Financial Feminist - 74. Life Insurance 101 with Ladder

Episode Date: March 2, 2023

If you’re already queasy seeing today’s title –– we’d invite you to push through. Whenever we talk about life insurance, we’re inevitably met with some resistance to talk about the hard subject of death –– but as Ladder’s Janette Angelini shares with us in this episode, Life Insurance is one of the most selfless things you can to for the loved ones in your life. That doesn’t stop there from being “bad” ways to look at life insurance. Today, Tori and Janette discuss the basics of life insurance, how to avoid scams (we’re looking at you, universal life), and why you need to consider this valuable service sooner rather than later. Learn more about our guests, read transcripts, and get additional resources on our show notes page: www.financialfeministpodcast.com Learn more about Ladder (affiliate link): https://ladder.pxf.io/herfirst100k Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hello, financial feminists. Hello. Okay, you saw this title and you're like, I hate it. I get it. I know. You're like, we're talking life insurance? Yes. Okay. We don't like to think we'll ever need life insurance. Life insurance is like, it's the thing that you do in murder mysteries to make sure that you like, you know, definitely, you definitely didn't kill your husband, but you need the life insurance policy. That's what I think of at least. And then I also think of death because of course, and you're like, I don't want to talk about that today. I need you to want to talk about it because it's not about people dying. It's about protecting your loved ones. And that is truly one of the greatest gifts you can give someone. In a previous life, in my corporate job, I worked for

a company that was talking about wills and trusts and life insurance, and no one wanted to discuss it. It's kind of like money, right? No one wanted to talk about it. However, I saw firsthand just how much suffering and grief and just like really shitty things people went through when they didn't have all of this in place or when they at least weren't willing to learn and talk about it. But we are talking about it today in a really accessible way and with no misinformation. I get so many comments on Instagram and TikTok, and you've seen these videos about people trying to sell indexed universal life insurance or whole life insurance. And they say, oh, you need to use your life insurance as an investment. And oh,

Roth IRAs are stupid. And I need to say this at the top of the episode. Indexed universal life insurance is a scam. It is not a good investment vehicle. You will pay thousands or more to literally just line an agent's pocket. They are there selling you an indexed universal life insurance policy, an IUL policy, not for your benefit, but to make money. There are so many ways to invest, and this one is just not a good one. But life insurance is a good one. Things like term life insurance. And we're going to talk about all of these things in the episode.

Usually solo episodes are just me, but we wanted to bring in an expert today to shed a little extra light on the ins and outs of life insurance. So today we are joined by Jeanette from Ladder, who is an affiliate partner we've worked with for years, to talk about why you need life insurance, what you should look for in a plan, and to answer some of our audience's biggest questions on this often shied away from topic. Please don't skip this episode. I know it sounds boring. It's not boring. In fact, it's really important for your financial life to protect your family, your loved ones. So let's go ahead and get into it. And now a word from our sponsors. Where are you in the world right now?

Where are you at? Right now I am in california live in north hollywood i just moved from chicago like less than a year ago so new to the west side how do you like it i love it so far i mean it was so different at first because it's obviously super different from like a condensed city it's super spread out but once i started getting used to that i was like oh yeah i i see myself living here a long time obviously there's downtown LA but there's no real like city center in Los Angeles which is like very bizarre even yeah like I live in Seattle I love New York like and then I visited LA and I like it's a very hard city for me to comprehend just because it's so spread out yeah no for sure and

then you find like cool pockets of neighborhoods but there's not yeah like there's no centralized downtown so and you have to drive so you care you're no you're not walking you can't walk yeah i didn't have a i didn't have a car for like the first couple months i'm like gotta get a car you're ubering were you ubering everywhere public transport oh yeah it was horrid it was hard there's like well there is no like public transport like in chicago like we had the l we had buses but here there's like a few buses that go to like the randomest places. So yeah. Hard to get around if you don't have a car and even hard to get around in a car in Los Angeles. So can you tell me a bit about yourself and how you started with Ladder? Definitely. Yeah. So like I was saying, back in Chicago, my job right

after the pandemic was I was working at a residential home for adults with disabilities. So developmental disability, intellectual disability. And I loved it. And I love, obviously, helping people and chatting with people. But my hours were pretty wacky. So I was chatting with my sister, and she had just started working at Ladder doing business development. And she was like, hey, there's actually an opening on the outreach team. I know you like helping people. I know you like talking. So it might be a great fit. And I, yeah, I interviewed with them. I met with the team and I just fell in love with the people and the culture and it all worked out. And then I became a fully licensed agent. So I'm a licensed life insurance

agent now. That's amazing. Okay. So we hear the words life insurance, just as a person walking through the world, you hear the words life insurance all the time, but I think very few people could actually define what that is. So in layman's terms, can you define what life insurance is and what it usually covers or doesn't cover? Definitely. Yes. So basically life insurance is a contract between you and a life insurance company. So if you're paying your premiums, it could be like monthly, annually, you're paying your premium. So in the event that you pass away, life insurance company would pay a death benefit to your beneficiaries. Covering and not covering, it's kind of dependent on each company, each contract. But at Ladder,

we cover most natural and accidental death. And then we have two exclusions, which is suicide within the first two years. And then the second is any instances of fraud. So you're lying about your identity or misrepresentation on the application. So in that way, just like be as honest on your application as possible. And yeah, that's, that's like kind of the basic, does that kind of make sense? Yeah. Yeah. And I think one of the things that even I feel in my own body and that I think a lot of listeners are immediately feeling is words like accidental death and suicide and life insurance just in general is kind of a scary concept. And I don't know if you know this, I worked at a company that partnered with Ladder and that's how

I discovered you all. I was running marketing for a fintech company before taking HFK full time. And so I've actually been working with you all for a very long time. And one of the things we were discussing when I worked at that company was like, how do you make a super uncomfortable, we were discussing when I worked at that company was like, how do you make a super uncomfortable, really sticky, often very tragic topic, something that people think about? Even though it's like very uncomfortable at times to think about a loved one dying or yourself dying. What had happened and we heard unfortunately horror stories is that people who were typically young and healthy, who, you know, had a partner who was financially dependent on them or family members, like children who are financially dependent on

them, something horrible would happen, like a ski accident or a heart attack that just came out of nowhere. And what ended up happening is this reality that, of course, is really difficult to face was even harder because they had no protection for, you know, this, this thing that unfortunately, you know, tragically happened. So I imagine you experienced some sort of like friction and getting people to even think about this. Can we talk a bit about that? Like discomfort? Yeah, absolutely. I mean, especially even like before I got into it, I was like, I don't know if I want to work in life insurance. I don't know if I want to talk about like mortality. It's like a beautiful thing. So if you're just like thinking about life insurance or like on the fence or just like you're in that arena, you've already done like a courageous act of thinking about mortality,

which is like so hard. So just like reminding like people that I talked to on the day, like reminding them of that you're on the right track. And this is something like you said, accidents happen constantly and you always think it's not going to be me. It's not going to be a loved one. But in reality, like it could be. So just having that like safety net, having something like that is like so important. But yeah, I get that friction sometimes they're like, Oh, I don't know if I want to talk about this. I get a lot of people who like apologize to me. They're like,

I'm so sorry. We have to talk about this. I'm like, it's my job. Like I'm happy to. I think one thing too, for me that I have used to like wrap my head around life insurance is yes, it does feel like a bigger deal because it is death, but I have insurance or hopefully people have insurance for other aspects of your life, right? Like I have car insurance. I got in a car accident last year. It wasn't my fault. It happened. It was not fun. Would have been way less fun without that. Right. It would have been so much worse or renter's insurance, right? Or homeowner's insurance, or even a lot of my friends have pet insurance of like their pet gets sick. And it's like, for me, it's, yes, it feels more significant and weighted. But if you can get to the point where, yeah, I have insurance for

everything else, this totally makes sense that I have insurance here, especially to your point where this isn't going to impact me at all, actually. It's going to impact, though, the people that I want to protect and the people I love most. Exactly, exactly. Yes, it's just like exactly synonymous to like car insurance or like homeowner's insurance. Just paying for that protection and just knowing that something is in place is actually going to make you feel better than not having it at all. In my experience. So when should somebody consider getting life insurance? Is it when they're starting to make money when they get get married, when they have kids? What is that life milestone or life milestones that we have to point to or get to point to to say,

okay, this is probably a good time? Yeah. I mean, there's a few things. I mean, to start off, the younger you are, the more affordable it will be. So if you're even thinking about having any financial liabilities, like any mortgage, any debts, any children to get through college, if you're starting to plan out those things, you might as well get it now when you are young and you hopefully don't have a ton of health issues so that you lock it in and you have it for when you need it the most. But yeah, those are kind of the things that I would say are kind of important to think about to make sure that those things are covered should something happen to you. Because yeah, you don't really know what health changes could happen in the future,

happen after you get the policy. So once you get it, it's yours and you don't have to like reach back out and be like, hey, I have this thing now. Like once it starts, it starts and you're like covered. How much coverage do you think the average person needs or how is that calculated? Yeah. So a good rule of thumb is like 10 times your annual salary, but there also is ladder has like a life insurance calculator. So if you, if I think it's like ladderlife.com slash calculator. You can link it down below too. Thank you. I think it'll calculate your mortgage balance, debt balance, your your income if you currently have life insurance like if you have anything through work and what's the last one how much

you have in savings so all those combined if you kind of input those in latter will generate something in like the ballpark of what you should be applying for you could always do more or less but it does give a good like baseline oh this is kind of the amount i should be aiming for so this might be too niche a question but actually I've been meaning to reach out to you guys because I don't have anybody dependent on me I don't have children I don't have a spouse but I have a business that is very dependent on me and if I were to get hit by a bus tomorrow I don't know how that business continues to run in the same way. I imagine I need life insurance. How does that work?

Is that a thing? Is that a question that you get asked? Because I'm thinking like it wouldn't affect like family, at least not financially, but it would deeply financially affect the business that I'm running. A hundred percent. Yeah. You can make your beneficiary the company or like you can like change up who like the beneficiary would be. But yeah, that's a great example of someone that like you can like change up who like the beneficiary would be.

But yeah, that's a great example of someone that doesn't have like quote have those like liabilities that I mentioned, but has something that is dependent on them that aren't those things. So yeah, that's a great question. And yeah, you can have that. Right. Even if you don't have a huge team or maybe you just have one person or yeah, your business, maybe your business, you have somebody else reliant on the business besides just you for their income, for their, you know, their living. That might be a really interesting way to get life insurance, which means I need to add that to my to-do list. All right. Okay. We have so many questions about term life versus other kinds of life insurance, whole life, universal life insurance. I have been very public

that I don't support and don't believe in life insurance as an investment. I largely think that's kind of a scam. And Ladder only offers term life. What does that mean? And why is that a good thing? Or why is that the most popular option for people? For sure. Yeah. So term life, the term is the amount of time that the policy is in effect for. So let's say you have like a 20 year term with like 300k in coverage. If you pass away within that 20 years, that 300k would be paid to your beneficiaries. The kind of like milestone or like the keystone for term life is that it is the most cost effective because you're only using it for this amount of time. And yeah, it's just like, that's like the biggest

component. Whereas with whole life, it lasts, it's permanent. So that lasts your whole life, but those can be anywhere from like four to 10 times more expensive. And like you said, there is like a cash value component and like investment component. But yeah, I guess on the opposite end of that, a lot of our clients think it's kind of a more lucrative option to get term life and then invest what they would have spent with whole life because then they have that like control over it. They, you know, can do what they please with that rather than investing with the insurance company. That's kind of how we see it working out the best. And that's what Ladder focuses most on. And we'll do a whole separate episode about this. But one of the questions I get commonly on TikTok is there's so many people talking about indexed universal life insurance as investment vehicles and people asking me if it's a good idea. The long story short answer to that is no, it's not a good idea. We'll link an article about how basically it's a scam and how you're about to lose a ton of money if you invest in that, especially in foregoing other investments. But we always say at HFK that life insurance should be used for

insurance. Investing accounts are used for investing like that's what they're used for you want to invest in life insurance because you want to protect those you love rather than using them as an investment vehicle what should you look for in a life insurance policy and what kind of signs can you look for for a good policy versus a bad policy for For sure. Yeah. So good pricing, good financial ratings, good reviews. Those are all things to kind of be on the lookout for. Transparency, just knowing what you're paying for and is it flexible? That's something that Ladder greatly appreciates. I guess when you're looking at what's being added on to the policy, Ladder also doesn't offer any riders to our policies, things like chronic illness, resposalal children's riders, although they like kind of sound nice

on the outside, they're adding complications onto your policy and also adding on to the cost. So something that's like straightforward, the person who put in the application is the insured. Bada bing, bada boom. big meta boom. Okay, so a lot of our listeners are younger, single, maybe newly partnered, but not legally partnered. So they may not own homes or have as much to cover when it comes to life insurance. How do you plan for adjustments as your income rises or you reach milestones like buying a home or having children how do you adjust your plan accordingly totally yeah there is luckily with ladder that is basically what ladder is all about it's the flexibility and like a streamlined process so if you have a 600k policy and you decide in a couple of years, some of your mortgages

paid off, some of your debts are paid off. If you have children, maybe they're more financially independent now, you can go into your profile and decrease the amount of coverage that you have and then save money on premiums in that way. Or on the opposite end, if you wanted to apply for more coverage, you can do that through your profile as well. So because I mean, our lives are so we know, with the last couple of years, especially, our lives are so ever changing, it almost seems wild for a policy not to

have that flexibility as well. So just to like, keep that policy intact, but also have that security, knowing that it can be changed without having to go through a bunch of paperwork and figuring out like the timeline of how it's going to be approved. With Ladder, we really do try and make it as seamless as possible just to make sure that that flexibility is there. Who is somebody that doesn't need life insurance? You're like, everybody needs it. I don't know. In a sense, yeah.

I guess if you're like, you're really sitting there and you're you're looking inwards and you're thinking about like your financial planning if you plan on not having any financial liabilities like kids are not in your future no mortgage no debts yeah that could that could totally maybe the product's not for you which like totally makes sense or i guess if you're older and like approaching retirement and you have like an egg like things for that then maybe the product also might not be the best for you either but I mean I think of like my parents are the most financially responsible people I know and don't have debt they paid off their mortgage but you like still have life insurance because it's like protection in there and I remember in

my work at the fintech company I was at too, there was a lot of conversation about how actually non-compensated working parents, so stay-at-home parents actually could really use life insurance as well. And I think they often get left out of the conversation because it's often the, you know, the parent who is going to work and getting compensated for their labor. But if, you know, your, your stay-at-home partner or your stay-at-home parent passes away, what is the cost of raising children, of upkeeping the home? And again, all of this is a little morbid and very much condenses all of these complicated things into this person dies, then what? But it's interesting to think about that as much as we need to protect the compensated working parent, the non-compensated working parent is doing just as much labor, sometimes even more

valuable labor. And, you know, it's one of those situations where it's actually interesting to consider, you know, life insurance for both partners. Yeah. I think this was even a few years ago, but the estimated cost like, or contributions to a stay-at-home parent was like $115,000 per year. So if you're looking at your annual, like 10 times your annual salary, I mean, there you go. But that was even a few years ago. It could totally be more now, but it was around the ballpark of $150,000. Yeah. Right. With inflation and daycare costs and all of that. Right. Yeah. Yeah. Yeah. And so I think that that's a conversation. And that's something I wanted to highlight in talking to you that, you know,

I didn't think about prior to starting to learn more about life insurance of like, oh, it's the person if there is, you know, two people in a relationship, and one is as a more traditional job, oh, it's that one you need to protect and it with a policy. It's also I think the non compensated working parent who, you know, is very much doing a ton of labor that, of course, non-compensated, but in a way that, you know, you would have to hypothetically pay for if that person wasn't working. Absolutely. Yeah. Another thing that people also sometimes forget about is if you're, like, taking care of, like, older parents, if if they have like like older family members that

they're taking care of like maybe like elder care that's another thing to think of too so if your income were to disappear would they be covered too like are they going to be okay so that's another thing that i feel like even sometimes when i'm talking with users i forget about that point but also you don't want to ask like, who are you taking care of? But like, you just like ask them, like, who's depending on you? Like, where's like, if you if your income were to disappear, who would be affected? Yeah, right. And even in 2022, you know, we know that women are still largely the caregivers, both to children as well as to ailing family members. And it's a huge reason why a lot of women leave the workforce either temporarily or permanently, because they're they're caregiving. And it's a huge reason why a lot of women leave the workforce either temporarily or permanently because they're caregiving. And yeah, to your point, I mean, we know the cost of

either daycare or something like a nursing home or at-home hospice care or something like that. It's incredibly expensive. And so I think revamping or at least rethinking how we think about protecting people in our lives with policies in the same way that, yeah, we want to protect the people who are also doing labor. It just might not be compensated labor. Totally. Yes. Couldn't agree more. My last question for you. What would you say to somebody who's on the fence about whether or not they need life insurance? Yeah. Kind of going back to my original kind of tangent, if you're thinking about it at all, you're already on the right track. Yeah. It's always going to be the most affordable right now. So kind of just look at what your future

holds and just have a moment with yourself or with people that depend on you that say, yeah, it's important to have that basic life insurance in place to like protect your family should like an unexpected death occur. So yeah, just kind of think a little bit deeply about your future for a hot second and congratulate yourself for thinking about it and, you know, getting those hard topics out into the ether and figuring out how you can best help the ones that you love. Thank you. This has been so helpful. It's one of the questions we get most frequently. We have our link to Ladder down below. Where else can people go to learn more about life insurance, about their different options? Feel free to plug away.

Yeah. I mean, Ladder is a huge help desk of like questions and FAQs. Also, how can we best help you in your journey so that you have like a confident and like clear perception of what you're buying and how we can like best facilitate that. So yeah, everyone on our team is always willing to help. We have our help desk and yeah, I mean, also if you want to do like supplemental research, do a couple of Google searches and do like a couple of reading, like, just like doing the due diligence of looking at a couple other options and then feeling out what you think is best. I'll plug ladder just a little bit more too, but like we have non-commissioned agents. So if you talk to any of us or like anyone on my team, I'm not like, you know,

pushing you to get this because I want to sell you something. I am pushing you to get it because I truly and earnestly think it's all for your financial planning and your financial future. So yeah. And like I was saying before too, there's plenty of people on social media, especially that are pushing life insurance policies and like, trust your guts. Like life insurance again, should be for life insurance, in my opinion, not for an investment. And there's so many studies and research that shows that you actually lose money if you're trying to use them as investment vehicles. And if again, if your gut's going off, your gut's going off for a reason. And so, yeah, I've been working with you all. Oh, gosh, it's like 2018. And so it's just, yeah, so helpful to be able to get some expertise and to have you on the show.

So thanks for being here. Thank you. Thanks for all So thanks for being here. Thank you. Thanks for all the work you guys do. Honestly, I love reading through your stuff. I love listening to the podcast. It's helped me immensely. So yeah, I appreciate you having me on and listening to some morbid talk, but also some important talk.

Thank you again to Jeanette for joining us. You can learn more about Ladder and their offerings at the link in our show notes below. And this episode more than any is like a perfect one to share, especially maybe with your partner who you've been thinking about life insurance with, your parents, just people in your life who have sent you the TikTok about IUL and been like, question mark. This is a great episode to send their way. Thank you for joining us. And please don't forget to rate, review, subscribe. You know the drill if you're enjoying the show. Thank you for being here.

Thank you for your support of this show and this mission. And we'll catch you later, Financial Feminist. Thank you for listening to Financial Feminist, a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields, marketing and administration by Karina Patel, Sharice Wade, Alina Helzer, Paulina Isaac, Sophia Cohen, Valerie Oresko, Jack Koning, Khalil Dumas, Elizabeth McCumber, Beth Bowen, and Amanda LeFue. Research by Arielle Johnson, audio engineering by Austin Fields, promotional graphics by Mary Stratton, photography by Sarah Wolfe, and theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100K team and community for supporting the show. For more information

about Financial Feminist, Her First 100K, our guests, and episode show notes, visit financialfeministpodcast.com or follow us on Instagram at financialfeministpodcast.