Welcome to money for average Joe’s a 12 part series on personal finance. I am your host, Jason Weaver, an average Joe. This episode number four is all about protecting your family from financial ruin by getting proper insurance. That way you can live better and have more money for when it matters most.
As a quick refresher, Episode Three was all about building a one month emergency fund as fast as possible. Then once your consumer debt is gone, go on to building a three to six month emergency fund. Now I also want you to think back all the way to episode one. And those roadmaps and plans. Basically, the budget is your game plan and insurance and emergency funds are your protection from financial ruin, and all the hardships that can hit you.
So let’s dive right into insurance. It may not be a exciting topic, but it is one that can prevent you from crushing debt. In fact, you should basically get these core insurances even before paying down all your consumer debt because if something major happens to say your health or you get in a car accident, it can really derail your entire roadmap that you’re taking to financial freedom or you know, success or however you phrase it. So these are the main ones that pretty much everybody can agree on health, you got to be able to take care of your body car, Home or renter’s insurance, life insurance case you pass away well, especially while you’re young and not self insured enough to build a handle, you know, a long period of reduced income for your spouse, and then disability because your primary income is what is used to build your wealth. So in the Free Church of Jesus Christ of Latter Day Saints course they have a really great kind A comparison for high deductible and low deductible. And premiums are what you pay monthly, basically. So you might take a look at that and just really realize, hey, look, if I have an emergency plan, I can use that money to pay off any kind of deductible, meaning the money had to pay before the insurance really kicks in, right? So if you have a higher deductible, you’re paying less premiums aka monthly and in general insurance should be used as you know, if the worst happens, it’s going to step in. Or if you’re you’re generally terrible health, maybe you would want a slightly lower deductible. But you know, each person is slightly different but you’re going to save a lot more money you know, unless you have a ton of issues under that particular insurance. So you have to kind of weigh you know costs Can I can I shuffle some of that money to my emergency fund And now on to my savings or paying down my debt, or am I you know, so fearful that I’m going to have, you know, almost no deductible plan but be paying crazy amounts monthly. So I’m definitely more towards the pay less per month side and have a little bit of buffer between you and the world by having that emergency fund. So take a look at that for sure health insurance. Now you only have one mind, and that affects everything else so and you’re only one body, so you definitely need to take care of that. So you need to go to your doctor more regularly. You need to have decent insurance. I’m self employed, my wife plan is kind of expensive. And sometimes that’s kind of crazy how our health care plan works, but I can’t even get subsidies from the open market. So I had to go with the Christian health ministries. So it’s kind of like a health savings. It’s not officially health. Care Insurance, right? Just for those interested if you’re like me self insured. For me, it costs around $200 a month. So everybody’s going to be different. It’s more, you know, in general, people say it’s bad if you need medications ongoing. You have to have kind of Brother’s Keeper to have catastrophic coverage. So for me, I include that in the 200 a month ish. But there is no in or out of network.
area. So like, if you travel throughout the United States, or, you know, that’s kind of nice. I feel like all insurances should be forced to have no internet of network, at least nationwide. You know, maybe there’s some doctors they won’t cover because they’re outrageous fees. But come on, you know, just because I live in Idaho doesn’t mean when I travel to Utah, I shouldn’t be covered. Or, you know, why should I have to pay 60% more if I’m out of network. It’s just kind of crazy. So I do wish they would eventually fix that issue and open it up across all borders. But for me, that’s one advantage. And then this is probably by far the biggest disadvantage of this health care savings ministry plan is you pay out of pocket then you have to go through this terrible submission process. A lot of people said it’s not that awful. I just did it. It’s, it’s awful for me. But you know, to you, you might not care filling out some paperwork and, you know, asking your doctor for an itemized list of all the things that happened. I be all To be honest, I don’t know a ton about health insurance plans. So you know, you may know more than me, but in general, tons of people really love these medical savings accounts. And that is one major way a ton of people lower their monthly costs. And it’s kind of like an emergency fund just for medical and you pay out of it. And I do think you have to like report what you spent it on, but even I’ve heard it simple things like band aids or a brace, you know, for a leg or knee or whatever I hear those things are covered out of that fund. So, if you’re savvy, you might look into that as a way to save. I know, there was an option for that when I was working for an employer, and I didn’t jump on it but sounds like I should have. And then if you’re interested just for fun if you absolutely want to know why our health insurance is all messed up, then I really love money for the rest of us has an episode 213 why health insurance is a mess. And it’s off of some really smart people’s books and writings as well. He covers that and I thought that was very insightful. Before I dive deeper, I just want to mention I created the show as a supplemental guide for you as you attend with your spouse, a local Personal Financial Group. There are free group meetings put on by the Church of Jesus Christ Latter Day Saints, or paid group meetings put on by Dave Ramsey, my wife and I call group meetings critical to your success. I am not officially authorized or affiliated with the church or Dave Ramsey, but I do feel these trainings are enhanced by my putting together the best resources from all experts, including them for you in this show.
For car insurance, it’s fairly easy to shop around and find a low price, right? But you need to make sure your insurance covers under insured or uninsured motorist and if you’re still making payments, you’re going to have to have full coverage. And then you might want to also understand how much property and injury you are covered for because obviously if you get in the accident hit a building or you hit and people then your insurance is going to need to cover that and you know need to understand your out of pocket deductible and that’s where your emergency fund can come in, you can save on your monthly if you just have a couple of thousand or or a decent amount stowed away for an emergency.
For Life Insurance, I feel like you don’t really love your wife and kids. If you don’t have a policy because if you die and don’t have at least 10 to 20% your annual income, it’s almost 100% chance your family’s going to struggle financially, especially the first year to why they’re grieving trying to put their life back together. Yeah, you can say you think they’re going to remarry or whatever, or they’ll go live with their parents. But really, you want to do that when you’re 30 to $70 a month, whatever it’s going to be payment could cover them for that. So an interesting idea I ran across split recently was, you know, don’t think about it as 10 to 20% your annual income or what it’s going to be in five years from now when you’re super wealthy because your of your certain job, you might think of it is like well What if they were going to live off of 4% earnings from this ginormous nest egg you get them the million $2 million kind of idea of coverage, you know, so they can live until the day they die. But what that translates to is you’ve got to get that million or 2 million coverage, and it’s going to cost you more monthly. So for me and my family, I think we went with about the the 20% annual income and we went with term life insurance. So I have 30 years before I have to become self insured to be able to cover the average What is it $15,000 for a funeral coverage and pay off the house and, you know, have money left over so my kids can go to college or my wife can get it back on her feet or just smooth things over with her lower paying, you know, government job until, you know until the kids are out of the house or until she dies, you know, so we didn’t go as much as you You know, the crazy nest egg idea. So for each person, it’s going to be different of what you’re comfortable with. But one of the best ways is to save on your monthly payment, but still cover the catastrophic sort of situation that can happen is that term life insurance. Now, the best thing to do though, for sure is while you’re young and healthy, or right now, because there’s no way you’re going to go work out and become young and healthy, and then get it right now Go, go get it. It’s not necessarily the funnest experience if they draw your blood or whatever, but you don’t love your family. If you’re not willing to protect them from you know, basically losing a primary income source or wealth building source is your income right? Now, all of us pretty much live either in an apartment or a home or if we’re living with family, this may not apply but you got to have insurance because if you’re owning a home and something catastrophic happens to it, you still have to pay for that home. Even if you can’t live in it, okay, that really stinks, feel you’re in an apartment and your apartment burns down, you might actually be liable to cover that piece of apartment paying for that to be rebuilt. Plus, imagine all your things right insurance is also supposed to cover all the things you own. So also depending on where you live in your region, fire storm flood, earthquake, those things might be more important. So when you’re looking for your insurance or talking to, my preferred way to go is you know, define an agent that met represents multiple agents, or companies that you can choose from. So that way you can kind of shop around and get their advice, and they’re keen on helping you with that.
But be sure to ask questions because you may be forced to prove even what you own in your house before it was destroyed. Right. And so I know I don’t walk around my house with a camcorder and you know, talk about each thing or have all the invoices from all the things I purchased, or the receipts from the things I purchased, to prove the value of them and that I own them. So you know, there are there are ways that having those insurances don’t matter if you don’t cover them correctly, but for the most part, like if your house burns down and you have coverage for your house burning down, you at least will have to pay for that house. But you may get a very small check to replace your clothes and your other things, right. But the most financial burden would have been paying for that house, even though you couldn’t live there. Correct. So that’s what that insurance is for. So once again, your primary income, you know, say you having a job and working is how you’re going to build your wealth and how you’re going to be financially secure. And so say you become disabled and you can’t work at all because of that, or you can’t work enough and you know, you can’t earn money, but you still To live, you know, whether you’re a vegetable or not, there’s disability insurance, and a lot of them are covering 60% of whatever you were earning at the time, you, you know, hit the kick the bucket almost, and then became disabled, right. And then I hear there are ones that are a lot cheaper, that kick in five years at, at after five years of being disabled till the end of your life, but you got to watch out for ones that only cover you for a short period of time. And then there’s tons of plans that are like, hey, like, for me, I do internet marketing or talking. And so it’s going to be real hard to prove unless I have literally no fingers or, you know, even disabled people can, there’s there’s tools to use the internet, right? That I wouldn’t be able to work. And so for each business so that you’re working at or job career, it’s going to be a little different. And there’s ways to save money and still protect your family. You know, maybe those first five years would be really tough, but after that, you’re getting a lot more income or help. And it’s covering you for something crazy like that, where you’re going to be disabled for the rest of your life, you’re not going to be able to work, you’re going to either be a vegetable, and at least now this insurance is helping you.
So Disability Insurance is one that I haven’t looked enough into. And I myself personally need to deal more with but being self employed, that also makes it a bit harder. So that probably doesn’t apply to you. So you definitely need to get your disability insurance and it’s not crazy expensive per month. And it’s the only other way to protect you because you can either die or become disabled, right? That’s the only other way to protect your primary wealth income.
So I’m not trying to scare you. All right, I’m just telling you that these are things that are likely to happen at some point statistically in your life, and definitely 100% likely to ruin you financially if they happen, or to really set you back potentially years. So you might as well prepare for them pay for that peace of mind. And, you know, if you can’t afford these things, then you’re the wrong drop job wrong career, and you need to listen to future episodes on how to earn more income, which is up next, or better education which is coming up soon as well right so that way you can gain better employment. So some other insurances that they don’t necessarily cover in the courses are vision dental identity theft, long term care for those 60 or plus or way more likely to need to have that long term care supplemental insurance not covered by major medical example Aflac. But that is kind of crazy. You have to get Aflac through a business. That still doesn’t make sense to me, but for those about to have a baby Aflac here makes a ton of sense. My wife just came to me and said she got cancer insurance, she went to a little seminar and for her work And they convinced her that more people dying of cancer, and it’s terrible. So she got it for our entire family for actually pretty cheap. I’m sure there’s some major limitations to which doctors you can go to or whatnot. But you know, there’s quite a bit of insurances out there. At some point, you have to say, look, I mean, I’ve got my emergency fund. And if something major happens, it stinks that in our country, you might have to switch jobs to get better insurance to cover some of those things. It just doesn’t quite make sense, honestly. But that’s why I mentioned that another episode of money for the rest of us that talks about that there are some major issues we have, but you know, vision dental, those makes sense for most people and then identity theft is definitely growing. I mean, just other day Disney plus got hacked. For goodness sakes, Disney should have tons of money to prevent that. But, you know, identity theft apparently is not a fun experience to prove that you didn’t buy things right. And, and that’s definitely no fun to pay back things that you didn’t know. Right. So, you know, long term care is definitely for those that are moving in their older years. And, you know, talking to my grandma, she didn’t get it because she looked into her friend that had it. And they could only go stay at the worst place in their town with insurance. And I wanted to say, and I probably should say, next time I see yours, then go find a better insurance. But you need to have it because we can’t guarantee that you can just stay at my house and we’re going to be able to give you the care you legitimately need. Right? And so sometimes it can be hard to have those conversations. And then supplemental insurance not covered by major medical that’s, you know, can be really good for having those kids from what I hear or if you like to ski and you’re like my friend that tore his ACL that was helped cover So, I hope that didn’t scare you. I hope that just helps you see your enable body human being, and you should be able to take care of these and protect your family and your finances.
Go to money average joe’s for show notes, and the nine principles Course Resources covered today. subscribe for free access. Remember by educating yourself and applying what you learn today, you’ll gain new skills, have fun and have much more money for when it matters most. The show social media hashtag is MFAJO e s, no apostrophe. So that’s MFA Joe’s. Please take the time to share something you learned online with your friends. And remember this show is for general education purposes. I’m merely a financial coach. I’m not a certified advisor or planner. I have not reviewed your situation. So this is not considered personal financial advice. I’m Jason Weaver with money for average Joe’s dot com Have a good day and I’ll see you next time.
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