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The Greatest Life Insurance Scam Ever · Chatting with The Experts with Paula Okonneh

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Welcome to another episode of Chatting with the Experts.
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I'm Paula Okonneh, and I speak with phenomenal women from Africa, from
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the Caribbean, and in the diaspora.
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Today's episode is:
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Is Your Income Properly Protected?
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And my guest, who will be joining me in a few minutes, says protecting
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your income is very important, and she says this all depends on who is
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dependent on your income, whether it's your spouse or your children.
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I'll tell you a little bit about her.
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She's a licensed advisor, financial advisor in Los Angeles, California,
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and she educates people on life insurance protection and how to
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invest properly in their retirement.
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She continues to make a difference in her community by trusting
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God and by helping others.
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And with that, I want to welcome Deidre Knighten to Chatting with the Experts.
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Welcome.
1:04
Good afternoon.
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I am so excited to be with you, Paula.
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I'm excited about what we're gonna talk about, and so I'm excited to be alive.
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So-
1:16
Me too.
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So just to recap, I talk about income protection.
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Mm-hmm.
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A lot of people like to call it life insurance, but really
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it's income protection.
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Mm-hmm.
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And what I mean by that is if we have a husband and a wife and a child,
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and one day the husband doesn't come home, those bills still keep coming.
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Mm-hmm.
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So you're protecting the income that comes into the household.
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Mm-hmm.
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So if you're just a single mom and your child is just dependent because
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you're a single mom on your income, and God forbid one day you don't come home,
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who's gonna protect that child's future?
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So I like to think of it instead of life insurance as income protection.
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I love that.
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It's very important, and we don't have to have income
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protection the rest of our life.
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So I'm also gonna talk about whole life as opposed to term insurance.
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Okay.
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Just protecting for the time you need it.
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And what I talk about is buy term insurance, which is the cheapest
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form of insurance, and with the money you save, you invest the difference.
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So that'll take me into investing and the rule of 72 and a lot of
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things that especially people in our community have not been taught.
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That's why you're here.
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We're taught to be consumers and not investors.
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That's why you're here.
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So let's talk about something you touched on, buy term and invest.
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I love that word invest because as you said, we are taught to
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be consumers and not investors.
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So let's talk about term insurance.
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You say you don't believe in the word term life, so let's talk about term.
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No, what I said is I don't believe in whole life insurance.
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I don't be- Oh.
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I don't believe in having insurance for your whole life.
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Mm-hmm.
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'Cause that's a death benefit, so you're betting, you know, "I'm gonna die." We
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all are gonna have to answer one day.
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Mm-hmm.
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But I don't believe you should pay for a whole life insurance your whole life.
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The only person that gets rich in that is the whole life
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insurance agent and the company.
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I believe for married couples, for single parent, whoever is dependent on that
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income, you need to protect that income.
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Mm-hmm.
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So say you have a four-year-old child at the time.
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Say you're a single parent.
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Mm-hmm.
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You have a four-year-old child.
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Get a term insurance for 20 or 25 years.
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That four-year-old in 25 years will be 29.
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In 20 years, that four-year-old will be 24.
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Mm-hmm.
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That adult will not be dependent on your income.
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They'll probably be working, in college, and have their own family by that time.
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So you only need that insurance for the time you need it, and in that 20 or 25
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years that you have term insurance, the money you save, because term insurance is
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about five times cheaper than whole life, that money you save, just say for a whole
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life policy you pay 100, for that same period of 20 to 25 years you only pay $20.
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Well, that's $80 you're saving.
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So true.
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What if you invest for the next 20 to 25 years with a rate of return of 6%?
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You could put that in any investment calculator and it'll show you what benefit
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you would get of investing $80 a month at a 6 to 7% rate of return, what you
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would have in the next 20 to 25 years.
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At compound interest.
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Yeah.
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It'd probably be more than that whole life policy was ever for the death benefit.
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Wow.
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So that's why I believe in buy term, the money you save, invest the difference.
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Wow, Deidre.
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This is an eye-opener.
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You know, most of us don't think about it that way.
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We think about, okay, term.
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Term is going to expire.
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We want to make sure that our loved ones are protected, and, you know, we
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want, you know, because it's finite, you want to make sure that whenever we go,
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our loved ones are protected, you know?
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So you think, okay, whole life, we are sold it that it's like an
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investment, and so you're investing for a future for yourself because if
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you don't use it, you can turn around and get, use that money for yourself.
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You can borrow against it.
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Those are some of the things we are told.
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So educate me and the viewers-
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So I'm glad you brought that up, Paula.
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Mm-hmm.
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So that cash value that they tell you that is invested in your
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insurance policy, think about this.
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Do you borrow against your car insurance?
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Never heard about that.
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No.
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Do you borrow against your health insurance?
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Mm-mm.
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Do you borrow money against that?
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No.
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Mm.
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What makes you think it's a good idea to borrow against your life insurance?
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That's what we've been told.
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This is supposed to protect you.
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Mm-hmm.
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You've been told something that is untrue.
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That cash value, you're only gonna get about 1 to 2% rate
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of return on that money.
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However, what the insurance companies don't tell you is that to get that
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cash value, they said, "Oh, if you need to borrow money, you'll have this
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cash value you can borrow against." How come you have to borrow the
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money that you put into the policy?
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It's your money.
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Why do you have to borrow your own money?
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That's like me putting $100 in a ATM machine, and then when I want to get it
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out, only $80 shoot back out, and I'm just like, "Hey, where's my hundred?" They
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said, "Oh, didn't we tell you the rule?
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You had to borrow from yourself to get that money back."
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Does that make sense?
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Tell me more.
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I'm all ears.
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Tell me more.
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Tell me more.
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Also, with the cash value, the only way you can get it
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is to borrow from the company-
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Mm-hmm
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… or to cancel your policy to get the cash value.
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But then you don't have any life insurance anymore.
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Mm-hmm.
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So how about doing it different?
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Because at the end of the day, one of the rules in that policy is that
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when you pass away, your beneficiary's gonna get that death benefit.
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Mm-hmm.
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However, all the cash value that you have accumulated-
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Mm-hmm
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… it does not go to your beneficiary.
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So who does it go to?
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It goes back to the company, back into the insurance company.
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It's written in the policy, but if you don't know how to read it,
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you don't know that it's there.
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So if you have a whole life policy, I suggest you let me
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review it, because there's five rules in every whole life policy.
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One is it keeps all your money the first two to five years.
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So say you're paying $100 a month.
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In year three, you say, "Mr. Company, how much money do I have in my cash
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value?" And they tell you a big, fat zero.
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You'll be appalled, right?
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Mm-hmm.
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But that's what it takes.
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They tell you, "Oh, it has to build up," and this and that.
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No.
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They're paying the cash value agent's commission out of that money.
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The second rule is that you only get 1 to 4% rate of return, whereas if
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you had an investment account, you can be getting 6 to 9% rate of return
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on the, on the money that you invest.
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Would you want 1% or 9%?
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Which one do you want?
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So the third rule is that if you need the cash value and you request
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it from your insurance company-
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Mm-hmm
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… they're gonna charge you 6 to 8% to borrow that money back.
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It's your money, so why do you have to pay to borrow it?
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And they're gonna charge you interest on it.
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Does that make any sense?
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The fourth rule is that you need it, it's an emergency, you ask the
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company, "Hey, can I borrow my cash value 'cause I have this emergency?"
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And they say, "Yes." It's July.
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We can hold that money up until December.
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What emergency do you know that will wait six months?
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So they can hold your money up to six months, unless it's to pay them premium.
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It's written in the contract.
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The fifth and the worst rule of all is that they keep the return
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of your money when you die.
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So Paula, you put this insurance policy in place for your loved one
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to have it, and when you pass away, they only get the death benefit.
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Whatever you had saved up in your cash value, that money goes back
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to the life insurance company.
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I got it.
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They don't explain that to you when they tell you about
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getting this whole life policy.
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Thank God we have term insurance.
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Your money is credited to you immediately.
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No fee to withdraw your money because it's just the death benefit.
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What you have is your money in an investment account.
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You can get that money, withdraw your money in seven days by check, or if you
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have direct deposit, 24 to 72 hours.
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And when you die, you have two accounts.
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You have a death benefit, a life insurance, and you
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have the investment account.
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Both accounts have beneficiaries.
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So when you pass away, your family get both pots of money.
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Isn't that a better deal?
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And term insurance is five times cheaper than whole life.
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So tell me why they sell us the whole life insurance.
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I think as I'm asking the question, I think I kind of know the answer.
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So for the agent, it's wiser-
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It's a bigger commission for the agent.
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That
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makes sense.
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And as you continue to pay, they continue to get commissions, so they'll do
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whatever to get you to keep that policy.
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But if you let someone, a expert review your policy and show you all
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five of those rules I just went over-
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Mm-hmm
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… it's like, do you wanna keep putting money in a pocket with a hole in it?
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Or do you wanna do something different?
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Mm-hmm.
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Wow.
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Deidre, this is eye-opening
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Even when they tell you that you can get paid up insurance, you gotta
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understand that prepaid insurance is just you paid it ahead of time.
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You still have to pay the cost for insurance, 'cause every year you get
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older, the cost of insurance goes up.
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Doesn't matter if your premium doesn't look like it's going up, but a
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20-year-old, by the time you're 30, your cost of insurance has went up every year.
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So it's more the closer you get to death, the more expensive it is.
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And now is that for whole life or for both term and-
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That's for whole life
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… for whole life, okay.
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And so what happens is you overpay for basic insurance.
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So when you're 20, say they charging you $100, some are going to fees, some
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are going to the cost of insurance, and some is going to your cash value.
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But remember, you have to borrow to get that money back.
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So say by the time you're 35, you're, you've built up about
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4,000 in your cash value.
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Mm-hmm.
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But what happens is by the time you're 55, every time your cost of insurance
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goes up, they're using the money from your cash value and putting it to your premium.
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So you think, "Oh, my premium hasn't went up since I was 20 years old." Yes,
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it has, but the company is paying it out of your cash value, and you don't know
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that's what's happening under the hood.
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So by the time you're 55 and they start using up all your cash value,
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what do you think they're gonna use to keep that premium going?
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They're gonna start deducting from your death benefit, and
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they're gonna borrow from that.
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And sometimes what happens is that the insurance blanks out and you
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don't have any insurance anymore, and you don't have any cash value.
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But that company is still charging you, and you don't even know
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unless you call the company that you don't have insurance anymore.
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So the best thing listening to you is, well, there are two
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things I'm gaining from this.
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Best thing is do not have whole life insurance, and the second
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best thing I'm hearing is if you do have whole life insurance,
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don't ask the agent any question.
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Go directly to the company and call them and say, "Okay, so where am I?
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What's my cash value?
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What's the cost of insurance?
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What's the fee?"
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And what- I think you should do it with an expert.
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Mm-hmm.
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You can be on the line with me or someone like me.
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Mm-hmm.
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And we call the company.
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The company has to tell you the truth.
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The agent will say whatever they need to keep, to make you keep that policy.
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Mm. But the company has to tell the truth on those five rules that I went over.
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They have to tell you.
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Now, the only time it's kind of bad is if you're in bad health and
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we can't get you a new policy.
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Mm-hmm.
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Then you're kind of stuck with what you have.
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All right.
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But if you're young enough or you find this information valuable, have me as a
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expert review your, do a policy review.
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It doesn't cost anything to review your policy, just to see
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if you have one of those policies.
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And if you're in good health, we can switch you out of that, 'cause like I
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said, do you wanna keep putting money in a pocket with a hole in it, or do you
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wanna do something better for your life?
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All right.
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So another question I have for you, Deidre.
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How old is young enough, or how young is young enough?
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You said if you're young enough and you're in good health, that it can be switched.
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But what's the age?
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The company that I work with, you have to be under 70.
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Under 70.
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Mm-hmm.
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So that's the criteria.
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Mm-hmm.
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Between… Well, you have to be an adult, so over-
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Adult, 18 to 70
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18
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to 70.
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Mm-hmm.
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Is young enough.
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Okay.
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That's, that's, ooh.
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That's good to know.
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Sometimes we review policies, and unfortunately, the people are not
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in health to get new insurance.
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Mm-hmm.
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And so they have to go with what they have.
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Mm-hmm.
16:37
Mm-hmm.
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But if you are in good health and this information is new to you, you're
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hearing it for the first time, I had a policy with a whole life policy, and
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once I found out all five rules and they showed me in my policy, I was still
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young enough, I was, I think I was 45, to switch out and get term insurance.
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Mm-hmm.
17:00
And I've been investing the difference for over 10 years, so I have a nice amount.
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So my family's gonna get the death benefit plus the investment
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accounts that I've set up.
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Wow.
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And that brings me to the rule of 72.
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That brings me- Have you ever heard of the rule of 72?
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Never heard of it.
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Tell me what that is, because we spoke offline about that.
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Okay.
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So the rule of 72 was really made famous by the mathematician Albert Einstein.
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Mm-hmm.
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Another word for it would be compound interest.
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Oh, huh.
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And you just take whatever interest rate you're getting and divide it by 72.
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So say you're putting your money in a investment account that's giving you 8%.
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You divide eight into 72, and that's nine.
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So if you had $1,000 in that account, it would take nine years
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for that $1,000 to double to 2,000.
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How long it takes your investment to double.
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So if you're getting 3%, you divide three into 72.
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If you had $1,000 in there, it would take 24 years for that 1,000 to double.
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But the good thing is that it double.
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That is what the rule of 72 is compound interest.
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That's something that little kids should know.
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If I give you $5 allowance, you should put it in a account that's gonna double,
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and then your $5 will now be $10.
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So you teach your kids early about compound interest and the rule of 72
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So wow.
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The takeaways.
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All right, Deidre, so-
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Yeah, it's very important.
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I learnt this at 45
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That was about a long ago
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But what's good is that I have young kids and I had grandkids that I'm teaching.
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My grandson is 19.
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He's already investing in a Roth IRA 'cause he understands the rule of
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compound interest, the rule of 72.
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By the time he's 40, financially he's gonna be good.
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Better than good.
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Better than his friends who are not investing, 'cause the earlier you invest,
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the more compounding periods you have.
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Of course.
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Of course.
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Wow.
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So we talked about the Roth IRA.
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Do you have any time to talk a little bit to educate us on
19:36
that, or that's for another-
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A lot of people don't get what a Roth IRA is.
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It's for middle class America.
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And so everybody knows about a traditional-
19:48
Yes
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… and that is pre-tax money.
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So a lot of 401s, TSPs, retirement accounts, they
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put your money away pre-tax.
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So whenever you retire, say at 65, 62, that money is gonna be taxed
20:07
by Uncle Sam So you should have diversification in your investments.
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So you should have some pre-tax dollars, which is a traditional,
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but you also should have a Roth IRA.
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That money is taken out of your paycheck.
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That money has already been taxed.
20:28
Mm-hmm.
20:29
So that Roth IRA, as it grows, all that interest comes to you.
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So when you get ready to retire, Uncle Sam, he cannot tax you twice.
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That money, it's already been taxed, so when you get your Roth IRA and you pull
20:48
that money, that money has already been taxed, so you don't get taxed again.
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So now you have diversification.
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You have pre-tax dollars, traditional, and you have Roth IRA after-tax dollars.
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That's what you need in retirement to protect your retirement income.
21:07
Also, it would be good if you're over 55 to get annuities, just a
21:12
lot of things, because experts say you should have seven to 10 multiple
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streams of income in your retirement.
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That was the next thing I wanted you to talk about, annuities.
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We hear about annuities, and we're not too clear on that.
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There are fixed annuities.
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There are variable annuities.
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It can get quite confusing.
21:33
It can.
21:34
I
21:34
think, I think we have a few minutes.
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That- Do you have a few minutes?
21:37
So, so what I would say is that annuities are based on who's getting
21:44
it, your particular situation.
21:47
Mm-hmm.
21:48
A lot of times you can't use all your retirement money in annuities.
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They won't let that happen.
21:53
Mm-hmm.
21:54
You have to still have disposable income.
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Mm-hmm.
21:57
The less you can put in an annuity is 25,000, but you have to have other income
22:05
before they would let you have an annuity.
22:07
So if all you had was 25,000, they would not let you put
22:11
all that money in an annuity.
22:14
But it's more individual about fixed, index, variable annuities,
22:19
but that would be a more investment appointment that you would…
22:26
I would have to look at all your documents and stuff that you have
22:30
to see what would be best for you.
22:32
But annuities, that's something that's, that I'm an expert on that as well.
22:39
And so it's just getting a roadmap so that when you're at retirement
22:47
age, you don't have to go work at Walmart because you ran out of money.
22:51
That's
22:51
true.
22:52
And that's when you see the older people at McDonald's, Walmart.
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It's not that they didn't work hard.
22:58
It's not, it's just they weren't informed.
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Nobody sat down and gave them a roadmap to how they should.
23:06
And I also provide a financial needs analysis, which would be a roadmap
23:12
and it would give you your FIN number.
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That's your financial independence number.
23:17
Okay.
23:17
So Paula, if I asked you, I told you I had a million dollars for you-
23:22
Mm-hmm
23:22
… but you have to come to my house and get it, but I never told you where I live, how
23:27
long would it take for you to get there?
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I wouldn't get there, because I don't know where you live.
23:31
Right.
23:31
Forever.
23:32
Yeah.
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So if you don't have a FIN number to reach for, you don't know what your financial
23:38
independence number, or you never heard of that before, then you need to sit down
23:43
and talk to an expert about that, so that if you know what your goal is, we can
23:50
set up a financial game plan to get there.
23:55
These are things, ladies, that we, many of us don't know about it, and
23:59
the earlier we know, the easier it is to plan for retirement or to plan, you
24:05
know, because one thing we know is that we are gonna… Well, we're gonna die.
24:10
Right.
24:11
But before we die, we are getting older every single day.
24:14
So not to know is like burying your head in the sand and saying, "Oh,
24:18
it's not gonna happen to me," or, "My son or my daughter will help me out."
24:22
No.
24:23
You know, it's best to know and then know what not to do than to not know
24:29
and you don't even know what to do.
24:31
So-
24:32
Correct
24:33
… these are, that's the reason that I'm glad-
24:35
One more little point I wanted to add.
24:37
Mm-hmm, go ahead.
24:38
Please, please, do not get your financial information from TikTok.
24:44
Or, from?
24:45
Uh.
24:46
Any of the other-
24:47
A lot of people or some of these other…
24:49
A lot of times, make sure the person is licensed.
24:53
Yes.
24:54
They have their Series 6, 63.
24:56
They have their investment license.
24:58
A lot of people are on these websites telling you to do this and do that,
25:03
and they don't bit more have a license.
25:06
So get your financial information from a licensed professional.
25:12
That is my takeaway for today.
25:14
Okay.
25:15
They wanna tell you about generational wealth, but they
25:17
don't even have a license.
25:19
So stay clear of just, whatever you hear on TikTok, that's the end thing to do.
25:25
No, talk to a professional licensed investment advisor.
25:30
Thank you so much.
25:32
You gave us some extra minutes.
25:33
For whoever now who's listening in, and of course, those who are in
25:38
the audience and are taking notes, if they need to get in touch with
25:41
you, Deidre, how can they find you?
25:44
They can call me.
25:45
Okay.
25:46
I'll drop your information but you speak it out, and I'll drop it
25:48
… you can call me.
25:49
I have a website.
25:51
Mm-hmm.
25:55
It's financialsolutionsbydk.com.
25:56
Love it.
25:56
You can set appointments.
25:58
I have information on that website.
26:01
Mm. You can reach me on Instagram.
26:04
Mm-hmm.
26:04
And Paula's gonna drop the information.
26:06
Yes.
26:07
And, Yeah, let them- … I'm free to talk and set up appointments
26:11
with you so that you can maneuver through this financial blueprint
26:18
that, you know, it's laid out for us.
26:20
You just need someone to help you
26:22
. Yes.
26:23
Thank you so much.
26:25
As she said, what you don't know that you don't know can really hurt you.
26:29
Right You know?
26:30
And for those of you who would like to be a guest like the phenomenal Deidre
26:35
Knighten, reach out to me on my website, which is chattingwiththeexperts.com.
26:40
I'm also on LinkedIn.
26:41
My business page there is chattingwiththeexperts.com.
26:46
Uh, chattingwiththeexperts.com.
26:48
That's my that's my website.
26:50
I'm also on Instagram, and my handle there is chat_experts_podcast.
26:56
And, we have a YouTube channel.
26:59
We'd love for you to subscribe there.
27:01
You will, of course, be able to listen to and view Deidre's
27:05
episode there once it's out.
27:07
And, we are now gonna open up the floor to all of you who joined us so that
27:13
the questions that I haven't asked her, which are so many, there are so many
27:16
questions here I have that I haven't had a chance to ask her because of time.
27:20
This will give you an opportunity to speak with her one-on-one and get to know
27:24
more of these very valuable information, these things that we need to know, that
27:32
we have been scared, some of us are scared to ask these questions because
27:35
we don't wanna- Right … we don't wanna seem like, you know, silly or uneducated.
27:40
But there's no foolish or there's no silly answer.
27:42
We need to know these things.
27:45
So thank you again, Deidre, for taking the time to meet with me and to share your
27:49
knowledge with those who have joined us.
27:52
And, now we're gonna open up the floor to everyone.
27:55
Thank you.
27:55
Thank you so much, Paula.
27:57
I'm ready for the questions.
28:00
It's my pleasure.