Nate Reineke (00:00)
Hello, physician moms and dads. I'm Nate Renneke, certified financial planner and primary advisor here at Physician Family Financial Advisors. Today, we are joined by Brian Leit. Brian helps physician families, just like you, that's you, if you're listening, navigate life and disability insurance. He is based in Oregon, but licensed and works with our clients across the country. And Brian actually,
usually works through advisors like us. So what's cool about that is we get to kind of tell Brian what our clients are looking for and Brian kind of carries that forward. So he's a good partner to have because you don't have to worry about getting sold something maybe that you don't want, which is kind of awesome. Brian, welcome to the show.
Brian Leet (00:51)
Thanks for having me,
Nate Reineke (00:52)
Yeah. So we're talking life insurance today. I know you do life and disability, but we had disability a couple episodes ago. So now we're getting into life insurance. Before we do that, tell the audience a little bit about yourself, like your family, how you got where you are today. What's life like for Brian?
Brian Leet (01:13)
Sure. Well, I am a native Oregonian. I've lived here my whole life. I grew up with two parents that were public school teachers. So I literally grew up and navigated the world thinking that everyone got summers off. But the nice thing about having parents that were teachers is that you did get summers off and you got to explore the country. And thankfully had folks that love to travel happily married for over 20 years now and have two awesome kids, a 15 year old son and a 17 year old daughter.
Nate Reineke (01:25)
Yeah.
Brian Leet (01:43)
five-year-old dog that we all think runs the house. But yes, so in terms of how I got into this business, it's certainly not something like a lot of people that get into financial services. It's not something that you know you want to do until you start seeing the effects of benefiting folks. So I actually started here locally at an insurance company. I worked in their home office and really got close to the products themselves.
Nate Reineke (01:47)
Nice.
Brian Leet (02:11)
and got fascinated by how the words worked in people's lives. And then I also got quite closely involved in claims, specifically disability claims. And most of the folks that we were working with were physicians who, for one reason or another, fell on the wrong side of a diagnosis. And that's where I got really intrigued by these products. And ultimately, that transitioned into this role, where I've now been for 13 years, helping people to protect
Nate Reineke (02:29)
Mm-hmm.
Brian Leet (02:40)
their income through both disability and topic of today life insurance, making sure that if something happened to them, there's a way for their income to continue so to speak so that they can achieve the goals that they set out for themselves.
Nate Reineke (02:53)
That's right. Yeah, think, know, not a good thing, I guess, but we've been talking a lot this year and I've actually seen a lot of claims go through this year. One was life insurance and a few of them were disability and it's really easy as a young doctor to, I guess, maybe put this on the back burner. But when you've spent enough time in these cases, you see that how important they are.
Something I'm always thinking about with life and disability is many people look to, you know, maybe replace their income or get the bare minimum covered. for physicians specifically, they have the means and they also have a great income to protect to where they should be getting plenty of insurance. And that's not something I ever thought I would say in my younger years. I just thought, you know, get the minimum and
But after you see many, many cases of people actually getting it and it really saving them. I've noticed that people plan for, you know, covering their expenses or covering the bare minimum of life insurance. And they kind of forget about their dreams, their hopes and dreams of retirement, their hopes and dreams to send their kids to college. And a lot of times that goes just flies under the radar. So I've seen how impactful it can be when you actually have to file a claim.
And when insurance is set up correctly, how well it works. I've seen some people have insurance that wasn't very good and the claims didn't go through all that well. And then I've had people who are set up just the right way and they just feel so secure despite diagnosis or bad things happening, at least secure with money.
Brian Leet (04:48)
Yeah, very true. think one of the things that I try to emphasize when talking about these products is the sincere hope is you never hope to use them. It's weird to talk about something you want people to waste their money on, which is very true for life and disability insurance. But to your point, there's a lot of comfort that comes with somebody calling you, letting you know that something happened to a loved one or to themselves in the event of a disability. And you can at minimum put their mind to these on the financial front.
Nate Reineke (05:00)
Yeah.
That's right. Yeah, you have better things to worry about at that point. OK, so I have five questions for you today. I'm going to start with this one here. for attending physicians who may have significant loan debt, that's private loans in particular, and a mortgage. So getting started and potentially even several years in, loans are big enough nowadays where, you know, physicians don't.
Brian Leet (05:19)
Yeah.
Nate Reineke (05:45)
get rid of them all that fast anymore. It's not really feasible to get rid of a six figure loan in the first couple years of practicing medicine. How do you recommend calculating the necessary life insurance coverage amount to ensure the family's fully protected for their loans and beyond that?
Brian Leet (06:05)
So think one of the things that I always address with folks when discussing the need around how much life insurance to get goes back to what you said earlier, what do we want it to accomplish? And so just in terms of like baselining from a financial perspective, I always ask folks if you pass away, purely from a financial perspective and only a financial perspective, if you pass away, what's the impact? Are we leaving folks with debt?
Nate Reineke (06:31)
Mm-hmm.
Brian Leet (06:31)
And if
the answer to the app is yes, then we just start right there. OK, well, what is that debt? And then to your point, we dive into student loan debts. Are they private? Are they public? Are they forgiven if you pass away or is that obligation still owed? Same with a mortgage. And so in terms of calculating, we start oftentimes with the debt. what can we do to ensure that we're not leaving behind and saddling somebody with that debt should you pass away? So that's easy to calculate. And then from there, it's
Nate Reineke (06:43)
Yep.
Mm-hmm.
Brian Leet (06:59)
gets into what you were saying. It's like, what are your goals? What do you want to accomplish in your life? Assuming you live a fulfilling and work a long career and are able to work and get into family planning. And that's always fun for me. It's fun talking to people, especially, you know, a lot of people buy life insurance often just as they're getting started in life. Maybe they just bought the house or they just got married or they just found out they're pregnant and they recognize that, gosh, there's more to, from a financial perspective to protect than just me.
Nate Reineke (07:28)
Mm-hmm.
Brian Leet (07:29)
And so a lot of what I do is I bring myself into the situation. Like I have these products on myself. you know, there's cooler things to spend my money on, but I recognize that though my financial plans predicated on me going to work every day. And if I were to pass away, I would want the goals that I set out for myself and my family to continue. So what that looks like for me specifically is, you know, I have a house, I have a mortgage. I want to make sure that if I pass away, that I am
Nate Reineke (07:49)
Yes.
Brian Leet (07:58)
leaving my wife in a situation where she doesn't have the mortgage anymore, the house gets paid off. Additionally, with kids, for those that have kids, kids are incredible, and they're life changing. And they're also very expensive. you know, specific to my own kids, I want to make sure that if I pass away, and this is something I talk to clients about all the time, what do you want that to look like? And so for me personally, knowing that we're talking to a number of physicians here, many of whom have
Nate Reineke (08:02)
Mm-hmm. Yep.
Mm-hmm.
Brian Leet (08:26)
student loan debt, one of the goals that I set out for myself at least with life insurance is that if I were to pass away prematurely, I want my kids to have a debt-free education. And I think once people see how inexpensive it is to get life insurance, that is a gift that a lot of clients like to pass along and identify with. They're like, that sounds great. And when I say debt-free education, I'm talking through residency, if that's their goal. If they want to become a physician, I want to make sure that that is the gift that I give to them.
Nate Reineke (08:45)
Yes.
Mm-hmm.
Brian Leet (08:56)
even though I'm no longer here. And for those that just, if my kids decide not to pursue education to that level, then ultimately what I want a portion of the proceeds to do is help them to get into their first house. It's no surprise that buying a house when you're in your 20s and 30s is beyond expensive, but if I were to pass away, I want them to know that they can remember me as the person who helped them make the down payment. And then lastly, it's what...
Nate Reineke (09:21)
Mm-hmm.
Brian Leet (09:24)
do I want life to look like for my wife? She works, a lot of spouses do, a lot of spouses don't. For those that don't have working spouses, you know, maybe their goal is to keep their wife in a situation, their spouse in a situation where they continue to not work and take care of the family. My wife does work. She's very good at her job. She loves it. But I also know that if I were to pass away, something unexpected happens. So I've added a component to my life insurance calculus that gives her
Time to grieve if that's what she needs for herself. I don't know.
Nate Reineke (09:54)
Yes.
Yeah, time
to grieve and money for help. There's a short period of time where probably no work and there is potentially many years of hiring help. Two parents in the house is a lot different than one as far as taking care of the kids. And then obviously, I'm thinking retirement.
Brian Leet (10:00)
Thanks.
Absolutely.
Nate Reineke (10:24)
I'm I'm planners. have this software that I like to use and you know that we use for everybody. And when I think about life insurance, I think about debt and then all the things you've said, which is a lot better than showing them a big spreadsheet of numbers. But then I just assume like what if you retired today? How much money would you need to have? And it's several million dollars. And that's a huge number. But when when I've seen people buy life insurance, nobody ever questions.
the how much it costs. Like I haven't heard anybody to this point when they're going to buy term life insurance say this is so much money I want to lower my coverage. So, you know.
Brian Leet (11:05)
That's
always been the amazing thing to me is that you can look at a if someone buys a 20 or 30 year term life insurance policy and maybe it costs a couple hundred dollars a month, but I've always been amazed by the idea that you are a walking 30 million dollar risk or excuse me walking 30 year risk to an insurance company and every day you wake up you present the same risk to them in terms of what they owe you and it is pennies on the dollar. I mean it's fractions of pennies on the dollar.
Nate Reineke (11:23)
Yeah.
Yes.
Brian Leet (11:33)
relative to what it costs versus what it can do for you your family.
Nate Reineke (11:36)
Yeah, agreed. Okay, great. So we've done the math on this. Or really, we used to do the math. You do the math now. But it's usually like in the lowest cases, it's a few million, but it's all the way up to maybe several million, maybe seven even. So that's generally what we see this come down to. But when we tell people that and they can't wrap their heads around exactly how it could cost so much.
And you just described it, right? To live off of this money for, let's say, a spouse and kids, it's millions of dollars. So what would it take to retire today, retire the family today? It's millions of dollars. So definitely different circumstances, I would say, that require doing this calculus, which is how old you are, how many years until retirement, how much you have saved up already.
But at the end of the day, you're just getting started, it's several million. And then as you go along, it can go down.
Brian Leet (12:41)
Is now a time to talk about like a laddered approach we often do?
Nate Reineke (12:44)
Let's talk about that. like how you do this.
Brian Leet (12:47)
Perfect. So one of the things that we talk about going back to the planning side of things is what do we want it to ultimately accomplish? And so let's say we're working with a client and we determine that the amount of insurance they need, I'll just make up a number, is $5 million. And their period of time that there's exposure to is maybe 30 years. Maybe they're 35 years old, they're just getting started, they just started a family, a house, and we recognize that, gosh, the next 30 years are critical. And as of now, we want them to have $5 million of coverage.
Nate Reineke (13:01)
Mm-hmm.
Brian Leet (13:17)
But again, keeping in mind that the purpose of maybe a term policy is to replace the income that that person wasn't there to earn, over time, the need for the insurance goes down. So if we recognize $5 million in 30 years, that is not to say that when that 35-year-old is now in their 60s, that they still need $5 million of coverage. So a common approach that we take is called a staggered approach or a laddered approach. And what it does is over time,
Nate Reineke (13:37)
Mm-hmm.
Brian Leet (13:45)
the amount of insurance, that $5 million reduces because maybe they've paid off their student loan debt or maybe the kids are out of the house at that point. So it reduces the insurance and subsequently the cost goes down. So it's really there to align with their financial plan. So as they hit their milestones from an income earning perspective and an investment perspective, the insurance and the need for it goes down.
Nate Reineke (13:49)
Yes.
That's right. Yeah. And one step further there, if you get if you take this laddered approach, which most people should most physicians should, you don't want to buy a 15 year policy and then after 15 years by another 15 year policy. Right. So explain that part.
Brian Leet (14:28)
Well, and that's one of the mistakes I would say that I see is a lot of people identify the need for insurance and they maybe buy too short of a term. They're young enough such that they don't have enough coverage to satisfy their long-term planning goals. And so to your point, if they buy a policy, it's a 15-year term and now they're maybe in their late 40s, early 50s and that term is up, they still have some concerns about
Nate Reineke (14:37)
Mm-hmm.
Brian Leet (14:57)
premature death and if they try to buy a new policy, a couple of things can happen. One is automatically they're older now. They're 15 years older and the way that these policies work, at least individual life insurance policies, by and large, you buy it and the age you buy that, you lock in the rates for the term. So if you're now buying it 15 years older, the incremental cost is that much higher. The other thing is if your health were to change between when you bought your first policy and your second policy, that can have a profound impact on A, your ability to get coverage if you've had a life event.
Nate Reineke (15:11)
Mm-hmm.
Brian Leet (15:27)
and certainly be the cost of it.
Nate Reineke (15:29)
Yeah, that health change, I see it all the time. I didn't think about it today. It is a big deal. I see people in the smallest health changes, completely changes their premium or they can't get coverage at all. And then there's, know, we'll get into group coverage later, but then they're stuck with only that.
Brian Leet (15:49)
Well, I'll add a component like a lifestyle change. Like I'm working right now with a client who, you know, started off by humble means, came out of school with debt and started making money and decided that one of his passions was flying airplanes. That is a different risk from when he first came out of school. And that's having an impact on what his insurance is going to cost him.
Nate Reineke (16:05)
Yeah.
Don't fly airplanes, please people listening. Okay. Next question. What is your philosophy on term versus permanent life insurance? It's sort of a debate, I guess, for high income physicians who prioritize maximizing retirement savings. And when is permanent life insurance genuinely the right fit?
Brian Leet (16:16)
Get your insurance first and then go fly your plane.
Okay, this is one of those questions that comes up a lot. I will say that I'm offering up my own opinions on this. And certainly you could spend all day on the internet finding arguments for both sides. My personal approach, specifically when working with young physicians that are starting family, a lot of the life events we've talked about who may not be in a situation where maybe they're debt free is I tend to lean more towards getting term insurance.
Nate Reineke (16:41)
Mm-hmm.
Sure.
Okay.
Mm-hmm.
Brian Leet (17:07)
let's get protection in place for the least amount possible. And there's this approach of, know, by term invest the difference. And that's certainly a philosophy that I personally adhere to. And, you know, the stock market has done very well these last few years. So that approach has served me well. I know that there's times where maybe the market can shift and people are looking for higher, more guaranteed returns where we might see a shift more towards permanent insurance. But for the most part, when I'm working with young clients,
Nate Reineke (17:18)
Mm-hmm.
Mm-hmm.
Brian Leet (17:37)
This tends to be the approach. It is a catastrophic difference in price between term insurance and permanent insurance. And permanent policy is kind of shifting to those. I do think they serve a purpose. I think there's a world in which they make a lot of sense in people's situations. A few examples might be one where they want long-term planning beyond what a term policy can do, whether it's, know, legacy planning where they're ensuring that no matter what age they are when they pass, they have access to benefits.
Nate Reineke (17:44)
Yes.
Brian Leet (18:07)
I've seen that come into play. have some folks that want, and that can be from either a legacy planning or they want a guarantee that they leave behind their family or they're covering, you know, maybe estate taxes or something that that could come into play. I also see it come into play in situations where somebody had a life event within the term. So an example would be I had a physician client a couple of years ago who had a heart attack and his situation was quite, I mean, it was pretty devastating. So it was one where he and his wife were both doctors.
Nate Reineke (18:08)
Mm-hmm.
Mm-hmm.
Brian Leet (18:36)
She passed away from cancer and they were able to collect the proceeds from her policy. He had a heart episode. He had a heart attack. Unknown whether it was related to dealing with a wife who had just passed from cancer, but he had a heart attack and was now the sole provider for his family. And his term policy, in my opinion, I didn't sell it, but in my opinion, it was sold too short. It was a 20 year term on a younger gentleman and he was coming up against the term. And it was one where
Nate Reineke (19:04)
Mm-hmm.
Brian Leet (19:06)
you know, a component within a lot of these term policies that we are sensitive to is a conversion option. Can you convert it over to a permanent life policy? And we, he had that provision and we said, gosh, this makes a lot of sense to do because we can't go out and get you another term policy once this term is up. Kind of going back to what I said earlier, you had a health change. And so that's where it made a lot of sense. And then lastly, I would say for high income physicians,
Nate Reineke (19:15)
Yeah.
Mm-hmm. Yeah.
Brian Leet (19:35)
If somebody's in a situation where they worked with you and your team and they have maximized any and all investment opportunities and they have money left over at the end and they're not sure what to do with, that can also be a world in which I see permanent insurance being a good fit.
Nate Reineke (19:50)
Yeah, I think everybody on the podcast has heard my thoughts about this. It's very easy to say it's never a fit. I guess it's convenient to say that. But when you've been around the block a few times and I actually helped, I didn't do it, but I saw a family convert their term to permanent policy and it was a major, major health change meaning.
beyond the scope of this conversation, but they were never going to walk again. They were never going to speak again. And their term policy was their term policy, but they didn't know if the doc was going to live another 20 years and go beyond the time. I there are certain situations where you can use it as a tool. I think at a really high level, most people don't need to pay the premiums, but you're right. There are some situations and I would consider it, you
very, very uncommon, but some situations where a permanent life insurance policy does serve people well. And I think it's easy to kind of talk poorly about them. Really, what I'm talking poorly about is, sorry, you might work with some of these people, but is the agent, they're just oversold, right? There's a place for them.
but they're oversold. That's kinda, yeah.
Brian Leet (21:19)
No argument here. I
know, I think, and I do think there's a lot of agents that are either captive to a company and they're trying to sell that company's products. Or what I also see is somebody who doesn't have the right licenses to sell investments or securities and they're using permanent insurance as the savings vehicle or investment vehicle that they're able to because they don't have access to sell the products.
Nate Reineke (21:34)
Uh-huh.
That's a good point. It's a very good point. Okay, good. All right, so many employed physicians have employer provided group life insurance. What are the common pitfalls of relying solely on this coverage? What are the three most important considerations when layering private policy on top of a group plan?
Brian Leet (22:06)
Gotcha. will try to answer the three as I weave in the answer to this question. But I think in terms of any time somebody gets a benefit through work, that's great. You got to dive into some of the details of what that benefit actually is. And so when I think of employer provided life insurance, I would categorize it in two buckets. Bucket number one is that it's employer paid. So employer provided could be one where the employer is paying for the premium and as a
Nate Reineke (22:10)
Okay, cool.
Mm-hmm.
Brian Leet (22:35)
physician working at a clinic or hospital or whatever, you get access to that level of benefit and your employer's paying for it, which is always nice when somebody's paying for something. I think on that aspect of things, something to keep in mind is that the benefit amounts themselves could be subject to tax. So, and that's, guess, one of the considerations when layering a private policy is that if you buy an individual policy on yourself, very different tax effects, much more beneficial tax benefits.
Nate Reineke (23:01)
Mm-hmm.
Brian Leet (23:03)
by buying a private policy versus an employer paid group policy. And typically the threshold where somebody has to pay taxes on a life insurance benefit that's paid for by the employer is about $50,000. So that would be, I mean, I don't know if that's a pitfall, but that's just the reality of situation. So I tell folks, if you get coverage through your work, fantastic, keep in mind a couple of things. If you were to change employers, you typically do not get to take that coverage with you.
Nate Reineke (23:14)
Mm-hmm.
Brian Leet (23:31)
So factor that into the equation. Item number two, and I'm going to now shift gears, is that a lot of employers give access to employee-paid life insurance. So if you're doing your open enrollment, for example, and you see that your employer provides, I don't know, $100,000 of benefit, but you can buy significantly more individually, that is an option that a lot of employers offer. Things to keep in mind, similar to what I mentioned on the employer-provided portion, you don't get to take it with you if you change employers.
And then typically, this is maybe one of the big pitfalls, is that the rates start off very inexpensive. So employer provided benefits that the employee can buy into are typically what's called age banded, meaning that the rates start off quite inexpensively when you're young. And then as you get older into your late 40s and early 50s, and certainly into your 60s, the cost to the employee goes way up.
Nate Reineke (24:29)
Mm-hmm.
Brian Leet (24:30)
So in their price, will say group life insurance policies by and large are priced for somebody who is below average health. So if I'm working with a client and they've got just a laundry list of pre-existing conditions, or maybe they've got some health issues such that getting a policy individually is just not effective for them, I will tell them to maximize what they can get with the employer and keep in mind that if they change employers, they could lose the coverage.
Nate Reineke (24:40)
Mm-hmm.
Mm-hmm.
Brian Leet (24:59)
But they may be better off price-wise going down that path. For somebody who's in generally good health, and you don't have to be in great health, but if you're in generally okay health over the long haul, you're going to be much better off financially with a private policy. So in terms of the considerations specific to a private policy, keep in mind that over time it's cheaper to have a private policy typically.
Nate Reineke (25:15)
Mm-hmm.
Brian Leet (25:25)
Private policies, the upside to this, you can take them with you no matter what happens. So if you were to change employers or move out of the state or any of those, that private policy can follow you. And that's true of both disability insurance and life insurance. And then, yeah, in terms of the considerations, you know, I think...
If I tell people, advantage of what your employer is going to give you, but I would not rely as much on that. And I think a lot of folks, when they think of, you know, where could there be gaps in their financial plan? I think, you know, they lean too heavily on any employer provided life and disability insurance once they dive into the details of how they work. So that's one thing that I love educating folks on is let's look at what your employer is giving you. Let's appreciate it for what it is, but let's also see how it.
Nate Reineke (25:50)
Yes.
Brian Leet (26:14)
does in terms of protecting the financial plan in terms of total overall coverage you need.
Nate Reineke (26:18)
Yeah, I want to second this, right? Because sometimes the good life insurance agents that I deem as good, right? They're still up against it because at the end of the day, you're selling something. And so people are buying it. They're wondering, are you telling me not to take this coverage just because you want me to buy more light? That is not the case at all. This is good advice. You should take what's free at work.
and then understand that it is severely limited in the future. So it's not portable is what you're saying. So if you added that one of those health changes and then you had to change jobs and your new job didn't give you very good coverage. So let's say you found a job and you thought this coverage really high, it's looking really good. And then you change jobs and it wasn't as good of group coverage. So you went to go buy your private policy and now you can't get it. Right. And then the expense factor.
It's just cheaper to buy it on your own. And the tax factor. mean, it's usually at work, you ought to pay a bunch of taxes to get it. So they'll see this big number of, this is for life insurance or disability insurance. They'll see this big number of their benefit, but they don't actually, it's hard to calculate at the end of the day, how much is actually going to come home to pay your bills. one little tip, I don't know,
The last time someone told me they tried this, it did work, but we used to see it all the time where we would really press hard for people to go and try to do this. with your premiums at work, you can ask your employer if you can pay the premiums. And a lot of times they will do this, I guess, for life and disability, so that it can be an after-tax benefit. But if your employer's paying for it,
then you got to pay the taxes. If you're paying for it generally, then you don't pay the taxes. So on those private policies, you just get a lot more out of them. So this is, I just, again, this is really good advice. This is like Nate approved, if that means anything. And you should probably not rely on much of your group policies beyond what's free. This is just a fringe benefit, take it, but beyond that, go get more. That was good. Okay.
Brian Leet (28:27)
You
Nate Reineke (28:43)
So I've been talking a lot about writers lately. So I wanted to ask you about one. What is a conversion writer on a term policy? And why might it be valuable, a valuable feature for physicians who are early on in their career, but expect to have a high net worth later on?
Brian Leet (29:03)
Yeah, so a conversion rider is a provision built into policies that kind of goes back to what we talking about earlier, where it gives the individual the option to convert it over to a permanent policy, whether it's a whole life policy or a universal life policy, something again that provides longer term guarantees and is more of a permanent type of coverage. And what's interesting, and this is where it's kind of fun. So a lot of what I do when I'm working with advisors or clients on options for life insurance.
is I leverage screen sharing a lot. get a lot of Zoom meetings where I'm building quotes in front of somebody. And when it comes down to things to look at on a term policy. So basically, if you're running a life insurance quote on somebody, you get high level information. What's their name, date, birth, gender, where do they live? And then you get a rough sense of how much coverage you want and how long you want it to cover them for. And so two of the things that we tend to look at. So once I have that information,
Nate Reineke (29:52)
Mm-hmm.
Brian Leet (30:02)
I hit basically the equivalent of search on Google and I brought up a list of insurance companies and what they charge for a policy that meets the criteria that we put into the variables. Like if we need $5 million for 20 years, it brings up a list of insurance companies and what they charge for $5 million for 20 years. And one of the things that I'm always sensitive to because the insurance companies, they shop each other. They want to be competitive. want to like anyone else on Google search results. It's nice to show up on page one.
Nate Reineke (30:13)
Mm-hmm.
Yeah.
Brian Leet (30:33)
One of the things that we look at is what is the difference in prices and does the coverage give you the ability to convert? And so that's item one that I look at. for the physician who's earning maybe not as much early in their career or maybe have more debt versus later on, it's nice to have the option to convert it over to permanent insurance.
Even if you decide not to do it, the reality is from a cost perspective, it tends to be a dollar or two different, maybe per month, to retain that option, which in my opinion is far more worth it than not having the option at all. And the premiums are not catastrophically different. And I've got some companies that even on their product, they will say it's a non-convertible product. And I tend to steer clear of those. Just because I don't think it's, even if it's...
Nate Reineke (31:24)
Mm-hmm.
Brian Leet (31:29)
know, a dollar or two cheaper a month, I don't think it's worth it to not have that option.
Nate Reineke (31:34)
So I know we talked about this and I'm following you, but just for the audience, when you're talking about converting, what is the catastrophic thing that's gonna happen? We're gonna repeat this. Catastrophic thing that could happen that someone would want to convert.
Brian Leet (31:49)
So the example of the physician that I mentioned that had a heart episode where his term was about to be up and he saw the need to have life insurance beyond what the term covered him for. That was where we took advantage of the conversion rider. And so it's a very easy process by which you can submit an additional application with the intent of converting it from the term policy. So it no longer goes from covering somebody for a very specific period of time.
Nate Reineke (32:04)
Yes.
Brian Leet (32:18)
like a 10 or 20 or 30 year term, it goes into covering a permanent policy that in theory they can keep into their 90s.
Nate Reineke (32:26)
Yep. Okay. Okay. Yeah. And so so I'm going to take another step back. Everyone hears about writers, right? Writers, writers, writers. What is a writer? Because this is this is what happens, Brian. I get emails all the time says, I got this email. It's about a writer. Should I do it? Should I should I whatever it is? And I'm like, you pay for this writer. You you ask for this writer or maybe they didn't ask.
someone sold you this writer. It's a benefit, right? So just tell us a little bit like what writers are and what you're looking for when you're building someone's, you know, policy on screen on a screen share. What kind of writers are you looking out for?
Brian Leet (32:54)
You
I mean, rider is an add-on. So it's something that can be built into a policy. Usually riders cost more money. Now with conversion riders, most of the policies we're going to look at have it built into the cost. But in general, when it comes to life insurance and disability insurance, for that matter, there's no shortage of things that can be added onto the policy that enhance what it can do, but also add to the cost.
Nate Reineke (33:11)
an add-on.
Yes.
Brian Leet (33:34)
So thankfully, most of the carriers that I work with have conversion built into their product, which is nice. And the reality is they build it in in part because ultimately the insurance company is going to benefit if somebody converts to a permanent policy, they're going to get more money on that person. So that's maybe one of the reasons they don't charge for it. Another rider that I see on life insurance policies is called the waiver of premium. And this is one that in my opinion, knowing that we're working and I'll describe what it does, but in my opinion, it's probably not the best use of money.
Nate Reineke (33:48)
Yeah.
Brian Leet (34:03)
So waiver premium, and not everyone's gonna agree with what I just said, waiver premium effectively says that if you become disabled and are unable to work, the waiver premium rider will kick in, it will continue to pay the premiums for you, which sounds great. I like in concept what it does. Here's maybe why I'm not a huge fan of it. If we're doing proper planning with somebody, they're also getting a disability insurance policy. And that disability insurance policy is designed to replace their income.
Nate Reineke (34:20)
Yeah.
That's right.
Brian Leet (34:32)
And if they do have a qualifying disability, presumably we can set up the benefits such that there's enough coming in that it will cover the life insurance policy premiums. And the reason I'm a bigger fan of that twofold. One is that the definition of the qualifying definitions of disability tend to be far more liberal or better on the disability policy versus the waiver of premium language on life insurance. Two is the cost.
Nate Reineke (34:56)
Mm-hmm.
Brian Leet (34:58)
Dollar for dollar, it's cheaper to buy a dollar of benefit of disability insurance than it is whatever the waiver can do.
Nate Reineke (35:04)
Yep. Yeah, you you said something important. This has...
When you're comparing financial products, it seems so clear to people like you and I what's good and what's bad, let's say for a physician. But really, the nuance is all the other pieces that fit into your financial plan. So when I say, you know, whole life is bad, that's like assuming a lot of things. It's assuming or...
or term coverage, laddered approach is good. That assumes that you saved some money for 15 years. Because if you didn't, you don't want a term policy or a laddered approach, you want something that covers you for 30 years. So there is nuance to all this and it's important that you take a big picture look at all your policies with your plans.
Brian Leet (35:48)
Yeah.
Nate Reineke (36:07)
And that is truly the right way to do this. And then at the end of the day, it will be obvious to you why you get a laddered approach and why maybe permanent is or is not good for you. But it always assumes, you know, every everyone who makes a sweeping statement about any type of product, they assume that you are approaching your finances the way they think you should. And whether or not you even understand how you should is a totally different story.
So I'm with you on that. I think if you're getting your disability coverage, like if they're working with Brian, they don't need that writer. If they're working with someone else, maybe it would be better, because they didn't get the coverage they needed. Okay, I'm glad I asked about that. I get a lot of writer questions. Okay, what is the biggest mistake you see attending physicians make when buying life insurance?
What is the single most important piece of advice you would give our listeners about securing their family's financial future?
Brian Leet (37:09)
That's a great question. The biggest mistake I see attendings make. I have to tell a story on this one. the biggest mistake, and this is heartbreaking. So I don't know, I have sold a lot of life insurance over the years and I don't know if working with me is good luck because I've only had one person pass away. And I also happen to work with a lot of younger people. So that certainly helps my cause. The mistake that I'm thinking of involves
Nate Reineke (37:17)
Let's hear it.
Wow.
Brian Leet (37:38)
a group that I was working with, was a group of radiologists, and they came to me asking for help with some of their benefits. So I helped institute some of the group life and group disability insurance we talked about earlier. They had a handful of physicians on staff that weren't able to get coverage through traditional underwriting. And so our workaround was to put in an employer paid plan with the ability for the employees to buy more coverage.
Nate Reineke (38:06)
Mm-hmm.
Brian Leet (38:07)
And it wasn't a very big plan. It was just trying to get our foot in the door with some coverage to help some of the doctors more on the disability side than the life side. But we made it abundantly clear to the folks we were working with that they should have a conversation with us to make sure that they're adequately covered. And so this particular group, in terms of the biggest mistake I've seen, it offered a $200,000 benefit, which is more than most. And as I mentioned earlier, the first 50,000 is tax free and they're taxed on the remaining 150.
Nate Reineke (38:22)
Mm-hmm.
Mm-hmm.
Brian Leet (38:37)
There was a physician there who decided not to pursue any additional employee buy-up, and he was, at the time, very healthy. And he did not decide to pursue a conversation to take inventory of his coverage to see if there was a gap in his plan. And tragically, this physician died completely unexpectedly. He was the sole provider for his family. His wife did not work, and they had kids.
Nate Reineke (38:54)
Mm-hmm.
Mm-hmm.
Brian Leet (39:03)
And it was devastating when I got the call asking, you know, what did he do to be able to say that he didn't do anything other than what we put in place. And that was $200,000 more than he would have had if we hadn't. So I think the biggest mistake is assuming that because your employer provides you something that it's going to be adequate.
Nate Reineke (39:16)
Yeah.
Yeah, it's all,
you know, another lesson from that story is when you're young, you just don't assume anything is going to happen to you. Yeah. And the the stories I have, you know, the sad stories I have, they're all young physicians, you know, whether it's disability or or life insurance, it's, you know.
When you're young, you're probably more healthy, but you also take more risks.
Brian Leet (39:55)
Yeah.
Well, and we kind of have this saying in our world that everyone, there's a day in somebody's life where you wake up uninsurable. Everyone has it. There is a day, no matter where you're at in life, that you wake up uninsurable, where you cannot get coverage. And for some people that's well into their old age and that's wonderful. For the other folks that wake up uninsurable when they're in their forties, early fifties, it is pretty darn devastating when they call, ask what their options are to let them know that
Nate Reineke (40:03)
Yeah.
Mm-hmm.
Brian Leet (40:25)
It's a different scenario today than it was yesterday in that we can't get you coverage. So in terms of advice, work with Nate. mean, the risk of sounding cliche, you've got someone who's got your best interests at heart. And I will say that building a financial plan in and of itself can be very fun. There is a lot that goes into a financial plan that is
Nate Reineke (40:32)
Well... Mm-hmm.
Yeah.
Brian Leet (40:50)
very exciting and works on investments and saving for college and things that I would call the more offensive side of things. Planning for vacations, whatever the case may be. It's important to have a balanced financial plan. And I try to make talking about these products as fun as possible as they can be. A, again, going back to what I said earlier, we hope you waste your money on it. I'm perfectly fine if somebody calls me the day they're
Nate Reineke (40:56)
Yeah.
Yeah.
Brian Leet (41:18)
term is up or that their disability insurance policy hits age 65 and they retire, I would love to get the call from somebody mad at me because we protected their income and they got to work every day and got to live and I was wrong.
Nate Reineke (41:30)
That's right. Agreed. Well, I hope that's what happens to mine.
Brian Leet (41:36)
Exactly. I mean, I have these products on myself and again, there's cooler things to spend money on, but I know that if I can use a portion, a small sliver of my financial plan or my income that comes in to protect the balance of it, it's money well spent. I love paying my premiums every year, both life and disability, because it's my reminder that I'm alive and still working.
Nate Reineke (41:37)
Yeah.
Yeah, yeah, I pay my premium. Well, the first policy I ever got was a million dollars and boy did I think that was a lot. And, know, and then now it's like now that I've written hundreds of financial plans, like that's nothing. But I write a three hundred dollar check every year and I'm always thankful I at least got a million, you know, in my 20s. And it's I have no problem writing a three hundred dollar check. It's like.
Brian Leet (42:07)
Yep.
Yeah.
Nate Reineke (42:27)
Just to think about my family not having to worry about money for 300 bucks is just, I don't even think people, I never get pushed back about life insurance premiums. The only thing I get pushed back about is actually getting the policy, like doing the paperwork and sometimes that gets put on the back burner, but.
Brian Leet (42:47)
interesting, okay.
We try to make that as easy as possible. But the other side of the coin is that for that $300, there's a lot of other people paying $300 and just know that that is going to help a family who did fall on the wrong side of a diagnosis.
Nate Reineke (43:04)
True, yep. Okay, Brian, so most people that come through our doors, they talk to you at some point, unless they've already gotten their coverage and everything. But if anybody wanted to reach out to you, can they reach you outside of coming through us?
Brian Leet (43:22)
They certainly can, yeah. I mean, I'll give my email is brian, B-R-I-A-N, at income, P-A, so short for income protection advisor, so brian at incomepa.com, or you reach them on my website, incomepa.com. And then my phone number's 503-928-4103.
Nate Reineke (43:40)
Awesome.
Great, all right, thank you, Brian. I'm gonna take us out. Thank everyone for listening. If you liked this show, you can subscribe so you don't miss a release of every episode. We release them on Wednesdays. You could also leave us a rating wherever you're listening. And if you'd like to work with me or Chelsea, you can visit PhysicianFamily.com to schedule an interview. If you're not ready for that, you can send us a question. Podcasts at PhysicianFamily.com. promise to answer.
every question we get, whether or it shows up on an episode or not. Until next time, remember, you're not just making a living, you're making a life.
