Description

In this conversation, Jeremy Vidmar, an insurance broker, discusses the various insurance options available to military service members transitioning to civilian life. He emphasizes the importance of understanding life insurance, disability insurance, and long-term care insurance, while also addressing the underwriting process and the need for personalized insurance planning. The discussion highlights the unique challenges faced by veterans in navigating these insurance products and the importance of seeking professional guidance.

Chapters

00:00 Introduction to Insurance for Service Members
04:50 Understanding Life Insurance Types
07:47 Navigating Permanent Life Insurance Advertisements
10:38 Determining Insurance Needs
16:58 Integrating Life Insurance with Survivor Benefits
21:44 Exploring Permanent Insurance and Annuities
26:20 The Importance of Disability Insurance
27:18 Types of Disability Insurance Explained
31:43 Understanding the Underwriting Process
43:42 Long-Term Care Insurance Considerations

Takeaways

• Insurance is a crucial consideration for transitioning military members.

• There are two main types of life insurance: term and permanent.

• Permanent insurance can be complex and often misrepresented in advertisements.

• Determining how much insurance one needs involves both empirical and emotional factors.

• Integrating life insurance with survivor benefits can be beneficial for retirees.

• Disability insurance is often overlooked but essential for income protection.

• The underwriting process is critical in determining insurance eligibility and rates.

• Long-term care insurance is an important consideration for future planning.

• Understanding the nuances of different insurance products is vital for informed decisions.

• Professional guidance can help navigate the complexities of insurance options. 

Contact Jeremy Vidmar, FIC®, CLTC®: ⁠https://www.e4.insurance/⁠ or [email protected]

Operation Retirement Readiness:  www.operationretirementreadiness.com

Schedule a consultation with Mike: https://nextmissionfinancialplanning.com/contact/   

Schedule a consultation with Amy: https://www.instarfp.com/contact

TRANSCRIPT

Amy (00:00)
Hey Mike, so today we have ⁓ Jeremy Vidmar who is an insurance broker out of North Dakota with E4 Insurance Services. Great guy and he’s a broker so that means he works with different companies. ⁓ I thought it would be really important for people to hear about the kinds of insurance decisions that they need to make as they retire from the military.

As you know, it’s rare for us to even think about things like life insurance or disability insurance and those kinds of things while we’re on active duty. But they’re certainly important things as we prepare to transition. Any thoughts about that, Mike?

Mike Hunsberger (00:37)
Yeah, we’ve talked about some of these things before in previous episodes, but this is great to get, you know, somebody who’s in the business that deals with the companies that can walk through the whole process ⁓ a little more informed than, you know, we do of, what is underwriting and those type of things. So, yeah, I think you’re really going to enjoy this episode. So sit back and relax and enjoy this episode with Jeremy Bidmar.

Amy (01:38)
Hi, today we have Jeremy Vidmar from, ⁓ who is an insurance agent to help us understand the kinds of decisions that service members might need to make when they’re leaving service. ⁓ Things around life insurance and potentially disability insurance and other types of insurance products that we usually don’t have to think about as service members.

So welcome Jeremy, if you could just start by telling us a little bit about yourself and how you got into this industry and what you’re doing now.

Jeremy (02:10)
Thank you guys very much. It’s a pleasure to be with you. ⁓ I guess a little bit about myself. I’m in Bismarck, North Dakota and ⁓ the place where it’s always colder. ⁓ Some of you might be familiar with Minot because there’s an Air Force base up there. It’s very cold up in Minot. I’m a little further south in the banana belt of North Dakota they call it. let’s see, getting into the business. I’ve been in the business about six, seven years now and it was kind of a… ⁓

was kind of trying to figure out what I was gonna do when I got older and ⁓ insurance found me, I would say. I wasn’t really looking for it, but ⁓ there was an agent that was looking for somebody to help him out in his agency and he plucked me out of the bank where I was working at the time and got into insurance and…

I thought I would say this, I actually really enjoy the insurance business. So, ⁓ I enjoy helping people out and a lot of my business now is I kind of call myself a pharmacist and I serve the doctors because a lot of the people that I work with are financial advisors who are helping clients. And when insurance is appropriate and suitable, then they ask me to help through the process, which we might get into a little bit. What does that process look like? ⁓ but it can be a little clunky. ⁓ I always tell

people that there’s not a lot that I like about insurance. There’s the process to get the insurance, you the underwriting, all of that kind of thing. And then there’s the premiums to pay. The thing that I like most about insurance is what it does, not what it is. ⁓ And when it’s, when it works for somebody, when it’s applicable, then I really, I really enjoy helping people in that regard. I should also mention I have a

kids we were talking before we got started here ⁓ I’m a father of seven actually and when I when I say what I do for a living I say I raise a bunch of kids and in my spare time I help people with insurance

Mike Hunsberger (04:09)
Yeah.

⁓

That’s great. yeah, that will definitely keep you busy. I had one and that kept me plenty busy. So, yeah, that’s awesome. Thanks, Jeremy. So, ⁓ you know, one of the big things that folks focus on when they’re transitioning out of the military is life insurance. you know, so can you just kind of break down the different types of life insurance that are out there that somebody

might consider when they’re getting ready to ⁓ transition either into retirement or actual just separate from service.

Jeremy (04:50)
Yeah, yeah, so I really, break it down between really two types of insurance. There’s term insurance and there’s permanent insurance. Most people are pretty familiar with term insurance and the best way that I like to describe term insurance is really it’s a leased insurance. So you lease it for a certain period of time and just like homeowners insurance or car insurance.

you hope you never use it, obviously, but term insurance is however long you buy it for. So a lot of times it’s a 10 year, it’s a 15, it’s a set period of time, 20, 30, even 40 year term insurance.

You have a level premium that you pay. So once you get into the policy and you go through the process, the insurance company says, we’re going to rate you at this. This is what the rate’s going to be. And then for that period of time, you pay the term or you pay the premium. And then when the term expires, then you’re done with the policy. The policy is done. The contract is void at that point.

Within term insurance, there’s a couple of things that I would point out. mean, so there are the level terms. There are, you know, there’s ways to renew insurance at some points throughout the policy if you wanted to. There’s some products that allow for you to kind of up the insurance. ⁓

But for the most part, what we usually deal with with service men and women is a level term policy for a certain period of time while you’re growing assets and there’s a need if something should happen to fill the void. Permanent insurance, there’s a lot of different varieties and there’s a lot of levers to pull in permanent insurance. So unlike term, you’re buying the product. It’s kind of like a mortgage, if you will. ⁓

you’re making the premium payments and then at the end you kind of own it. And it’s going to be there until you die. I should say depending on as long as you put it, as long as you put a guarantee in it. Because not all permanent insurance is guaranteed. You know, there’s… ⁓

whole life insurance. So that’s like what most people think about when they think permanent insurance. And those are usually dividend paying companies, know, the mass mutuals, the Northwestern mutual, there’s a lot of different companies out there that have ⁓ permanent insurance. And in those companies, you’re really buying a piece of the company in many ways. And then they’re guaranteeing that they’re gonna pay out of death benefit when you pass.

But then there’s also guaranteeing universal life policies. There’s indexed universal life policies and variable universal life policies. I don’t know if we need to necessarily go into the weeds on all of those, but we can really just differentiate term insurance and permanent insurance. And then within permanent, there’s a lot of different varieties there.

Amy (07:47)
Yeah, and I don’t think we need to jump too far in, but I mean, I do think this is a good place to bring up the fact that, ⁓ you know, if you’re on social media at all, you definitely see different kinds of permanent life insurance policies being advertised on there. ⁓ Do you have any thoughts about the kinds of ⁓ advertisements service members might see and…

⁓ you know, sort of cautions you might have for service members when they see those types of advertisements or reels or whatever they’re watching.

Jeremy (08:22)
Well, maybe I can think of a fun little story. my wife recently bought a drone for my son, like a little, she was like, I want to get him a drone. She’s like, I found this one for $25 on eBay or something. And I was skeptical, obviously, a $25 drone. thought the thing’s going to fly once, fall to the ground, and we’re going to be done. But.

When I got it, when we finally got it and I started playing around with it, I was like, oh, this thing actually works pretty well. That’s usually not the case with permanent insurance. When you usually buy it or when it’s, what it’s advertised as, isn’t always the way that it turns out. So there’s a lot of advertising. There’s a lot of stuff out there about permanent insurance. You know, buy a permanent policy for $15 a month and it’s guaranteed.

know, underwriting is a big factor when you’re talking about permanent insurance. So usually when you see ads out there, they’re going to show you the preferred plus best rating out there in terms of pricing. ⁓ Sometimes they don’t have guarantees that last all the way to age 100 or 120. So they might say it’s a permanent policy, but it does actually expire. So I would just say…

Whenever you see an ad like that, take a step back, really ⁓ examine what it is and read the fine print. Know what you’re getting yourself into because oftentimes it’s not what you think it is. ⁓ And so it’s worth really taking a step back and even having a second set of eyes on it to really review it and say, what is this that we’re looking at? So.

Amy (10:06)
Yeah, I mean, you brought this up as part of your intro, the idea of ⁓ insurance being a tool that you use. So you have a need and you go find the right tool. So just because ⁓ maybe you need a permanent life insurance policy just because you saw an ad for it doesn’t mean that that’s the right tool. And we’ll probably get into that a little bit later, but we have some more basics that we can jump into first.

Mike Hunsberger (10:38)
So yeah, so what’s, when somebody’s thinking about how much insurance they might need, do you have a good kind of rule of thumb or how’s the best? Amy and I, I think in a previous episode, probably back shortly after we started, talked a little bit about this in some different ways, but you as a professional, somebody comes in, how do you kind of size up how much money they might need?

Jeremy (11:03)
Sure. So this is one of the most difficult questions I have when I’m talking to clients. How much insurance do I need? I mean, there’s really like the empirical numbers that we could point to. And then there’s the emotional side of it. I’d often think about this when you’re talking to somebody about, what’s your risk tolerance? I mean, on anything, like, it’s not as cut and dry as we might think. Now, there’s lots of calculators out there. I mean, you can go onto the internet and say, how much insurance

do

I need? You plug in your debts, you plug in your income, you plug in education expenses maybe for dependents, and it’s going to spit out a number. And it might be a huge number that it’s going to say. You can certainly do that. And I think a general rule of thumb in the industry is five to 10 times your annual income is what you sort of need as an empirical number.

emotionally or psychologically or whatever you want to however you want to talk about it like I always say there’s two there’s two real reasons for buying insurance it’s because you either owe somebody or you love somebody so if we want to talk about owing somebody it’s like okay well if something were to happen to you most people are going to come with a bill and say

you need to pay this and you need to pay it in a certain amount of time. Insurance can really be a way of filling that, writing that check. But I always go back to who are the people that you love because after we get the who we owe out of the way, you really have to sit down and have a real conversation with the people that are closest to you and say, how much insurance, how much money do we need to have to take care of you and whatever other obligations that I have?

You know, I always, I mean, like I said, with so many children that I have right now, when I look at my wife, I’m like, how much insurance do I need? She’s going to say as much as you can possibly get. You know, the insurance companies have parameters. So they’re going to look at, you know, they’re going to do some financial underwriting, find out.

What’s your net worth? How much income do you make? And then they’re actually gonna put a restriction on how much insurance you can get. You know, it’s usually pretty high. So like myself, I’m 41 right now. They would take my annual income and multiply it by up to 30 times and say, that’s how much insurance you can get. So the limits are pretty high. ⁓ But it is, in my opinion, it really comes down to what are you comfortable with?

with some of being informed by the empirical numbers as well. I mean, there’s no doubt that we have to look at, how much do we owe? What are some obligations that we have? And that’s gonna give us a baseline. And then anything on top of that is really who are the people that we wanna take care of should something happen to us and how much money is really gonna be necessary to make that happen. ⁓ Lastly, I guess I would just say, when we…

When we look at somebody who’s approaching retirement and we think about how much income would be lost, let’s say if their pension goes away or half their pension goes away or their income decreases because they’re no longer here to the household, we can say, well, there are products out there that provide income going forward. And so we know exactly how much money would be needed to make up that income.

So that’s an annuity, the product that I’m talking about, but that would be a way of empirically figuring out exactly how much is needed. ⁓ And then lastly, I’m just gonna say this as well, there’s a way of doing insurance planning where you can actually ladder down the coverage as you get older.

So as somebody grows their assets, as investments are growing, ⁓ they’re getting to a point where it’s not as necessary to have so much, you can actually create a plan where the coverage decreases. ⁓ And it’s a more affordable way of working an insurance plan for somebody who’s approaching or into retirement.

Mike Hunsberger (15:30)
And that latter, that’s different than like a decreasing term policy, correct?

Jeremy (15:38)
Yeah, so a decreasing term, I mean, it would be very similar, but like a lot of times what we do is we’ll say, set somebody up, let’s say we need a million dollars of term coverage because they’re 45 years old, but when they get to be 55 years old, they only need 750. So you would do a 10 year term of 250,000 and a 20 year term of 750,000. So when they hit 55, that $250,000 policy would fall off.

Mike Hunsberger (15:43)
Right.

Jeremy (16:07)
and then the premium would fall off as well. So you have, you know, it’s a more affordable way instead of saying, well, let’s just do a million dollars of 20 year term, which is going to be the full 20 years you’re to pay the full premium. but there’s, uh, yeah, so it’d be a way of just doing different increments for different time periods.

Mike Hunsberger (16:26)
It seems like that is now the standard route. I I know there is decreasing term out there, but it seems like that’s often more expensive than doing what you were talking about, like with the laddering, at least when I priced it a couple of different times. Because I was in that situation, like, yeah, my need’s going to go down over time as I have more assets and I approach retirement. ⁓ So yeah, that’s ⁓ great.

talking about that.

Amy (16:58)
What I like, I like how you kind of thought about, you know, cause it seems like simple question, like how much do you need? And for service members, know, you have SGLI that’s 500,000 and there’s not really a question about it. You can have it less, but you’re not going to have more than 500. And then there’s additional benefits. So if you pass away on active duty, there’s, you know, a variety of, um, benefits that come in. So we don’t really think about like how much or how to attack this. Um, so I really like how you kind of walked through.

all the different ways. ⁓ How much do you owe and who do you owe and who do you love? That’s great way to frame it. Now, when we think about, you cause there’s another part for those who are retiring, there’s another part, right? So if you’re gonna retire, you’re gonna have a pension and then you have to make a decision about whether or not you’re gonna ensure your pension with survivor benefits.

Jeremy (17:33)
Yeah.

Amy (17:53)
Can you just walk us through how you might help either a client or a financial advisor that you work with helping clients think through how to integrate life insurance with their survivor benefit on their military pension?

Jeremy (18:08)
Sure, yeah, so that one comes back pretty empirically, if you will. Like ⁓ it’s pretty cut and dry when you’re looking at how much are you gonna get if you have no survivor benefits and how much are you gonna get if you do include survivor benefits. And most of the time, in most situations, ⁓ it can make sense to take more.

and not leave a survivor benefit to it and then supplement that with life insurance ⁓ to leave something if the member would die prematurely. Now, I mean, a lot of times when we have run military pensions, sometimes empirically it doesn’t work out. Like it’s like it doesn’t make sense to put insurance in place. It’s better to have the survivor benefits on there and just let it go. Now,

That still comes back to the question of who do you love because sometimes it can still make sense to put a minimal term policy in place for the first 20 years, let’s say, of receiving your pension because we want to make sure that there’s enough there should something happen. ⁓ we do a lot of, we call them pension max planning. So this is more on the private sector side where it really does make a lot of sense to take the full pension.

100 % with no survivor and then take the additional income that you would be making from that on monthly basis and put it towards some term. Sometimes it is permanent insurance as well like a minimal permanent plan because again like in that laddering strategy we might have a lot of insurance for the first 10 years.

It goes down in 20 years, but we still want to have something that’s going to last, you know, should somebody die in their late 70s and the spouse is going to live for another 10, 15 years, it can make a lot of sense to put some permanent insurance in place for them.

Amy (20:07)
And I mean, right there, like, just want to, I want to point out to folks, you know, in case it wasn’t, ⁓ you were clear, Jeremy, but just in case, like, just to highlight the fact that it is individual situation.

⁓ You know, there’s times when the survivor benefit makes the most sense. There’s times when adding life insurance makes sense. There’s times when just life insurance makes sense. ⁓ There’s literally countless ways to attack this problem. ⁓ So I just wanted to highlight that for listeners.

Jeremy (20:40)
And I would just add on to that as well, is like a lot of times it depends on the health of the individual as well. mean, we’re not just looking at, I we might run an income plan or we might run a plan for somebody out to age 95, but people have to step back and the insurance space is like this weird world that I live in because you’re not just talking about dollars and cents, but you’re also talking about people’s health. And you have to try and marry those two together and say,

Is this even a possibility? Because there are considerations that the insurance company takes because they’re insuring your life. ⁓ And so sometimes it might make sense, but it doesn’t work. And sometimes it might not make sense, but some people might say, you know what, we want to try and get it anyways because there are other considerations.

Mike Hunsberger (21:34)
Yeah, that’s great. ⁓ Amy, anything else as we kind of wrap up the life insurance stuff? Any other questions along those lines?

Amy (21:44)
Well, this, I mean, this might be a can of worms, but I know that ⁓ in our military community, sometimes there’s strong feelings about around ⁓ permanent life insurance. talked a little bit about it and just being, you know, kind of buyer beware, make sure that you have an extra set of eyes. ⁓ There might also be sort of a sense about annuities. Can you just, you know, talk to us when…

Talk to us about when it might be absolutely appropriate to take a look at a permanent life insurance or an annuity, which sometimes are products that have bad connotations with them, but there might be good reasons to use them. So can you just tell us what those good reasons might be?

Jeremy (22:25)
⁓ Well, yeah, like I like to say like they’re tools in the toolbox. ⁓ Annuities, permanent insurance are tools that can be utilized and they have been utilized a lot in the past in financial planning for individuals.

Can I say like absolutely when it’s appropriate? It’s hard to say like in this situation, it’s absolutely appropriate because everybody has a different situation. Now, I do think that it ultimately comes down to, you know, what is a client comfortable with? Do they, is it?

Is it absolutely necessary? Maybe not. I mean, I’ve had situations where annuities make sense, like somebody has ⁓ some savings and maybe a spouse is not as financially savvy or responsible. And so sometimes annuities have made sense because it’s, put money in and the insurance company is going to guarantee a payment out every month.

So you’ve essentially created a pension with an annuity. That’s what annuities are first and foremost. And so sometimes it can make sense to do those in those situations because we don’t want to leave somebody $500, $1 million of cash and then have to live for another 20 years off of that and maybe not do it as responsibly as they should. So sometimes I feel like those can be situations where it really makes sense. ⁓

That’s on the annuity side. the permanent life insurance side, I mean, a term insurance policy, as I said before, is really leased insurance. Now,

What does permanent insurance really provide? It provides leverage, it provides tax efficiency sometimes in certain situations, and it provides predictability. ⁓ Some people are really drawn to that and they know that they have a legacy that they want to leave and they know that they want to make sure that it’s going to be there. And so some people are very comfortable with the idea of, okay, I’m going to put the money away. It’s kind of a forced savings for legacy planning. And in those situations, I think it really makes sense.

⁓ The only other thing that I would maybe add is sometimes when there’s a large age discrepancy between spouses.

That can be another reason why I think it can really make sense. I as I said earlier, like if one spouse were to pass away at 75 and the other spouse is 10, 15 years younger, you have potentially 30, 40 years that they could be living and having some permanent insurance to be something that you leave behind could make a lot of sense, I think.

Amy (25:21)
Yeah, I appreciate that. ⁓ Because again, I think it’s important that we not take tools off the table, ⁓ even if we might have a bias for or against them. I think it’s really important to look across the ⁓ whole spectrum and figure out what tool makes the most sense for the given situation in the person.

Jeremy (25:40)
I mean, sometimes they have a bad rap for good reason. mean, let’s be honest about that. There’s definitely been a lot of selling that has happened in the past and still continues to happen. I there’s sharks out there and they’re looking for opportunities to sell. But I think taking a comprehensive approach and saying,

We don’t want to throw the baby out with the bath water. There are situations where tools can make sense for certain people.

Amy (26:14)
Yeah. Mike, you want to take us down the disability route?

Mike Hunsberger (26:20)
Yeah, yeah. So one of the other things we wanted to make sure we hit was ⁓ disability insurance. I’d say very, very few military members really think about that, if at all, ⁓ while they’re in service. ⁓ And it’s something that probably should be considered more, especially during the transition. while you’re serving,

like Amy said, there’s other benefits. You could get a medical retirement and stuff. So you’re pretty much have disability insurance, if you will, ⁓ while you’re in the military. But afterwards, if you’re still needing to work and save and accumulate for ultimate retirement, it can play a big part. So do you mind talking about

disability insurance in general and know there’s a couple types and explain all that.

Jeremy (27:18)
Yep, yep. So the first thing that I always say is again starting with a little bit of a story. So my wife is not financially savvy. If I asked her how much money was in her checking account, she might be able to tell you, but aside from that, there’s not a lot that she’s really, she leaves that up to me, whatever. Divide and conquer is the way we sort of approach a lot of things in our family.

Every year when I get my disability premium notice and I’m like, man, this is kind of a lot of money. I don’t know if I want to write the check. She is very adamant that she does not want me to give that up. And part of the, she says, you know, if something, if you were too sick or hurt and you couldn’t work, you’d be laying in bed or on the couch or whatever the case might be. The expenses aren’t going to go away and we’re still going to need to provide for the family. So.

I’m a strong proponent of disability insurance. think it’s a really ⁓ important piece of anybody’s financial plan. ⁓

To say something specifically about military ⁓ people, servicemen and women, it becomes difficult. I’ll say that. mean, we’ve tried to do a lot with them while they’re in service, but it’s very difficult because they do have so many benefits already. And then a lot of disability insurance companies are pretty leery of offering coverage while they’re in service. Now, during the transition time, ⁓

a lot of the companies still will not allow coverage until they are totally separated. And we do run into issues with ⁓ trying to get coverage because generally then there’s ⁓ a disability rating that’s assessed afterwards. And so it can become challenging. Now, the…

I would just take one step back and say like after somebody’s out of service, ultimately what does disability insurance come down to? It comes down to cash flow. And is it necessary? I think it’s really worth fighting for to try and get it after you’ve separated from service. But I will say like it does become more challenging as you go through the process of transitioning and. ⁓

and trying to get it with some of the ratings that you might have afterwards. It’s not impossible, I’d say, ⁓ but we always have to go back and look at, what are the reasons for the ratings? What are the underlying issues at hand? And then…

Sometimes insurance companies might give exclusions on policies that happens quite frequently. If somebody does have a history of health history, they’ll put an exclusion on a policy. I would say don’t be too afraid of those, but it is something to be aware of. So I don’t know if I answered the question exactly. I kind of went down the hole a little bit, ⁓ it is an important piece and it’s something to definitely look at, but there can be challenges with it with military ⁓ servicemen and women.

Amy (30:20)
I just want to highlight that we don’t think about it because we have the benefits that we have. And a lot of people might not think about it because you think, OK, well, I’m going to have my pension. I’m going to have my VA disability if I have a rating that’s high enough. ⁓ And then you kind of stop at that. But if you’ve built your lifestyle such that you have to work, that means you need that job. You need that income stream. And so that means that

you assume a risk of not having the income stream if you don’t have any disability insurance at all. ⁓ And so, you know, when I run plans for clients, it’s something that I definitely look at. ⁓ Now, you know, you’re an insurance broker, you sell disability insurance, but employers also provide group ⁓ disability insurance, which opens the door and might help avoid some of the issues that you highlighted, Jeremy, which are that

you know, if you’ve got pre-existing conditions which are going to come out during your VA disability rating, ⁓ that might help there. But let’s ⁓ just quickly go back and explain to people because again, most service members, many service members have never even heard of disability insurance. They don’t know what it is. They don’t know how it works. ⁓ And you know, off the top of my head, I know there’s at least two types. There’s short-term and there’s long-term. Jeremy, can you just explain that and if there’s any other types that I didn’t mention?

Jeremy (31:43)
Yeah, so short term and long term are just like they sound. If there’s a short term disability, short term disability insurance covers you in the short term. So usually it’s 90 days or less. And a lot of those policies will even have like a cash.

benefit that’s paid for a condition. if somebody were to have a heart attack or if they’re diagnosed with cancer or sometimes if they’re having a baby, the short-term disability plans will oftentimes say for each one of these conditions, we’re gonna give five or $10,000 just because you’re diagnosed with it. It’s not really a…

a continual income that’s going to be paid to you every month. And that’s where long-term disability really comes in. A lot of times, well, the long-term disability is if you are too sick or hurt and can’t work, and you can show that my income is now… ⁓

been decreased because of my illness or my injury, then the long-term disability will kick in and say, we’re going to pay you a monthly benefit for a set period of time, the benefit period. So a lot of times on those long-term disability plans, they have an elimination period. So some of them are 30 days, some of them are 60 days, some of them are 90. Those are like your deductible. So you have to pay the first 30, 60, 90 days ⁓ while you’re not earning income.

But then after that, the long-term disability plan would kick in and say, we’re going to pay you a monthly benefit of usually about 60 % of your gross income that you were making before the sickness or the injury. And then those will pay for some of the plans or two years, depending on your occupation. So they’re going to look at your occupation and say, we’ll give you a benefit for so many years or so many ⁓ until age 65. ⁓

So those are, that’s maybe kind of stepping back, but ultimately disability is ⁓ if you’re sick or hurt and you can’t work, you can’t make an income or it’s decreased, then the insurance company will kick in income to provide the cash flow that you need to live on. ⁓ Yeah, that’s kind of, I’d say that the difference between short and long-term disability and…

and kind of how they work. You’re insuring your income really and that’s what it’s for.

Mike Hunsberger (34:08)
And then some of those have specific, you know, what they consider the disability, how you’re able to work, if you’re able to either do type your own job correct or any job and they have different flavors there of when you’ll actually get paid. Can you expand on that a little bit?

Jeremy (34:27)
Yep, so it is that is important and again, this is kind of the fine print of the disability policies you want to make sure that Well, I should say for some occupations They will not cover you at your own occupation. So Maybe maybe I should explain that a little bit when they say own occupation. They mean like Typically with those are in a more white-collar professions. So if somebody is a doctor or a lawyer

CPA and they can’t perform their specific occupation then it’s going to keep paying them a benefit. Other disability policies and these are the ones that you need to be leery of but they sometimes are the only thing that’s available given whatever occupation you’re in.

is if you can do any kind of work, then the insurance company will not pay the benefit. So a lot of times on those policies, they have like a 24 month. So if you were a carpenter, let’s say, and you couldn’t work, ⁓

for the first 24 months it might cover you, might pay you the benefit. But then after 24 months, the insurance company is gonna say, well, you have a college degree, you could go find another job someplace, so we’re not gonna pay the benefit anymore. Again, that’s definitely like a fine print of the policies that you need to be aware of. ⁓

And again, usually those policies are a little bit more affordable, obviously, because the benefit isn’t going to be paid out as well. ⁓ So it can still be appropriate, I think, and it can still be suitable for people in certain situations. But you do need to be aware of what it is that you’re buying, you know, that ⁓ it might not be the most robust disability plan, but it’s ⁓ something that might be fitting.

Amy (36:18)
Now we’ve talked ⁓ about two kinds of insurance, broadly speaking, life insurance, disability insurance. ⁓ You sort of alluded to this idea of like the process and you’ve talked about underwriting, like not everybody might, a lot of people might not know what underwriting is. So in either case, the process is a little bit similar. Can you just walk through what is the process? So ⁓ you’ve either identified a need for yourself or you’ve worked with an advisor of some kind and they’ve suggested that you get some say life

insurance. Can you walk us through the general process for putting life insurance in place?

Jeremy (36:53)
Yep, so if you’re already to the point where it’s like we know that insurance needs to be implemented, ⁓ we start with a meeting with an agent and the agent will gather just some personal information, ⁓ send it to the insurance company and then the insurance company reaches out to the client and will ask all the health questions. A lot of the insurance companies have been trying to make this a much more efficient process. So a lot of it is done online or

can be done through a phone interview and somebody will ask all of the health health questions. So have you ever been diagnosed with or treated for and then name a list a list of a number of conditions. So they’ll go through all of those and the way that they’ve tried to be more efficient is they’ve been trying to do less exam in labs but everybody knows when you hear life insurance or disability or even long-term care insurance they’re always going to ask you know ask all

questions and they’re going to determine what are the next steps. sometimes they do order examine labs where they’re going to draw blood, you’re going to pee in a cup, they’re going to examine all of that and decide what kind of rating they’re going to give you for your health. ⁓ That would be the the basic process. After they get all of the information back, then the insurance company turns it over to the actuaries and says this person falls in this risk class and so this is what we’re going to charge them or we’re going to offer them coverage for this amount.

At that point, you as the client and if you’re working with an advisor can look at the offer and say, we want to take it or not. So you’re not bound to take anything until the insurance company tells you exactly what they’re going to, what the price is going to be.

We should also, know, there is a, like I said previously, there is a financial component to it as well. You know, they’re gonna wanna know how much money you make, what kind of assets you have, what kind of debts you have, and they’re gonna make an assessment according to that about how much insurance could be offered. ⁓ I’d say as well, one of the things that we try and do as a firm and I as an agent, ⁓ we try and pre-screen as much as possible.

because sometimes it is important to know which companies are better for certain conditions. So if somebody has a heart condition or a history of cancer, we might put them with a company that might not be the cheapest company out there, but they might be the most accommodating for whatever conditions that they have. ⁓ So that’s kind of the process in a nutshell. It’s apply.

health screening underwriting offers given to you, you decide if you want to take it or not. And then once you pay the premium, then the policy is in force. If you do ever decide to stop paying the premium, I always say it’s kind of a one-sided contract. if you stop paying the premium, well, the insurance company just isn’t going to pay the benefit. It’s not like you’re obligated to keep paying it if you decide at some point down the road that this isn’t appropriate or it isn’t applicable anymore.

Amy (39:59)
Perfect. And the term underwriting, that is sort of the process, right? That’s just the term for what’s happening ⁓ is underwriting.

Jeremy (40:08)
Yeah.

Sorry, sorry, if I’m using too much jargon, please. Yes, there’s underwriting under, know, there’s there’s mortgage underwriters. There’s there’s a lot of underwriting is nothing more than the insurance companies looking at your full picture, asking questions, prying, prodding, poking in there.

you know, trying to figure out who is this person, how healthy are they, how much can we, you know, do we wanna take them on as a risk? And do we wanna offer them coverage? And I would also say like with the advances in medicine as well, sometimes people look at insurance and they’re like, well, I’m not insurable, I can’t get it. And…

We’ve had a lot of luck with people who have had conditions that they think make them uninsurable. And there’s companies out there that will still take it, still take the case. And it’s worth at least exploring and seeing what kind of offer they would give.

Amy (41:08)
And I just like to make the point that, you know, ⁓ there’s a lot of value in, you know, Mike and I are financial advisors and, you know, but we don’t have insurance licenses. So we need somebody like you to work with. ⁓ And what I really appreciate about that kind of relationship is exactly what you just talked about is the pre-screening. You know, I always tell my clients, I don’t need to know your health stuff. But when you talk to the agent, you should disclose.

you should answer the questions honestly because there’s a good chance that they’ve already helped somebody who has situations similar to yours and they know where to go to get you the best possible chance of coverage. ⁓ I appreciate that relationship.

Jeremy (41:51)
Yeah,

you asked earlier about the social media posts and what people are putting up about permanent insurance and things like that. I will say this, most of the time when insurance agents are working with you, they are going to show you the best possible rating out there. They’re going to say, this is the preferred best class, which is a technical term for the lowest premium out there. Now,

the reality is that most people don’t get the preferred best class. the insurance company starts poking and prodding, they’re gonna say, they’re gonna flag this, they’re gonna flag that and say, we’re gonna have to step you up a little bit because we figure that your risk class is a little higher. So you wanna make sure that if you are going out to get quotes, you have to be realistic with what you’re looking at. If it looks like it’s too good to be true, it probably is. And… ⁓

Mike Hunsberger (42:40)
.

Jeremy (42:42)
You need to be honest and and I you know when you’re talking to insurance companies It’s like you’re on the stand in court like you have to tell them everything truthfully because they’re gonna find out ⁓ But you don’t need to tell them any more than they ask and so but but and they’re gonna give you a realistic Realistic idea of what it actually is gonna cost

Mike Hunsberger (43:07)
Jeremy, that’s great. Amy, any other specific questions before we wrap up?

Amy (43:13)
No, not specific, but just in general. we hit life insurance, we hit disability insurance, because those are the things that people should probably at least take a glance towards as they’re preparing to leave service and determine whether or not they need it. ⁓ Are there other types of insurance that we haven’t discussed here today that might be appropriate for service members to at least take a look at, even if it’s a specific subclass of service members?

Jeremy (43:42)
I mean the other type that I really work a lot in is long-term care insurance or what most people talk about is nursing home insurance. ⁓ Now I know there’s a lot of VA benefits out there and there’s a lot of opportunity for ⁓ servicemen women to take advantage of that if that would to come to that point. ⁓ But I think it is definitely something to consider or it’s something to at least think about and

if for no other reason, it gives you flexibility. And again, this does not come back to the empirical sort of calculations of what is appropriate or what is suitable. again, from some personal experience with parents and in-laws, ⁓ people always are more, ⁓ it’s easier to sign the back of a check than it is to sign the front of a check.

And what I mean by that is when it does come time to get to a point where care is needed, people are more likely to take better care of people when it’s not their money. And so if an insurance company is willing to offer coverage for long-term care and they’re going to pay you a check every month to do it, are you going to be taking care of your spouse or your parents in a more…

quality way. Unfortunately, I’ve seen it on both sides and the negative side is not great. And so I would say, although the VA does offer a lot of benefits to servicemen and women, ⁓ I think it’s something to at least think about, talk about, ⁓ and consider at some point.

Mike Hunsberger (45:27)
Yeah, maybe we’ll have to you come back and talk about that ⁓ in another episode. Because yeah, that’s one of the big things I definitely talk to folks about is the long-term care piece and just getting their head around that and stuff. yeah, there are some VA benefits, but a lot of them are tied to income and assets and stuff. So if you’ve got the retirement pension coming in,

It may not be as much as you think. It may not be everything that you think. So there probably still is a need. So yeah, that’s a great point. And yeah, if you’re willing, we’ll have to.

Jeremy (46:11)
⁓ yeah,

no. It’s one of the bigger focuses that I have actually in my own practice is doing long-term care planning. And I would say a plan doesn’t necessarily mean insurance, but we really do need to make sure that we have a plan because otherwise a lot of things can fall apart and it falls apart quickly. And it is important to have a plan.

So I’d love to come back on and talk about that sometime. So yeah.

Amy (46:41)
Yeah, I think that’s a great idea.

Mike Hunsberger (46:42)
Let’s.

And that’s fantastic, Jeremy. If people want to get in contact with you, ⁓ where can they go to find out more?

Jeremy (46:54)
So the firm that I work for is called E4 Insurance Services. So that’d be E4.insurance is where you can find our web page. I would say if you do want to get in contact with me though, ⁓ jvidmar ⁓ at E4.insurance. I don’t know if you guys can post that in the notes or whatever, but I’m happy to visit with anybody who would like to just explore and ⁓ talk about insurance or if they have any questions, I’m happy to answer anyway and

any way that I can.

Amy (47:24)
Jeremy, thank you so much for being here. I really appreciate the time. I always appreciate talking to you. So thank you so much.

Jeremy (47:33)
Thank you guys, yeah, it’s been a pleasure.