Latest / Money In Motion with Klaas Financial / Protecting Your Paycheck and Your Family

Transcript

Protecting Your Paycheck and Your Family · Money In Motion with Klaas Financial

0:00
Speaker 1: And our phone minds there open to you right now.
0:02
Speaker 2: If you've got a question for our retirement planning professionals
0:05
Speaker 2: from Class Financial. Love to have you join us this morning.
0:07
Speaker 2: Telephe number to get on the air six SOH eight
0:09
Speaker 2: three two one thirteen ten. That's six SOH eight three
0:13
Speaker 2: two one thirteen ten. Love to have you join us
0:15
Speaker 2: this morning. We'll f CJ Class and Eric Schwartz along
0:18
Speaker 2: our retirement planning professionals from Class Financial to answer your questions.
0:22
Speaker 2: Dorf Gay can learn more about Class Financial on their website.
0:25
Speaker 2: Class financial dot com that's class k l aas financial
0:29
Speaker 2: dot com. Website tells you a lot about COSS Financial,
0:32
Speaker 2: their separate divisions, how they can help you. Also, if
0:34
Speaker 2: you're an employer, how they can help you there as well.
0:37
Speaker 2: You can also listen back to this in previous shows, podcasts,
0:40
Speaker 2: and if that wasn't enough, you can also schedule a
0:42
Speaker 2: complimentary chat right from the website. Just head on over
0:45
Speaker 2: to class financial dot com that's class k l a
0:49
Speaker 2: as Financial dot com or give them a call tell
0:51
Speaker 2: phone number six oh eight four four two five six
0:54
Speaker 2: three seven. Don't forget that first initial goods to know
0:56
Speaker 2: you conversation that appointment's not going to cost you a
0:58
Speaker 2: thing at Class Financial and that tele number six oh
1:00
Speaker 2: eight four four two five, six three seven as mentioned.
1:03
Speaker 2: Joining us this morning are our retirement planning professionals CJ.
1:07
Speaker 2: Closs and Eric Schwartz.
1:09
Speaker 1: CJ. How you doing this week?
1:11
Speaker 3: I'm doing great, Sean.
1:12
Speaker 4: How are you?
1:12
Speaker 1: I'm doing really well. Great to have you along. Eric,
1:14
Speaker 1: how have you been?
1:16
Speaker 4: You know, it's been a good week, Sean. I can't complain.
1:18
Speaker 2: It's it we are in that. It's an exciting time
1:20
Speaker 2: of year for sure. So yeah, that's definitely I've been
1:23
Speaker 2: a great week, and we've got I've got a great
1:25
Speaker 2: topic ahead of course, the importance of protecting both your
1:28
Speaker 2: paycheck and your family. I'm kind of getting Eric and
1:31
Speaker 2: CJ's perspective on things like life and disability insurance coverage,
1:36
Speaker 2: why those things are so important in the role that
1:38
Speaker 2: they that they play. We'll get into that, and just
1:40
Speaker 2: a moment, a couple of things. As I mentioned, of course,
1:42
Speaker 2: phone lines are open. Gets you on the air six
1:44
Speaker 2: oh eight three two one thirteen ten. That's six oh
1:47
Speaker 2: eight three two one thirteen ten. Anything retirement planning and
1:50
Speaker 2: retirement related. If you've got a question, you can join us,
1:52
Speaker 2: whether it's about the topic at hand or anything on
1:54
Speaker 2: your mind. Love to hear from you this morning. Telephe
1:56
Speaker 2: number six so eight three two one thirteen ten. That's
1:58
Speaker 2: six oh eight three two one thirteen ten. Before we
2:01
Speaker 2: get rolling on this week's show, Each and every week,
2:03
Speaker 2: do the class quiz question the week your chance to
2:05
Speaker 2: win a fantastic prize from our friend at friends at
2:08
Speaker 2: Coss Financial. And this week is no exception chance to
2:10
Speaker 2: win a twenty five dollars gift card to Amazon. Tell
2:13
Speaker 2: you a little bit later on the program how you
2:14
Speaker 2: can win that little tiptoed about every show, the question
2:18
Speaker 2: and answer to the class quiz question the week comes up,
2:20
Speaker 2: so you definitely want to pay close attention. And before
2:22
Speaker 2: we start talking about different types of insurance coverages things
2:26
Speaker 2: like life and disability, let's actually look back at last
2:29
Speaker 2: week's show, Eric and get the question and answer to
2:31
Speaker 2: the class quiz question of the week.
2:34
Speaker 4: Absolutely. So, last week we on our show we talked
2:37
Speaker 4: about conflicts of interest and where they pop up, maybe
2:41
Speaker 4: in places that people aren't used to thinking about. And
2:44
Speaker 4: so our question for last week was true or false
2:47
Speaker 4: cost financial beliefs referrals to other financial professionals should be
2:51
Speaker 4: driven by the professionals competence in character and not compensation.
2:57
Speaker 4: And I would hope that everybody would would believe that
2:59
Speaker 4: the answer to that is of course true.
3:02
Speaker 2: Yes, absolutely. Congratulations to our winner. Don't forget a chance
3:05
Speaker 2: for you to win again this week chance to win
3:07
Speaker 2: a twenty five dollars gift card to Amazon. Also speaking
3:09
Speaker 2: of last week and previous shows, fantastic information available to
3:13
Speaker 2: you right at class financial dot Com. You can listen
3:16
Speaker 2: back to the podcast right there. That's Closs k l
3:18
Speaker 2: Aas Financial dot Com and CJ. This week we're shifting
3:21
Speaker 2: gears a little bit talking about protecting your paycheck and
3:25
Speaker 2: of course ultimately your family through things like life life
3:28
Speaker 2: as well as disability insurance.
3:30
Speaker 1: Why is this so important for people to grasp? CJ?
3:35
Speaker 3: Yeah, this is one of the most overlooked areas of
3:38
Speaker 3: financial planning, believe it or not, especially for people who
3:40
Speaker 3: are still working and earning an income. So during your career,
3:44
Speaker 3: your paycheck is your most valuable financial asset. It funds
3:48
Speaker 3: your lifestyle, supports your family, and allows you to save
3:52
Speaker 3: for the future. The challenge is that while while people
3:55
Speaker 3: ensure they're homes, their cars, and even their phones. They
3:58
Speaker 3: often don't think about protecting the income that makes all
4:01
Speaker 3: those things possible. If that paycheck or that working income
4:05
Speaker 3: were to stop due to a disability or a death,
4:09
Speaker 3: the financial impact obviously can be quite significant to your
4:13
Speaker 3: loved ones. So insurance is really about making sure a
4:16
Speaker 3: temporary or permanent disruption doesn't derail everything you've built.
4:23
Speaker 2: Talking this morning with CJ Closs and Eric Schwartz our
4:25
Speaker 2: retirement playing professionals from Class Financial, CJ doing a fantastic
4:29
Speaker 2: job is always kind of laying out this week's conversation
4:31
Speaker 2: if you've got a question, whether it's about this week's
4:33
Speaker 2: topic or anything retirement related. Love to have you join
4:35
Speaker 2: us again. The number to get on the ear six
4:37
Speaker 2: h eight three two one thirteen ten. That's six h
4:39
Speaker 2: eight three two one thirteen ten. So, Eric, when you
4:42
Speaker 2: sit down with folks, sit down with clients, how do
4:44
Speaker 2: you frame these risks? I mean, you think about this
4:46
Speaker 2: and the role of insurance. Obviously it's very important. It's
4:50
Speaker 2: an important conversation to have. How do you talk to
4:53
Speaker 2: them about the role that insurance plays in protecting them?
4:57
Speaker 4: Yeah, that's a really good point, Seoan. It's it's very important,
5:00
Speaker 4: and it's it's not the most exciting thing for for
5:03
Speaker 4: us to talk to clients about. Nobody likes to think about, well,
5:05
Speaker 4: what if I'm disabled and I can't work, or what
5:07
Speaker 4: if I what if I pass away and my family
5:10
Speaker 4: is left without without the financial security that they need.
5:14
Speaker 4: So it's a little bit like eating your vegetables. Nobody
5:16
Speaker 4: wants to do it, but it's good for you. And
5:18
Speaker 4: and when we're talking through this with clients, we're typically
5:22
Speaker 4: going to start by separating the risks between the two
5:25
Speaker 4: categories that we're going to talk about today, because they're different,
5:28
Speaker 4: but they're they're equally important. So the first risk is
5:32
Speaker 4: the risk of premature death, right, So this is where
5:34
Speaker 4: life insurance comes into play. Life insurance is designed to
5:38
Speaker 4: replace income, payoff debts and provide financial stability for your
5:43
Speaker 4: surviving family members. And the second part of that is
5:46
Speaker 4: the risk of disability. And this is surprisingly actually more
5:50
Speaker 4: common during your working years than than the risk of
5:54
Speaker 4: premature death. And disability insurance replaces a portion of your
5:58
Speaker 4: income if you're unable to work due to illness or injury.
6:03
Speaker 4: And as I mentioned there, I want to really put
6:05
Speaker 4: a fine point on it. The risk or what surprises
6:09
Speaker 4: people often is that they're statistically more likely to experience
6:13
Speaker 4: a period of disability during their career than they are
6:16
Speaker 4: to pass away early. But disability coverage is often the
6:20
Speaker 4: one that gets less attention when we're talking about these
6:23
Speaker 4: topics that frankly, people don't want to talk about very much.
6:26
Speaker 2: So and it's it's interesting as as Eric and as
6:30
Speaker 2: you kind of talk about that stuff. Yeah, obviously, disability
6:34
Speaker 2: and those type of situations far more more common but
6:38
Speaker 2: less less commonly addressed. And these are important conversations. And
6:42
Speaker 2: as we work through some of these very important topics
6:45
Speaker 2: and very important conversations, don't forget you can learn more
6:47
Speaker 2: about everything online Class financial dot Com. Also listen back
6:50
Speaker 2: to this in previous shows podcast right at class financial
6:53
Speaker 2: dot Com TELF number six so eight four four to
6:55
Speaker 2: two five six three seven for colss Financial. No charge
6:58
Speaker 2: for that initial get to know you, Poyment Tech Lost
7:00
Speaker 2: Financial complimentary to you again their number six eight four
7:03
Speaker 2: four two five six three seven So CJ. Let's kick
7:06
Speaker 2: it off with the life insurance part of this. What
7:08
Speaker 2: role was it play when it comes to protecting a
7:11
Speaker 2: family's financial future?
7:14
Speaker 3: Yeah, good question, Sean. You know a couple things here
7:16
Speaker 3: as I as I start to talk about this. Number one,
7:18
Speaker 3: we're not we don't we don't sell insurance. So as
7:21
Speaker 3: we're talking about this topic, just so everybody understands, this
7:24
Speaker 3: is from a financial planner's perspective on the topic of
7:28
Speaker 3: life insurance and disability insurance and how critical it is
7:32
Speaker 3: to the stability of your long term financial picture. But
7:35
Speaker 3: we're we don't sell it, so we're really just here
7:37
Speaker 3: to educate. And then Eric was referencing the probability. I
7:42
Speaker 3: was looking this up in the background because I thought
7:45
Speaker 3: I knew it, but I wanted to double check it.
7:47
Speaker 3: To Eric's point, you are about three to four times
7:51
Speaker 3: more likely to become disabled before the age of fifty
7:55
Speaker 3: versus die. And yet you know Eric and I Eric
7:58
Speaker 3: can attest to this, how how often do people have
8:01
Speaker 3: life insurance versus disability insurance? And the answer is probably
8:05
Speaker 3: three to four times more likely to have life insurance
8:07
Speaker 3: than they are to have disability insurance, even though those
8:09
Speaker 3: numbers should be inverted. So anyway, just at reemphasizing Eric's
8:15
Speaker 3: point there. But yeah, to your question, Sean, life insurance
8:17
Speaker 3: provides financial continuity for people who depend on you. So
8:21
Speaker 3: if something were to happen, it obviously creates a pool
8:24
Speaker 3: of money that can replace lost income and support long
8:27
Speaker 3: term goals. Believe it or not, everybody in our jobs
8:32
Speaker 3: it's kind of like being a doctor or a pastor.
8:35
Speaker 3: We deal with death a lot, and we deal with
8:38
Speaker 3: it intimately, right. I just yesterday was in Chicago for
8:43
Speaker 3: the funeral of one of our former advisors in laws,
8:49
Speaker 3: and it's somebody who is in their thirties. And so
8:52
Speaker 3: these things are they happen. They don't happen statistically that often,
8:57
Speaker 3: especially in your thirties or forties, but when they do,
9:00
Speaker 3: they can just rock the world of those you leave behind.
9:05
Speaker 3: So we often think about it in terms of responsibility. So,
9:09
Speaker 3: do you have a spouse relying on your income? That
9:11
Speaker 3: matters a lot. Do you have children who will need
9:13
Speaker 3: support or education funding? Obviously that matters. And then do
9:17
Speaker 3: you have a mortgage or other debts that would need
9:18
Speaker 3: to be paid off in the event of your premature death.
9:22
Speaker 3: So listen, if you're hearing me on the air right now,
9:25
Speaker 3: and you're twenty five years old with your first job,
9:27
Speaker 3: but you have no spouse, no children, and no mortgage
9:30
Speaker 3: and just some rent my comment would be, you might
9:33
Speaker 3: want to get some life insurance to basically bury you
9:35
Speaker 3: and take care of final expenses, but not huge, huge
9:39
Speaker 3: things there. But if you just go two more years
9:41
Speaker 3: into the future and suddenly you've gotten married, you bought
9:45
Speaker 3: a home, you had your first child, well, what might
9:48
Speaker 3: have been a fifty to one hundred thousand dollars policy
9:51
Speaker 3: to bury you could now become a million two million
9:54
Speaker 3: dollars worth of term life insurance to try to provide
9:57
Speaker 3: continuity to the loved ones. So again, life insurance helps
10:02
Speaker 3: ensure that these obligations don't become burdens. It allows a
10:06
Speaker 3: family to maintain their lifestyle, stay in their home, and
10:09
Speaker 3: continue pursuing long term goals, even you know, within these
10:13
Speaker 3: very difficult situations.
10:14
Speaker 2: As we learn about the importance of it, I will
10:17
Speaker 2: I will then turn to you Eric about kind of
10:19
Speaker 2: quantifying this. You know, how should we think about when
10:21
Speaker 2: it comes to what should we be thinking about when
10:23
Speaker 2: it comes to how much life insurance you'll actually need.
10:29
Speaker 4: Yeah, this is a really important planning point because you
10:33
Speaker 4: know it, sometimes it can feel like, oh, you're just
10:35
Speaker 4: picking an arbitrary number and saying you need this much
10:38
Speaker 4: life insurance. Right, But really what we want to do
10:41
Speaker 4: is we want to tie life insurance big financial needs. Right,
10:45
Speaker 4: So we want to look at how many years of
10:47
Speaker 4: work do you have in front of you, and what
10:50
Speaker 4: sort of income would be lost if you were to
10:53
Speaker 4: pass away, What major debts do you have that you
10:56
Speaker 4: would want to potentially pay off, like a mortgage. What
11:00
Speaker 4: future goals do you have for your your family?
11:03
Speaker 3: Right?
11:04
Speaker 4: Are you maybe you want to provide education funding or
11:08
Speaker 4: you know, whatever it might be. What what future goals
11:11
Speaker 4: would you want to make sure are funded? And then
11:14
Speaker 4: the final piece that we look at here is you
11:16
Speaker 4: know what what sort of final expenses would we want
11:18
Speaker 4: to make sure are covered by that life insurance policy.
11:22
Speaker 4: So from there we can build up to a number
11:24
Speaker 4: that that supports these goals. Right, and for younger families especially,
11:28
Speaker 4: that number can be larger than they expect because you're
11:31
Speaker 4: protecting many years of future income. Now, when we're looking
11:35
Speaker 4: at life insurance, just to be to be clear here,
11:38
Speaker 4: it's not like, oh, upon upon the death of someone,
11:41
Speaker 4: we need to have a death benefit that covers all
11:44
Speaker 4: of these expenses forever more, right, we want to be
11:47
Speaker 4: able to create a bridge and you know, be able
11:51
Speaker 4: to create a plan to probably invest some of the
11:56
Speaker 4: dollars as well, so that they can grow over time
12:00
Speaker 4: and h and provide income, you know, into the future.
12:03
Speaker 4: So it's not about having every dollar you need upon death,
12:05
Speaker 4: but being able to bridge into into the future for
12:10
Speaker 4: your family. Now, I mentioned earlier that that younger families
12:13
Speaker 4: especially can see bigger numbers because there are more years
12:17
Speaker 4: of income to replace, and maybe they have larger mortgages
12:20
Speaker 4: because you know, just purchased at home. The good news
12:23
Speaker 4: here is that term life insurance is often a really,
12:26
Speaker 4: really cost effective way to cover those those high need
12:29
Speaker 4: years when financial responsibilities are the greatest. And then as
12:33
Speaker 4: you age and those those financial responsibilities reduced, maybe well
12:38
Speaker 4: maybe your mortgages is a lot lower, or you have
12:41
Speaker 4: fewer years to replace income. That's when the the insurance
12:45
Speaker 4: can essentially expire and you no longer need to need
12:49
Speaker 4: to pay for it.
12:50
Speaker 1: Talking this morning with Eric Schwartz and CJ.
12:52
Speaker 2: Coss or retirement playing professionals from class Financial website class
12:55
Speaker 2: Financial dot com. That's Coss k l a A s
12:58
Speaker 2: Financial dot com. Are making an appointment at Costs Financial
13:01
Speaker 2: six oh eight four four two five six three seven
13:04
Speaker 2: No charge for that initial get to know you appointment
13:06
Speaker 2: at Costs Financial. It will be complementary to you again
13:09
Speaker 2: their number six oh eight four four two five six
13:11
Speaker 2: three seven. So we talked about life insurance. What about
13:15
Speaker 2: disability insurance coverage. We'll get the details from CJ and Eric.
13:18
Speaker 2: We will do that next as Money in Motion with
13:21
Speaker 2: cost Financial continues right here on thirteen ten WUIV eight
13:25
Speaker 2: talking with our retirement planning professionals CJ. Coss and Eric Schwartz.
13:29
Speaker 2: They come to us from Coss Financial online Coss Financial
13:33
Speaker 2: dot com. That's Coss k l aas Financial dot com.
13:36
Speaker 2: They're topal number six oh eight four four two five
13:39
Speaker 2: six three seven. No charge for that initial get to
13:42
Speaker 2: know your appointment dech Loss Financial. It will be complementary
13:45
Speaker 2: to you again their number six oh eight four four
13:47
Speaker 2: two five six three seven. Talking this week getting a
13:50
Speaker 2: financial planner's perspective on life and disability insurance. Talked in
13:54
Speaker 2: that first segment about life insurance. That brings us to
13:57
Speaker 2: disability insurance and CJ. Earlier you mentioned that the risk
14:02
Speaker 2: with the need for disability insurance is often underestimated.
14:07
Speaker 1: Why is that?
14:10
Speaker 3: Yeah, I think of I think part of it is
14:12
Speaker 3: that people associate disability with something extreme or or unlikely,
14:17
Speaker 3: but in reality, disability can come from a wide range
14:19
Speaker 3: of situations, such as injuries or illnesses, or surgeries or
14:23
Speaker 3: even chronic conditions. So we mentioned it before, but during
14:27
Speaker 3: your lifetime, before the age of fifty, you're three to
14:29
Speaker 3: four times more likely to become disabled than you are
14:32
Speaker 3: to die, which, honestly, if you actually pause for a
14:36
Speaker 3: moment and think about that, it's kind of like, yeah, obviously, right,
14:41
Speaker 3: death is a one time event. You can quote unquote
14:45
Speaker 3: become disabled multiple times throughout your life. Right If I
14:49
Speaker 3: go in for a two day surgery, technically that's a
14:52
Speaker 3: short term disability. So anyway, you get the point. The
14:57
Speaker 3: question is how long am I disabled? Is this a
15:00
Speaker 3: lifetime disability? And it is those longer term disabilities that
15:06
Speaker 3: can really put you or your family or loved ones
15:09
Speaker 3: in a financial pickle because truth be told, Eric referenced
15:12
Speaker 3: it before, but buying term life insurance is not that difficult.
15:17
Speaker 3: It's pretty inexpensive under most circumstances. Unless you have some
15:21
Speaker 3: sort of chronic medical condition. It can cover you during
15:25
Speaker 3: the most critical years. And so if you die and
15:28
Speaker 3: you ensure this large death benefit, that can provide for
15:32
Speaker 3: your family. However, if you become disabled, it's almost like
15:37
Speaker 3: the worst of all situations, right, And it sounds terrible
15:42
Speaker 3: because you go, well, that's better than dying CJ. And
15:44
Speaker 3: I go, yeah, relationally, it's better than dying, but financially
15:48
Speaker 3: it's not. Because you're still alive. You feel like you
15:51
Speaker 3: can't provide the way that you used to be able
15:53
Speaker 3: to which you can't, and the families you know worse off,
15:58
Speaker 3: much worse off. So the key issue isn't just the
16:02
Speaker 3: medical event of disability, it's the income disruption that comes
16:06
Speaker 3: with it. If you're unable to work for months or
16:09
Speaker 3: even years, your financial plan can come under pressure very quickly.
16:13
Speaker 3: So disability insurance addresses that directly by replacing a portion
16:18
Speaker 3: of your income so that you can continue to cover
16:20
Speaker 3: expenses and stay on track financially. So Eric will be
16:24
Speaker 3: talking more about this in terms of how much does
16:26
Speaker 3: it replace, how expensive is this. There's a lot to
16:30
Speaker 3: know here, but really especially for the younger professionals who
16:34
Speaker 3: are out there who don't have a lot of wealth
16:36
Speaker 3: but have a lot of income. You know, think epic employees,
16:40
Speaker 3: Exact sciences employees say to Wisconsin employees, although I think
16:43
Speaker 3: in the state of Wisconsin they offer some disability insurance.
16:46
Speaker 3: Eric can speak to that. But if your employer doesn't
16:49
Speaker 3: offer employer sponsored disability plans, you really want to slow
16:52
Speaker 3: down and take a look at those.
16:54
Speaker 1: And Eric CJ perfectly set up this.
16:57
Speaker 2: How do you then help clients evaluate webs their disability
17:00
Speaker 2: coverage is sufficient.
17:03
Speaker 4: Yes, CJ just hit on a really important part of
17:06
Speaker 4: this discussion. We talk a lot about how people don't
17:09
Speaker 4: often think to get their own disability insurance, and the
17:12
Speaker 4: good news is that many employers do provide this as
17:16
Speaker 4: an employee benefit. So what we start by doing is
17:20
Speaker 4: we look at any coverage that people already have, but
17:23
Speaker 4: you know, generally through an employer. And many people are
17:27
Speaker 4: surprised to learn that. You know, there's not only one
17:31
Speaker 4: disability insurance policy, but two that is offered by a
17:35
Speaker 4: lot of employers. So the first of those would be
17:38
Speaker 4: short term disability, and this generally covers the initial period
17:42
Speaker 4: of a disability, so I think like a three to
17:44
Speaker 4: six month timeframe, and it's designed to provide income replacement
17:48
Speaker 4: during temporary situations like I think recovery from an illness. Right,
17:55
Speaker 4: this is going to cover that initial short timeframe. Then
18:00
Speaker 4: we have long term disability, and this usually will be
18:03
Speaker 4: designed to start after that short term period ends, and
18:06
Speaker 4: it's intended to provide ongoing income support and this can last,
18:11
Speaker 4: you know, several years or even all the way up
18:13
Speaker 4: to retirement age, depending on the policy and the extent
18:17
Speaker 4: of the disability. But it's important to remember that even
18:21
Speaker 4: with these benefits in place, most group disability plans only
18:25
Speaker 4: replace a portion of your income, often in the range
18:28
Speaker 4: of fifty to sixty percent of your pre disability earning power.
18:34
Speaker 4: And these benefits may be taxable if the employer is
18:37
Speaker 4: actually paying the premium on the policy. Okay, so we
18:42
Speaker 4: start by understanding what is already in place, and then
18:46
Speaker 4: from there we evaluate, you know, how much income is
18:48
Speaker 4: actually protected when you factor in both those short and
18:52
Speaker 4: long term coverages. How long will these benefits last, especially
18:56
Speaker 4: on the long term disability side, and how long you'd
19:00
Speaker 4: need to actually wait before benefits begin. So this could
19:03
Speaker 4: be on both the short term side having a waiting
19:06
Speaker 4: period and the long term having a waiting period to
19:10
Speaker 4: get started. And if there's a gap here, we may
19:13
Speaker 4: actually look at an individual disability policy to supplement that coverage.
19:17
Speaker 4: So the goal is to coordinate these different layers so
19:19
Speaker 4: that if your paycheck stops, there's still enough income coming
19:22
Speaker 4: in to support your core expenses and help you maintain
19:26
Speaker 4: that financial stability.
19:27
Speaker 1: Talking this morning with Eric Schwartz and CJ. Closs.
19:30
Speaker 2: They are our retirement planning professionals from Class Financial. This
19:33
Speaker 2: week's conversation talking about getting their perspective when it comes
19:37
Speaker 2: to life and disability insurance coverage. Don't forget if you
19:40
Speaker 2: ever missed part of this program, you want to listen
19:42
Speaker 2: back or you want to share it, if you head
19:43
Speaker 2: on over to classfinancial dot com you can do just that.
19:46
Speaker 2: That's Coss klaas Financial dot com telph number six so
19:49
Speaker 2: eight four four two five six three seven. We'll take
19:52
Speaker 2: it down the home stretch next as Money in Motion
19:54
Speaker 2: with Coss Financial continues right here on thirteen ten WUIB
19:58
Speaker 2: talking with our retirement planning for professional CJ. Closs and
20:01
Speaker 2: Eric Schwartz. Of course, the website they come to is
20:03
Speaker 2: from it's Classfinancial dot com. Of course you can learn
20:06
Speaker 2: more about them right on their website. Dell phll nu'mber
20:08
Speaker 2: give McCall six so eight four four two five six
20:10
Speaker 2: three seven and CJ. As we're talking this morning, we've
20:14
Speaker 2: heard about disability insurance benefits through Social Security.
20:17
Speaker 1: Where does that factor in?
20:19
Speaker 3: Yeah, good question, Sean. I'm gonna as we start talking
20:22
Speaker 3: about Social Security disability, I'm going to use myself as
20:24
Speaker 3: an example. It's often easiest to do this, but here
20:27
Speaker 3: at Class Financial, for our employees, we offer a short
20:30
Speaker 3: term and long term disability policy along with some employer
20:34
Speaker 3: sponsored life insurance. Well, one of the things that Eric
20:37
Speaker 3: mentioned previously as it relates to disability is that disability,
20:40
Speaker 3: if paid for by your employer, may be income taxable
20:43
Speaker 3: to you. And that matters a lot, right, because if
20:46
Speaker 3: if I'm getting fifty to sixty percent of my income
20:51
Speaker 3: from a disability policy, when I become disabled and it's
20:54
Speaker 3: not taxable, well that may replace the majority of what
20:58
Speaker 3: I had. But if I get fifty to sixty percent
21:00
Speaker 3: it's taxable, well, then it's going to replace fifty to
21:02
Speaker 3: sixty percent, right, And so whether it's taxable matters. Well.
21:07
Speaker 3: In the case of like Class Financial and many employers,
21:10
Speaker 3: they'll do something called imputed earnings, so they'll take those
21:13
Speaker 3: premiums and they will add an additional tax so that
21:16
Speaker 3: you are paying the tax on the premium even though
21:19
Speaker 3: you are not paying the premium yourself. It's kind of
21:22
Speaker 3: this interesting way for the employer to pay for it,
21:26
Speaker 3: but for you to pay the tax so that when
21:29
Speaker 3: you die and get a death benefit it's tax free,
21:31
Speaker 3: or when you need the disability insurance, it's income tax free.
21:35
Speaker 3: So what we would say is this is why people
21:38
Speaker 3: like us exist. As we sit around, we nerd out
21:41
Speaker 3: on these things. We find out if you have disability,
21:44
Speaker 3: is it taxable, is there imputed earnings on that or not,
21:48
Speaker 3: and then we just help you kind of figure out
21:50
Speaker 3: what you would need in the event of a disability.
21:52
Speaker 3: I must admit everybody, unless you do this for a living,
21:55
Speaker 3: it's kind of complicated. But if you do it for
21:58
Speaker 3: a living and you do it over and over and
22:00
Speaker 3: over thousands of times in a career, it becomes second nature.
22:05
Speaker 3: So what you were asking about their shown social security
22:08
Speaker 3: disability acts as a secondary or a supplemental layer within
22:12
Speaker 3: the broader kind of income protection plan. So in most
22:15
Speaker 3: cases it doesn't replace employer or individual disability coverages, it
22:20
Speaker 3: actually coordinates with them. So here's how it typically works.
22:24
Speaker 3: Employer and individual disability insurance are the primary income replacement tools.
22:29
Speaker 3: These are the policies we rely on to provide more predictable,
22:32
Speaker 3: timely income if someone can't work. Social Security disability sits
22:36
Speaker 3: in the background and may provide an additional benefit if
22:40
Speaker 3: someone meets the qualifications. But the qualifications to qualify for
22:46
Speaker 3: Social security disability are typically more stringent and different than
22:50
Speaker 3: they would be for an individual or a group policy.
22:53
Speaker 3: So where the coordination comes in is that many long
22:56
Speaker 3: term disability policies are designed to integrate with social security disability.
23:01
Speaker 3: If someone qualifies for SSDI, the long term disability carrier
23:06
Speaker 3: may offset or reduce its benefit by the amount of
23:09
Speaker 3: social security received. As a matter of fact, I want
23:12
Speaker 3: to pause on this point. This is very common, very
23:16
Speaker 3: very very common. People say, oh, my goodness, you know
23:19
Speaker 3: so and so became disabled at forty and now think
23:22
Speaker 3: that that you know, insurance policy has to provide disability
23:25
Speaker 3: income for the next whatever, thirty forty fifty years. Not always.
23:31
Speaker 3: If somebody has a long term disability, they will often
23:34
Speaker 3: qualify for social security disability as well, at which point
23:40
Speaker 3: the individual policy or the group policy may have an
23:43
Speaker 3: off where whatever you get from SSDI social security disability
23:49
Speaker 3: is offset by what the carrier is providing. Now does
23:53
Speaker 3: this matter to you as a consumer? Not necessarily. You
23:57
Speaker 3: might just be surprised that if someone in your family
23:59
Speaker 3: become disabled that the insurance company providing you with the
24:03
Speaker 3: long term disability will be very interested in getting you
24:07
Speaker 3: qualified for Social Security disability. And you might go, why
24:11
Speaker 3: do they care?
24:11
Speaker 2: Why do they care?
24:12
Speaker 3: Well, because if they can qualify you for SSDI, they
24:15
Speaker 3: can stop paying so much. So again, does this matter
24:19
Speaker 3: to you as a consumer? Maybe, maybe not. You just
24:22
Speaker 3: need to know how this game works and again cover
24:25
Speaker 3: yourself and your family appropriately.
24:27
Speaker 1: Talking this morning with CJ. Class and Eric Schwartz.
24:29
Speaker 2: They are our retirement planning professionals from Class Financial. A
24:32
Speaker 2: lot of great information this week. As always doth Forge
24:35
Speaker 2: you can listen back at class financial dot com. That's
24:37
Speaker 2: Class k l a a S Financial dot com. And Eric,
24:40
Speaker 2: let's kind of you know, when you put kind of
24:42
Speaker 2: that life insurance disability insurance together, they actually can work together,
24:46
Speaker 2: they can compliment each other.
24:47
Speaker 1: What do we need to know there? We lose everything?
24:51
Speaker 1: Okay for Eric, that's all like, yeah, I can't hear Eric,
24:55
Speaker 1: Yeah I don't. I'll jump in, Okay, I'll jump in
24:58
Speaker 1: take this.
24:59
Speaker 4: Yeah.
24:59
Speaker 3: Yeah, So they really protect two sides of the same coin.
25:02
Speaker 3: So so disability insurance protects your income while you're alive
25:05
Speaker 3: but unable to work, and life insurance protects your family
25:09
Speaker 3: if that income is lost permanently. So when they're coordinated properly,
25:13
Speaker 3: they can create a safety net around your earning power,
25:15
Speaker 3: which is often your most important asset during your working year.
25:19
Speaker 3: So we would say it is both that families need
25:22
Speaker 3: to be considering.
25:24
Speaker 2: That's great, great insight and information as always from our
25:27
Speaker 2: retirement planning professionals from Class Financial, don't forget you learn
25:30
Speaker 2: more online the website Coss financial dot com. That's Coss
25:33
Speaker 2: k l aas Financial dot com. There top number six
25:36
Speaker 2: oh eight four four two five six three seven. No
25:38
Speaker 2: charge for that initial gets to know the appointment at
25:40
Speaker 2: COSS Financial. It will be complimentary to you. Again they're
25:43
Speaker 2: number six oh eight four four two five six three seven.
25:46
Speaker 2: Goat to hold on too that telephone number as well,
25:48
Speaker 2: because it's time now for the Coss Quiz Question the Week.
25:50
Speaker 2: It works like this, In just a moment, I'll ask
25:52
Speaker 2: you the Class Quiz Question the Week. You will then
25:53
Speaker 2: have thirty minutes from the today's program to call the
25:56
Speaker 2: Coss Financial Office right here in Madison at six oh
25:59
Speaker 2: eight four two five, six three seven. If you are
26:02
Speaker 2: the first car with correct answer, win this week's prize,
26:04
Speaker 2: which is a twenty five dollars gift card to Amazon.
26:07
Speaker 1: This week's class quiz question leak. Is this true or false?
26:12
Speaker 2: Most employers sponsored disability insurance policies are designed to replace
26:17
Speaker 2: fifty to sixty percent of a worker's working income. Is
26:22
Speaker 2: that true or is that false? Telphe number six O
26:24
Speaker 2: eight four four two five six three seven.
26:26
Speaker 1: Good luck.
26:27
Speaker 2: First caller with correct answer won the twenty five dollars
26:29
Speaker 2: gift card to Amazon. CJ Eric always great chatting with
26:33
Speaker 2: both of you, guys. Enjoy this fantastic day. Thank you Sean,
26:36
Speaker 2: Take care guys. News comes your way next here on
26:38
Speaker 2: thirteen ten WIBI.
26:41
Speaker 1: This is Money in.
26:42
Speaker 2: Motion with Coss Financial Asset Advisors, LLC, a registered investment
26:46
Speaker 2: advisor registered with the SEC. The contents of this show
26:50
Speaker 2: are for informational purposes only and should not be considered
26:53
Speaker 2: individual investment advice. Closs Financial does not offer tax or
26:57
Speaker 2: legal advice. Any opinion offered during the course of this
27:00
Speaker 2: show is the opinion of that particular investment advisor. Representative
27:05
Speaker 2: and not necessarily the opinion of cost financial