A record breaking year for life insurance payouts. One hundred billion dollars was paid out in twenty twenty one from life insurance companies to beneficiaries. So that is actually an eleven percent jump from twenty twenty, which represented the largest year over year increase fifteen percent since nineteen eighteen influenza pandemic.
So that's crazy. So all right, life insurance.
Yeah, whenever I have a financial planning call for Eyo University, I always get the most questions about life insurance. Is an ongoing thing, like every single time. So it's never a bad time to talk about life insurance because I realized that so many people still have so much questions about life insurance.
But I want to talk about it, but I want I.
Want to get you guys opinion on it before before I stopped talking about it.
So, all right, one hundred billion dollars.
Was paid out last year from life insurance companies to beneficiary.
So what's your initial thoughts on that.
I'm a little conflicted, to be honest with you, right to be for a couple of reasons. The first reason is that if it's paid out, that means people actually had it, and I'm telling you. When we sat down fifteen twenty years ago and we were talking about life insurance, it was not even a topic in our community, Like nobody was even interested in hearing about it. Now, out of that one hundred billion, I'd be interested to see how much it was paid out for communities that look
like US. That is a statistic I would like to see. But I don't know is it encouraging? I'm torn, I'm honestly just torn about it.
But why are you torn?
Well?
Because if it we know that that that's a form of a way to generational wealth right for our communities. That hasn't been nobody, but we know that it is now And obviously what you're doing and everybody is doing in the financial literacy movement talking about it and showing how it can be a builder black for generations out of here, outside of US, one hundred billion is obviously a huge amount. I'm just saying, how much of us are represented in those numbers?
Right?
So, like, yeah, it's great that people are aware that life insurance can be a building block.
Are we aware are we represented inside that billion?
That's a big question.
Yeah, I mean that's what I'm saying. I'm trying. I don't. I'm conflicted on it. I don't know.
To be honest, I haven't done enough research on this topic. So I think it would be a disservice to the audience, myself and this amazing show to give commentary that is not based on fact or research. I know some people think I just rant because you know, I like attention this. This is backed by God and the work that I put in, so I don't betray your point is really interesting.
I wonder how much of those payouts or disperse us, Especially from the conversation that we had with Don People's last night, I would estimate probably less.
Than fifteen percent.
But I do want to give a homework assignment for the money that has been dispersed over the last five years to the audience. How much of that goes to black and brown families? And it's not because we're not applying, because I know a lot of people will say, well, if people apply to get it. I have personally went to situations when family members have poured into a policy for twenty and thirty years and did not get that projected earnings a point supposed to get the death benefit.
But I think it would be a disservice to me to speak for this one.
You said fifteen percent you think.
I mean that.
I'm just like that.
I mean, well, so the thing about it, that's a high ceiling that that's what I said, so different really quickly, because like, even even when we do have it, I feel like, especially like if people have insurance to their life, insurance to their job, the amount is like so low. Right, Like even when I told people when I was twenty five, like I have a million dollar policy, it was like how did you do that? Like why would you do so much? And I'm like, well, it's for the year
is the one I'm going. So the mindset wasn't even there. But I mean this, this guy's the expert. Come on, come on, go crazy.
I feel it well, I feel like, yeah, there's two different conversations having happening. If we're taking advantage of it or not, that's a conversation that we we don't know.
We'll have to see the numbers.
I would suspect that there has been an uptick, but I would think that we're still under insured as a community. I would I would think that we're still under insured. Now that's one conversation. The other conversation is okay, one hundred billion dollars is being paid out. We understand that life insurance is one of the fastest and easiest ways to grow generational wealth because you're pretty much paying for money pinions on a dollar, right, Like, if you have
a life insurance policy, it's a million dollar policy. Let's say you've paid one hundred thousand dollars of premium before you die. Then you've purchased one million dollars for one hundred thousand. That's a good deal in anybody's book, right, But it's important to understand the life insurance that you're
actually getting and how the process works. So like even when Ian was saying that you know a lot of people, they might have paid into a policy for twenty years or thirty years and then they don't actually get or the policy you know, expires or explodes or different things that they should because not all life insurance is created equal. That's something that's extremely important to understand as well. So when you're buying your life insurance policy, it's important to
be educated on what you're purchasing. It's just like anything else, like if you're purchasing a home, or if you're purchasing a car. Every car is not the same, every home is the same. Right, you have to be educated on what you're actually purchasing so you can have the most efficient outcome when it comes to that. So briefly, because I've talked about this a few times, but term insurance very important to understand. That is the lowest costing insurance,
lowest premium. It lasts a term, you know, ten to fifteen, twenty year term where you pay a premium, you have a death benefit. Let's say you have a twenty year term policy. Right, you pay a premium for twenty years, and if you pass away before that twenty years is over,
then your beneficiary is to get money. Now, the problem with term insurance is that I think like ninety seven percent of term insurance policies don't actually end up getting paid out because most people don't die within the term. So to get insurance, you have to be approved for insurance, right, and there's underwriters, so they're usually not going to approve somebody that has a high probability of dying within a
twenty year term. So anybody can die at any point in time, but you go by odds, right, and it's mathematical statistics, so it's like the odds of somebody that's twenty five and they're healthy dying in a twenty y eight next twenty years is relatively low. So now you can afford as an insurance company to give, you know, insurance to a lot of different people, because you know only a few people is actually gonna die and a few
people that do die. The other you know, ninety seven percent of people that don't die, those premiums are going to make up for that. But it's still beneficial because some insurance is better than no insurance, and if you don't have a budget for anything else, then term insurance can be a good option. And then you have whole life insurance, which lasts your whole life and it also builds cash value. The cash is money that you can
actually use while you're alive. Now, a lot of people have criticized whole life because they say that it's too expensive and they don't want to mix investing with permanent insurance. It's your own personal prerogative on that. There's pros and cons for it, but the general idea of it is that it lasts your whole life. But there is a hybrid approach guaranteed protection universal life. We've talked about this EIO University alone a lot where this is a pretty much like a.
Lifelong term policy.
So you're paying premiums and as long as you pay a premium, you have a death benefit. So that's extremely beneficial because now if you don't want to mix investing with insurance and you just want, you know, the clean cut, just whatever I pay for I'm going to get, you know, if I die, my family gets money, then that's that's an option. And the premiums are less than whole life insurance, but they're more in term, so you kind of get
in the middle ground for that. Now, where people come into problems with their policy a lot of times where they don't fully understand it is universal life policy, index universal life policy, and variable universal life policy. This is life insurance that's tied to the stock market. Now, this is where it kind of becomes a little tricky because there's a lot of variables that go into play. So this is a hybrid type of insurance policy where you're
actually mixing insurance with investing. The problem with this is that if you don't fully understand it, and in times like even now when the stock market is down. Now, that can draw all your cash value and negatively affect your insurance policy. So this is something that you have to be extremely educated on. If you're going to mix the life insurance with investing, you have to know how
much money you're putting in. You really want to overfund a policy in that scenario to make up for any down years in the stock market, and you have to be careful when you take money out. So, like I said, I can go on for this for a long time, but I.
Just wanted to choose cool questions for you. I'm going to cut you off. I want you to finish project before we go to the next one. I do have two cool questions for you that I think you got. Yeah, if you let's say a person is making one hundred thousand dollars a year, what is the multiple that they should have for the depth that if it won't pass?
So yeah, good question. And you know, of course it goes by like if you have a family or house. But rule of thumb is that you should always have probably ten times your income. So if you're making one hundred thousand dollars a year, you should have at least a minimum of one million dollars life insurance policy. You might need more, like I said, if you have kids, if you have a mortgage, you might even need two million or two point five million, But at the very
least you need ten times your your income. That's like, you know, and that might seem like a lot, but it's really not so if you think about it from a standpoint of all, Right, let's take a million dollar policy, right and let's say you're making Let's say you're even making fifty thousand dollars a year, so we'll do twenty times your incomefidence area. Let's say you're making fifty thousand dollars a year, right now, you have a million dollar policy.
So what happens is that when you die, your beneficiaries have an option. Usually, and this is why it's important to education your beneficiaries as well. But your beneficiaries usually have an option where they can take a lump sum, or they can take it's kind of like a checkbook with the insurance company or send them a checkbook, and they can just draw off of the insurance policy whenever
they need the money. But let's say that they actually just take the lump sum of one million dollars, the million dollars is going to be a tax free million that's going to be to your family nine times out of ten, so you get a million dollar dollars. So now, the worst thing that you can do is just give somebody a million dollars with no plan, because we know that they're going to blow that million dollars very very easily.
Right.
So now, and this is what storm lee or was talking about. If you set the million dollars up where you can set it up in the trust, or even if you don't set it up in the trust, you could just give them directions on how to actually invest it. And let's say that they just invest the money in long term Conservative index fund, right, and they're drawing Let's
say they draw five percent off of that. Why do I say five percent because that the Monte Carlo stimulation factor is that if you draw a five percent over the court of time, then you'll never run out of money. That's like a retirement formula. So if you take five percent from a million, that is fifty thousand dollars, right,
So that's really replacing your income in that scenario. So when you look at it from that standpoint, if you look at okay, even if you go higher, you'll say, even if you take seven percent off of every single year, every year, you're taking seven percent off, and that's higher for people that's taking money from their accounts. Now you have seventy thousand dollars a year. Still, that's still it doesn't seem like that much money, right. You're just replacing
your income pretty much. So it's not like you're so if you're making one hundred thousand dollars a year, you're probably walking away with sixty five thousand dollars. So if you have a million dollar life insurance policy and you're joining seven seven percent seventy thousand, you're pretty much just replacing your income at that point in time. So this is why it's beneficial to have more than And you got to realize too, if you're making one hundred thousand dollars,
then you have a one hundred thousand dollars policy. I mean that's just one year. Like you might live for what your family's gonna need money for twenty years. Your family gonna need money for thirty fifteen years. So it's important to think bigger. So that was kind of a long answer to the question, but I just want to raction.
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Because I know if I just say, like you need a million dollars worth of insurance, people like I don't need a million dollars, Like I don't even have a million dollars.
Why would I need a million dollars?
Well, eight, that's not the best way to think about it, because you want to leave more money than you have. But also just from a pure practical standpoint of replacing your income, because that's what life insurance is for, You're going to need a bigger number to replace what you're currently living on.
Planning for the future because you're going to be older a lot longer than you're gonna be younger. But I'll ask you this based on your expertise in the field and being in the field for over thirteen years. When you see an article like that, seeing one hundred billion is paid out, I think they said in the article like forty six million policies were sold in twenty twenty one,
which is a six percent increase. However, the actual coverage amount has gone down, so like people are getting policies that actually less, which is kind of what I was thinking, like, yes, are we involved, what type of policies are we getting obviously to whole life in terms all those but the amounts are going down I think like one and a half percent.
So what does that say to you when you look at that?
What's it again?
Like reframing question, so pretty much seeing that, seeing these statistics right and knowing that more people obviously are you looking at it? Is it a courage encouraging sign or like all right, you know what? People still don't get it. These numbers should be higher.
Well I don't know if they should be higher, because I mean, one hundred billion dollars is a lot of money, so and it's an all time record, So I think that people are but also we have to understand that people are dying too. I think this is like one of the first years where the projected life expectancy has actually decreased a little bit. So you know, you got COVID, you got but outside of COVID, right, you have just unhealthy lifestyle for Americans, period, high blood and this is
this is something that's extremely important. Everything ties in together. So when we talk about finance, you have to talk about health because the two go together, and especially in life insurance conversation, especially with black people. So black people traditionally have had at the times getting life insurance and have had higher rates. One of the reasons for that
is because of their medical state. So black people on average have diabetes at a higher rate than the regular population, have higher cholesterol at a higher rate than the regular population, have high blood pressure at the high at a higher rate than the regular population, and are over are overweight
more than the regular population. This is something that is extremely detrimental to not only your physical you know, situation, but also for your economic situation because now that's going to determine if you can get life insurance, if your life insurance policy is going to be higher. So that's
part of the conversation as well. And as far as you know, people dying, so when you're planning your financial plan, you have to you have to have your life in order, and you have to you have to be in shape, you have to, you know, take care of yourself. You have to eat good. These are all things that you know go hand in hand. Your physical health and your financial health are usually related. I learned this early on when I was first started working in finance. Most successful
CEOs are in shape. Of course, there's always going to be exceptions to the rule, I get it. But if you look at if you take a survey, very rarely do you see a successful CEO not in shape. The two go hand in hand, right, disciplined exactly. So this is something that's extremely important to talk about because you know, if we're dying, that's bad, but if we're dying and not even having any life insurance, that's even worse.
Yeah, and that's mostly I mean, for a long time that was the situation with dying with nothing and leaving Like you used to say this to I remember being here on the Saturday, cause it'd be like, not only are you leaving nothing, but you're actually leaving debt because the people who are left behind now have to pay for your funeral rule and they didn't have the money to pay for it, so now they have to figure
out how to even afford to bury you. So people, I mean, that's why I said, man, that that that line of planning for the future is so so so vital, especially to our community.
We have to look at it.
We have to have the Mantranset mind set to change how we view the world and how we view life. I remember just even trying to have a conversation about life insurance to like my coworkers and they'll be like, I'm not thinking about dying, And it's kind of like we have this mindset where it's like, if we get it, we get life insurance waiting, we're waiting to die. It's like, no, no, it's not really. It's just education. That's what it comes down to.
Education.
And I think it's undeniable that the healthcare space is incredibly important, whether it's on the life insurance side or the market. That's why companies like United Healthcare, Striker, Eli, Lilly are incredibly important. So in some way your portfolio does need to have ten to twenty percent exposure for you. They get paid throughout your life or post life. So please write down what percentage of your capital is going to go to life insurance and what percentage is going
to go to the healthcare sector. You cannot avoid that sector at all. But I will say our physical ailments and diseases that are problematic in our community are placed upon us, not because we are collectively lazy or dog.
That's true, but then also but also we have to there's a certain level of accountability that has to be taken because we understand that even traditionally, right we were given diets that were detrimental to us, like all it soul food is pretty much slaveful that you know, pig feet, octails, these are the worst parts of the animal that was thrown away and we made They didn't have an option they had to make out of their situation. But now we're in twenty twenty two. Now we're educated. We don't
have to make those same decisions. Now a lot of times it's done by choice. You're if you're educated and you're still making the same decisions about food that slaves made, then you gotta look yourself in the mirror. We know there's liquor stores on every corner, but who told you who made you drink liquor. You know what I'm saying, like, at some point in time, there has to be some level of accountability to stay the odds is always gonna be stacked against us we're black in America.
But also it's really going to talk about what our politicians and allow for. So when I go to Mexico, which I can't wait to go and set up by place o God, God, it's good. The preservatives that are in the food that I eat there are not present in the food that I have in the United States.
So yes, we have to make.
Delicacies out of parts that were not favorable. But if pep See and Hormel and Crafts are putting preservatives and extra sodium into everything that we eat, at what point when we keep those companies responsible and not just say it's the people's job to be responsible for what the corporations are doing based on the lobby and powers to have that the politicians didn't allow.
Well, that's true, that definitely the food industry needs to be held accountable. But once again, we live in America. So you know, it's beneficial to keep people sick. They've been hold doctor. True, it's profitable, it's profitable to keep people sick.
It's not to keep us on the normally.
This is my lane, all right, the situation, I think we can do Barclays next year. I don't want to get our wings clip. I've ever seen what Dope Sick?
Is it?
That's a great movie.
Yeah, I mean, but one of these things where it's like the pharmaceutical industry right where they've made billions of dollars and there's no effort to make people healthy. It's only efforts to put people on medication. So it's like,
you know, it's like this. This is a great book called How Not to Die, And the whole point of the book is that I've caused everybody dies, right, But they're saying that ninety five percent of the reasons why people die prematurely are preventable, like most cancers are preventable, right, and most of it is through your diet. So the guy that wrote it was a doctor, and he was saying that he stopped practicing medicine because they were only
teaching people. They were only teaching the doctors how to treat patients with medication, but they weren't teaching the doctors how to tell the people not to get sick, Like you know what I'm saying, Like it's like, Okay, you're overweight. Here's blood pressure medication. Why don't you tell them how to lose fifty pounds so they don't so they're not overweight, Like that's probably more beneficial than treating them. And now you got to take this medication for the next thirty years.
That goes back to the self accountability part. Like two months ago, I went to the doctor. They said I had high blood pressure. I looked at my wife and I said, oh, time to change my life like that quick and it was like, all right, let's cut out sodium.
And that was interesting. We just had this like epiphany.
But like we for so long we've been taught that, you know, like yo, that food.
Don't have no flavor. Yo, we don't have no flavor. And we looked at.
Other coaches in community, like yo, that's that food is bland. That food is bland, no preservatives, and it was like, yeah, the reason it is is because there's no salt added. There's no sodium added into it. And quickly, like I literally watched my like my whole body just change and feel different.
How much weight did you lose damn shy do you put me on? Yeah, Like.
A matter of like I say, about six weeks, I probably lost like twenty two pounds, crazy, crazy, And it was just it was one of those things where it was like we moved so much and so out all the time, and we eat bad, and when we do eat, it's late, and then we're going to sleep, and so we try to get exercise in and it's like it's just really inconsistent. But one thing that can be consistent is the discipline to say, all right, I'm not doing
that right. So like I stopped drinking soda, I stopped eating candy, I'm only having water, I'm only eating like oatmeal for breakfast, and you know what I'm saying, Like these are the Like it was just this mindset change because I'm looking at myself. Like when I saw it the blood pressure red, I was just like nah. And then the doctor came in. He was like, yo, if we continue this for ten years, you won't be here. That's all I needed to hear.
I didn't. That was it. That was it.
And so my wife was like, look, this is what we're doing. I'm like, bet, let's do it. So yeah, man, it goes back to that the education around it and having self accountability to say, like I'm willing to stop this is it worth me being here for my kids?
That was it.
If you guys need a place to go to have very healthy food, get your tickets from That's that's uk.
That ship.
Boy. But it was interesting.
I was even at a restaurant and I'm like, hey, like what about this is like you Americans are so poisoned you don't even know good food. I'm like, Jill, but we don't have less preservatives than the ones here.
But you know, you know what's so crazy.
I went to Thailand five years ago, and you know, I was just eating fruit and just the pineapples and every it tastes like I never tasted pineapples before.
But I realized that's because that was like real pineapps. I had.
I had a milkshake and it tore my stomach up because that was like real milk. Like, so we get so used to the preservatives and artificial flavoring and everything that's in our food. When we go to these other countries, that's like real food. Like even our fruit is not real food. This is why you got to grow your own food. I could have a whole thing about this, but I was gonna say like we would. We was in Abu Dabi. We were sitting and we're like, yo, this food is it? And he was like, Yo.
The barriers for us to have food in America are so low that you can put anything in it and it's going to be DEFDA is going to pass Awhayas in other countries and other places, they have to have legitimate food or it can't be served to the public. Not the same here. But we digressed. Health is really healths. I appreciate it. You been glowing looking good.
I know you was tired yesterday, but man, you noah, But I do want to give him an ETF really quick for the healthcare space. Please write this down a VHT that is Vanguard's health ETF. If you go back to twenty and seventeen, it was at twenty eight dollars and seventy eight cents and it is now at two hundred and forty eight dollars in thirty five cent. So that's been some nice growth. Twenty twenty was a good time to buy in. I'll give you guys a price.
Everybody in Patterson writes this now six will be a good place to enter. It is a little bout in Jersey forever. And then are you listening real two O six ninety and New York, Because you know, I love y'all. You know I just want you to give me that that that roud, the loud Harlem energy.
I love you, I love your idea.
My graduates from my school being forced back drop, back drop, Mike drop, back drop drop