We kick off 2023 by answering your questions on making portfolio changes, risk tolerance, the strong dollar, inflation and retirement, influential books, and other topics.
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Transcript
David: Welcome to Money for the Rest of Us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it. I’m your host, David Stein. Today we are here with my sons, Camden and Bret.
This is episode 415, and it is a Q&A episode to start off the year. Thank you for all the listeners that submitted questions. Excellent questions, we reviewed every single one. We obviously won’t be able to cover every question in this episode, but a number of the questions will definitely be addressed in future episodes. Well, welcome, Camden and Bret, to the podcast.
Camden: Thank you. Happy to be back.
Bret: Excited to be here for the first time.
David: It’s great to have you here. That way I don’t have to do this by myself. Finally, go ahead, Camden, lead off with our first question.
Camden: Alright, so our first question comes in from Plus member Eric, and it says, “David, you run advertising copy on your podcast for life insurance. As part of the copy you mention that you yourself have a life insurance policy, and you may even have renewed or purchased a new policy recently. Given your age and portfolio, I assume you can self-insure. I also believe your kids are grown, adults. Broadly speaking, and without getting too personal, can you speak to why someone in your position would choose to carry life insurance instead of self-insuring? It seems like it doesn’t make financial sense.”
David: In most cases, it doesn’t, and including in my case. So I think I’ve talked about when we bought a couple of life insurance policies 20 years ago when Camden and Bret and our daughter were young. The whole idea, as we talked about on the show, is to cover expenses in case that I die early.
But it’s a 20-year term, with the idea that in 20 years, we would have sufficient assets that we could self-insure. And we do. I’ve just mentioned that when a 20-year policy comes up for renewal, they send a renewal rate. And the renewal rates have been over $3,000, so not where—I think before I was paying roughly $250 per year for a half-a-million-dollar policy, so we definitely are not renewing.
Most people, hopefully by the time you’re in your 50s, 60s, when you’re retiring, or even if you’re working, you’re not in a position that you necessarily need life insurance. In this case, we’re talking about term life insurance. Whole life insurance is a completely different animal, where there’s an investment component, and we won’t get into that situation or topic in today’s episode.
But for the traditional term insurance—yeah, it’s very expensive to buy life insurance once you’re older. And so in many cases, including ours, we’ll let our policies expire because we don’t need them because we have sufficient assets to make it through.
On that note, Cam and Bret, you’re young. Do you have life insurance?
Camden: I do not. I think I might have had it through my last job kind of automatically included. But at this point, I haven’t really searched it out, it hasn’t shown up as relevant. I live alone, which sounds very sad, but I live a rich life.
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