Why life insurance is the best gift to give this year - Expert Edition Episode 1

“When you rely on GoFundMe accounts to pay for funerals, you're still short selling your family in the long run because GoFundMe will just pay for the funeral. But life insurance pays for the finances well beyond your life. It can pay off your mortgage, cover kids' college, and also keep a spouse from having to go right back to work if they wanna have time to grieve or they wanna take time off from work after the death of a partner. 

But it's also important for single people to get life insurance too, because if your parents depend on you for income or you're taking care of siblings or someone else, then they need to know that they're gonna be taken care of. And life insurance is a guaranteed way to do it.”
-Acquania Escarne

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TRANSCRIPT:

[00:00:00] Naseema: Right today. So I'm super honored to be joined by Scarne. She's the homie and the life insurance expert. And we are gonna jump right into talking about why life insurance is the best gift to give this year for Christmas, and just time. But specifically because we're going into the holiday season, and I know this is something that people put.

This is a good reminder that this is something that you need. Now What's up Aqua?

[00:00:30] Acquania Escarne: What's up Nasima? How are you doing? Thank you so much for having me on the show. I am doing

[00:00:35] Naseema: okay. Yes, you are very welcome. As our insurance expert, , I love having you here to shine light on this very important product or service that people need in their lives.

It's often put off. So let's just dive right into why life insurance. Why do you think, first of all, people don't have adequate life insurance? Or why is it something that

[00:01:05] Acquania Escarne: people put off? Honestly, I think it's because something, it's about something people don't wanna think about.

People always associate life insurance with death, and nobody likes to think about dying, right? But the reality is life insurance gives life. It gives life to your family. It creates a legacy for you, and most importantly, it gives your family tax free dollars in the event of your death, which is important to know.

because unfortunately, when you rely on GoFundMe accounts to pay for funerals, you're still short selling your family in a in the long run because GoFundMe will just pay for the funeral. But life insurance pays for the finances well beyond your life. Here it can pay off your mortgage cover kids college.

and also keep a spouse from having to go right back to work if they wanna have time to grieve or they wanna take time off from work after the death of a partner. But it's also important for single people to get life insurance too, because if your parents depend on you for income or you're taking care of siblings or someone else, then they need to know that they're gonna be taken care of.

And life insurance is a guaranteed way to do it.

[00:02:15] Naseema: Yes. And why is now a good time to get life?

[00:02:19] Acquania Escarne: Well, first and foremost, tomorrow's not guaranteed. And you know, every day I open my phone, I find out about another person who's passed away, and I actually just read an article this morning about a musician who was 37 years old, just got married and passed away in his.

Sleep. Now obviously that is not what normally happens, but it can happen, right? And I'm sure no one expected that to happen, especially to someone who's so young and presumably healthy. They're, they're actually trying to figure out now what was the cause of death? So I say with that, especially around the holiday season when losses can be even more impactful to a family, you wanna make sure that you're giving them the gift of knowing that they're gonna be taken care of.

And definitely it's important to remember that life insurance becomes more expensive the older you get or the more severe health issues you have. So if you're young and you're healthy regardless of how old you are and you don't have life insurance, go get life. I. Because we don't know what's gonna happen to our health, or we don't know what could happen to us.

You wanna get life insurance before you have certain health issues, but if you do have health issues and they already exist, I don't wanna discourage you from even inquiring about quotes. Go ahead and get quotes. It may cost a little more, but it's still worth it.

[00:03:36] Naseema: So what kind of life insurance should most people?

[00:03:42] Acquania Escarne: So that's a really good question, and it honestly, it depends on what your needs are and your goals in general. I like to walk people through what I call like the dime method. It's the D I M E. It is not the final. Answer of how much insurance you need, but it is a good starting point. So let me quickly go through that so people can understand what to consider.

So D stands for debt, and this is gonna be, who do you owe in the event of your death? Most likely they're gonna wanna get paid, so you wanna add up all your debt. Then you wanna take I, which stands for income, and you wanna multiply your annual income by five times or by 10 times. We normally do that because five times we'll get your family through five years after your death, and 10 times we'll get your family through 10 years after your debt.

Then you wanna think about your mortgage. If you own property, how much do you have left on the mortgage? Because the. Couple of months after you pass the mortgage still needs to get paid, and if possible, you could even pay it off. So look at the balance on your mortgage as of today, and presumably the older you get, less and less of your mortgage will be due.

So if you die later in life, that just means more money your family gets to keep. So it doesn't matter if that number's gonna change. And then EU stands for education. So that's an estimate of how much you wanna contribute to your children or someone else's education, and you want life insurance to be what pays for it.

So I traditionally estimate about $50,000 a year if you want your kids to get a f. Full ride and cover four years of school, then you would multiply 50,000 by four if you just wanna contribute to their education, but you don't wanna necessarily pay the full price, then you might wanna do 25,000 a year per kid, but you would add up your d i m and E number and you would see what you get.

For some people, that number might be a million dollars, for example, and that much coverage is most affordable as a term policy. So a term policy is something that expires and it has a limited amount of time. It covers you. But for most people, the normal 20 or 30 year policy will cover you for your working years, which is the really primary parts of your life where your kids or a spouse may be depending on you, but by the time you're retirement age.

God willing, your kids are grown more independent, or maybe you don't end up marrying someone, so you just only had them to worry about. Then by the time you reach retirement, you may be what we call self-insured and don't really need a policy anymore. Right. But you may still choose to keep one if you want to.

Leave a specific amount of money to your kids or to family. The alternative to term life insurance is called permanent life insurance. That's the kind of policy that covers you for the rest of your life. It is significantly more expensive than a term policy, and the reason is because it's guaranteed to be paid out.

Insurance companies charge more for taking on a hundred percent risk that you're gonna die. But they do try to give you incentives, which they call cash value or divide. Where they will pay you interest on money in the policy or additional money on the money in the policy. So you kind of earn money on that money.

This is a good strategy for someone who maybe, you know for a fact you want to have insurance for the rest of your life and you're already older and you don't want an expiration date to. So you go ahead and get permanent, but it also could be a good strategy for someone who's extremely young and healthy and wants to lock in a really low price for the rest of their life or for the rest of their working years, depending on how long you want to pay for the policy.

But I recommend you talk to a life insurance agent and really look at both. And then make an informed decision because permanent insurance is not for everyone's budget, and term insurance is the most affordable way to cover your family, especially if you need a lot of life insurance. So,

[00:07:44] Naseema: I've heard the term getting life insurance on someone else.

Can you explain what that

[00:07:49] Acquania Escarne: means? ? So long story short, that's putting out money or getting the guarantee that if someone else passes away, you're gonna get paid, right? But I don't want you to see it in a negative way. It's just basically saying that person's. Life has value to me, and if they were to pass, I'm gonna suffer financial, mental, or physical loss.

Right? The reason I'm saying those specific terms is because you cannot just go get insurance on random strangers. There's actually a rule that says you have to have insurable interest, which means that person has. If they were to pass away cause a physical, mental, or financial loss to you, and that's why the insurance company should give them a policy and then when they die, they should pay you the check.

If you don't have that insurable interest, you should not be allowed to even get a policy on another person. The other thing to remember is they have to know that they have a policy on them , so you also shouldn't get policies or attempt to get policies. The person's knowledge that's not legal, and you should definitely not do that.

But

[00:09:01] Naseema: do they have to consent to the policy?

[00:09:04] Acquania Escarne: They should. If a, a good agent should ask the questions and even talk to that person so that everyone is aware, even if you're paying for it and they're the insured. Everyone needs to be aware that this policy exists and that it is being drawn up on your behalf because it is a contract and that contract is stipulating that.

God forbid somebody passes away, I'm gonna get a check for it. That person needs to know that I'm gonna get that check even if I am paying for it. So yes, I, an insurance agent a lot of times will need two signatures on policies like that. One signature will be from the payee and one signature will be from the insured.

[00:09:46] Naseema: And so can you do that with both term and permanent

[00:09:49] Acquania Escarne: life? Absolutely. It depends on the company, but most of them will request the two signatures or the acknowledgement that the two parties are aware of the policy. And you can definitely set it up. How you set it up just depends, but nowadays, so many companies are doing electronic signatures and electronic policies that you will most likely sign it electronically with some kind of code or.

Secret information that only the person who's signing would know so that they can sign that policy in good faith. Okay.

[00:10:22] Naseema: So in terms of like the gift giving season and you know, we're coming into the holidays, how should we be approaching life insurance or discussing the topic of life insurance? Like with

[00:10:34] Acquania Escarne: the people that.

That's, I think this is a great time to have normal money conversations and checkups. So this is a good time while you're with family, to ask them, you know, how's it going? You know, do you have your affairs in order or since the last time we went over your affairs, what changes have you made? For some people that might be an increase in assets or an increase in property, and they might need to reevaluate their insurance.

For others like parents, it might be the first time you're talking about whether or not they have life insurance. So you definitely wanna approach these conversations differently, but it really starts with normalizing a conversation. And when it comes to parents, I especially recommend that you have them be involved in a conversation as though they are equally a part of.

Don't try to come into it telling them what to do or suggesting on what they need to do with their affairs, because that might turn them off to having the conversation, but more so welcome them into the conversation by suggesting, Hey, I really wanna make sure that if you're unable to speak for yourself, or God forbid you pass away, I honor your wishes.

So do you mind telling me what it is that you'd like me to do? And in that conversation, when they're answering what they would like you to do, they could also highlight what they. So that could include, oh, I have life insurance and here's where I keep it and here's who I want the money to go to, and et cetera.

So having those conversations or updating that information is a great thing to do during the holidays when you have family together.

[00:12:07] Naseema: I think that's an excellent suggestion. What do you recommend for people who say that they're gonna stay childless and single as far as getting life?

[00:12:18] Acquania Escarne: I still think single people need to get life insurance.

You just might, may not need as much as someone who has a partner and family. What I would say is ask yourself, honestly, if I died tomorrow, would my family be able to afford a funeral? And if the answer is no, then you need life insurance. Ask yourself, if I die tomorrow, would my family have to raise money on GoFundMe?

If the answer is yes, you need life insurance because we don't want families raising money on GoFundMe and making sure that they understand that even if you have. all this money and you feel like they should be able to access it to do whatever they need to do. That may not be enough. That may not be immediately accessible and that may be taxable.

Most people forget that part cuz they think, oh, I have money in my 401k, or, oh, I have money in the bank. , but some of that money will be taxable upon inheritance. Life insurance is not. So it is still the cheapest way to pass on a legacy. And it's also the most affordable way to build a legacy before you actually have one.

Right? Cuz you can gift a million dollar life insurance policy and not have a million dollars in the bank because once you pass away, they're gonna cut that million dollar check. And so a lot of people will use life insurance. Lessen the wealth gap between different cultures, but also give their family a huge advantage for the next generation.

[00:13:49] Naseema: Yeah, I think those are really, really good tips. So if somebody isn't working with you, how do you advise people to find a trusted person to work with

[00:13:58] Acquania Escarne: to get life insurance? The best place to start is, in my opinion, asking around with your friends and family with who they have worked with and they like working with.

I think referrals are really important because they're, that's already a connection there and it's a, hopefully a easy connection to, to reignite so you can introduce someone to someone else, but if you're someone who, no one in your family has life insurance, you have no idea where to start, definitely.

On social media, nowaday. You can actually put in hashtag life insurance agent and a lot of people will come up. You may wanna look at their profiles, what they're talking about, see if that person is aligned with you, but then definitely have a conversation. I recommend that you work with someone if you can, that's independent and has the ability to shop around rates for you.

That's what I prefer, but I do understand that so, That person can only sell their products with the company they're with, and if you vibe with that person and you still wanna work with them, then feel free to get those products. But I appreciate being independent, being able to shop around so I can really find a product that works best for the client.

but just know that not everyone is gonna be able to do that. You can also look on the internet for best life insurance companies and you wanna look for companies that have a plus ratings or, or, or a ratings. And then you can look for agents in your area with those companies.

[00:15:27] Naseema: Would you recommend people do exchanges like a policy genius or

[00:15:32] Acquania Escarne: anything like that?

So that's a tough one for me because although I love what technology has been able to do to expedite the process, and you can actually, I even have companies I work with, you can get a quote in 15 minutes and insurance in 20 minutes. It, it, it's not as personal to me. And if I can, I always wanna work with someone directly.

And I know that people appreciate that experience because you get to ask questions. When you get a policy on the internet and you're filling out a form in 10 or 15 minutes, you might be missing the opportunity to incorporate expenses. You weren't thinking about like your student loans, for example. I know a lot of people.

Think their student loans are gonna be forgiven when they die, not realizing that that's actually not the case. Yes, federal loans that are subsidized tend to be forgiven thanks to the 2018 Jobs Act, but, The private student loans that you had someone cosign to help you get, those are not automatically written off or forgiven, and they might still be due.

And so if you're only calculating what you remember to calculate and you forget things like that, you might be leaving a bag in someone's hand to have to pay when you're gone, which is really unfortunate. That's why I, I like working with a person, but I understand for some people you just need to get covered and maybe online insurance quotes is the best way.

[00:17:02] Naseema: So you did mention like looking online for an insurance agent. But what I have found in increasingly, you know, of late is that there are a lot of people selling life insurance online that aren't necessarily very reputable. Like, how can you parse out

[00:17:19] Acquania Escarne: those kinda people? Well, I definitely want you to look 'em up, check 'em out, have a conversation with them, if you can research the company cuz at the end of the.

You are still buying a policy from a company and that company has to honor the contract. So I should have started out with life insurance is a contract, right? And whatever you sign up to, those are your terms. Those are, that's your policy. So the person might not be, On the up and up, but the contract should be on the up and up.

So that's why it's still important to do your research on the company to make sure that that's a good company. Cuz you probably will have your relationship with the company much, much longer than the person you meet, depending on their situation. You know, cuz life insurance agents move, sometimes they get out of the business, but that policy is still.

So I do think reputation's important and you can definitely look up your people that if there's any complaints against them, it'll be public knowledge. A lot of times in the insurance bureaus. So you'll know if that person has been sanctioned or penalized for not so savvy habits in the industry.

But you still wanna make sure that that company is one that you're comfortable working with because they're ultimately the ones responsible for paying out when you.

[00:18:35] Naseema: And lastly, like I've had this kind of like real like dread for their insurance for insurance agents because I feel like all too often, and of course not you all too often, I feel like, you know, black and brown people are oversold into policies that don't actually fit with a need.

How can you, how can you tell like that that's something that's going on? Cause I know it innately, but how does somebody else that just is like, just trying to get covered? How do they know?

[00:19:06] Acquania Escarne: Mm-hmm. Well, that is a good reason to shop around if the person that you're working with can't shop rates. You can always get more than one quote.

You're not obligated to only work with one person, and you're also not obligated to only have one policy. If you get a policy at 20 something with someone, say online, and then 10 years later you need more insurance, you're always welcome to apply for another policy. So I do, and I'm not selfish. I know that I'm not the best person for everybody.

Maybe I, we don't vibe or you're not comfortable working with me for whatever reason. I always offer you that option to shop rates with someone else and take what you found with me and compare it to someone else. And if you decide not to do business with me, like no hard feelings, I would love for you to work with me.

But I understand when some people don't. And I think you should also talk to the person and see if they have that same transparency. Cuz truth be told, if I shop around and I still can't beat the quote that you got from another company and I know that they're a good company, I'm gonna. That I'm gonna be straight honest with you and say that is a reputable company.

I can't beat those rates because sometimes when you are a captive agent who works for the company, sometimes you may get better rates than someone like me who's independent. I can't manipulate my rates, that person can't manipulate theirs. Those are just the rates that we got right. At the end of the day, a hundred thousand dollars is a hundred thousand dollars when it's written to your family.

So I don't think you should pay more to get the same amount of money when you die, right? So go with the cheaper policy as long as it's a reputable company that's known for paying their claim. Love it. I

[00:20:52] Naseema: love it. And PO is gonna be back with us because she's one of the experts on the Financially Intentional podcast.

But if you if someone wants to work with you with upon, how can they get in

[00:21:03] Acquania Escarne: touch with you? Absolutely contact me via my website, the purpose of money.com. I have a Connect with me button and you can sign up for a free consultation and I'd be happy to talk to you about your life insurance needs. You also can follow me on Instagram at the purpose of Money, where I'm sharing wealth, building tips and strategies and facts about life.

[00:21:26] Naseema: Always so good to have you cause you're a wealth of knowledge. You so well versed in this industry, so I always, you're always my trusted person to go to. So I appreciate you so, so much and look forward to having you on.

[00:21:38] Acquania Escarne: Again. Thanks for having me. Can't wait to see you soon.

Hey there I’m Naseema

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