This Nurse is Creating Generational Wealth Through Insurance - Ep. 46
Nurses can use it to build generational wealth and leave their family money to survive after their gone. Acquania will explain who needs insurance, why and how much you need. Acquania is a US diplomat working for the US Department of state. Her passion for personal finance and investing began when she was in high school and her father gave her a copy of Rich Dad, Poor Dad by Robert T. Kiyosaki. At 16 years old, Acquania opened a Roth Individual Retirement Account and has been seeking financial independence and early retirement (FIRE) ever since. She aspires to create generational wealth for her family and has created multiple streams of income for her family to enjoy today. She still works a 9 to 5 as a Diplomat but is counting down until the day her residual income provides enough money for all of her family’s needs.
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TRANSCRIPT:
Naseema McElroy (00:00): Hey Nurses on Fire. I'm super honored to have Acquania Escarne back with us. She was on episode 20 talking about how you too can be a US Diplomat. Hey Acquania.
Acquania Escarne (00:17): Hey Naseema thanks for having me.
Naseema McElroy (00:20): Thank you again for coming back on and because of what's going on right now in the US in relation to Covid 19 and just kind of the hysteria and the shifts in everybody's lives that has happened. We wanted to discuss a super important issue today that can affect you and your family. So Acquania actually let's talk about your background just a little bit for people that didn't listen to episode 20 but if you guys want to find out more about how to be a U S diplomat, go back and listen to episode 20 and you can find that at nursesonfirepodcast.com/20 but give us a little bit of background about you, what you do and then we'll dive into the very important subject that we're going to talk about today.
Acquania Escarne (01:09): Okay. So I am a U S diplomat and I've been working for the state department for over 12 years now. Where in foreign policy I'm promoting us relationships with other countries, helping American citizens abroad and facilitating a lot of our logistics. So specifically right now because of Covid 19 we've been facilitating the return of American citizens back to the United States for those that are overseas and wanted to come home and assisting our embassies and consulates staff with any support they need if they're choosing to stay and continue to serve overseas. Outside of that, I'm very passionate about financial literacy. I have my own platform, thepurposeofmoney.com I have a podcast also called the purpose of money. And on my platform I'm helping promote financial freedom and more ways to pay off debt, handle your finances, and get your lives in order so you can have a financially free life and specifically focusing on women of color. So in that capacity, I also promote life insurance. So that's why we're going to talk about that today because it's very important that everyone, everyone has life insurance. And I will explain more why on the podcast today, but I've been selling life insurance for three years now and trying to really help people get themselves protected and help provide their family income if they are to pass, but also ability to build generational wealth.
Naseema McElroy (02:47): That's awesome. Before we dive into life insurance, you brought up something super important that I didn't want to pass over, but what is the situation internationally with diplomats that are out there? Foreign countries, are countries like one of them to leave because they are American or are we like trying to just get everybody back for safety? What does that look like?
Acquania Escarne (03:10): In general? We're still promoting good relationships with any of our allies where we're located and no one has been forced to leave, but we are allowing American citizens who would like to come home to come home and we've been supporting American citizens in different ways, including helping them find commercial flights that they can get on or assisting with chartered flights that helps people return back to the United States because they may want to seek better healthcare here versus where they are. Or maybe they just want to be reunited with family. So I'm proud to say that we've still been doing our day to day responsibilities as much as we can, but we have, um, also facilitated support to Americans who are either living or visiting abroad and want to come home.
Naseema McElroy (03:56): So that's not exclusive to diplomats. That's Americans that are living abroad ex-pats. It doesn't matter how long people have been out the country, as long as they're still a US citizen, you guys are assisting them in getting back home
Acquania Escarne (04:08): and we do help others, but our priority is American citizens, but in some cases we have facilitated the return of legal permanent residents as well.
Naseema McElroy (04:18): Wow, okay.
Acquania Escarne (04:19): Also known as green card holders.
Naseema McElroy (04:21): Got you. Got you. Oh, that's super important to know. I guess you just kind of get out of touch with what all the state department does internationally and so you know, to put things in a broader perspective, like everybody in every country, in every nation, I don't know one person that hasn't been impacted by this, but we're in isolation. So it's sometimes hard to visualize what's happening out there, especially on a global level. So thank you so much for sharing that because that's, that's really good information and it's comforting to know that you guys are actively doing that. So let's dive in and talk about the importance of life insurance in general and then we're going to talk about it as far as what's going on right now as it relates to this virus and how things are changing.
Acquania Escarne (05:11): Yeah, absolutely. So I'm a big advocate for getting covered. Life insurance is a great way to protect your family. And the primary purpose is to ensure that if something happens to you, those that depend on you financially are still able to provide for themselves or have the resources, the financial resources they need in order to continue living the life that you want for them. So for a lot of people, that means if you have a family and you want them to live in the house where you're living, you want your children to go to college, you want them to be able to still have the lifestyle that they have currently. You buy life insurance, you pay for it while you're alive, and then the life insurance company pays a death benefit to your family. God forbid something happens to you. But life insurance is not just for people who have children and spouses.
Acquania Escarne (06:02): It's also for people who have any kind of dependent. So I want to remind you that if a family member depends on you, which can include your elderly parents, siblings, cousins, God, children, nieces, nephews, anyone who regularly come see you for financial support is probably someone who depends on you for income. And that is why most people could argue that they need life insurance. And if you don't need it at this time in your life, you'll potentially need it in the future. So I always try to talk to people about it, no matter what their age, because it's something that should be in the back of your mind. And when your lifestyle presents itself, where you can afford to pay for it, and you have those who are depending on your income, so you have a reason to be covered, that's a great time to get life insurance.
Naseema McElroy (06:50): Yes, the very thorough explanation.
Acquania Escarne (06:53): Thank you.
Naseema McElroy (06:56): So when it comes to life insurance, you know there are several different kinds of life insurance. Obviously it's going to depend on an individual level, what kind of life insurance you may need. But in general, what's the basic life insurance coverage? Most people out there need? So I'll go ahead and first explain what the two main types are. So just in case someone out there doesn't know, there is term life insurance and there's permanent life insurance, term life insurance. The greatest analogy is a lease or rent, your rinse thing for a term of time. A term policy can be one year, five years, 10 years, 15 years, 20 or 30 years. What that means is I want insurance for a certain amount of time. That's the term you choose and you will pay for that insurance for that duration of time. That's the length of your lease per se.
Acquania Escarne (07:50): However, when the time limit is up, so it was the insurance and unfortunately if you haven't passed away, your family does not receive a death benefit and you do not get a refund for all the premiums you paid through the duration of the time that you had the policy. So in some cases people will get life insurance in their thirties for example, they will go and get a 30 year term policy and then their sixties they're facing retirement and they can choose to get a new policy, keep the one they have, but pay a much higher price for it or decide they don't need life insurance anymore because they built enough personal assets and they're self-insured as we call it, and therefore they don't pursue life insurance and retirement. However, permanent life insurance on the other hand is more like buying a mortgage or buying a house.
Acquania Escarne (08:41): You pay for it for the rest of your life or the terms that you've agreed to, but you do pay for it. It's covers you until you die. And then once you die, your family is paid out. And that could be 20/30/40 years later, depending on the date in which you got the policy. Both of them normally involve a fixed premium amount, which means the price doesn't change. However term life insurance, because it's normally for a shorter amount of time, it's much cheaper. And then in comparison to the reward, so you may pay a couple of dollars a month and be qualified for half a million or a million or more versus whole life insurance. If you wanted that same amount of coverage, you would pay a significant higher amount of money to get that same type of insurance, but it would be guaranteed to your family as long as you pay the premium every month until the month you die.
Acquania Escarne (09:38): Right. So as far as what most people get, it really depends. I am a financial coach, a life insurance agent, and I also help with retirement planning. So we look at an individual situation and it's not always just about what you can afford, it's also about what your needs are. So as a mother of a special needs son, I'm going to feel necessary to always have life insurance even after retirement. So I have invested in whole life for my son's sake, but there are others who they have perfectly healthy children. Once they reach retirement age, the children are grown, they have their own jobs, their own life insurance and their own finances. They may decide I only need a term policy for 30 years and then I'm be self-insured and my kids really don't need this insurance money to bury me or to really facilitate me leaving them money.
Acquania Escarne (10:33): However, I work with clients to figure out what's best for them. A lot of times term is the more affordable solution and then if you are seeking to use insurance and more creative ways or you have a family situation where you need whole life insurance, then I work with you to find the whole life insurance that covers your needs, but it might cost more.
Naseema McElroy (10:54): Yeah. Can you explain self-insurance?
Acquania Escarne (10:59): So self-insured is just a term that basically means I am rich enough that I have money in the bank or have easily accessible income. Whether it be through assets that I can cash in or a bank accounts that are fairly liquid that I don't feel like I need a life insurance policy to cover my final burial expenses. Now some people will look at this differently. Some people will think they're self-insured with 25 times their income.
Acquania Escarne (11:30): They're financially free. So why do they need to continue to pay for life insurance? Others may use life insurance as that guaranteed income to leave their family and allow that their assets that they build to be theirs and to do what they want, whether it's to give it away to charity when they die or to give it to their family. So I've seen people who use life insurance as that. This is exactly what I'm going to leave family. So I know you have more than when I came here, but everything else is mine or mine to do with and not necessary for the planning of my final burial expenses or for your future education or other goals that I have for you.
Naseema McElroy (12:09): Awesome. Awesome. And a lot of times people use life insurance as a legacy building tool. So if they feel like they have enough to pass down and whatever accounts that they have, that's a form of self insurance too. It's sometimes it goes beyond, you know, end of life expenses. So thank you so much for sharing that. You want to talk about now like what the differences is in life insurance or the importance of life insurance right now?
Acquania Escarne (12:34): Yeah, absolutely. So everyone knows that your future is not guaranteed and you never know when you're going to die, but we all know we're going to die. So my advice is to get insured when you're young and healthy as soon as you can, when you can afford it, and when you have dependents or someone else who relies on you. And I also want you to kind of think about some other factors. So before I get into the other aspects of your question, I want to talk about the DIME method. DIME stands for Debt, Income, Mortgage and Education. This is a short and quick and easy way to determine how much life insurance you may need. Your debt refers to student loans, which a lot of us have. Car loan debt, credit card debt, any type of debt that you've accumulated that is not going to disappear when you die.
Acquania Escarne (13:23): Income is how much you're making, but when you are calculating your insurance need, you should take your income and multiply by by 10 you can do as little as five, but I choose 10 because I like my clients' families to have some time to grieve and not have to worry about going right back to work. So giving them 10 years of your income gives them 10 years or more to really figure out what am I going to do, how am I going to make it without this person that meant so much to me. Mortgage is well how much you have left on your home to pay. It doesn't necessarily mean when you get the insurance check, you're going to send a check to the mortgage company because some people would like to hold onto that cash and still pay the mortgage on a regular basis, but maybe not write a blank checks right away.
Acquania Escarne (14:09): But then I have other clients who are like, no, I don't want to pay a mortgage anymore. So if something happens, I want my family to be able to write off the mortgage. On the second day they get the check. So you always include the balance at the time of your application. That's your, your mortgage payment. And then E is education and it normally relates to education of your children or anyone else who you want to pay or their education. It does not have to be the full education. I have some parents who tell me, I went to school on scholarships, my parents helped. So I want to pay 50% of my kids' education. And then I have others who say, no, I want to pay a hundred percent I want them to be able to go to Harvard. I don't want money to be an issue. Right? So you have parents who have opinions. So what I normally do is I calculate about $50,000 a year for education if they want to pay the full amount. So you need about $200K for four year institution. But if someone says, Oh, I only want to pay 50% and they need to get scholarships, then maybe you only calculate a hundred thousand for your child's education, you add the dime figures up, and that's normally your minimum amount of insurance that you should apply for.
Naseema McElroy (15:18): Oh, that's great. That's actually the first time that I heard that. But that's super practical and I think anybody can understand that. And it customized does it specifically to what their needs and wants are. And it gives them kind of like a plant. So it incorporates all these planning things that they need to do in formulating their estate plan. So it makes that that much easier as well. So I really liked that methodology. Yeah, that's so cool.
Acquania Escarne (15:44): So what's going on right now? Why it matters? Covid19 is a pandemic nobody was prepared for. Let's be real and people are dying. Now I will say more people are recovering and getting over the virus than are dying. But the reality is some people have health complications and the worst happens and they're just not prepared. So everyone should take advantage of this opportunity to think about your estate planning, to get your affairs in order and to get people covered. I have to be honest, I've been doing a lot of life insurance applications lately because my clients are thinking this through and they're like, look, I don't have enough and I appreciate insurance policies that come with your employer. But I will say I'm a huge advocate of you getting insurance outside of your employer for several reasons. One being you may want to switch jobs and it's very expensive to take a life insurance policy with you.
Acquania Escarne (16:40): It's also not the best policies, the ones that your job gets their group term insurance policies, which means they get a cheaper rate because they have a large number of people they're insuring, but they renew every year and they get more expensive the older you get. So rather than having to pay more and more each year, why not just invest in an affordable policy? When you're young and healthy, you get to pay the same price the whole time and you know that you can change your jobs for whatever reason. And it doesn't impact your life insurance. So think about all of those things and then think about what's going on now where insurance companies are actually having to reevaluate how they process applications. Because Colby 19 is impacting people in so many different ways and it is resulting in the death of individuals. So in some cases it's taking longer to get insurance policies approved
Acquania Escarne (17:38): or if you've been diagnosed with Covid 19 they want to see how you respond and improve health wise afterwards because they're taking on a risk of insuring you for a certain of money. And their goal is not to pay. Let's be honest, they don't want to have to pay a huge lump sum of money because you've passed away. And most good companies insure you the day after you're covered, give or take some have a two year contestability period, which means the first two years if you were to pass away, they may still pay, but they'll want to do an investigation to make sure you didn't miss, guide them on your health or any other issues. Right. So with Covid 19nand not knowing the longterm effects, you have a lot of insurance companies reevaluating how should they assess this and its impact to individual's health.
Acquania Escarne (18:29): I've been pretty lucky in that my insurance companies that I work with because I work with several are processing claims the same way they were in the past about two to three weeks to get covered once they look into your medical history. But there are still this factor of what are the long-term impacts, you know, how do we evaluate someone who may have taken much longer to recover from Covid 19 or maybe had a more severe impact from it hospitalization, longterm respiratory or ventilator usage. You know, how does that play into their lifespan? And there's a lot of mathematicians doing the math behind the scenes to figure that out too.
Naseema McElroy (19:09): So yes, there is a health exam typically that you have when you apply for whole or permanent or term life insurance. Have you seen the way that they actually conduct those health exams change over the last month or so?
Acquania Escarne (19:25): No changes yet. But they do have an individual who comes to your home typically and does blood sample urine sample and ask you a couple of medical questions and because of the scare around Covid 19 I've had some clients not wanting to take those exams which delays your insurance coverage. Right. If they can't determine you're healthy, they're not going to insure you site on scene so you have a delay in the processing. It is your choice to delay the exam. You don't have to invite this medical professional into your home to conduct it, but you have to be able to live with the consequences that the longer you take to get insured, the longer it will be before you have insurance.
Naseema McElroy (20:05): I was thinking about like for the examiners, I'm wondering if they are doing more televisits and then having the person just in labs like through the mail, through like a quest delivery system.
Acquania Escarne (20:15): I haven't seen that yet.
Naseema McElroy (20:17): Okay. I was just wondering.
Acquania Escarne (20:19): Well, I do have some companies who will call you and they'll do the medical questions over the phone before they send a person, but they're still doing blood and urine for those that require those exams.
Naseema McElroy (20:31): Got you. Okay. Yeah, like it is. All of this is scary and all this is scary, but it's even more relevant right now because I know that each and every one of us has seen someone gets sick or even pass away who we would never have expected. And what would that do to your family if that was you? You have to think about that. So this is a time of real reflection on a lot of things, but really the protection of your family should be paramount right now. And so I really feel like this conversation is super timely because I can talk about life insurance all the time, like seriously, because I really feel like it's that everybody knows that they need, but always, always put it off. Just like put in their legacy plan and doing their estate planning. You know? Like they always put it off like people don't know you're going to die. Yeah. You're going to die. Let's just have the conversation. Okay. Like you're going to die. Like why are you so scared to talk about it? Why are you so scared to think about it? I mean that avoidance could really make the hugest difference in your family's life. It affects your legacy. It's the reason why a lot of times, especially in the black community, we have to start over again. It's not that we didn't have the capacity or resources to get these things in place, we just didn't do it and so let's not do that.
Acquania Escarne (22:02): The sad part is that sometimes they don't get to that level of self-insurance. People always think, Oh, when I make more money I'll be able to put more money aside and I'll do an investing and then I'll have this money for my burial, but Go Fund Me account Funerals is real and that was actually one of the things that motivated me to get qualified to sell life insurance is because I saw what I want it to be. My last go fund me request for someone to pay for a funeral. And it happened to me for a family who was black, but then someone at my job passed away. Um, now granted it was a really, really tragic family accident where two of the adults in the family passed away at the same time and one of the children. So it wasn't expected to have that many people pass at the same time in a car accident.
Acquania Escarne (22:55): But the fact that they needed GoFund me because the family didn't have insurance. That's when I was like, okay, this is crazy. Like these were middle income white American people who also had not thought of life insurance and now need the help of strangers to facilitate burial of their family members. And that's when I really had to sit back and say, okay, I need to do all that I can to educate people about today's life insurance, how affordable it can really be and what you're getting. I mean, it's the best deal in town for some people. If you're paying 20 or $30 a month for two three $400,000 in coverage, you're never going to pay the insurance company the amount of money they're going to pay you never. Okay, so go for the investment that's small on a monthly basis, but can be such a huge reward for your family because like I said, it's more than just a burial if you planned it right, if you follow the DIME method, you're going to spend maybe 20,000 on a funeral, but then you have the rest to help your family live their lives after you and who wants to be like tormented with worry of how am I going to make this bill?
Acquania Escarne (24:10): How am I going to cover your medical expenses that those doctors, they don't say, Oh, they died. We're not going to ask them to pay these bills. No, they come after you. Yes. You know taxes. People don't realize. Just because you pass away doesn't mean you don't have to file taxes. Your estate still have to file taxes. The final year you were alive. If there were any debt or loans forgiven, you may have to pay taxes on the forgiven debt. Where's this money going to come from?
Naseema McElroy (24:42): And not only that, but now not only are you more than the person that you lost, you trying to figure out where to come up with money. So that's just unnecessary stress and unnecessary burden on your family and loved ones when they could be supported during this time of need.
Acquania Escarne (24:59): And the most important factor is likely the insurance benefits are not taxable. So you're leaving your family a tax free gift that once they inherited, they can take care of the experimental expenses, they can take care of your dad and bills and they can have money left over to continue to live their life, sustain the lifestyle they had. So that's one less change they have to make. An uncle Sam is not going to touch it. And in most cases it's also not money that can be sued for or involved in any type of legal court cases. So if you happen to owe money for some reason to someone else, this is still protected income. So I can't emphasize that enough. People don't understand the value of tax free income, but that's huge. Okay. Especially in a situation where you go from a two income household to a one or none. This is, this is big.
Naseema McElroy (25:54): Yes. And this is just been such a timely, thorough and just on point conversation, you know like I'm so glad that I brought you on to talk about this because like I said, I talk about life insurance pretty often, but you know, I think that you bring such a fresh perspective and just all the good benefits that you're able to present in the case around life insurance. It's like everybody who's listening to this, if you don't already have life insurance in place, you should have it in place. And, and if you do have life insurance in place, you should always be checking and making sure that you're paying the best price for your life insurance. So a Kwania if somebody wanted to work with you to get their life insurance in order, how do they reach out to you?
Acquania Escarne (26:43): Absolutely. Contact me via my website, the purpose of money.com I have a contact page. You can also reach me through Instagram at the purpose of money, have the ability to contact me via email, through my Instagram page. I'm constantly here to help and support you with your financial plans, which will include life insurance if I have anything to do with it and I'm here to answer questions since as well. So feel free to reach out to me at thepurposeofmoney.com and I look forward to hearing from you.
Naseema McElroy (27:13): Acquania is just a wealth of knowledge, all things financial from so many different levels. She has her own real estate investing business, the insurance, the total whole personal finance picture. So she's just someone that you want to be in contact with in general. And again, if you want to learn a little bit deeper about her background story, how she became a U S diplomat and how you can too listen to episode 20 of the podcast. Thanks again Acquania. This has been such a timely and just awesome conversation. I really appreciate you being on.
Acquania Escarne (27:47): Thank you so much for having me take care.
Hey there I’m Naseema
My dream is for everyone to know that financial independence is attainable with a little intentionality. Learn how I can help you finally break the cycle of living paycheck to paycheck.
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