Insurance is one of those parts of financial planning that most people would rather not think about, but getting it wrong can have a much bigger impact than choosing the wrong investment. It’s not particularly exciting, and ideally you’ll never need to use it, but the right coverage can provide the foundation that allows the rest of a financial plan to work as intended. In today’s episode, we’re dissecting the role insurance plays in financial planning with Broc Buckles, co-founder of BC Brokerage.
Listen in as Broc explains how to think about term life insurance as a way to protect income and human capital, why it can make sense to build some flexibility into your coverage, and what to watch for when permanent insurance is presented as an all-in-one financial solution. You’ll learn how umbrella liability coverage works, why disability insurance costs vary based on occupation and risk, how underwriting can differ for military and other higher-risk professions, and how the long-term care insurance market has changed. Broc also discusses hybrid long-term care policies, what to consider before cancelling an older policy after a premium increase, and why having a dedicated plan for potential long-term care costs matters.
Listen to the full episode here:
What you will learn:
- Why insurance should be viewed as a foundation of a financial plan. (5:30)
- What to watch out for when finding life insurance. (12:00)
- How umbrella liability coverage protects against major liability claims. (21:00)
- How insurance needs can change as you build assets. (26:00)
- How term life insurance helps protect income and human capital. (34:00)
- Why disability insurance costs vary based on occupation and risk. (40:00)
- How underwriting can differ for military and other higher-risk professions. (43:00)
- How the long-term care insurance market has changed and why hybrid policies are becoming more common. (47:00)
- Why long-term care planning doesn’t have to be all or nothing (and why existing policies should be evaluated before being cancelled). (51:00)
- Why having a plan is the most important thing of all. (56:30)
Ideas Worth Sharing:
- “If you can set it and forget it and just be glad that you have it and know that it’s running there in the background, that’s best case scenario.” – Broc Buckles
- “I always say, ‘Get what you need, but put a little bit of buffer in there for down the road.’” – Broc Buckles
- “Having a plan is the most important thing.” – Broc Buckles
Resources from this episode:
- Broc Buckles: LinkedIn
- BC Brokerage
- FEFP: Why Federal Employees Can’t Afford to Ignore Insurance with Broc Buckles (EP98)
- Mason & Associates: LinkedIn
- John Mason: LinkedIn
- Tommy Blackburn: LinkedIn
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Read the Transcript Below:
John Mason: Welcome to the Federal Employee Financial Planning Podcast. Tommy and I are honored to have Broc Buckles as a returning guest from BC Brokerage. The last episode with Broc was released in August of 2025, which was episode 98. We’ll include a link to that episode in the description and show notes.
Broc is a co-founder of BC Brokerage, which is an insurance agency that partners with fee-only financial planners, business owners, and families to deliver tailored insurance solutions in all 50 states. Broc and team can help with life, disability, umbrella, property and casualty, and long-term care. Broc, welcome to the Federal Employee Financial Planning Podcast.
Broc Buckles: Thanks, John and Tommy. It’s always great to be here with you guys. I al- It’s always a good day when I get to hang out with you two, so thanks for having me.
Tommy Blackburn: Back at you.
John Mason: Yeah, it’s our pleasure, man. I mean, you’re, you make insurance exciting.
Broc Buckles: I appreciate it, man. It’s not easy to do, I can tell you that. I, Sometimes when I see people and I tell them what I do, I think their face just kind of glosses over. They’re like, as soon as they hear insurance, they’re like, “Oh, no.” I think their first thought is, “Is he gonna try to sell me something?” Which the answer is no. That’s what I was- but yeah, no, it’s … I appreciate that.
Tommy Blackburn: Yeah, I would- I agree. I would think it’s, he’s like fear, here he comes, the sales pitch, and then once it’s not a sales pitch, probably gloss over. Yeah. But then they get to talking to you, and it probably gets entertaining from there.
Broc Buckles: Yeah. Th- then from there, if we’re at some, like, casual gathering, I’m like, “Why don’t we not talk about work? Let’s talk about something that we both like, like, golf or something like that.” So- Yeah, it’s fun. It’s
John Mason: a much better conversation. And I mean, it’s fascinating how the three of us and both of our firms, all we wanna do is help people, but I know that sometimes when people ask me what I do, it’s like, man, I just, I don’t wanna talk about work. I don’t want you to think that I’m trying to sell you something, and so much in this industry is like, practice your elevator pitch. Practice this. And it’s like, I don’t wanna do any of that. Yeah. Like, if you wanna work with us, great. Yeah. Otherwise, like, let’s have a beer. Let’s go play some golf. Like, I just wanna be your friend, and- Yeah … and I w- it’s silly that, like, we feel almost guilty, I do sometimes, or, like, embarrassed about what I do, and it’s like, I’m not embarrassed. I just don’t wanna come across salesy. I don’t wanna be Ned Ryerson from- Yeah. … Groundhog Day.
Broc Buckles: Yep, for sure. Yeah, like, “What do you do?” “Oh, I own an insurance brokerage,” and they’re like, oh,” and I’m like, no. Don’t. We’re not doing that, I promise. So let’s move on. What’d you do today, right?”
John Mason: Exactly. Exactly. Well, audience, thanks for tuning in to another episode of the Federal Employee Financial Planning podcast. Insurance, we know, is not, like, your number one ticket item that you wanna hear, but we promise this is gonna be an educational episode. Regardless of whether you’re early in your career, mid-career, or already retired, there’s gonna be nuggets of information here for everybody. And remember, you can be somebody’s hero. When you learn something today, share this episode with friends, family, and coworkers across the country. It can make a huge difference.
With what we do, guys, in financial planning, we love optimizing Social Security, tax planning, retirement planning, federal benefits, but I think it’s good for us to reflect that the thing we do that really changes lives or has the ability to really change a life is probably not what ETF somebody’s invested in. It’s making sure that they have the right insurance when life happens.
Broc Buckles: Yep. Yep. No, I completely agree, man. I mean, that, that’s the thing is, like, no one wants to think about it until it’s them, right? But everybody knows who’s… E- everybody knows someone who’s gone through a situation that they would definitely have preferred not to be in, but because they had the right insurance coverage, like, it, it made all the difference in the world. And I mean, that’s whether you’re talking about life insurance or disability income insurance or, home auto. Like, if you have to file a claim, you want that to pay out. So is it fun? No. Are you gonna be super excited to see those premium payments coming out of your bank account every month? Definitely not, right? There’s a lot more fun things that you could do with them. Is it super impactful, though? Absolutely.
Tommy Blackburn: It’s kind of the- It- … the foundation, right? If you come back to thinking about the order of operations, like you have to have that foundation covered. It’s not fun, but that’s… It’s a peace of mind to allow you to address everything else. If you skip that, that’s what’s catastrophic and can blow your plan up, I think, is where we’re all going with it. And we talked to, you joking about like the insurance sales. I’ll never forget. So on the one hand, completely agree and foundational, very important, gotta have it, can’t skip over it, powers everything else. One insurance agent years ago, I remember saying, “Well, your insurance would be like your most ex- the most expensive part of your budget.” And I was like, “Really? This is an interesting, interesting take on it. Don’t know that I agree with that. I think it’s important. I don’t know that it should soak up our entire budget, though.”
Broc Buckles: Yeah, for sure. And the not so fun parts, I remember I listened to, one of the episodes that you guys did where you were talking about getting your own life insurance. Like the, the part of it is getting it is not fun too, right? Like the medical exams, the medical questions, the application process, the like how many emails am I gonna get about this one particular thing? Like, it, you’re… It’s definitely one of those things where I always tell people, “If you can set it and forget it and just be glad that you have it and know that it’s running there in the background, that, that’s best case scenario.”
John Mason: A little bit of pain for long-term gain Yes Right? and that’s why, Tommy and I don’t overanalyze life insurance, and that’s not because we’re lazy. But, like, if we met with a younger person, it’s like, yeah, probably 1.5 or 2 million would do you really solid. Yeah. And we could really break it down to whether or not they need 1.6 or 1.8 or laddered term, but at the end of the day, it’s like get as much as you can that’s reasonable, that fits in your budget so you never have to do this again. Yep. Totally. It’s not fun, so just go get a bunch.
Broc Buckles: Yeah, and build it in. Like I always tell people, this is a thing that you’re thinking about, especially when it comes to life insurance, for the next 20 or 30 years, right? So, like, obviously your life is subject to change. You’re probably gonna do better down the road. Inflation definitely has kind of a, a thing, is something to think about when you’re thinking about how much life insurance you should get. So I always say, get what you need, but put a little bit of buffer in there for down the road. And also, if anything happens with your health and you’re not able to buy more down the road, I always like to kind of plan for the future in mind, for sure.
John Mason: There’s a common misconception with Social Security where people are like, “I have to claim at 62 because I wanna have fun now. I don’t wanna wait until 70 to have fun.” And we always say, “Just because you’re delaying Social Security doesn’t mean you have to live on less.” Well, there’s a common misconception inside of life insurance or long-term care or P&C or what have you. People are, like, really against insurance companies, and they don’t… They’re like, “Well, if I pay for that and I don’t die, the insurance company’s gonna win.” And it’s like, that’s good. Yeah. Like, we want the insurance company to win all day long. Like, we want you to pay and pay, and never, ever under any circumstance use any of the insurance policies. That’s best case. Yeah. But people make these, like, decisions, like, “I don’t wanna protect my life because I don’t want the insurance company to win.” And it’s like, no, protect it and be happy that the insurance company won.
Broc Buckles: For sure. I think- and what I always tell people when they say that, they’re like, “Wait, so the insurance company wins? Like, what did I get out of this?” And I’m like, “Well, think about it. You paid for this policy. The policy expired. It never paid out. So in turn, what does that mean?” They’re like, “I’m still alive?” And I’m like, “Yes.” “That’s a good thing. You won. You actually won.” But it… I always tell people, like, it’s a really good thing to have, especially term insurance. It’s like a way to fill in that gap, right? So I always say when you have more human capital in your younger and your working years, as you slowly make it to retirement, right, you’re gonna have more of those assets, more of those investments, more of those actual things that you’re gonna be able to rely on in retirement. But you’re gonna have less work horizon, less of a time horizon to work. So it’s great to kind of slowly make that transition, and, you should slowly need less insurance as time goes on if you’re doing it right, I think.
Tommy Blackburn: I think what we’re all talking about too is we keep saying insurance, and where insurance gets crazy, in my opinion, is when we start bolting on all these other things and trying to have it be the Swiss Army knife versus just the insurance. So going back to, hey, the, the human capital over your life, like you said, I think we shared this last time, a saying we have is, “You can afford to retire. You can afford to die.” You’ve built those assets up at that point, so the life insurance need has probably diminished, quite a bit there. And to another good insurance case is, I don’t know why we’re okay with us dying in these life insurance examples, but it’s like You insure your house, right? In case it catches on fire. You hope, you never go around thinking like, “Man, I hope it catches on fire so I can get that insurance payout.” Right. I don’t know why we feel differently about these things, but it’s a similar concept, right? We’re just, it’s risk mitigation. Yeah.
Broc Buckles: Yeah, nobody ever says like, “Oh man, I wish I would’ve gotten in a car accident this year so that I could make a claim.” Like, that’s not a conversation people have. So yeah, it is interesting, and I think it’s weird too, because a lot of times it can actually be cheaper if you’re young and healthy than what other types of insurance will. But I think because people see, like, a million dollars or a million five on the other end of the life insurance, it’s just kind of hard for them to justify a lot of times in their mind as to like, “Wait, I had this money on the hook the entire time?” And it’s like, by the way, you were never gonna see that money if it’s your life insurance policy. So, like, let’s be clear about that, too.
John Mason: For the audience’s benefit, you can run term quotes or ask for term quotes at the BC Brokerage website, which we’ll link in the description below. If you don’t wanna go through that process, you can go to termforsale.com and run some free quotes there too. But I know I bought a 1.5 million term, 30-year term probably in the last five to seven years, and it’s $87 a month for- Yep … 1.5 million, and that’s their preferred best. Yeah. I feel really good about that. I know I bought an insurance policy at, like, 25 or 26. It was a 30-year term, $500,000, $33 a month. Yep. So that two hu- that 2 million of 30-year term is, like, less than 120 bucks a month, which is not zero, but it’s still a really good value.
So Tommy, I wanna come back to, you mentioned the bolt-ons or the add-ons. Well, let me just acknowledge something about YouTube and podcast. Riverside microphones, all these things are relatively inexpensive, and it’s really easy to set up a YouTube channel. It’s free. So there’s a lot of people out there that just spew information about indexed universal life, infinite banking, the Swiss Army le- Knife, why you don’t need a TSP or Roth IRA, and all you need- Yeah … is an insurance policy. So we’ve kinda danced around the topic a little bit, Broc, but when you see those, and I’m just gonna say this out loud, I think you s- like, half of your social media is basically bashing- … that type of content- Yeah … respectfully.
Broc Buckles: Yeah. Well, my, my thing is, man, is, like, I started my career in an insurance culture that was very, like, predatory. Everybody needs this type of insurance, and, like, I just got a very bad taste in my mouth. So I promised myself when I left that company, I was going to be, like, try to be the light in the insurance industry and just call out bad practices, right? And, like, when I see something that I don’t think is honest, I like to call it out. Because the bottom line is there are people out there that sell these contracts as a Swiss Army knife, as an end-all be-all, as the right solution for every single problem that’s ever existed. Like, you have a flat tire, buy an IUL. If you’re, if you run out of gas, throw some IUL in the tank, right? Like, it, it’s a horrible thing.
And, the things to watch out for, i- ’cause if you’re thinking, like, I’m seeing these life insurance things online, it’s pretty easy to spot because the language around the product will just be full of hyperbolic statements, right? Like, “This is the best thing that’s ever happened. Nobody’s ever seen policies that are better than this.” “This does everything that you want it to do. It’s gonna pay for your life. You’re gonna save as a bank account. It’s gonna be like an investment account inside of it. And by the way, no taxes, too.” A- and so, like, that just drives me nuts because nobody talks about the fact that when you’re contributing to these, even if there is a cash value, the flipping point of when you’re actually gonna have some money in the policy versus what you put in is years down the road most of the time. No one tells you that there’s, like, an increasing term or increasing cost of insurance inside the policy. No one tells you if you take loans out of it and then you let the policy lapse, anything beyond the basis is taxable. A- and so, like, ev- they all wanna make this sound like it’s the greatest thing that’s ever happened.
So yeah, John, to be honest with you, I spend a lot of time bashing it, and I love to bash it because, although there are definitely uses for permanent insurance or whole life or, guaranteed universal life for permanent insurance needs when people need the policies, it’s definitely not, like, an end-all be-all or something that everybody should have or ditch their TSP or 401(k)s for.
John Mason: There are a few things there that I just wanna kind of add on to what you were saying is these aren’t easy. I think that’s the other thing is they’re marketed that they do all of these things, and that it couldn’t be easier, that anybody who’s anybody could understand a 1,000 page contract with all of these rules and all of the tax ramifications and the surrender charges and the premium loads and all of the internal costs. Like, they’re not simple. And just, like, taking a loan is not this simple thing. So I think that’s good for our audience to know.
Number two is that you could get out of college on June 1st. Thank you. And by July 1st, you could have a life insurance designation ready to sell a policy. Yeah. And you may not have even studied financial planning, taxes, or insurance in college, but within 30 days you could have passed a life and health exam, you could have acquired a designation, been appointed with an insurance company. Maybe I’m, like, exaggerating a little bit.
Broc Buckles: No, I don’t think you’re exaggerating at all. From the time that you get hired, I’ll just be honest, I took my life and health with a guy named Randy. He had this ponytail. You show up, he’s like, “All we’re gonna talk about is what you need to pass the test,” right? Like, we’re g- all the other stuff is not important. And literally, like, I think the following Friday I was licensed, right? And so, a lot of it comes from experience in the industry, actually working with people, understanding how underwriting works and how you can work with people and what the needs actually look like. But for all intents and purposes, you do not need to be a rocket scientist to go get your life and health insurance license. Yeah.
Tommy Blackburn: I’m
John Mason: glad you guys came. And you can ask people to commit hundreds of thousands of dollars to a policy that pays a 7 or 10% commission up front and locks your money up for 10 years- Yeah … with somebody that’s been in the industry for 30 days, that, that has no credentials or experience at all. So we’re not saying that, like, CFP-
Tommy Blackburn: By the way, this person who’s fresh out of college and gets these sales in the beginning, what is the turnover rate on them? Oh- And my point is, like, they’re probably gonna make these commissions and do some entirely other career in a year. I mean-
Broc Buckles: I can actually tell you … over the course of five years, there’s a 95% attrition rate.
Tommy Blackburn: Right. So it’s like this, you’re so passionate with this Kool-Aid you’ve drank, and you, and convince these people to do these things, and then you’re, but you’re not here to pick up the pieces on the back end. Yeah. Not that you, that was ever the intention. It’s just that’s how it, that’s how it turns out.
Broc Buckles: Well, and, for anybody who’s listening or that has, like, done one of these internships or that was in this position, like, you don’t know, right? You come in- It’s innocent … it’s this nice shiny office. They’re promising you the world, and they’re telling you, “You’re gonna go out and sell insurance, and you’re a financial planner now.” No, you’re selling life insurance, but, like, they’re trying to get you to kind of believe that this is what you are. And then yeah, ultimately people leave.
There was a saying at the first company I was ever at where it’s like, “If you’re here for five years, there’s a 95% chance that you retire here.” It’s like, yeah, that’s because you’re, like, getting locked in by all the pension and all this stuff, and now you’ve been here and you’ve been here long enough to kind of fall into that trap, and 95% of the people that you’ve ever known that have walked through the door have left. So it’s interesting. There’s a lot of turnover for sure. Yeah.
Tommy Blackburn: John, you
John Mason: mentioned- Well, we need to move on to the next topic, but one, one thing that came to mind during the, this whole Swiss Army knife, this- Yeah … idea that you can buy one product that solves all is to me it sounds like a phishing email almost. Yep. Yep. We get spam emails all the time at our company, people trying to hack our systems and things like that. We all get those, and what do they do? They say, “There’s this great promotional rate. Click here. Do this now. If you don’t do this now, you’re gonna miss out. This is the greatest thing since sliced bread.” And we’re all taught to keep our eyes out for those kind of phishing emails. Well, these over-promising, under-delivering indexed universal life or what have you to me just sounds like a phishing email. So it’s kind of like- Totally … a cybersecurity awareness as well as, like, just be aware that this doesn’t… If it sounds too good to be true, it probably is too good to be true.
Broc Buckles: Absolutely. John- Yeah, you guys, you got me on my soapbox, John.
Tommy Blackburn: Yeah, you gotta let me go on a soapbox for a second. I know you wanna move on to the next one, but you talked about how complicated they were, which I agree, because you’re intersecting contract law, you’re intersecting how, like, the taxation of a product works, insurance, and investments. You bundle, it’s not simple at all. It’s ironic to me as I think about that, that I’m pretty sure probably a blanket insurance agent statement or disclaimers are just like, “I can’t give tax advice,” but here we are talking about- Yeah … you’ll get all these tax benefits on it, which is kind of ironic.
And the other part is—and this isn’t always true, but many times I think these products are marketed to people who are probably not in the highest tax situation. Yep. And so we tout the tax benefits, and it’s like this just doesn’t even line up to probably … They probably were gonna be in a low tax situation anyway. Right. So this just,
Broc Buckles: Could not agree more on that one.
John Mason: Maybe just a strong statement wrapping that up is sometimes it’s almost predatory towards maybe folks who are a little bit less educated or less financially savvy or didn’t grow up in a background where their parents were financial planners or bankers or what have you. And this community of people around you is all buying whole life policies, and then people are selling it to you and promising you the world, and sounds a lot like winning the Mega Millions or the Powerball, and it just, it’s a little bit, can be a little bit predatory.
Caveat, insurance agents who are out there, BC Brokerage, LLIS, there are companies that do a really good job, and that’s what we’re just trying to say is let me separate the folks who are doing really great things from the ones who may be, are incentivized or need to make a sale so they can pay their mortgage payment. And we just have to understand that conflicts of interest are present regardless of where you are in this industry. They’re there, and we just have to educate ourselves to make sure we’re finding the right ones. So insurance is necessary. We need good people to help us get it. We need good advice on it. So takeaway, audience, is don’t run and hide from your insurance problems because we just scared the daylights out of you. Just go find somebody that’s gonna take good care of you.
Broc Buckles: Yeah.
John Mason: Let’s transition to umbrella liability, which there’s not a lot in our financial plan that is just blanket advice. But going out on a limb here, Tommy, it seems like you should have a $1 million umbrella liability as a minimum is kind of blanket advice that applies across our client base. So what is umbrella? Well- Whoever wants to answer it. How much do they cost? And is that a good statement that it just seems like it’s applicable to everyone?
Tommy Blackburn: I wanna let Broc be the insurance expert here. I want him to run with it other than, just to elaborate on why a million is the number, because that’s the lowest amount I’ve ever seen that you can get it in. Yeah. So it starts at a million, so that’s why that number is there, and it typically moves in million-dollar increments.
Broc Buckles: Yeah, definitely. I mean, to keep it simple for the audience, it’s essentially like an extra liability coverage above home and auto, right? You’re kind of, for on the personal level. It is not for you, so it’s not like, if I go past my home limits or something happens, I’m gonna get this money. It is for liability exclusively, right? So, like, a good example would be, if you happen to rear-end somebody, right? And y- you hit their car. It’s a Rolls-Royce. Maybe you have 250, $500,000 limits. They have a really expensive car. We’re already pretty close to what the limits can handle inside of our policy, but oh, by the way, they also have a problem with their neck now, so they’re going to the hospital. And so now you’ve exhausted the limits. This is like an extra coverage that covers everything that you can tap into once other limits are exhausted, hence the umbrella policy. So I kind of think about it, if you can think of all your policies kind of under one big umbrella, whenever those policies under the umbrella are exhausted, you can tap into that umbrella piece. And so it’s a really good way to mitigate catastrophic type events, I think is the best way to say it.
John Mason: And these policies are very expensive, right?
Broc Buckles: Yeah, no. Yeah, that’s one of my favorite things is, a financial planner asked me recently, he’s like, “Yeah, but like, is the juice worth the squeeze on it?” I’m like, “I don’t know. You tell me. Would you like to have an extra $1 million for like 300 bucks a year?” ‘Cause like, I think it’s one of the easiest ways to insulate yourself and make your financial plan more solid. And, it just makes total sense. It doesn’t even have to be with your existing carrier a lot of times, right? You can have one with them, but there’s also monoline umbrella policies that you can purchase separately. If you’re high net worth, there’s ways to where you can stack them on top of each other, and it’s just a, for most people, I would say it’s a no-brainer. It’s just a part of good financial planning to have an umbrella policy.
Tommy Blackburn: I gotta pick on financial planners for a second since we did it with insurance. You just teed it up there with like, “Is the juice worth the squeeze?” And so that’s where it’s like, okay, financial planner, are we thinking maybe you just didn’t know the cost, or are we thinking- Yeah … about this? I can only imagine you had to pause for a second and just look at him like-
Broc Buckles: Gather myself, all right. Yeah. Yeah. Yeah. For sure, because it was just like one of those things like you’re contributing this much to investments, you’re contributing this much to your life insurance, you’ve got all these things going on. Make sure that the limits on their umbrella policy look good. And again, you do have to typically have like a minimum underlying liability requirements. You’re not gonna be able to have state minimum insurance, whether that’s 15,000 and 30,000 per person, per incident. You’re gonna have to have underlying limits before most companies will issue an umbrella policy. A lot of times that looks like 250,000, 500,000, but it’s a no-brainer I think.
John Mason: So a couple things here. The more risky you are, the more costly your umbrella liability policy is. So if you have a pit bull and a pool and multiple vehicles- Trampolines. Yep … trampolines, all of these things- Teenagers, maybe … rental properties. As you add on additional risk items, what happens is your premium goes up. So- Yep … I think I have a $2 million policy, and I’m pretty confident it’s less than $800 a year-
Broc Buckles: Yep …
John Mason: with three vehicles, an RV, and relatively new vehicles. So it’s not crazy expensive, so I think that’s good for the audience to know. Also, it’s not necessarily, like, if somebody quotes you, Broc, $500 for an umbrella, it may not actually be $500 because what could happen is maybe you were at 500,000 liability on your auto. You tack on the umbrella, and you could actually reduce your auto limit some, right? Yep. So there’s ways that we can kind of massage these policies where you can add additional coverage, and maybe you’re not stacking 100% of the premium on top.
Broc Buckles: Yeah, absolutely. As long as it’s the minimum of what they require to be able to qualify for an umbrella, you’re exactly right there. And yeah, to your point, Tommy, a big one is definitely teenage drivers, which everybody knows is kinda scary, honestly. If you think about it- Oh, yeah. For sure … teens in a car for the first time, definitely makes sense, but yeah, great points there and additions, John.
Tommy Blackburn: I think, I don’t know if we hit it on the umbrella, but I know I, I joked about the reason we say a million is because that tends to be just, like, that’s the starting place. But is there… Like, what’s BC Brokerage’s thoughts on the appropriate amount of umbrella and probably without… Again, like, we don’t let perfect get in the way of good enough. I think we all agree, but what’s your thought there?
Broc Buckles: Yeah, I think a couple things to consider, like, where your assets are at as well, so being able to kind of cover your assets, and also kind of look at, like, what future income and exposure is going to look like, right? So, like, to your point, if you kind of know these things ahead of time, y- obviously you know what your assets are gonna be, but if you know what you’re planning on doing ahead of time, you’re like, “Next, next month we’re buying a house that has a pool, and our 12-year-old or our 13-year-olds are gonna be 16 in a few years,” it’s like k- you can be proactive in that conversation and kinda understand the direction that you’re trending. So although it’s not an exact science, I think kinda being proactive and getting the bang for your buck and setting yourself up for success, I don’t think anybody’s ever been mad about having a little bit more umbrella coverage if they needed to file a claim.
John Mason: I think I’m a little bit maybe uneducated or under-informed on when I buy an umbrella policy, what am I actually protecting? So for instance, let’s say we have 3 or $400,000 equity in our house, and then let’s say that the client has a million dollars in IRAs, TSPs, et cetera. So we have a net worth that exceeds 1.5 million, hypothetically. Some’s in qualified accounts, some’s in your house. You have some bank accounts. When I buy an umbrella liability policy, what am I actually protecting?
Broc Buckles: Yeah, that’s a good question. I would say you’re protecting the accounts that aren’t already protected by some sort of law, right? So, like, the, the a- the money that people can actually get access to in the event that you’re sued or the money that they can touch, that- that’s not gonna be protected is- is really what you’re going for there.
Tommy Blackburn: I have a question, though, on that, and I’m no expert in how this would work legally, but so let’s say, you caused all this damage. You get sued for the liability of… And your policy’s exhausted, and you say, “Ha, I’ve got all my assets in these qualified accounts. You can’t get them.” My suspicion, and maybe y’all know, is that there’s still gonna be a judgment attached to you which says, “That’s cool. We’re not gonna go after it, but anytime money comes out of those, it’s somebody’s in line waiting.”
Broc Buckles: Yeah. Yeah, well, that, and then also, another big thing is garnishing future wages, too.
Tommy Blackburn: That- that’s exactly what I’m thinking, where it’s like- Yeah … maybe I can’t take it all now. I’ll just get it-
Broc Buckles: They might, yeah … in dribs and drabs. We can’t get, we can’t get to it while that’s in those accounts, but the money that you have in the future or the ability to garnish wages is definitely something to take into consideration there.
John Mason: What a great point. That’s a great point because it is, you read 401(k)s, TSPs, they have all these legal protections. Some states have different rules, like Virginia versus North Carolina versus California may have different rules, and rollover IRAs versus contributory IRAs, et cetera. Yeah. But I never really thought about the garnishing of the future wages or the garnishing of future distributions, so you feel all like a badass because all your money’s in qualified. And you guys just dispelled the myth here that’s like, yeah, we should probably have $1 or $2 million of liability protection if you’re in that 1 to 2 million net worth- Right … even if it’s all qualified money.
Broc Buckles: Well, right, because, like, it, it’s like, yeah, look at all this stuff I have protected behind my gates. It’s like, yeah, but what about the thing that funds all of that, which is your income- Right … and the way that you’re continuing to be able to save into those accounts. A- and guess what? They can come after that for sure, and you can definitely have a judgment ruled against that, so…
Tommy Blackburn: And, yeah, just putting a bow on it, we just talked about, I’m sure there’s a way where, yeah, it’s like, well, don’t let it out the gate, or you can’t put more past the gate. But $800, John, you said, that sounds very typical for that size of policy. In my experience, Broc has a lot more- Yep … but $800 peace of mind. Yep. It’s almost like the term life insurance, right? It’s like, just do it and move on.
Broc Buckles: Yeah, and for most people, if you’re, like, relatively responsible with money, like if you need a $2 million policy and you’re paying around $800 a month- You can probably afford it. So, like, a- again, it’s gonna be one of those things maybe you’re not super pumped about paying for, but it’s definitely worth getting.
Tommy Blackburn: And I think just to clarify, I think you said 800 a month, which that would be a very expensive umbrella.
Broc Buckles: Oh, I’m sorry, 800 a year. My bad. My bad. Yeah. Yeah. Just so the audience doesn’t get scared away from umbrella, yeah. There you go. 800 a year. Please-
John Mason: So here’s the- … redact
Broc Buckles: that. Yeah. Yeah.
John Mason: Here’s the $2 million question for you, Broc.
Broc Buckles: Okay.
John Mason: Is you have this $2 million umbrella liability policy, and you told us you’re a golfer.
Broc Buckles: Yes.
John Mason: And arguably, with your new driver, you may get a little erratic sometimes.
Broc Buckles: That’s right.
John Mason: So- Yeah … so what happens when big man Broc- … who benches, like, 400 pounds, works out every day and is gonna post his swing on social media- … drives a ball through a window, a car, or somebody’s head- Right … just to be, like, really violent here.
Tommy Blackburn: Through somebody’s head.
John Mason: Yeah. What happens then? Like, does this umbrella protect you on the golf course?
Broc Buckles: It technically, it can. If someone sues you- … the, it technically can protect you on the golf course. Y- if that ever happens, I’m just gonna hope that I hit the big giant guy from Happy Gilmore that’s not even gonna feel it, but I don’t think that I can count on that being the guy that actually gets hit by the golf ball, so.
John Mason: Well, I know that’s always been Mike’s comment. He’s like, “I’m on… I’ve watched my dad hit at least three people on the golf course.”
Broc Buckles: Yeah.
John Mason: At- yeah … at least three. Yeah. And I’m one of them. He drilled me in the back one time. Ooh. And I’m like, “Man.” And then like six holes later, he hits one right at my head. Oh. I’m like, “Dude, you’ve gotta stop.” You may have had that day,
Broc Buckles: Huh? You gotta stay behind that guy.
John Mason: I see. Right. And I’m like, “This is terrible.” And he’s like, “Well, that’s why I have umbrella, and- …
Tommy Blackburn: I can drill
Broc Buckles: you intentionally.” I can nail John in the back. That’s why I have umbrella. Oh, that’s so funny, man. Well worth it, eh? Yeah, no, that’s true. If you get a little erratic with the driver, it’s a good time to have the coverage, for sure.
John Mason: Let me transition over to term life insurance. I- if there are any updates here, the process is pretty straightforward, like submit a quote through your website. Yep. Answer some questions. I guess I’m really curious for younger people, what are we seeing as far as underwriting? Are they requiring medical exams? Is it still mostly accelerated underwriting? What are you seeing? Yeah.
Broc Buckles: Good question. Yeah, I mean, if you’re young and healthy, especially through COVID, like they just had to find ways, a- and you can’t guarantee it, but a lot of people are being able to get through underwriting without having to take medical exams. It’s gonna depend definitely on your medical history, blood work. Like, if you have, if you have a history of high cholesterol, th- they might wanna see where your labs are at, right? But, like, if there’s not a lot in there, you’re pretty healthy overall, there’s a good chance that you can get through without ever having to do it.
John Mason: That’s awesome. And what about rates? ‘Cause I know we’ve been doing this 17 years, and-
Broc Buckles: Yep …
John Mason: in my mind, rates have been coming down my entire career. Yep. Cost per thousand. Are they still going down? Have they gone back up again?
Broc Buckles: We’ve seen, we’ve– Recently, we’ve seen a little bit of an increase across the board. Nothing, like, too substantial to where it’s gonna scare you away from wanting to get a policy. But you see, like, little rate adjustments all the time, whether it be up or repricing down, just based on loss ratios, the way the market’s kind of going. But I think overall, it, it’s nothing that, like, anybody should be too concerned about. You’re still, if you’re young and healthy, y- you still, kind of like what you mentioned, are gonna be able to get that $1.5 million policy for 85 to 100 bucks a month probably, so.
Tommy Blackburn: When does it get… Is, like, is there, like, stairstep increases? Like, I know when we look at, federal employee group life, like, there’s age bands, and you can see, like, it’ll double, like, once we start hitting these certain brackets. Do you see that with term? And is there even, like, a point in time where it’s like, “Hey, man, you’ve probably just passed the point of term insurance”? Like, there’s just, it’s not going anywhere.
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Broc Buckles: Yeah. Yeah, for sure. I would say especially… And it depend, it depends also on, like, what the term length is that you’re looking into, right? So, like, around, like, 55, 56, like, you’re starting to age out of, like, a 30-year level policy, right? You’re starting to look at more of a 20. As you get to, like, 65 and later, you’re starting to look at, like, a no longer than a 20. And then, like, once you’re in your 70s, it’s like, “Hey, appreciate that you want to apply, but, like, anything more than a 10, we’re not even going to be able to explore,” because most of the time, you’re not having term past your 80s, right? Like, your mid-80s. And so it really does depend on age, health, tobacco status. But as a general rule of thumb, like, I would say 30s, early 40s, you’re still in a pretty good zone in terms of price. Once people are getting into, like, their early 50s through their 60s, you definitely see it start to go up. And a lot of times then you’re also seeing health considerations arise a lot of the times where there’s, like, one or two things where, like, if you were in perfect health, it’d be a little bit more expensive. But especially with a couple more health things in your medical records, you’re gonna see the price go up pretty dramatically later on.
Tommy Blackburn: Thank you.
John Mason: You mentioned kind of like mortality basically, so I don’t know what the average mortality is in the United States. Let’s say it’s 78 years old or something.
Broc Buckles: Sure. Yeah.
John Mason: So if you’re trying to buy a 20-year term at fif- at 60, you’re past the average age of death, so now all of a sudden that policy’s gonna be more expensive because the insurance company believes actuarially that it’s actually gonna have to pay a death benefit. Yeah. So that’s what all this is based on, right? Is like what are the chances or the probability that the insurance company has to pay a claim? So my mind was always like once you start extending past mortality, then you’re probably looking at an IUL, a GUL, or a VUL. Yep. Because now you’re trying to have that coverage till your 80s or 90s or even till 100. Yeah. And the cost difference between a term and a permanent policy when you start getting into death is sooner or imminent—
Broc Buckles: Guaranteed death.
John Mason: Death, a guaranteed-
Broc Buckles: No, true … death benefit is helpful. I mean, at the end of the day, the thing that people have to understand, and, like, I don’t think in a malicious way necessarily, but in order for life insurance companies to be able to, to issue new life insurance policies, they do have to be in the green and they do have to be making money. So the, it’s all… Th- there are not very many industries that have as much statistical data as the insurance industry does, right? Like, they’ve written millions and millions of policies. They’ve been able to say based on X, Y, and Z health considerations, this is how long people typically live. And so they’ve reverse engineered all of that to come up with pricing for different term lengths, to get very specific around it so that they’re not going to lose money in the long term. So yeah, it’s a, it’s very detailed.
John Mason: I have a ran- It’s a- … random question. Sorry, Tommy, for interrupting. I love nutrition podcasts or a health podcast or, things like Rhonda Patrick or used to listen- Yeah … a lot to Peter Attia. Anyhow, GLP-1s are, like, all the rage.
Broc Buckles: Yeah.
John Mason: Yeah. And, you would think that if one was on a GLP-1, that they’ve dropped 30 or 40 pounds, they maybe don’t have high blood pressure or cholesterol anymore. I’m curious how this works with life insurance. With smoking, for instance-
Broc Buckles: Sure …
John Mason: It’s like, when did you quit? How long have you quit? Can we issue you a non-smoker rate? I’m curious with these GLP-1s. I know there’s a question around how much weight have you lost in the last 12 months. Right. But is there any talk in the industry about GLPs are transforming people right before our eyes? How do we insure those type of people?
Broc Buckles: Yeah, it’s a good question. I think a lot of that is coming down to, like, people can get into better health, but it’s going to be more of a long-term thing as it continues to develop, right? Because right now the big consideration is have you lost weight, right? H- how much weight have you lost? Because that’s a consideration for sure, where you’re probably not gonna get that much more favorable of a rating if you lost 50 pounds this year. And the reason why is because it’s too unpredictable to know what’s gonna happen in the future, number one. Number two is why are you on the GLP-1, right? Are you pre-diabetic? Do you have diabetes? And then that opens up a whole nother can of, okay, you have diabetes, what’s your A1C level? So the, the best way to kind of say it is I think it’s gonna be a really long-term thing of seeing how it affects people long term, what it ends up doing to their health. And it’s gonna be kind of a TBD thing, ’cause it’s relatively new.
And, kind of one of the parallels that I would say is on the tobacco side, that’s kind of been like the Zyn pouches and the vaping recently too. Where it used to just be cigarettes, cigars, and chewing tobacco, and now they’re having to try to underwrite for vapes and nicotine salts. And so it’s an ever-evolving landscape. But I would say overall on the GLP-1 stuff, they’re going to dig deeper and say, “Why are you on it? What are the other things that have caused you to be on it?” and see where it plays from there.
Tommy Blackburn: That, I think that makes sense, ’cause you, you said it’s all based on statistical data that, you know, across millions and, however many decades or hundreds of years, so they just don’t have enough data to really- Yeah … fully price that in yet. I was curious too on whether it’s term or maybe other products, sometimes like certain professions you’ll read about have… So there’s usually like a professional association that maybe has an offering, but even like doctors I think have like special things, like their own, I guess, risk category. Do y’all see that? Is that part of what you do at BC Brokerage? Just a random question.
Broc Buckles: Yeah, for sure. In terms of term insurance or like long-term disability?
Tommy Blackburn: Mm-hmm. Both, I guess, if you… Yeah, hit them both.
Broc Buckles: Yeah. Well, there’s a lot of times you’ll find like things that you can opt into that are kind of like group benefits that are beneficial for people to be able to do. Definitely applies heavily to long-term disability insurance. Like what your occupation is and how risky it is has to do with how expensive it’s going to be. I always tell people it’s kind of you’re looking at like 1 to 3% of your gross income typically for a LTD policy. But it can definitely differ. If you’re like a traveling salesperson, for instance, your policy is going to cost more money. If you work a job where you’re using your hands and if you can’t do that, like if you’re a neurosurgeon, you develop a tremor in your hand, you’re done. Like you might be able to go practice family medicine, but you’re no longer gonna be able to do surgery on someone’s brain. And so those policies are gonna be substantially more expensive. So for people that are like very high re-ri- high risk, high reward type jobs, typically you’re going to see their, their policies be a little bit more expensive, for sure.
Tommy Blackburn: I’m curious if you see, and on the flip side, on the life side, so disability is critical, particularly as we’re, building assets, working a career. If you see from, like, a life perspective, if there’s, like, this tends to be pick on accountants, CPAs, if you want. Like, they sit behind a desk most of the time, low risk. Like- Sure … they’re probably gonna live the term. They’re not high-risk people. Yep. Do you, like, ever see oh, yeah, you fall into this niche, so you get special underwriting?
Broc Buckles: For sure. Yeah, that, that’s a good question. Yeah, and some people it’s just a flat out decline, right? Like, i- if you’re, like for instance, we work with a lot of military folks. Like, we work with a lot of people that are special forces soldiers, and it’s like, “Hey, call me when you’re done deploying.” You’re like, nobody even knows the missions you’re going on, right? Like, they’re doing things that are not-
John Mason: The cantons there, yeah …
Broc Buckles: Yeah, not typical. And so insurance companies are pretty conservative. They’re not super anxious to give people coverage when they don’t know what they’re doing day to day. Police officers can sometimes be difficult. Like, it depends on your line of work, but the more dangerous it is, the less likely, insurance companies are going to be to offer coverage and/or rate the coverage to where they’re just gonna make it a lot more expensive, for sure.
John Mason: I’m glad you mentioned that because I remember helping a c- a client get term life insurance policy 10 years ago, and they were an Air Force pilot or a Navy pilot.
Broc Buckles: Yep. Yep.
John Mason: And we tried to do insurance through somebody like BC Brokerage, and it came back rated with, like, a special rate adjustment. Yeah. So it wasn’t just standard, preferred, substandard. It was like, here’s-
Broc Buckles: Flat extra …
John Mason: An extra flat dollar per thousand or something. Yep. Yep. But then we were able to pivot to USAA, and USAA was able to grant a policy or issue a policy without that flat extra. Yep. So I’m sure you guys encounter that too. You probably are aware of how, often we can beat USAA or have a better policy than what they would issue, but sometimes that may be the best route for military members.
Broc Buckles: Totally. Yeah, no, that’s a really good point. Yeah, what you’re talking about is a term that’s conventionally known as a flat extra, right? So, like, literally per 2,000 or per $1,000 of insurance, it’s one or two or $3 more. So, like, the, the premium can skyrocket if you have a flat extra on a policy. But yeah, I mean, we work with a lot of military folks to where I’ll meet with them and, whether there’s things in- that they’re currently doing, like they’re on jump status, jumping out of airplanes, and, like, they’re actively doing that, or there are medical diagnoses that are in their past. Like, a lot of people that we talk to, obviously they’re in war zones. They have TBIs, like traumatic brain injuries, as well as maybe PTSD. And civilian carriers are not necessarily the best bet for those people because their underwriting is not built around that specific niche, right? Where if you go to, like, a, like you said, like, a USAA or an Armed Forces Mutual or a Navy Mutual, they’ve kind of said, like, “We understand this category. We understand how we’re grouping these policies. We understand how they’re pricing these policies,” and so they have a lot better opportunity to be able to offer that coverage. So if we can’t help, we’re always more than happy to try to point them in a direction that can.
John Mason: That’s well said. I wanna transition to long-term care now, but I did Google this as you guys were talking, and I think this will be a great transition, and I d- I haven’t got the second stat yet. But, I just wanna read this because you mentioned, Broc, that life insurance has been around for a long time. So I threw into Google, “When did life insurance start?” And does anybody have a guess before I read this?
Broc Buckles: Oof. I mean, I know there’s companies that have been around since the 1850s, but I’m gonna guess, I don’t know, early 1800s. Am I close?
John Mason: What’s your guess, Tommy?
Tommy Blackburn: I gotta go, I guess, a little earlier. Let’s see. Like, I’m thinking, like, the British East India Company. Like, when do we have some big companies we can think of? So I guess I’ll go, like, 1750. Watch it be, like, 400.
John Mason: So Google AI says, “The concept of life insurance began in ancient Rome with military burial clubs. Wow. However, the first recorded modern life insurance policy was issued in London on June 18th, 1583. Wow. The first formal life insurance companies were established in the 1700s using mathematical mortality tables. In 100 BCE, Roman generals formed burial clubs so soldiers pooled funds to cover funeral costs if a member died.” Wow. So when we talk about life insurance, guys, it’s been around.
Broc Buckles: Yeah …
John Mason: It’s been around forever.
Broc Buckles: Literally. Yeah, that’s insane. I learned something new from you today, John. That’s incredible. I’m taking that. I’m gonna take that with me.
John Mason: Yeah, it’s fascinating. Like, you know how long it’s been around?
Broc Buckles: Yeah. Yeah.
John Mason: Forever.
Broc Buckles: Yeah. Yeah.
John Mason: So long-term care, which is a, a beautiful transition, I’ll find when we talk, when did long-term care start, long-term care is kind of the bane of our existence in a lot of ways. It is a very difficult concept because so many people are going to require this care, and end-of-life care and drawn-out medical expenses, I mean, frankly, people are living years with zero quality of life, and it’s very expensive. Seven, eight, $10,000 a month. Yeah. So if you could just give us an update on what you’re seeing in the long-term care industry, and I’ll cap- I’ll say this as well. In my career, premiums have done nothing but skyrocket. People that bought policies in the ’90s and 2000s, we’ve seen doubling and quadrupling of premiums. Yeah. So much so that it scared the daylights out of us to where we almost don’t even wanna talk about it. Sure. But we have to. Yeah. So where are we with long-term care? Has it gotten any better?
Broc Buckles: Yeah, it’s a good question. So, like, yeah, to your point, like, in the early 2000s, a lot of those policies that they were coming out with, one of the biggest issues was they were not pricing the policies according, like, according to what they should be to the risk, right? They were making the benefits or the payouts to the clients way too generous, and a lot of times the terms were lifetime. So what happened was people went on claim, and they’re paying way more than they should for way longer than they ever planned, which ended up making these companies struggle, and a lot of them are no longer in the industry. And so they start writing into the contracts, basically they reserve the right to raise the premium every 13 months. And so people get letters in the mail saying, “Hey, this is going up again. Sorry about your luck. I know you’re older now. Too bad. Sucks to be you,” right? Which is not ideal.
So what we’ve seen, especially on the traditional underwriting standpoint, companies aren’t loving writing past, like, 63, 64, as a general rule of thumb, and that’s kind of what we’ve seen on our side. That’s when it tends to get, like, almost declines or so expensive people aren’t even interested in it anymore. As a general rule of thumb, I think the policies are designed more favorably than they used to be, meaning, like, they’re being a little bit more realistic. The benefits aren’t as high, the benefits aren’t as long, and the pricing is substantially higher. And so they’re not having to raise the rates anymore, or as much.
But I will say from what we’ve seen, more and more people are choosing what we call hybrid or asset-based policies that are built on a life insurance chassis, for a few reasons. Number one, because it’s technically on a life insurance chassis, they cannot raise the premiums legally. So what you see is what you get. What you sign up for is what you’re getting. Two, it’s not a use it or lose it so, when you sign up for the policy, if you end up passing away, with a traditional long-term care policy, a lot of times it’s just kinda like the policy goes away, right? There’s actually a death benefit that pays out to a family member or a beneficiary, and then there’s also some discrepancies in how the money is paid out. And this isn’t, like, a total rule of thumb, but a lot of times because life insurance carriers on the hybrid asset-based side know that they’re going to have to pay out the money regardless, they pay it out on an indemnity chassis. So as soon as you qualify, essentially they’re just stroking you a check every month, which gives you a lot more autonomy over how you’re using that money. So if you wanna help compensate a family member that’s taking care of you, or, you’re doing things that aren’t necessarily what an insurance company would call a qualified expense, that’s a lot better because historically some of the traditional policies have been reimbursement. So essentially you have to pay for it, turn in your receipts, and hope that they’re gonna give you your money back down the road. So that would be kind of like a general state of the union of long-term care, I would say right now.
John Mason: So indemnity on the hybrid policies, I mean, that’s certainly a win to not have to save receipts and worry about is a family member eligible or like I have one client right now who has an old long-term care policy that’s nursing home only.
Broc Buckles: Yep.
John Mason: Not memory care, not assisted living, not home health care. Yeah. Nursing home only. Yeah. Well, guess what? They’re not moving her into a nursing home. They’re moving her into memory care, and so this policy that we’ve been paying for 50 years is not ever going to pay a benefit. So if you’re gonna get a long-term care contract, we want one that has home health care, assisted living, nursing home, memory care. Ideally, it would be on an indemnity type rider so you have more flexibility. Sounds like 63 or 64 is kind of the cap on when—or the latest you’d want to explore that policy. Yeah. Federal government, Tommy, is still not offering FLTCIP at the moment, which was our go-to for a long time. We’re hoping that comes back and curious to see what those premiums will look like because even those were getting expensive.
Tommy Blackburn: Was already getting expens- exactly. Yeah, you read my mind. Even that was getting a little harder, but it’s not even an option currently.
Broc Buckles: Yeah. And what I always tell too people… tell people too is it doesn’t have to be like an all or nothing. Like couple points, it doesn’t have to be an all or nothing, right? A lot of people think you either have to have a policy or you have to self-fund. I think a better answer a lot of the times if you’re going to explore it is maybe have a policy for those base expenses that you’re planning for, right? Know what those are, know about what they cost in your state, have a policy for those, and then assume some of the risk yourself. I don’t think it has to be like, this way or that way.
The other thing is if you keep getting premium increases, have somebody that knows what they’re doing look at that policy. Because one thing I can tell you is, you might not like getting the policy increases. However, if you’re getting older, that might be the best policy that you’re ever going to get, because if you were to go revisit the market right now, you’re older, maybe there’s some more health things that have popped up for you, so you’re probably going to pay just as much or more for a much less policy. So don’t just go like automatically cancel it because you’re getting these letters. Work with people like John and Tommy to kind of figure out, what’s my budget, is this doable for me, and go from there.
Tommy Blackburn: Dude, what a great public service announcement, and I think that might be one of the biggest takeaways, action items that I would say people should get from this episode, which is—and John, I imagine you’re on the same track. But yeah, we get these with clients all the time, which is why we also hate it. Because people are never happy. They get these astronomical increases, and they’re mad. We’re trying to salvage the situation of just figuring out, what’s actually best for you and how do we deal with this. So dropping the policy is probably not the right answer. We have other options, usually ones in addition to what they even put on the letter. So yeah, just take a breath and evaluate the options before we take any actions.
John Mason: Yeah. I love what you said, Broc, about not feeling like you have to insure the full amount of long-term care. So average stay in a nursing home or long-term care I think is still around three years- Yep … or even less than that. So we could be looking at a three-year policy. This isn’t advice, but maybe a three-year policy. Let’s say Tommy and I both delay our Social Security until 70. We’re married. We both have a $50,000 Social Security check, and long-term care costs 100,000 a year in Virginia. Well, maybe what we do is we buy a long-term care policy on me that covers 50K, and we buy a long-term care policy on Tommy that covers 50K, so if I go into a nursing home, my Social Security and my policy cover everything. Tommy has his pension and his, and all of our joint assets that he could still live on. So is that perfect? Would Tommy have a reduction in quality of life or lifestyle or have to cut expenses? Maybe. But we did a pretty good job smoothing out that risk, so I love the concept of not feeling like we have to insure everything. Yep. Whereas life insurance, you kind of, especially early in your career, you need to insure the whole thing.
Broc Buckles: Right.
John Mason: But long-term care you could probably stand to insure a piece or a part. And then just elaborating on these increase letters, I’ve had clients who had a lifetime benefit, Tommy, that we’ve scaled back from lifetime to five years. I’ve had clients who had a 5% inflation rider that we scaled back to 2 or 3%. So you start looking at the different variables, and to Broc’s point, it’s like how much do we actually have to cover? Maybe we don’t need unlimited lifetime 5% compounded inflation, add all the things, no elimination period.
Tommy Blackburn: Yeah.
John Mason: Yeah.
Broc Buckles: That’s a good point, John. Yeah. So, like, a lot of times when you get those letters, right, it’ll say, like, “Here’s the new premium,” or, “Here are a couple other options and ways that you can adjust the policy.” So that’s a, that’s pr- that’s a good thing to bring up, for sure.
Tommy Blackburn: I think long-term care, it’s a tough topic just for the audience, as I shared. And I think we probably all approach it something like this. Like, it’s a discussion of just, usually whenever it comes up with clients, it’s like, what’s your experience and what are your feelings? And I don’t know if that’s the best answer, but some people feel very passionately about, like, I’ve seen it, and I either have seen the power of a policy or I wish we had a policy, and, like, I am determined I want that protection. Okay. Yeah. Let’s go explore. Let’s look at the prices. It’s probably gonna knock your shoes off, but let’s take a look. Others are more of just like, “Ah, I don’t wanna be a burden. Like, help me evaluate this,” and maybe that’s where we go through a plan that’s like, you can… Some people don’t like the words, but, like, you can self-insure.
Broc Buckles: Yeah.
Tommy Blackburn: A catastrophe’s a catastrophe, right? And then that coverage doesn’t exist anyway anymore, so-
Broc Buckles: Sure.
Tommy Blackburn: If we can’t do anything about it, here’s what it looks like, and it probably means you leave less of a legacy or maybe there’s a middle ground. So just- Yeah … all of that to say, like, it’s, I feel like it’s a very fluid discussion you have to have, and there’s not great answers right now. The final point, John, you mentioned averages, which I think is probably correct. I just always say be cautious with averages to anyone listening because when I Googled, it said the median duration of a nursing home stay is five months and assisted living is 22 months. So-
Outro: Yeah …
Tommy Blackburn: Average is taking, we have some extreme numbers in there. And again, that could be the catastrophe as well as, like, the median’s probably more of like, here’s what you’re actually commonly seeing.
Outro: Yeah.
Tommy Blackburn: So we don’t have to scare everybody. And then you’ve got-
Broc Buckles: People that will live in assisted living communities for 12 years. I mean, like-
Tommy Blackburn: Exactly, and that’s what costs them a fortune.
Broc Buckles: It happens, right? So, and I would say, like, to kind of leave people with this: having a plan is the most important thing. Yeah. I do not care how you wanna fund it, if it’s gonna be through insurance, if it’s gonna be self-funding, if it’s a combination of both. But having a dedicated, peeled-off portion of either money or policy or both, and knowing that is specifically what that’s for, not just saying, like, when and if it comes up, I can hack it based on this, like, general pot of money over here, I think is a good way to kind of think about it too.
John Mason: Maybe, Tommy, next strategic planning meeting season, we make long-term care, like, a big bullet item to address with everybody, and not trying to convince everybody to buy a long-term care policy, but I think I could benefit from having these conversations with people because I think it’s something we’ve shied away from a bit, maybe out of fear or some sort of anxiety about how tough this industry has been. I think maybe we should add that as a bullet item for client meetings next year.
Tommy Blackburn: Yeah, I think so, and I don’t … But, this is just my own experience and bias. I don’t think you’re gonna have a lot of people come out of that wanting to get policies. But I think it’s gonna be a good … It’s just a good discussion to have if you haven’t had one in a while, like, “Hey, if this happens, this is what it looks like, what are your thoughts, and let’s go from there.”
Broc Buckles: Yeah. Well, and then I would say 95% of the people that, like, proactively come to us are asking their advisors about policies have recently gone through a situation, to your point, Tommy, where they watched somebody in a long-term care situation, right? The other 5% are just, like, people that are super proactive, and they’re 40, and I’m like, “How, what are you thinking about? Why are you thinking about this?” But I’m like, “Good for you for being proactive,” but-
Tommy Blackburn: John’s probably over there like, “I have a long-term care policy, guys. Don’t judge me.”
Broc Buckles: Yeah. Not yet. I don’t know. I’m doing the insurance part of my life right now, and I’m planning for everything. It’s like, all right, right on. Good on you. But for everybody else, most of the time it’s something that kind of hit close to home and something that they had seen with a family member or friend or something like that.
Tommy Blackburn: Hey,
John Mason: This is important Real quick, Tommy Okay I think it’s important Okay, go ahead … that people realize that you cannot just, like, say, “I’m just gonna die,” or- Yeah … “My wife knows,” or, “My husband knows what I want.” Like, we probably don’t have, shots that… We don’t have assisted suicide. That’s not something that exists in this country. No. And we are not… You cannot just say, “It’s not going to happen to me. I’ll just die,” or, “Everybody knows my wishes.” In fact, what ends up happening is your life is going to be extended whether you want it or not. Yep. And I think sometimes people can ma- ignorance is not the right word, but because they don’t wanna think about it- Right … they just say things like- I’m in the same … “I’m just gonna die” or, “Joe knows what I want,” and that’s not enough.
Broc Buckles: Avoidance. Avoidance mentality.
John Mason: Yeah, avoidance. Yeah. That’s a better word.
Tommy Blackburn: Yeah. So John, I guess a couple things. I know we probably wanna move off of it, but one, this is the Federal Employee Financial Planning Podcast. I just wanted to mention, you are a little different if you are that federal retiree than the average private sector person, right? Because you probably have one or two great FERS pensions, so you already have some great guaranteed income, plus Social Security. If you’re military, you’ve got some other things, and you maybe have built one to several million dollars worth of assets up. So I just so people aren’t afraid, and we’re talking to you like you are in a different situation than normal, most of the rest of the country.
And the other is on this long-term care topic, which I think is honestly a much better solution, is, and maybe it’s not a solution, but part of the strategy, is doing what all of us on this podcast are doing, which is exercising and trying to build health so that when we do inevitably begin to decline later in life, or at least it seems inevitable, you’ve really built the situation up. So I think that increases your odds the most. Probably the cheapest solution is just never have it happen, and being healthy probably is the highest probability of avoiding it.
Broc Buckles: Preventative maintenance, baby. I love it, Tom. Yeah, exactly.
John Mason: Yeah, absolutely. Tommy, did you mention survivor benefits when you were going on the federal part?
Tommy Blackburn: No, I had the thought, but please throw it in there.
John Mason: Yeah, it’s nice to know that if you elect full survivor benefits on your military pension, your state pension, or your FERS pension, or your CSRS pension, and a long-term care event eats up all of your assets and all of your stuff, and you die, and you’ve spent all your money, at least survivor benefits is coming back for your spouse, so they have their social, their pension, and your SBP benefit. I think we find this often that people don’t really think through the survivor benefit decision. Obviously, we’re huge fans of that. But the long-term care facility and all of these places can’t ask you to spend something that doesn’t exist yet. So at death, after you’ve spent assets on long-term care, boom, SBP comes back in.
Tommy Blackburn: That’s a great point. I’m glad you threw it in there.
John Mason: Well, guys, let’s wrap it. Broc, any closing thoughts? We appreciate having you on.
Broc Buckles: No, I mean, I would just say I really appreciate you guys bringing the attention to this. I know that we said at the beginning it’s not fun, but I hope the people that have stuck with us this long got some good things that they can take with them and, as always, appreciate hanging out with you guys.
Tommy Blackburn: Yes, Broc. Yeah, back at you, man. It’s always great to have you on here. We will try to– I’m sure we’ll try to get you back on here, maybe even come on your podcast if that would be helpful. I think, hopefully if we can come back to it, we wanted to dive into some whole life, I think, a little bit more and kind of some things we can do there. But that’s another topic for another day.
And as I think about it, I guess big action item for me, John, is if you get those long-term care increases, just pause and let’s evaluate our options. As John once quipped, and I liked it a lot, was, “A lot of times you have a license to shop, not a license to drop,” at least until you’ve had the proper analysis done.
John Mason: Thank you, Tommy. Two, two or three actions for me. If you’re a federal employee and you’re carrying Federal Employees Group Life Option B and you are 45 years or older, we need to license to shop, not license to drop. Go to BC Brokerage’s website, request a term life insurance quote. If you are a standard risk non-smoker, somebody in average good health, you will likely benefit from switching to a 20 or 30-year term to replace your Federal Employees Group Life Option B. So you can get that quote, termforsale.com. We would recommend BC Brokerage. If you’d rather work through us, email masonfp@masonllc.net. If you’re a client, definitely work through us to get those insurance quotes. Remember, we’re fee only, so we’re not compensated for this. So that’s one thing.
If you’re listening to this and you’re saying, “Wow, I really am concerned about long-term care,” same thing, BC Brokerage or email us at masonfp@masonllc.net. We’d be happy to get you a long-term care quote or one of those hybrid quotes. So license to shop, not a license to drop. Guys, thank you so much for being with us today.
Tommy Blackburn: Thanks, guys.
John Mason: Audience, thank you. Thank you for being on this journey with us. Please do all the things: like, subscribe, hit that bell notification, and remember, you can be somebody’s hero by sharing this podcast with friends, family, and coworkers across the country. Remember, we’re financial planners first and we do this second, and we hope you leave this episode and every episode feeling educated and empowered to make positive changes in your financial plan. Thanks for hanging out with us on another episode of the Federal Employee Financial Planning Podcast.
The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.
We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.
