the homework. First misnomer people have to understand is the marketplace compensates us to work with people. There's not enough people out there working for the exchange or the marketplace, or healthcare.gov. You'll see commercials on TV for it. If you call, you're going to get a representative who's going to be no more than an order taker. They're not going to walk you through it. They're not going to check doctors with you, they're not going to direct you.
They're not going to ask questions about your income. They're not going to give you the blind spots, if you will. My job is to make sure this is the best plan, you understand all the plans, why certain plans are better than other plans. At the end of the day, should we enroll you, you become our client, it's in the records that you're assigned to us, and they compensate us a few dollars to do that.
One of my big lines is don't go it alone, because I can't tell you how many people have come to us trying to do it themselves, mucking the whole thing up, and then I have to go in and show them all the mistakes they were making and what we're going to do to clean it up and why what they have now is proper for them. They're just blown away of all the mistakes they were making. Of course they're going to make mistakes. Who taught them how to work the exchange and understand what to be plugging into these things. Don't go it alone, get help.
Paula: I had to do it for myself after my divorce. I started to look at it and tried to figure it out and I said there's just no way, and called someone to help me. There's so many resources out there that nobody has to do anything on their own.
Bruce: Exactly. On the flip side, there's private health insurance plans that will, let's say, compete against Obamacare for somebody who doesn't have pre-existing conditions and doesn't get federal subsidies. I label them healthy and wealthy. In your case you mentioned you don't really get subsidies, so that means your income's above a certain level. If you don't have a pre-existing addition, Paula, you may be able to find private options to provide you health insurance way less expensive than what you're getting on Obamacare. Again, people don't know that stuff exists. Again, you want to do your homework and understand what's available to you.
Paula: I guess I'm going to have to look into that.
Bruce: For sure.
Paula: Because with my cost of insurance and my deductible, had I needed to use my full deductible, is $15,000 a year. That's expensive.
Bruce: Sure. Plus the premiums.
Paula: That includes the premiums.
Bruce: Include the premiums.
Paula: Yes.
Bruce: You're out $15,000 before you see a penny back.
Paula: Correct. I'm not likely going to use my deductible, knock on wood.
Bruce: That's right.
Paula: Just my insurance and premiums alone are $7,300 a year. It's ridiculous.
Bruce: Then you're still talking another $5,000, $8,000 of deductibles and co-insurance and max out of pocket. Again, what I try and educate people is the shift that's gone on the last decade or two of what health insurance used to provide and what it provides now, and what people are more aghast than anything about is how little they're getting for what they're paying. It's become where health insurance in general is more catastrophic related than just everywhere you go paying $5. Those days are gone.
Paula: Yes, they're gone.
Bruce: Your deductible of $5,000, if you have appendicitis, you're out the $5,000 right off the bat. You go to the ER for something, you're going to be out $5,000 right off the bat. Your deductibles, unless you're in the subsidy category with those lower-income families, you get what's called cost sharing reduction. That'll bring their deductibles down from that $9,000, $5,000, $2,000 level to virtually 0. Again, my kids are not making or reporting large sums of income with what they do. Their health insurance without a subsidy might run $300 a month and they're paying around $25 a month, but they have a zero deductible.
They virtually have zero copays. Their max out-of-pocket might be $1,000. They now go make $100,000, they're going to pay the full $300. That zero deductibles is going to go up to like $5,000 or $8,000. The max out-of-pocket's going to go from a $1,000 to $9,000. Their $5 copays for their doctors will be more like $40 and $50. As you start making more money, they're going to take away some of those benefits. Again, if you take whatever percentage of the household incomes are below those levels that we're talking about, there's a lot of free insurance and benefits there.
Realistically, socialized health reform is here. It exists on Obamacare, because the people who have the money are paying a lot more money to offset the people that are getting the subsidies. The money's flowing from somewhere. Keep in mind, the insurance companies are getting paid. That subsidy is coming from the federal government to reduce the premium. Aetna, Cigna, Blue Cross, Blue Shield, whoever you're using, they're getting that price, that sticker price you're seeing, they're getting it. Taxpayer's paying for it.
Paula: That was depressing.
Jon: I feel sick.
Paula: We started laughing and now we're depressed.
Bruce: [laughs] Come on, Pam, bring it back. Come on. Bob and Pam are here to cheer people up.
Paula: Let's change the subject. You talked about that 22-year-old and the having to file bankruptcy, and then you talked about that 25-year-old with three kids. I think that's a huge audience that misses the importance of having life insurance. They're going to live forever. We all are. Nobody's ever going to die. They don't understand that if something happens to them, what's going to happen to their three kids, and their spouse? Are they going to now be at the poverty level because you didn't have life insurance to replace your income or at least pay off the house or cover college tuition? Most people don't think about it. Term insurance is so inexpensive. It's just should be something everybody does as soon as soon as they have a child or get married.
Bruce: There's a line that I've said over the years, I've been giving retirement planning seminars since mid '90s. I have a line in there about a premature death. I joke and say, what exactly is a mature death? A premature death basically means that you have financial obligations still outstanding. That's a premature death. If you have a family, you have a mortgage, you have a spouse or partners that's staying home, a parent raising the kids or not, and you are the majority breadwinner, what happens in that situation when you don't come home anymore?
We just had 9/11 pass by. There's how many families that that parent didn't come home that day. Their life was now turned upside down. Something that tragic, and now they have to worry about, gee, how am I replacing her income? How am I meeting that mortgage payment? How are we putting away money for retirement? How are we putting money away for college? All of these things, there's bills that still need to be paid. There's sacrifice and there's a challenge, but you know what happens, and so you want to make sure that you have things prepared.
I'll give you another story. Tragically. Friends of mine, the husband would not stop smoking and you have to go at least a year to get a non-smoker rate. The reason that's important is a smoker rate can be five times the price of a non-smoker rate. They just kept refusing to pay the smoker rate. They went without insurance year after year and kept saying he's going to stop, and never stopped and never got the insurance. They made financial decisions, they bought bigger cars, they leased expensive cars. They traveled and did what they wanted, but they never prioritized in their budget to take care of that life insurance.
Lo and behold, a year and a half ago, he's driving home from work in his box truck, and he got hit head-on by a tractor-trailer. He got pinned in the cab, he caught fire. He survived, but barely. Then through months of very painful rehab and surgeries, eventually succumbed to his injuries with no life insurance. They got a 17-year-old daughter getting ready to go to college. He was the majority breadwinner. They had a mortgage on their condo. Her whole life has turned upside down.
Paula: Oh my God. There you go. Another depressing story.
Bruce: This is what you're trying to avoid. You're trying to give your listener the, why do I need it? Because stuff like that happens every day. Just open up the newspapers. It's because there's 300 million or so people here, and it's not me. It's going to be them. It's going to be somebody else. We're omnipotent. My job, whether it's financial or insurance-related, is like, look, you got to take care of your house. It doesn't matter. You know what your mother said probably when you were a kid is, if Paula jumped off the bridge, would you follow her?
I can't worry about what somebody else is doing. The lesson is, what are you going to do? I tell clients all the time, I'm not very heavy, if at all, sales pressure-oriented. I put the facts out, I educate people and I'm like, look, bottom line, Paula, I got my insurance. I got my health insurance, I got my life insurance, I got my long-term care. I have mine. If you don't want yours after everything we've talked about, that's your decision. We're sharing with you and showing you why you're vulnerable for these things. How do you want to see it play out if the unfortunate side of events occur?
Paula: The sad thing is that most people look at, what am I going to have to give up to have that insurance, to have that peace of mind? Am I not going to be able to go out to dinner or buy the expensive car just to make sure that my family's taken care of? I don't even think it's necessarily even the breadwinner that needs to be insured. Should also be the non-breadwinner. Because expenses increase-
Bruce: That's right.
Paula: -the same no matter who passes away.
Bruce: I agree with you 100%. I've had that conversation hundreds of times. Again, if you have a stay-at-home parent, you cannot devalue what that costs in exchange for a paycheck. Because now, and we'll just use the mom and dad scenario, if mom's staying home and dad's working and dad's making six figures, mom's staying home, now of a sudden mom's gone, how is that parent going to be able to go to work every day and raise those three children? What is a housekeeper, a nanny, who's going to get them to school? His job is going to change.
His availability to go to his work is going to change. His requirements of being at home are going to change. Not for nothing. I was raised by a single parent. If something happened to my spouse, I would want to be home with my kids that they weren't raised by a stranger. What would that take financially for me to be able to stop working for that window of time to raise my kids because the mother of my children couldn't be there anymore? Just reverse the scenario. There's a line I use here, it's called Woody Woofy. What do you want for yourselves?
When you put these scenarios in front of somebody, in front of a couple, well, what do you want to have happen here? If something happens to this person, what do you see happening? If something happens to the other person, your partner, what do you see happening? What would you prefer to do? Would you prefer to go back to work and have a nanny living with the kids and you still work 16 hours a day, and barely get to see your kids, or would you want to stay home for those years? Because guess what, in the blink of an eye, they're going to be 32 years of age and out of the house, you could work all you want.
What about those 18 years? Who's molding those kids? You've got to make those decisions. It's your wallet. Now does it mean you got to go out to dinner one less time a month to take care of that? Okay. These are where the decisions of budget comes so heavy into play. Where's your money going and why wouldn't you take care of this? Because as you said earlier, Paula, is for a few bucks, term insurance is so inexpensive for a 25 to 40-year-old. It's a non-excusable decision.
Paula: It's so inexpensive.
Bruce: It could be $30 a month. Come on, $30 a month is a half a tank of gas, a quarter of a tank of gas now. A 30-year-old could get $1 million of life insurance, assuming they're non-smoker and healthy for peanuts. Peanuts, $1 million.
Paula: To have that, to give your spouse and your children that peace of mind that if something happens to you, they're going to be okay. Life will change, but you're going to be okay.
Bruce: The emotional side's a different baggage than the financial. You're doing what you can. The last thing you want is to add the financial strain on top of the emotional because the kids just lost daddy. They just lost mommy. Now I got some stranger changing my diapers and feeding me, and taking me to school?
Paula: Worse at, I got to sell the house. I got to move in with my parents because we can't afford to live here anymore.
Bruce: That's right. It's got ramifications. What do you want to do with those ramifications if it, God forbid, happened to you, and, oh in a sweep of a pen for $30, $40, $50 a month, we could take care of that? Come on.
Paula: I know. It's so inexpensive.
Bruce: Your cell phone bills more than these things. Stop replacing your cell phone every three years.
Paula: I agree with you 100%. I talk to people all the time about making sure that you're taking care of your family. Everybody has choices in your life. You make your choice and then hopefully everything works out, I guess.
Bruce: Can I drill down a little further? How many people out there lease cars and overspend on a car that they probably can't afford because it's a lease? Guess what? The lease becomes an infinite trap. Just like your cell phone. The phone companies want you replacing your phone every two to three years. The technology changes enough, your old phone then suddenly stops working, so they want you to keep buying a new iPhone or a new Android, or whatever it is. Now we'll finance it $30 a month, $50 a month, but you're paying Verizon and AT&T in perpetuity, aren't you? You just did the same thing with leasing.
When leasing started 30-plus years-ago, people used to buy a car, finance it for three years, own it, drive it another five to seven years. Who knows? Now, oh, I got to get a new car every three years. Got to get a new car every three years. The payment never goes away. Guess what? The payments go up. This time it's 600. Next time it's 700, next time it's 800. That money's just constantly leaving the cash flow. What if you bought a used car? What if you bought a car and paid it off and kept it for 10 years, and freed up that money to pay for your life insurance or your other insurances? You got to make decisions and be financially literate. What is that decision truly costing me?
Paula: I think you hit it right on being financially literate. I think a lot of people aren't, and they don't reach out to get help. Then their parents aren't as savvy as they should be, so we end up with a whole group of people that are just uneducated.
Bruce: The cycle keeps perpetuating itself.
Paula: It does. You have a podcast, I want you to mention that briefly. Then we got to get going.
Bruce: It's called Ask the PlanMan, A-S-K, Ask The PlanMan. It's all things finance, insurance, and more. No commercials, no advertisers. We're not pushing products. It's just education. Just like we're talking about today, is like what's term insurance versus permanent? What's Obamacare versus private? Just things to educate people. Giving them enough that they can go execute on their own or certainly raise their hand and get help from either us or somebody they're familiar with or know. We're just trying to help people get information.
Paula: If somebody went in to reach out and talk with you, how would they get a hold of you?
Bruce: They could call me on 844-PLANMAN. That's our toll free number. They go to the website, asktheplanman.com. Then bruce@asktheplanman.com is my email. You get me. I don't have a team of people that I pass you off on. What you see is what you get, or what you don't see is what you get on this case.
Paula: I really enjoyed talking with you. You can tell you're very knowledgeable and passionate about financial planning and insurance.
Bruce: Thank you. Thanks for having me.
Paula: You're welcome. If anybody like to get a hold of me, you can reach me at paula@paulachristine.com or check out my website at paulachristine.com. Thanks again, Bruce. Have a great day.
Bruce: You too.