Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by CoolInvestor

Posted by Wayne-NC on June 06, 2007 at 11:59:16:

I guess that my thinking is for the masses, and when you get into the millions of dollars, the common sense rules of engagement change. It is always that way for the top 2% or so of the population. I am talking about securing a future, not keeping it. It takes time to earn 20M. What happens before one gets there or anywhere near it? I believe that you are getting into complicated asset protection strategies that are going beyond the scope of the original question. That is fine by me however. I love subject. Yes, if you look hard enough, there is a justification for everything. No argument here.

Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by CoolInvestor

Posted by CoolInvestor on June 06, 2007 at 01:51:21:

I’m seriously considering quitting my job soon and going full time since it’s making far more money and my day job is getting in the way… LOL

One question is, how do you folks handle the insurance thing? I get a really good deal through my employer and it’s one of the best around, PPO which I hardly even pay anything for + flexible spending account etc.

How much should I expect to pay for my family coverage (spouce + 1 child ) if I get my own medical insurance (medical + dental + vision) AND life insurance? Also, I want to continue contributing to a retirement fund.

Please provide some good resources for me to shop around and compare premium prices.

  1. medical insurance
  2. dental insurance
  3. vision insurance
  4. life insurance
  5. how do i set up a flex spending account?
  6. any other tips?

Feel free to email me as long as you’re not “promoting” your own business or affiliated with it.

Re: Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by Rich-CA

Posted by Rich-CA on June 06, 2007 at 17:06:04:

Ignore Steve. A position like his is about the same as self insuring your rental buildings. You have people that need taking care of, do so. Failing due diligence is to fail them.

Re: Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by Rich-CA

Posted by Rich-CA on June 06, 2007 at 17:01:40:

For 15 years my wife and I were employed by her company so we paid all our own coverages.

We purchased general medical from an HMO (Kaiser).

We looked at dental coverage but discovered that the cost was such that you never broke even on costs. At best 75% of what you put in was paid out in benefits. So we went self insured there.

We looked at vision insurance. Same deal. Not worth the expense.

See if you can set up an HSA (Healthcare Savings Account) which collects pre-tax dollars for specific expenses.

Re: Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by Natalie-VA

Posted by Natalie-VA on June 06, 2007 at 14:26:59:

For health insurance, try www.ehealthinsurance.com.

I recommend the HDHP with an HSA like Wayne said.

I don’t have separate vision and dental…that comes out of the HSA.

I only recommend life insurance for people who have dependents that would be in financial distress if they were to pass away.

We are employess of our s-corp and contribute the max to our 401ks plus 25% of W2 income to profit sharing.

–Natalie

self insure - Posted by lukeNC

Posted by lukeNC on June 06, 2007 at 13:49:52:

once you start making money and have that cash sittin in those accounts, you’re self insured!

Re: Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by PC42

Posted by PC42 on June 06, 2007 at 10:56:04:

You can join the National Associated for the Self-Employed (NASE) and get in on their health insurance program. There are a lot of benefits to NASE in terms of learning the ropes about being self-employed. The health insurance is one of many benefits. I pay about $400 a month for a family of four. I’ve always had life insurance on my own as the token $10k policies that a lot of companies offer are pretty much worthless. You can barely be put in the ground for 10 grand.

(For the record, I am self-employed but not as an active real estate investor…not yet anyway)

Keep your Day Job - Posted by steve

Posted by steve on June 06, 2007 at 09:39:08:

Where’s the 401K, morning coffee and Friday dounuts. You may want to keep your day job and let your boss take care of you. You need to change your mind set if you are going to make it in a REI or any business. Half of what you listed is totaly unnessary and is the problem (reason) for high cost medical and why so many have no true financial freedom as they are locked in a mindset/job. You know what they say - “get a good job that will provide you security.” Yeah right. . .I say keep your job you’re not ready.

You got it all wrong - Posted by Wayne-NC

Posted by Wayne-NC on June 06, 2007 at 06:20:25:

What you want is value meaning price vs coverage. Shopping just price is useless. So, learn what is REALLY needed and then you can shop accordingly. The first thing is to learn HOW to shop. With that said I will address #6 only and it will cover 1-5 all at once. Now, the philosophy of insurance is to protect that which you can’t afford to pay for yourself. Example: Would you buy insurance to replace your coffee table? No, but you buy insurance to replace your house! That should strike out 2 and 3. Also it would be fair to note that insurance companys are profit making organizations. They will charge more in premiums for those insurances than you will receive in claims in most all cases. So, it is not an “investment” with a positive return for you. Just pay for your services. Anything really serious, the major medical will cover. Recommendation: purchase a high deductable policy that is HSA qualified. Your HSA will pay for the “pennies” and the major med will cover the dollars should that occur. Life Insurance: That is a way to buy “time” to become self insured. Recommendation: Term, term, and term insurance is all you should consider. (Life insurance is NOT an investment. You have those already in REI). It is the most coverage for the least price ie value. You determine your term and amount of coverage. I left a lot out here as I don’t know your specific finances and situation, but this is a general start to your shopping. Ofcourse all bets are off if you or anyone in your family are currently in ill health. The company does not want to insure a house that is already burning or a woman that is just a “little bit pregnant.” That is not a good investment for them. In conclusion, learn how to buy insurance and what really needs (not wants) to be covered. Understand that these needs change over time. Less life insurance and more health insurance is needed as you get older. So, a decreasing term life insurance policy (or level to cover for inflation) along with an ever increasing HSA account should do the trick. Lastly, do an archive search as this subject has been discussed at length before. Happy shopping.

Re: Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by Jersey Joe

Posted by Jersey Joe on June 06, 2007 at 06:13:03:

This was discussed just a couple weeks ago - check out the recent archives. If you set up a company (LLC, corporation, whatever) and have at least 2 employees (could be you and your spouse), you can establish a health insurance plan.

Contact a local insurance broker. You can also try a company called IncSurance that specializes in small company plans. 307.683.2700

Re: Full time Investors! MEDICAL/LIFE INSURANCE? - Posted by Wayne-NC

Posted by Wayne-NC on June 06, 2007 at 17:40:50:

Ofcourse the benefits are 75% (give or take) of premiums. Do you really think the companies are going to invest in a product that is a guaranteed loss? One the other hand, nobody should buy insurance with the expectation of using it. Dental and vision plans are just that, expected to use and a guaranted loss. A no win situation for both company and insured. The best plans that they can provide are associated with discounts from “prefered providers.” Still a loss for the “insured”, but less so. Anyway, you’ve done the right thing, pay the pennies but insure the dollars. Have you read this entire thread? You are right on with your insurance philosophy and experience.

Right On - Posted by Wayne-NC

Posted by Wayne-NC on June 06, 2007 at 17:52:18:

Natalie, how do you write so little but say so much? I basically wrote a book trying to say what you have explained in a paragraph! “All wraped up in a nutshell” as the saying goes. I guess I just got a little carried away in the subject matter.

Life Insurance, etc. - Posted by Jimmy

Posted by Jimmy on June 06, 2007 at 08:08:41:

obtaining health insurance as an individual is an expensive proposition. I’ve been on that track for 15 years or so. just a cost of being independent. if your family’s coverage will cost you $1000 a month, then you need to be certain that your REI acticvities can cover your nut (including the $1000). and don’t expect that $1000 numbeer to stay there. I get premium bumps once or twice a year.

as for life insurance… in my 20 years of practicing trust & estate law, I had this conversation with hundreds of clients. and I was constantly in conflict with life insurance agents.

if you need for death coverage can be measured by a period of time, go with term. I carry two term policies that will run out when my youngest kid is about 22. that gets them out of collge, hopefully. then they are on their own. my wife’s need for more enduring coverage will be addressed when the maturity dates are on me. as I get into my late 50’s, I will assess the situation again. by then, I may have NO need for insurance. I won’t know until I get there.

and one more thing: most term policies don’t “expire” at the end of the term. you have the option o converting them into permanent policies, with much graeter premiums. if you want to, you can start paying more money into an existing term policy, which will extend its life. this is a great idea for someone who is no longer insurable, and needs the coverage to extend out a few more years.

there are certain circumstances where term policies are not the right play. if the need for insurance is PERMANENT, then the insurance policy needs to be permanent. this would indicate whole life, universal life or variable universal life. for example, if a client is facing a $5,000,000 federal estate bill, and the client does not want his kids to have to liquidate assets to pay it, a VUL policy is probably the answer (a second-to-die policy is the common tool here).

Re: Right On - Posted by Natalie-VA

Posted by Natalie-VA on June 07, 2007 at 06:00:06:

I’m a lot smarter than I look. :slight_smile:

It’s easy when you’ve already taken the time to give the details for me.

–Natalie

I like most of what you say - Posted by Wayne-NC

Posted by Wayne-NC on June 06, 2007 at 09:05:46:

First of all, a successful RE investor (which we all try to be) will be aquiring the assets necessary to cover any and all liabilities, including the cost of insurance over time while on the road to success or total self insurance if you will, all to a certain degree. A term policy for me covers the mortgages and the rents are the income while the appreciating properties are the growing net worth, much like an IRA. So, as usual, the life insurance covers the income should I prematurely expire before I had the time to pay them off with future successes. Permanent life insurance is planning to fail in my view. How can you predict if one would need permanent life insurance in the beginning stages of life? Later on, who should really need life insurance over 60? Older people are more worried about failing health. Without health, all else is nothing! Protect it. Yes, term insurance can be converted to permanent IF necessary however, all the liabilities are (or should be) gone by that time. If not, OOPS. When you recommend permanent insurance you are advising people who really don’t know what we know and subliminally telling them early on that they will never make it to self insurance. I myself would try to give a more positive outlook. One other note, only insure your assets, not liabilities. I am an asset to the family, my kids (as much as I love them) are not. So, knowing what you think I know now, how would you advise me to go? That would be an interesting topic of discussion. I always listen with an open mind to what others with knowledge have to say and feel free to make some assumptions. Thanks.

Re: Right On - Posted by Wayne-NC

Posted by Wayne-NC on June 07, 2007 at 08:26:27:

"I’m a lot smarter than I look. :)"
OK, I’ll just have to take your word for it. Change that! Take a family trip to the OBX this summer. Lots of real estate here…Sand!

Re: I like most of what you say - Posted by Jimmy

Posted by Jimmy on June 06, 2007 at 11:16:31:

wait a second. I got into many arguments with life insurance salesmen on this very issue. they would always find a need for VUL. I would get in their way. If they could not articulate a persuasive argument supporting a need for permanent insurance, I would kill the deal.

there was one common situation where certain clients absolutely, positively had to have the coverage in place. the client is worth $20,000,000. facing an estate tax of $6-8-10 Million (I say this, because the liability will be different depending on which year they die. 2010 would be a zero tax. 2011 reverts back to a 55% tax and a 1.1M exemption).

I then ask the client: Is it ok if you leave your kids 12M? or 10M? some clients don’t blink. they didn’t inherit anything, so what’s the big deal if the government takes half of their stuff. but others don’t see it that way. if the answer is 'I don’t want the government to get one penny!!" then I have a situation where term will not do the job.

by the way. the need for life insurance oin an estate tax planning scenario IS THE LAST PIECE OF THE TRANSACTION. The LI agent wants to do the insurance first. not with my clients. First, I want to implement tax reduction strategies. I might be able to take a client facing a 10M tax, and cut it back to 3M. family partnerships, intra-family gifts and sales, wealth compression techniques, certain charitable arrangements. its all legal, and supported by many reported cases.

only after doing the planning do we address the insurance need. If I have a $2M tax that is unavoidable, then we have to arrange to get it paid. Maybe the client has enough liquid assets to cover it. Maybe they don’t. Maybe they do, but they don’t want to use their cash to pay it. Its up to the client. They set the parameters for the engagement.