August 23, 2021
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In this episode, Suze talks about an email she received from a listener who was convinced to invest in an insurance policy. Suze breaks down why investing in insurance is such a bad idea and how doing so can end up costing you a great deal of money in the long run.
Podcast Transcript:August 22nd, 2021. Yes, everybody today, it's just me, all me and you, no KT. Although I have to tell you, I personally love when KT does these with me. So, you never know when KT and I might just do ask Suze Anything's on Thursday and Sundays. You just never know. But here's the thing. So, many things went on in my life last week. So, many things and conversations and interactions with people that I so would love to tell you about because there were lessons to be learned, there all kinds of things. But my problem is I have so many of those lessons that came this last week that I want to share with you. I actually don't know which one to pick. So, I decided, alright, I'm gonna pick the last one that I experienced and that is the one I want to share with you. So, today, it's actually Suze's story, even more than a Suze school, maybe it's a Suze school story. But regardless, you will learn from this story. Now, as you know, many of you right in to ask questions and you write in to email@example.com and you ask questions and I read every one of them. KT, I don't know which one she's really going to choose for the podcast, but I do scan or read every single one of them and many of you know that I absolutely answer you personally via email. And every once in a while, I write you and I say I need to talk to you, I need to talk to you. So, what is your phone number? So, I can call you. Now, usually when I am requesting a phone number from you, it's because I know that you have gotten yourself or you are about to get yourself into serious financial trouble and I want to make sure that that doesn't happen to you because that's my job everybody. You know, I'll never forget when I left the Suze Orman show and it was the very last show I recorded and I remember ending it with, who's going to take care of all of you after I'm gone. Who else really cares about what happens to your money and they care about it because they care about you, they don't care about you so that they can make money off of you, they really care about you, like I do, I mean, who else at this point in my career would answer so many of you personally, would call so many of you personally would offer courses and things for you for free. I do, because I really, really care about each and every one of you and I know that you know that I care that you become the secure, strong and smart people that you are meant to be and I want that for you and one of the main things you have to do is know how to deal with your money, which is what this podcast is all about. So, the other day I'm going through the emails. So, I see an email that says in the subject area, please all capitals PLEASE!!! read me, read me and I'm like okay, I'll read you. And as I'm reading it, I'm going no, no, please, no, no, no, no, please. And I go oh God, really? And so essentially what the email said was this and it was from a woman who is getting $1,500 a month to invest for somebody who's in their mid 40s. So, that eventually this person when they're in their 60's and they retire will have a nice lump sum of money. And this woman didn't really know what to do, so she asked somebody who she trusted and they said, well you know, I put my money in an Index Universal Life Insurance Policy and so that's probably what you should do as well. So, this person, fabulous woman by the way, did exactly that about a year or two ago. And then a few months ago started to get an inkling in her stomach, remember how I tell all of you, you have to trust your gut more than you trust others. That is a major law of money. You have to trust your gut more than you trust others. Because what happens to your money, everyone your money directly affects the quality of your life, not the advisor’s life please never forget that. I've said that to you. So, this woman is starting to get a feeling that maybe this investment isn't quite working the way that it's supposed to be working, calls the insurance agent, insurance agent sends her a long email explaining whatever and she still doesn't feel good about it. So, of course she writes me. As soon as I read this email, I write her back and I said all right, I need you to send me XYZ. All these things. And one of the things I wanted to see was the exact guaranteed illustration of this Index Universal Life policy. Now before I go on, how many times have I said to all of you. Insurance is insurance, investments are investments and do not mix the two ever, ever ever. How many times have I said to you then on my top hate list is a universal life insurance policy, a variable life insurance policy, is a variable annuity, I don't like those investments. And I've said it over and over again. Now I have nothing to gain by not liking those investments. But you have everything to lose if you do or somebody else talks you in, to putting your hard-earned money into them. And so I say in an email, please send me the illustration because words lie numbers do not, unless of course you fix the books. But, that's besides the point. So, the next day or maybe it was that day. I don't even remember anymore. This is really just a few days ago. And I get an email back with the attachment of the illustration that I asked for. And when one is looking at an illustration, now we're gonna go to Suze school, if you are going to buy a universal life policy, of variable life, an index Universal life insurance policy, any life insurance policy and you are being sold that policy under the guise, this is a fabulous place for you to be able to cover your family and make sure they are insured. Save money, be able to access that money tax free later on in life and on and on stop. Just stop and you are to ask that person for an illustration. Now illustrations should go out until you are at least 85 or 90 years of age or 100. You do not want to get an illustration that somebody gives you that only goes out until your 65. No, you want to know what does this money do over your entire life. So go to 100, go to 95 and look at what the numbers are. Also, when you request an illustration, usually you only look at the projected side and the projected side is this if your money is put in here and it's projected to return 5, 6, 7% a year for the next God knows how many years this is how much money you would have. But I don't care about projections. I don't care about woulda, coulda, shoulda. I care about actual guarantees. I care about the worst-case scenario. And if the worst-case scenario works for me, then I'm fine with making an investment. If the worst-case scenario doesn't work for me, I don't touch it with a 10-foot pole. And the worst-case scenario is always presented under the columns titled guaranteed return, guaranteed surrender value, guaranteed, everything under those columns are guaranteed. How much you could take out after the surrender charge? So, you put in 5000, can you take out 5000 a year later? It shows you everything, it shows you the death benefit, everything you need to see. And it shows you year after year after year after year. So, we get this illustration and then I asked her for her number and I called her. After she calmed down because she was so excited when I called her. I always loved that by the way. Oh my God. Oh my God. Oh my God, I love it. You can never get tired of somebody being excited when you call. I said, all right, take out the illustration and we're going to go through it line by line. So, as we looked at line one, she put in $14,400, if she needed money today, the guaranteed policy value was zero, she would get zero back if she wanted to take her money out and so on and so forth. We went through line by line and even after 15 years of putting in $14,400 a year, I'll just give you an idea, let you do the math on that. If she wanted to take out the money should have only $72,000 in there guaranteed, guaranteed. So, we went through this and I asked her all of these questions and I said, did your insurance agent tell you there was going to be a surrender charge? Did your insurance agent say this and that and all of these things? And she kept saying no, no, no. And I said, all right, before we decide what we should do in this case? Because now it's been, I believe two years since you've been doing this. So, before we cancel it, before we act hastily, let's find out more about the person that you want to take care of. And the questions I went on then to ask her were, does this person own a home, if they own a home, do they have a mortgage on it? If they have a mortgage on it? What is the interest rate? What are the mortgage payments? How many years left on the mortgage? Does this person have a spouse? Do they have children? How is the health of this person? The health of this person's spouse? How old are the children? Do they have any debt? Do they have an emergency fund? Do they have a 529 plan for their kid’s college education? Do they have to take care of their elderly parents? Are they going to inherit any money? Do they have the must have documents? Do they owe any money on a car? Are they going to have to replace the roof on their home? Or do they have any major expenses coming up? Is their job secure? What happens if Covid hits again, are they still going to get a check? What is in the retirement account? I need to know all of those things before we can make any decision. And I then asked her the question, before this insurance agent told you to invest your money in an indexed universal Life Insurance policy, did they ask you any of these questions? And she said to me, no. I said, well, what does that tell you? So, again, a lesson, you have money. I don't care if it's $100, I don't care if it's $50, I don't care what amount of money it is, if you are going to any financial professional and they just simply tell you, and I've said this on other podcasts. Now, this woman is a devout Suze podcast listener, fabulous woman, but somehow, she missed this one. So, you know, I have almost 300 podcasts that are out there. So, I don't expect that all of you are going to go back and listen to every single one of them. Maybe some of you only listened to them based on the topic or whatever it is. But I have to assume now that you haven't gone back and listen to all these lessons, so I need to start to repeat them at times because I've gone through this before. But I have to go through it again. Because if you ever go in to an investment person to ask for help and they don't know everything about you and they don't take the time to find out everything about you. How do you expect them to be able to tell you what to do with your money? How do you expect that? And if they simply say, oh you have $1,500 a month to invest? All right, let's put it in an index Universal Life Policy. Why did this person, advisor, suggests that this woman do that? Because this is the exact same advisor that told this woman's friend to do that with their money. So, obviously that's what the adviser tells everybody to do. I also asked this woman did the advisor who was a man not anything against men. I'm just saying this one happens to be a man. Right, tell you how much commission he makes every time you do that. And she said, no. Next Suze lesson, a great financial advisor will always tell you what it's going to cost you to make an investment if you go to see this person and they're not charging for their time. You're not going to get a bill that says all right, they're charging $200 an hour or whatever it is just to give you advice. Then somehow, they have to be getting paid. They're not going to do it for free in most cases. So, if you are not paying them directly in your mind, who's paying them? And I got news for you indirectly, It's you. So, every great financial advisor before they actually make an investment for you without you having to ask, should say, all right, if you put money in here $1,500 a month, this is how much I'm going to be paid, and the company pays me, you do not. That is the typical comment. To find out if that comment is true or not. You then are you all writing this down? You better be writing this down. This is an incredibly valuable Suze story school today, incredibly valuable. It would have saved this woman a lot of money is she knew this story, but it's all right. The story ends okay. Just so, you know everybody. However, it's important that you know this. So, if they say that to you, your next question to them, is this alright, If I put $1,500 a month in or whatever amount it is and at the end of the year, I want to take all of that money out. How much would I be able to take out? Now, depending if it's an annuity or a life insurance policy or whatever it is, you're going to find out that at least in this particular case you can't take any money out, you would get nothing back at least, that's what the illustration says. Now, why is that? It is because there is a surrender period and that surrender period is if you decide to close this account out early, the company wants to make sure that they get back the commission that they paid the agent to sell you this policy. And so, if you're no longer in this policy, that means they need to get their money back and guess who they're going to get it back from, you. That is what a surrender charge is. You are being charged a fee to surrender your policy to cover the costs or the money that the company put out for somebody to do something and they want to be made whole. Are you following me? So, when that was finally shown to this woman and she understood that her agent did not ask her the questions that he should have asked her. Did not say how much money that he was being paid. Did not say any of that. That, that should have been a serious warning sign to her. Obviously, I just want to say this. If your advisor doesn't tell you how much they're being paid on their own, that's a serious sign that you should think twice about using that person by the way. So, you have to get this and you must never forget what I'm telling you right now. So, where are we with this woman? So, I had a long talk with her and it seems and we'll know for sure when I hear from her again next week because she went to this person and found out more about this person's situation. This person is so ecstatic as well that I want to help him, I want to help him. I want to help her and I want to help them just because I can. I can and it's my duty to. But I found out that this person is thinking about refinancing their home now, why does somebody typically want to refinance their home? They want to refinance their home to lower their payments. Why do they want to lower their payments? They usually want to lower their payments because they need to free up money. So, we stopped that from happening until I know more about them. Because remember are they going to keep this house if they refinance his house? How much is it going to cost them? Does it make sense for them to refinance at all, depending on the refinancing costs? How many years did they have left on their mortgage, which I found out was 26 years. So, are they going to refinance for another 30 years? I hope not because then it makes no sense to refinance because the money you're saving monthly you're just going to pay at the end. These are the things that are so important for you to understand. And I want to talk about this woman for a second and I'm sure she's listening to this right now and going, oh my God, oh my God, what's so fabulous about this woman as she was able to stand in her truth and she knew that she made a mistake. So rather than try to justify the fact no, no Suze. It's alright. I've done it for two years, the insurance agent probably said to her if you continue to do it will all work out fine. She was able to stand in her truth and she was able to go to the person that she's supposed to be taking care of her the future of this person. And tell him that she made a mistake, that they're looking into this now and that they need to start over most likely. But in the long run because I came up with a tremendous plan for her of how to recapture money, what we need to do with it, the foundation we need to set up for this person. Because what good does it do this person to have money in an Index Universal Life policy that they can access if they don't even have an emergency fund, that they can't really pay their bills, whatever it may be. That makes no sense at all. So, wouldn't it be smarter to take this money and open up to Roth IRAs one for this person, one for his wife. Wouldn't it be smarter if there was extra money left to put it in the Alliant Credit Union account and try to win the sweepstakes? So, these are all things. So, I set up a thing of all right. This is what we're going to do because I already know the answers to the questions that she's going to come back to me with and we're all going to be okay. And in the long run if you do what I tell you, we will make back the two years of money that you put in there before you even know it and everything will be made whole and you will have a whole lot more money. One of the things that I did tell them to do because I am going to tell them to cancel this policy, after she has them go to selectquote.com which is one of my favorite quoting services to find out how much would two $1 million policies cost them for a 20-year level term policy. And that's because her friends are in their mid 40s. It's not going to cost them hardly anything. So, then I know that they're covered in case something happens right now and they're covered with twice almost the amount of assurance insurance that this other policy was giving them. So, little by little we're going to make them more than whole. So, what is the main lesson for all of you to take away from this? Have you not heard me say it's better to do nothing than to do something you do not understand if you don't understand it, just because somebody else has told you, it's what I did. How many people, told how many people that they invested money with Bernie Madoff. So, you all felt those of you who did that, it would be fine. Does not matter what anybody else does. It does not matter what anybody else tells you. I don't care who that person is, including me. If I tell you something and it doesn't feel right or you don't understand what I'm telling you. It is better to do nothing than something you don't understand. The only thing that it's okay for you to do is to write in to firstname.lastname@example.org and tell me what it is that you do not understand. We can do this, everybody, you, me, all the podcast listeners, we can do this, but to do this, you have to look at your money, you have to know that it's doing exactly what you think it's going to do or you want it to do. You cannot just take an advisor's word that everything is okay. It doesn't matter. It's gonna work out. No, you are to plan for the worst and hope for the best. I am not a pessimist. I'm the most optimistic person that I know but optimism has to be grounded in the truth. It can't just be oh, I'm gonna say it's gonna be okay all right, I'm gonna set these goals. I'm going to do this, I'm going to do that and it's all in your mind. No, your mind is strong. Your words are strong, but there's nothing stronger than actions. Actions to check your account, actions to get your money out of someplace that it shouldn't be, actions to make you the strong, smart and secure people that you are meant to be. But if you don't take actions, if you don't get involved with your money, if you don't look at these things, you have nobody to blame but yourself when things go wrong, that is what makes this podcast so great because its sole intention is for all of you to be strong, smart and secure. See you Thursday.