Insurance 101: Demystifying Disability and Life Policies with Mark Maurer, CFP®

Transcript of the Episode

Mary Beth [00:00:00]:

Hey there. Welcome to the if Money Were Easy podcast. The show where we teach you how to expand what’s possible with your money. We’re your hosts Neela Hummel and Mary Beth Storjahan, certified financial planners &Co CEOs of Abacus Wealth Partners. Today on the show we’re going to talk about considerations for disability and life insurance.

Neela [00:00:22]:

We are very excited to have Mark Maurer joining us on the show today. Mark is the president and CEO of Low Load Insurance Services. Mark grew up in the insurance industry. Learning from his parents’ experience. He joined LLIS in 2003, earned his CFP designation in 2006 and became a leader in 2012. Under his guidance, LLIS has expanded into services for fee only financial advisors and their clients. Mark’s industry experience has helped uphold Load’s commitment to quality information and customer service, a tradition since 1992. He also introduced Allis.

Neela [00:01:01]:

I think that’s advisors, right Mark? Well, he’s going to tell me. A client management system that enhances the firm’s approach to meeting client needs. His team of over 20 members adapts effectively to continue seamlessly supporting advisors and clients, demonstrating resilience and dedication to service. Mark, welcome to the show.

Mark Maurer [00:01:18]:

Thank you everyone. It’s always so weird to hear somebody describe you in three or four sentences in the bio. It’s just.

Mary Beth [00:01:26]:

And you have to sit and listen.

Neela [00:01:28]:

You do? Yeah.

Mark Maurer [00:01:29]:

It sounds like somebody, somebody kind of old and, and respectable and, and like.

Neela [00:01:35]:

Just seeing you just now, I was like, I have known you, I have known you for years. I may be a decade at this point in time. So I’m like, well, we are, we are all. If you are old, I’m also old.

Mark Maurer [00:01:43]:

And so maybe not old, just, just kind of stuffy.

Neela [00:01:47]:

It sounds like there’s a lot of.

Mark Maurer [00:01:49]:

I need to work on that.

Neela [00:01:50]:

You have a lot of wisdom in your bio. I think there’s just a lot of wisdom there. A lot of wisdom.

Mary Beth [00:01:54]:

I think if you start calling the client management system Alice and like her. Is it Alice?

Neela [00:02:00]:

I haven’t, I haven’t used it long since I haven’t used it. I was like, I know I’ve used it. I’ve seen it because I’ve used it. But I’m like, I don’t, I don’t remember what it’s.

Mary Beth [00:02:06]:

She’s a whole person. She’s a vibe. I like it.

Neela [00:02:09]:

She’s very helpful. She is very helpful. From what I remember. I haven’t, I haven’t used her in.

Mark Maurer [00:02:12]:

A while, but give it a couple of Years. And she’ll take over the world.

Neela [00:02:17]:

Ariel. Ariel uses Alice, I think. Ariel. Yeah. So, okay, into our episode here today, I think, Mark, I want to kick off with the obvious question, which is, why are people so apprehensive about insurance?

Mark Maurer [00:02:29]:

Why? Ooh. So there’s a couple things. One I think is it forces us to think about things we don’t like to think about. And me, I grew up, as my very proper bio says, grew up with my mom and dad, who were in the insurance business. So when you think about life insurance, you want to say life, but really it’s something that happens when you die. And people don’t want to necessarily think about death, but you have to have it so that if something did happen to you, your family isn’t decimated. It’s just. So it’s important to have.

Mark Maurer [00:03:01]:

Same thing with disability. We don’t want to think about not being able to work, being hurt, being all these things. So there’s part of that that I think is just hard for people to think about. Same thing with, I’m sure almost all aspects of financial planning, getting wills, getting. I mean, I think even some people think like, well, if I make a will, I’m going to jinx myself. Well, that’s not really true. Just means you’ve done good planning in case something happens to you. And the other thing is, insurance is you pay for it and you hope you never use it.

Mark Maurer [00:03:32]:

Amazon Prime. I can get a garden hose, a T shirt, and probably a book by tomorrow if I wanted it. And I get to use it right away. I pay hundreds of dollars a month and my own personal insurance, term insurance, disability insurance, and I really never want to use it. So if life works out well for me, I will get zero benefit from it. We can put money in our 401k. I see it grow. We pay down our mortgage.

Mark Maurer [00:03:58]:

I see my mortgage balance grow smaller. Life insurance, I’m paying for this term every year. Yeah. But at the same time, I pay for auto insurance and hope I don’t get in a car wreck. I pay my homeowner’s insurance and I don’t go, ooh, it’s been a couple years. Kind of hope I have a fire.

Mary Beth [00:04:13]:

Right. The goal is to waste money on insurance.

Mark Maurer [00:04:17]:

Yes, exactly. What we want to waste this money. We want to basically throw it away because if we use it, things went wrong.

Mary Beth [00:04:24]:

There’s, like, so many threads that I want to pull on based on what you just said. But growing up with parents who are in the industry, can you think back Of a moment where you really felt the value maybe as a kid or you, you know, some story that your parents shared with you that you were like, oh my gosh, this is so important.

Mark Maurer [00:04:42]:

You know, I can’t think of one in particular. Particular because it was all sort of high level. I don’t think we talked about it that much. It really was. When I got my first job, which wasn’t working with them, I think it was working here was my fourth or fifth job before coming in the insurance world and just sort of that first job and realizing, oh, I have all of these things to take care of. And seeing people who were having things in life, you know, the older you get, the more you might meet somebody who does die young. And seeing all of those things and realizing, okay, that’s those people who did have insurance are better off than the people without. And that’s, you know, I wouldn’t say 100%, but I’ll go 99.9%.

Mark Maurer [00:05:28]:

Somebody might be okay without insurance, but you’re better off with it than without it. And so realizing, I think at that point, just moving to just sort of a more adult idea of what can happen in life. When Mary and Beth and I first met each other, probably neither of us were thinking about long term care because that was something that happens 20, 30.

Neela [00:05:48]:

Years ago to much wiser people. It happens to much wiser people than.

Mark Maurer [00:05:52]:

Us, more seasoned people. And my wife and I bought ours last year. So things just happen.

Neela [00:06:00]:

Yeah. So with that, this idea, you’re talking about this as you get older, I’m like, oh, when we all lost our innocence, we realized we needed insurance. That’s what happens. Okay, so how dark and scary the world is. We got to arm up to protect ourselves. With that said, there’s two things and I love talking about the psych, the psychological element of it. I mean, 20 years in the industry, I’m always fascinated when people, I mean, I’ve definitely encountered people who are like, I don’t need life insurance. I’m like, what makes you so special? That element of it is interesting to me.

Neela [00:06:29]:

But with the. Once that one decides they want life insurance or disability, any type of insurance, you could decide, like, identify the problem, yes, I want this. And then you’re encountered with a, like, you know, an Alphabet soup and a variety of options. And we have things like disability insurance or life insurance. If you have an employer that offers benefits, I might have a group policy that I can enroll in. And how do I know? Let’s, let’s talk whole like disability insurance first, like how do I know my, my group disability policy, does that suffice? Do I have to get an individual one? What makes it that I need a different outside policy and that I’m not just covered by my employer? What are the considerations I should be making for myself?

Mark Maurer [00:07:05]:

That’s a great question. So group coverage usually has two different caps to it. So it will have a cap of a percentage of your usually salary up to a monthly cap. Most common is 60% of income up to $10,000 a month. So when, when are considerations? Well, first thing is if your employer pays for it, that’s fantastic. I’m not paying for it. My employer’s parent, that’s great. But any benefits you get would be taxable like your normal salary.

Mark Maurer [00:07:34]:

So when we hear 60% of income, we might have numbers, but not realizing, okay, that’s 60% of, you know, again, it’s 40% less. Assuming the same amount of taxes, which still pays for groceries, still pays for a lot of things, not going to be a lot of wiggle room for extras, but it still should cover groceries, mortgage, things like that. I think what a lot of, especially people who are working with financial planners may or may not realize is that most group plans cover base salary. So people who make 100, $150,000 in bonus variable compensation commissions, K1 distributions, all of those things may not be covered in that base salary part. So automatically, if you’re making $100,000 extra a year in commissions, that’s $100,000 that isn’t being covered. So your 60% for a lot of high earners is not 60% of what you’re taking home. It’s 40, 30, 20%. So I’d say that’s for most people.

Mark Maurer [00:08:34]:

So when you have a one income household, I think it’s very important the group is either paid for by the employer or you sign up for it. And it’s very cheap. I tell people do that 100% of the time. And then if we want to supplement because that 60% doesn’t quite meet the numbers, you’ve got a lot of variable income that’s not covered, then a supplemental policy that lays on top of it is a great plan. If you had a couple both making $100,000, $80,000, $90,000, $100,000, and they both have a group plan of 60% to $10,000, they’re not hitting the cap. The 60% each is probably okay because we’re assuming the other one could still work. You know, again, being Risk averse being raised by insurance people. I would say everybody should look at that supplemental just to see what it is.

Mark Maurer [00:09:20]:

But I would say for them it’s not as important as a one earner household.

Mary Beth [00:09:25]:

So if you’re making six figures and or if you receive a bunch of compensation in any form that is not base salary, you should absolutely look at what kind of coverage that you might need on top of an employer plan.

Mark Maurer [00:09:39]:

Right. Because your gap if you’re making $60,000 a year, that base coverage A is either low cost or paid for by the employer. Your percentage is going to be spendable is still you’re not hitting that $10,000 a month cap. And disability coverage because you’re more likely to become disabled than die by age 65, Di is on sort of benefits a little. It’ll cost more per year than a term policy. So if that’s okay coverage most I’ll segue into group term. Most group term may only cover $50,000, $100,000 one to two times salary. And if you have kids, I like Everybody to have 10 times earnings.

Mark Maurer [00:10:21]:

Even then if you’re 35, you may have 20, 30 years of income ahead of you and that’s a better number. But 10 times earnings would probably mean you don’t lose the house. You know, a surviving spouse is going to probably have to go back to work or keep working. It’s lots of things. But one to two times income for a 35 year old, that, that doesn’t get you very far.

Neela [00:10:44]:

Yeah. So let’s close up on disability insurance quickly. So we talked about group policies supplementing with private individual policies. And let’s just talk for a minute about self employed entrepreneurs, those that are, you know, there is no group policy unless you’re part of some association and you’re lucky. But what happens when there, when there aren’t those options?

Mark Maurer [00:11:00]:

Then instead of having this group base, you know that you have this group base and now we’re going to supplement on top. You basically need to have that business owner start from there. And with disability policies there’s a lot of neat writers or extras you can add on to them. The ones that we recommend are ones that I have on my own policies. But a group plan isn’t going to have things like an inflation rider. It increases your benefits every month as long as you’re on a claim. That’s a neat writer. It’s great to have I have it on my own policy but a group plan doesn’t have that.

Mark Maurer [00:11:33]:

So a lot of times if I Were starting with a self employed, a business owner who has nothing. I might show two options. One is the way I have it for myself and then a second one to say, but if we wanted to make yours look more like a group plan, here are some additional things that I like. But to keep the cost down, let’s sort of simulate your own group plan as close as possible to, you know, maybe bring the cost down a little bit.

Neela [00:12:00]:

I think that’s one of the things you mentioned, the costs that I’ve seen over the years. I mean group versus like individual policies. There’s a significant price differential there. You know, life insurance I think makes a lot of sense to people. And it’s funny that you say you’re more likely to end up disabled.

Mark Maurer [00:12:14]:

Right.

Neela [00:12:14]:

Than you are to die. But disability seems to be one that folks are more resistant to in terms of the costs associated with it. And so when, when you kind of throw like everything in there, either everything in the kitchen sink at the policy and it kind of comes at this like astronomical number. Talk a little bit, just briefly, about what are the, what are the levers that people can adjust or pull to kind of adjust pricing or things they want to consider?

Mark Maurer [00:12:38]:

Sure. So there is a number of different riders and there’s things we can drop off, probably a base policy if I, if I cut out, like I said, some of the, we’ll call them extras for this. But a disability policy is going to say after you have been unable to work due to injury or illness for X number of days, we will pay Y per month for Z period of time. And those are our basic levers. So normally we look at a 90 day elimination period. So with the idea that most advisors want clients to have three months of emergency cash. So there’s nothing probably more of emergency than not being able to work for three months due to injury or illness. So I use up my emergency fund and then my disability benefits kick in after 90 days and it’s going to pay me $7,000 a month based on my income to my age 65.

Mark Maurer [00:13:32]:

So what levers can we pull? We can pull. Well, Mary Beth and Neela really want Everybody to have six months of emergency fund. Well, I can have a 180 day elimination period and that’s going to lower the cost. I’m self funding more of that upfront needing the benefits and it reduces my costs. Maybe I qualify for $7,000 a month, but really I could get by with $6,000 a month or $5,000 a month. Because if I own the policy Myself now, these benefits are tax free. So if I lower the benefits by 10%, I lower the premium by 10%.

Mary Beth [00:14:04]:

Elimination period is probably new for many listeners, but a lot of people are used to the concept of a deductible. And you can kind of think about elimination period as like the deductible for disability insurance.

Mark Maurer [00:14:15]:

Exactly. And it’s a deductible in time instead of dollars the way it’s phrased. But it could be the same as dollars if it’s 7,000, $7,000 a month. And in benefits, I either have a $21,000 deductible, that’s three months. 42. My wife’s the math teacher, so yeah, got it. Boom. 42 to be 1000.

Mark Maurer [00:14:34]:

Can you tell her that she should be proud?

Neela [00:14:36]:

I will actually send her this recording. We’re going to send her this.

Mark Maurer [00:14:39]:

Just that snippet, that’s all.

Neela [00:14:43]:

Yes.

Mary Beth [00:14:44]:

I think you also pointed out just one interesting point on taxes, Right. If you’re buying your own policy and you’re paying the premiums, get are tax free, but if your employer is paying your premiums, then you get tax on those benefits.

Mark Maurer [00:14:57]:

Right, Right, exactly. So at a $6,000 a month group plan that my employer is paying for, I could say that’s $5,000 a month if it’s tax free or $4,500 or. And then the third lever would be that 2 age 65. A lot of companies have a 10 year benefit period. Most have a 5 year. A 2 year. All of mine are 2 age 65. Because again, my concern is not necessarily a short term issue or for the most part, I sit at my desk.

Mark Maurer [00:15:28]:

My concern is something like a stroke that messes with my cognitive abilities. And at that point then I’m probably not able to work in anything ever again. So I like the age 65. But to bring it to a 10 year benefit period, if everybody’s doing well and has a good amount of savings, I say, okay, we could maybe possibly retire in 10 years. And then that I think that comes to the question, is retirement. Does that mean when I want to stop working or is that when I can stop working? And some people, I always get that sometimes, well, it’s a retirement age. Well, I might keep working. Well, okay, when do Mary Beth Neila say you could stop? Oh, here.

Mark Maurer [00:16:09]:

If you want to work after that, that’s great. But when do you. How long do you have to work to make everything happen?

Mary Beth [00:16:15]:

Oh, I love it. And if your head’s swimming, just call Mark.

Neela [00:16:17]:

Y’all okay, so that’s disability insurance. I like, I’m fascinated by all this stuff, I mean, which says I’m a total nerd. I’m so sorry. I just realized that was.

Mark Maurer [00:16:28]:

Sorry. All right.

Neela [00:16:29]:

Mark’s also a nerd.

Mark Maurer [00:16:30]:

Just two of us in the whole country. Fantastic.

Mary Beth [00:16:33]:

Just been like working with clients.

Neela [00:16:34]:

I mean, how many? I can’t, I don’t, I don’t know how many disability insurance policies I’ve reviewed and like pulled the levers on for the clients for the reasons and different things that you specialize and worked with entrepreneurs, you’re, you’re in those policies. Okay, so let’s it now to life insurance and let’s talk about. We obviously are big fans of term insurance. Right. But that’s not the only piece to play and the insurance game. But talk for a minute. Just about. I know you spoke briefly about the group insurance, kind of the one to two times salary that, I mean that’s cheap coverage.

Neela [00:17:02]:

Take that, take what you get. But that’s, that’s a really base, thin level of foundation and you need to build upon it, tell us a little bit about what the options are in the market and what people should consider.

Mark Maurer [00:17:13]:

Okay, so for term life insurance is again to use my example of our homeowners or auto insurance, term is, is what I call a pure insurance. You pay this premium every year if you need it, then there’s a death benefit paid to your beneficiaries. If you don’t need it, you paid the $500 a year or $1,000 a year and you get nothing back except.

Mary Beth [00:17:37]:

The confidence of not having died.

Neela [00:17:39]:

Yeah, except that you’re still here. You need another year.

Mary Beth [00:17:42]:

Like I said, one more trip around the sun.

Mark Maurer [00:17:44]:

All of these things, if it pays out, you lost. So that’s why it’s, you know, again, not as much fun as getting stuff on Amazon.

Mary Beth [00:17:51]:

Right.

Mark Maurer [00:17:52]:

So term life insurance, why it’s called term, is that it has a period of time or a term where the premium is fixed. It’s locked in. Which again, unlike our homeowners and our auto and our health insurance and everything else that seems to increase every year. And you go, what? I thought we just did that Term insurance, it can lock in a premium. 10, 15, 20, 25, 30. There are even some with 35 and 40 year level premiums. So you can lock in a million dollar 2 million, 3 million dollar death benefit for a specified period of time. And what we try to do is line those periods of time up with certain life events.

Mark Maurer [00:18:29]:

And I do that with Personally, when both of my kids are able to drive. So for everybody with kids, I think once kids are all able to drive, or at least one is able to drive, I have one who can. Life really changed. There was the ability for him to get himself places and even take his sister places if my wife and I were otherwise occupied. So. And if I’m not there in the world, that’s a huge help. So kind of the need for care of children, I think kind of lowers at that point in time. Then there’s college funding.

Mark Maurer [00:19:03]:

Years. There’s another period of time where I’ve looked at what college costs. I’m going to need to keep working as long as they’re in college if they want to go to college. I keep saying, hey, insurance is not a bad job and I won’t have to pay for college. And I know a guy who’s probably hired. So far, nobody’s bitten on that one yet.

Neela [00:19:26]:

It’s a Q. Five jobs to get there. So maybe it’ll take them five jobs to get there.

Mark Maurer [00:19:29]:

That’s true, it might. So making sure my income’s protected through college, end of college, and then the third one is retirement. And really within all of those things, we can look at how long somebody’s mortgage is. Well, that’s good to know. But all of it really is based off of my income and sort of that idea that everything I want to do is predicated on my income. So there’s lots of different ways to value and calculate and there’s financial software, does a great job of doing that. But also just sort of look, you know, like I said, very round numbers. 10 times somebody’s income is.

Mark Maurer [00:20:02]:

To me, that minimum planning software is going to be much more accurate, much more detailed, because I don’t know things like, you know, they just won the lottery four years ago and, you know, already have 5 million in the bank. I can’t know that. But for Your average person, 10 times income is going to get them when they have kids that protection of some kind of a fairly good safety net that, that group coverage one to two times usually just doesn’t get talk for a minute.

Neela [00:20:28]:

This idea of so 10 times, like straight through, let’s say, you know, 100,000, let’s say million dollars of coverage straight through to 65, call it a day, boom, you’re done, versus the option of what you kind of just brought up these different life events and the idea of laddering policies.

Mark Maurer [00:20:41]:

Oh, okay, now I’m going to nerd out. Okay, so I love laddering. I Love layering. Because let’s say, let’s pretend I’m still 40 and I’m going to work for round numbers. Let’s say 20 years, my kids are 10 and 12, I’m making $100,000 a year, I’m 40, I might work another 20 years. So round numbers, $2 million. But in theory, I need a lot more today when I have 20 years of income ahead of me than I do at age 59 when I’m only going to work one more year. I’m pretty sure my last year of income is not worth $2 million.

Mark Maurer [00:21:14]:

That would be great if it was. So the idea of laddering or layering policies because the longer the term is, the more it costs. So in that scenario, if I could ladder some 10 year term, some 15 year term, some 20 year term and have this, what starts off at $2 million and then, okay, kids are, one of the kids can drive. Okay, that first policy, that 10 year term drops off. Why? Just save money. And now I have another that does. So goes like that. So that idea of laddering and it costs less because I’ve said I need $2 million, but I don’t need all 2 million, all 20 years.

Mark Maurer [00:21:51]:

So this idea of laddering, layering for different life events I love because it’s, it costs less today, it costs less as these policies drop off and then I’m not really overpaying potentially for coverage, still having $2 million the year before I retire.

Neela [00:22:07]:

So that you’re saying is like spreading that 2 million across three different policies. So when you’re going in, you know the amount of coverage you have, but you’re going to have three different policies and those policies will just expire over time.

Mark Maurer [00:22:16]:

Yep. Then one’s going to drop off in 10 years and then another in 15, and then in 20 years you all did your job, client lived, client worked, saved, invested, and in 20 years they’re ready to retire, they don’t need the term insurance anymore. And so that’s in general why we look at term for almost, almost everybody as compared to some of the other types of permanent or cash value life insurance policies that are out there.

Mary Beth [00:22:40]:

That’s so great. So it’s like a good start is 10x earnings, call it a day. Right. But if you want to kind of sharpen your pencil a little bit, you can think about what are the big events that you’re really trying to cover for. And that’s when the latter approach comes in and you talk about like minor dependents, college expense, maybe a Mortgage retirement, kind of. You can start playing with some of those building blocks.

Mark Maurer [00:23:02]:

Well the first thing I would do is have them talk to you all to get a good financial plan together because there’s nothing more important than a good financial plan.

Mary Beth [00:23:09]:

Love that Wink. Love it.

Mark Maurer [00:23:11]:

But yes, I would agree with if somebody walked up and just said I need some insurance. 10 times income to retirement age would be. It’s like if I get one shot at this and we’re worried about affordability or something like that, that would be my 10 times earnings. So using my 40 year old gonna work 20 years, make it a hundred thousand. A million dollar 20 year term is going to cover a lot of stuff. But like Mary Beth said, ideally that first year initially it would be a lot higher but I might decrease it to where it’s not even $500,000 those last five years.

Neela [00:23:45]:

Maybe I just realized our math got off. So yes, it’s 10 times earnings. If you made a hundred thousand dollars, it’s still a million dollars. I think we did the 20 year and made it 2 million. So it’s still a million dollar policy for 20 years. As Mark just said. Just if the math isn’t mathing for everybody. A million dollars, 100,000 times 10 is 1 million.

Mark Maurer [00:24:01]:

Go show my wife this section over, over 20 years. If I messed up the math, I don’t want to.

Neela [00:24:05]:

We both picked it up. That’s great. Just continuing the story in the thread. Okay, let’s talk just briefly though about you know, the term versus permanent insurance. What is, where does that come into play? You know my idealist favorite thing is when clients come in with the whole life insurance policies we get really excited about that, don’t we? Talk to us a little bit about that. And when they’re necessary, if they’re necessary.

Mark Maurer [00:24:26]:

So. So with term the whole idea is that it ends and if we go back a whole number of years, probably not that too far. There weren’t financial planners, there weren’t CFPs. Most people didn’t have Robinhood to E trade to any of these things. If you wanted to put some money somewhere, you either put it in the bank or possibly in a life insurance policy. So whole life policies were this. It slices, it dices it Julianne’s kind of thing. It’s a retirement account, it’s death benefit, it’s going to be your college funding.

Mark Maurer [00:24:58]:

And it’s like there’s not a fuel efficient Humvee or you know, a Prius you want to tow a boat with. Nothing can be good at everything.

Neela [00:25:08]:

I’m like viewing the infomercial in my head though, and I think it’s like variant. That was a great example.

Mary Beth [00:25:12]:

Great.

Neela [00:25:13]:

Sorry.

Mary Beth [00:25:14]:

I’m with it.

Mark Maurer [00:25:15]:

And I did. I was able to find a Prius towing a boat one time on. That was a pretty funny image too. So whole life is designed to be permanent life insurance. So it’s not covering a period of time replacement, income replacement. It says I want to leave money to someone when I die, matter when that is. But as far as life insurance goes, it’s definitely going to be more expensive than term because we hope we outlive the term. If it’s priced correctly, it will pay out.

Mark Maurer [00:25:42]:

You’re putting it there and instead of investments, instead of other things paying down debt, it’s going there and the costs are higher again. So who is it good for? I think a lot of people have it. A lot of people possibly were sold it. A lot of people might want to leave their kids $100,000 and they can leave them what’s left in their IRA, their 401k, their Roth a house. They might want to leave them permanent life insurance because there are some neat parts about it. It’s tax free, it passes to a beneficiary, so it doesn’t go through probate. You can name beneficiaries as you pay money in, it grows on a tax deferred basis. You can take withdrawals up to your cost basis.

Mark Maurer [00:26:25]:

You can take tax free loans. So there’s a lot of neat parts about it. What I think many times isn’t explained is that there are still insurance charges. So here’s all the neat benefits of it. But you’re paying these expenses and you’re paying them for your entire life. And so I’d say there are times when it makes sense. If people have an estate tax issue which under today’s numbers, that’s not very much of us. But you might sometimes estate planning, not necessarily state a tax plan, but estate planning.

Mark Maurer [00:26:58]:

Somebody’s net worth may be very heavy in a family owned business or a farm. How do you give one kid the farm when that’s 80% of your net worth? And you know, do you cut out the other kid or do you give them half ownership of the farm? Well, maybe they don’t want to do that. So life insurance can be used to equalize an estate. We use it sometimes for special needs planning. You have two parents with a special needs child. Many times that special needs child might, you know, have a life expectancy of longer than the parents and so we have our term and our disability when we’re younger to make sure that we can replace income. But as long as one parent is alive, we’re going to provide that care for free as long as we can. But what happens when both parents aren’t there? And maybe now there’s an adult special needs child, he has a child now, but he’s adult now.

Mark Maurer [00:27:52]:

There’s a survivorship or second to die permanent life insurance policy that comes into play to help a sibling provide care or maybe a facility where all of a sudden there’s this thing. We needed a big bunch of money when both parents are gone and sometimes people just want it. I’d like to leave my kids $100,000. Okay, you can do that with a life insurance policy. You might be able to do it with lots of other things, other assets. But I find a lot of people who were the beneficiaries of a life insurance policy at one point from their parents, liked it. And again, I have yet to have anybody try to send money back. No thanks, y’all can keep that.

Mary Beth [00:28:38]:

Do you ever see it also? I’ve seen it a few times. If people have a term policy but might have a hard time getting underwritten for a new policy and that they can basically their term policy can kind of turn into a permanent policy.

Mark Maurer [00:28:51]:

Good question. So we call that conversion. So within term policies you have this provision that allows you to exchange the term coverage for permanent coverage. So that would be the whole life, universal life, something with cash value without any medical questions. So I got that term policy when I was 48 years later, have cancer needs. Some want to make sure my coverage doesn’t lapse. I can convert it now. I convert it as a, a male, age 48.

Mark Maurer [00:29:18]:

Kind of. You converted the age at which you are when you do the conversion. But if I was issued preferred back at age 40, my new policy is preferred. So no health questions, no underwriting. So that’s the real value to that conversion. The flip side is instead of my short, low cost term, I’m trading it for permanent coverage. But maybe if I’m uninsurable or, or new coverage would be very expensive, it might still be a good idea. But for the most part, if I can get new term coverage, it’s probably going to be a better, better deal.

Mary Beth [00:29:51]:

I feel like we could nerd out on this for literally hours.

Neela [00:29:54]:

Going to be a long episode which probably, yeah, probably transition to our wrap up questions. Even though I have like five more things to talk about that do a part two.

Mark Maurer [00:30:03]:

Fine. With me, I can again. I can talk insurance all day.

Neela [00:30:06]:

I know as bad as batching of our listeners, they might not want to hear.

Mary Beth [00:30:10]:

They’re like you all are monsters.

Neela [00:30:12]:

Go ahead, micro dose it for them. Like subsets down the journey. I was like so much talking about from the underwriting too. Didn’t even go there.

Mary Beth [00:30:20]:

Right.

Neela [00:30:21]:

Okay, so let’s transition to the. To the wrap up questions. Mark, what would you say is the best financial advice you have ever received?

Mark Maurer [00:30:29]:

I like this one. When I got my first job, it was to open up a Roth and contribute to that. And that was great.

Mary Beth [00:30:38]:

A good one. Good old friend Roth. Every financial planner’s best friend. What is your favorite money mistake you’ve made and why?

Mark Maurer [00:30:46]:

I thought about this one and I don’t know if it’s favorite but it might be most recent and I think it’s a good story. So we had a 20 year old dryer, just clothes dryer and it stopped working and realized the part was going to cost more than buying a whole new dryer. We bought a new dryer, it worked for about two weeks, needed about six new parts because the motherboard and all the electronics. This is a 20 old dryer. It had two knobs, you know, on dry hot. I really wish I would have spent more money and fixed my old dryer because it had gone 20 years. There was no computer. There’s no beeping, there’s no computer.

Mark Maurer [00:31:27]:

Motherboard. No, I think it was a. Whatever that is, the drum and something that made it hot. That was so two months later and trying to get things repaired and we ended up actually having to buy a second new dryer because the other one, they would send parts in piecemeal. And after like three or four months we still didn’t have all the pieces to fix it.

Mary Beth [00:31:48]:

So yeah, air drying the clothes, they’ve gotten so fancy. They’re like, you can now control the washer with your app. I was like, but why?

Neela [00:31:58]:

But why? You can’t put the clothes in there with the app. You still have to. What’s. Why can’t I.

Mary Beth [00:32:02]:

Does it magically move from the washer to the dryer? If not, I don’t care.

Mark Maurer [00:32:06]:

Right. Right. I’m out enjoying dinner. Ooh, you know what I’m really thinking about? Laundry.

Mary Beth [00:32:12]:

One more spin cycle just because I’m feeling frisky.

Mark Maurer [00:32:17]:

So that was the one that I most recent. I wish I would have spent the extra money and just fix it. It could have lasted six months, but at least I wouldn’t have.

Neela [00:32:25]:

You wouldn’t have had like the shut. You would be wondering about it now. You wouldn’t be. You wouldn’t be wondering.

Mark Maurer [00:32:30]:

I would have said, I knew. I knew it was a gambler on a very old machine. But. Okay, that’s a good story.

Neela [00:32:36]:

Okay, fill in the blank.

Mark Maurer [00:32:38]:

If money were easy, I’d be walking in the woods. We’re in, we’re in Tampa, Florida. We have heat, we have sun, we have beach. So mine would be just out walking in the woods someplace quiet.

Mary Beth [00:32:52]:

Very Robert Frost of you. I like it.

Neela [00:32:54]:

All right, Mark, tell our listeners how they can contact you where you’re at on the Internet.

Mark Maurer [00:33:00]:

L l I s dot com. You can find us there on our website. And again, Mark Maurer or Mark M A U R E R l l I s.com if you’re using the email.

Neela [00:33:11]:

There you go. Mark has a great website, lots of client resources, advisor resources and the ability.

Mary Beth [00:33:16]:

To get quotes and things like that. So you can just like test drive things with our good friend Alice.

Neela [00:33:21]:

Alice, not a L L I s. That was very long.

Mary Beth [00:33:24]:

You’re so wordy.

Mark Maurer [00:33:25]:

I was.

Neela [00:33:26]:

Alice. Didn’t want to assume.

Mark Maurer [00:33:29]:

He needs to work on this.

Disclosure [00:33:31]:

I didn’t want to assume, you know.

Neela [00:33:32]:

I don’t want to be.

Mary Beth [00:33:35]:

Mark, thank you so much for joining us.

Neela [00:33:37]:

Yeah, thanks for being here.

Mark Maurer [00:33:38]:

Thank you, ladies. It was fun.

Mary Beth [00:33:40]:

Thank you for joining us for another episode of if Money Were Easy. We hope you’re walking away with some fresh insights, maybe some inspiration and some ideas to apply to your finances, life, et cetera.

Disclosure [00:33:52]:

If you’re excited about these conversations, we would love for you to follow or subscribe on your favorite podcast platform and YouTube. It’s one of the best ways for you to support the show and that way you will never miss the latest from us.

Mary Beth [00:34:04]:

We’re also turning if Money Were Easy into a community and we’d love your help building support. So leave us a review. Share your favorite episode with a friend and we’d be super grateful.

Disclosure [00:34:13]:

We are also launching a newsletter. There you will get the episode updates, behind the scenes content, all of the bloopers from Neela and I and what we are reading, watching, watching and listening. You will find the sign up link in our profiles.

Mary Beth [00:34:28]:

The bloopers are choice. Just gonna say they are. They’re really, really great. Please connect with us on Instagram. We’re at Mary B Storage and Neela Hummel cfp.

Disclosure [00:34:38]:

Abacus Wealth Partners is an SEC registered investment advisor. SEC registration does not constitute an endorsement of Abacus Wealth Partners by the sec, nor does it indicate that Abacus Wealth Partners has attained a particular level of skill or ability? This material, prepared by Abacus Wealth Partners, is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security strategy or investment product. Opinions expressed by Abacus Wealth Partners are based on economic or market conditions at the time this material was written. Facts presented have been obtained from sources believed to be reliable. Abacus Wealth Partners, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Abacus Wealth Partners does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice. Economies and Markets Fluctuate Actual economic or market events may turn out differently than anticipated.

Disclosure [00:35:38]:

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