Using Life Insurance as Your Personal Bank

Thomas Knoble on August 25, 2025

If you’re like most Americans, you know that Life Insurance can financially protect your family. When you pass away, your loved ones can use the Death Benefit to cover expenses and outstanding debts. However, Life Insurance is much more than a financial protection tool. In fact, you have the (very cool) ability to treat it as your personal bank. Let me explain.

Some Life Insurance products – called Indexed Universal Life (“IUL”) – allocate a portion of each premium to a savings fund that grows with interest. One of the many ways you can leverage this Cash Value Account is to take a loan against it. While a bank can also help you save and borrow money, an IUL product can do so with several distinct enhancements. For example:

  • The interest rate to grow your Cash Value Account can be tied to a stock market index, like the S&P 500. Thus, IUL products give you the potential to build significant wealth.
  • That being said, your Cash Value Account doesn’t decline when the stock market index drops, since IUL products contain a guaranteed minimum interest rate.
  • No income verification or credit check is required to get a policy loan. Because there’s no approval process, you often receive the loan amount in three to five business days!
  • Furthermore, you don’t have to use assets as collateral to get a policy loan. The Death Benefit is essentially your collateral. If you don’t repay the loan, the Death Benefit will be reduced.
  • The money received from a policy loan is tax-free.
  • Policy loans will not appear on your credit report.
  • The interest rate to repay the policy loan is typically lower than the rate on traditional loans. Additionally, your credit rating has no bearing on the interest rate.
  • Last – but certainly not least – the borrowed money continues to grow in your Cash Value Account as if you never took it out. (Side note: I thought this was a misprint when I first read it, but trusted experts confirmed it for me.)

As long as you repay the loans, you can repeat the cycle of building up your Cash Value Account and borrowing against it. Appropriately, this looping concept is known as “infinite banking”.

The next time I invade this space, I’ll explain how infinite banking can be utilized to achieve your financial goals. (I’ll give you a few hints though: retirement, college, real estate, and expenses.) Until then, please keep in mind that Life Insurance is a powerful – yet underrated – financial tool. Not only can it protect your family when you pass away, you can leverage it to accumulate wealth and borrow from yourself (instead of traditional banks and lenders).

For more information, my email address is insuritystreet@gmail.com. The consultation is free with no obligations.

Insurance Considerations in a Divorce

Thomas Knoble on August 25, 2025

Divorce is a challenging, emotional process that requires careful consideration of many important matters. Two areas that are often overlooked are Life and Disability Insurance, which can provide financial security for both parties involved… as well as their children. So, if you’re going through a divorce, here’s what you need to know about Life and Disability Insurance!

If you purchased coverage during your marriage, there are two key matters to examine:

  1. Review the beneficiaries and owners of your policies. Ensure that you’re the owner, which gives you the ability to change the beneficiaries. Speaking of which, your ex is likely the beneficiary. Unless you still want him or her to receive the death benefits, you need to request a beneficiary change. This does not happen automatically.
    1. Side note: If you have children who are minors, please do not designate them as your new beneficiaries. Minors cannot legally accept a death benefit. So, to ensure that your children receive the proceeds, you can either (i) arrange for a custodian to control the funds or (ii) set up a trust.
  2. Your Life Insurance policy may have a cash value that accumulates with interest or a rate of return. The funds can be withdrawn or taken as a loan to be used for emergencies, a down payment on a home, or college tuition. In short, the cash value is effectively a savings account and thus can be considered a marital asset to be split in divorce settlements.

Even if you have coverage already, there are two key reasons for purchasing additional Life and Disability Insurance:

  1. If your ex is required to pay you alimony and/or child support, I recommend that you ask him or her to purchase coverage as part of your divorce agreement and name you as the beneficiary. This way, if an unexpected death, injury, or illness occurs to your ex, you’ll continue to receive the alimony and/or child support in the form of insurance proceeds.
    1. Side note: If you don’t trust your ex financially, you may want to own the policy and pay the premiums yourself.
  2. If you have primary custody of your children, you need to have sufficient coverage yourself to ensure your kids have the financial means to maintain their quality of life and pursue their dreams.
    1. Side note: For Life Insurance, you can estimate the minimum death benefit you need by (i) determining the number of years until your youngest child turns 18 and (ii) multiplying it by your annual income. For Disability Insurance, you can estimate the minimum benefit amount by adding monthly expenses like your mortgage, utilities, groceries, and child care.

I get it: Most people don’t want to think about insurance. However, it is a necessary evil as I jokingly say, and there are specific matters to consider when going through a divorce. So, I hope you found these tips helpful. If you want to discuss your insurance situation in depth and privately, my email address is insuritystreet@gmail.com. The consultation is free with no obligations.

How Much Life Insurance Do You Need?

Thomas Knoble on August 25, 2025

Life Insurance is one of the building blocks of a sound financial plan. Without it, an unexpected death may force surviving family members to use their retirement and college savings for other, more immediate needs. If you have loved ones who depend on you financially, the difficult question isn’t “Do I need Life Insurance?” (Hint: The answer is “yes!”) Instead, it’s “How much do I need?”

Many Americans are aware that Life Insurance covers funeral and burial expenses. What is not as commonly known is that Life Insurance covers so much more. If you’re a breadwinner, you can get a policy that maintains your family’s quality of life for years after your death. If you have children in particular, you can also ensure they have the means to pursue their dreams. To accomplish these goals, consider all of the expenses that your family would have to bear after you pass. They include:

  • Immediate Expenses such as funeral and burial costs, unpaid medical expenses, the mortgage or rent, car loans, credit card debt, and personal loans.
  • Ongoing Expenses such as food, utilities, transportation, health care, and insurance (home, auto, medical, etc.).
  • Future Expenses such as college tuition and retirement savings.

Aggregating these expenses would certainly be a comprehensive way to determine how much Life Insurance you need, but it would also be very time-consuming (unless you’re already tracking most of them in a money management tool). Fortunately, there are a few rules of thumb you can use instead.

The first is called the DIME Method, which stands for Debt, Income, Mortgage, and Education. In short, you can estimate the coverage you need by adding:

  • Existing Debts,
  • Your annual Income (times the number of years until your children reach 18 years old),
  • The balance of your Mortgage, and
  • The cost of a college Education (times the number of children).

Another rule of thumb is called the 10x Method. Quite simply, you can estimate the coverage you need by multiplying your annual income by 10. (If you want to get “fancy”, you can then add $100,000 per child to include college tuition.)

Perhaps you’re doing the math in your head and thinking: “Wow, I need a lot more coverage than I expected! How much would I have to pay for it?” If so, you may be surprised to know that Life Insurance is not as expensive as you think. According to the 2022 Life Insurance Barometer Study, “More than half of Americans overestimate the cost of Life Insurance by as much as THREEFOLD.” So, for your consideration, please don’t let the misconception of cost prevent you from securing your family’s financial future.

Life Insurance is a powerful, affordable, and necessary component of your financial portfolio. If you have loved ones who depend on you financially, a robust policy can maintain their standard of living for many years after your death. Fortunately, such coverage is not as expensive as you may think, so please explore your options… and get some much-needed peace of mind.

Breadwinners: Here’s the Best Way to Protect Your Most Valuable Asset.

Thomas Knoble on August 25, 2025

For “working stiffs” like you and me, what is our most valuable asset? You may be surprised to know it’s not our house, savings account, or IRA. Instead, it’s THE ABILITY TO EARN A LIVING. After all, without our job income, we likely couldn’t pay the mortgage, provide for our loved ones, or save for retirement. As you do with your house, automobile, and other assets, you need insurance to protect your ability to earn a living, and the best way to do that is with DISABILITY INSURANCE.

Disability Insurance is a contract that provides a source of income when an injury or illness keeps you out of work. It allows you to pay your “everyday living expenses” like the mortgage, utilities, groceries, and child care. After all, when you’re disabled, your earnings stop… but your bills don’t.

Given what it protects, Disability Insurance is just as essential as Auto, Health, Home, and Life Insurance… yet consumers don’t normally give it the requisite amount of consideration. The primary reason for this is a lack of education, which has led to widespread misconceptions like the following:

  • THE ODDS OF ME SUFFERING A DISABILITY ARE SLIM TO NONE. I wish that were the case, but the data suggests otherwise. For example, a recent study by the Social Security Administration found that, during their working lifetime, 25% of Americans will be out of work for at least one year because of a disability.
  • I’LL GET BENEFITS FROM SOCIAL SECURITY, SO I DON’T NEED DISABILITY INSURANCE. While Social Security has a disability program, it’s difficult to receive benefits from it. To qualify, you must be unable to perform the duties of any occupation. On the other hand, Disability Insurance has a much less stringent requirement: the inability to perform the duties of just your own occupation.
  • I HAVE WORKERS’ COMP, SO I DON’T NEED DISABILITY INSURANCE. It’s true that workers’ compensation insurance often replaces lost wages, but only when you become disabled as a direct result of your job. By contrast, Disability Insurance is comprehensive, as it covers illnesses and injuries that occur both on and off the job.
  • DISABILITY INSURANCE IS TOO EXPENSIVE. Fortunately, you don’t have to break the bank to protect your most valuable asset. As a rule of thumb, the cost of Disability Insurance is just 1% to 3% of your earnings. So, if you’re making $60,000 a year (or $5,000 a month), you can expect to pay about $50 to $150 a month.

If you’re a breadwinner, your most valuable asset is the ability to earn a living. The best way to protect this asset is with Disability Insurance, which provides a source of income when an injury or illness keeps you out of work. The product doesn’t get the attention it deserves, as a lack of education has led to several popular misconceptions. Hopefully, this article is a starting point for appreciating the awesomeness of Disability Insurance.

How to Save on Medicare Costs (Part 2)

Thomas Knoble on August 25, 2025

Medicare beneficiaries often live on a fixed income that’s stretched out under normal circumstances. So, with today’s inflation affecting the cost of food, healthcare, and other expenses, their standard of living could be severely diminished. Some may even have to choose between buying food and prescription drugs. (Reports indicate that poverty is rising among senior citizens.)

If you’re on Medicare and under financial stress, there are many ways to find relief! In last month’s article, I listed four resources to help reduce your Medicare premiums and out-of-pocket expenses (such as copays and deductibles). This month, I’m back to share four more tactics, all of which can help you save on prescription drug costs! Let’s get to it!

Pharmaceutical companies often manage Patient Assistance Programs (“PAPs”) to help low-income individuals with the cost of their medications. PAPs serve as an augmentation to Medicare beneficiaries’ existing Part D coverage. (Side note #1: Part D is the Medicare section that covers most outpatient prescription drugs.)

GoodRx is a website that helps you find the lowest price for prescription drugs at nearby pharmacies. To take advantage of their free service, all you have to do is:

  1. Enter the name of your drug to compare the prices in your area.
  2. Find the lowest price available on both generic and brand-name drugs.
  3. Select the deal you want, then GoodRx will create a coupon you can show at the pharmacy.

Another potential way to reduce prescription drug costs is to communicate with your physicians openly. Don’t be shy if they prescribe a brand-name drug you can’t afford! Ask them for help. Perhaps they can give you samples or prescribe an equivalent generic medication.

The final cost-saving measure for prescription drugs is to explore other Prescription Drug Plans (“PDPs”) in your area. Fortunately, many PDPs are available, all of which have their own:

  • Drug formulary. (Side note #2: A formulary is the list of generic and brand-name drugs covered by a PDP.) If your current plan’s formulary excludes one of your medications, you may find an alternative PDP that covers it (as well as your other medicines).
  • Tiers. (Side note #3: PDPs often place drugs into different tiers, each with a different out-of-pocket cost. Typically, drugs in a lower tier will cost you less than drugs in a higher tier.) You may find an alternative PDP that has your medicines in lower tiers than your current plan.
  • Preferred pharmacies. (Side note #4: PDPs often designate select pharmacies where beneficiaries can get their drugs at a lower cost.) If your current plan doesn’t label your favorite pharmacy as preferred, you may find an alternative PDP that does.

I hope the information in this and last month’s articles serve as a good starting point to help you save on Medicare costs. If you have tips that I didn’t list, please send them to insuritystreet@gmail.com so I can help as many beneficiaries as possible.

How to Save on Medicare Costs (Part 1)

Thomas Knoble on August 25, 2025

Medicare beneficiaries often live on a fixed income that’s stretched out under normal circumstances. So, with today’s inflation affecting the cost of food, healthcare, and other expenses, their standard of living could be severely diminished. Some may even have to choose between buying food and prescription drugs. (Reports indicate that poverty is rising among senior citizens.)

If you’re on Medicare and under financial stress, there are many ways to find relief! In this and next month’s articles, I’ll provide a list of resources that can help reduce your Medicare premiums and out-of-pocket expenses (such as copays and deductibles). Let’s get to it!

Medicare Savings Programs (“MSPs”) offer assistance with your hospital (“Part A”) and medical (“Part B”) expenses – especially the premiums. To qualify, your resources and monthly income must fall below certain limits that increase every year. (Side note #1: “Resources” are your stocks, bonds, and the money in your checking, savings, and retirement accounts.) You can apply for MSPs through your state’s Medicaid program.

Another cost-saving measure is to explore the Medicare Advantage (“MA”) Plans in your area. (Side note #2: There are two primary ways to get Medicare coverage. The first is through the government, which is known as “Original Medicare”. The second way is through a private insurance carrier, which is known as “Medicare Advantage”. MA Plans include the benefits of Original Medicare plus dental, hearing, vision, and other extra benefits.)

  • Fortunately, many MA Plans are available, all of which have different designs. So, you may find one that, when compared to your current plan, better fits your needs and reduces your costs. (For example, if you have recurring appointments with a number of specialty doctors, you may discover an MA Plan with lower copays for specialists.)
  • If you’re in good health (or a veteran who utilizes your VA benefits), the Part B premiums could be your largest medical expense. (Side note #3: In 2023, the Part B premium is $164.90 per month.) So, you may want to find an MA Plan with a “giveback” feature that lowers your Part B premium. (Side note #4: If you’ve seen the commercials about putting money back in your Social Security check, they’re referring to an MA Plan with a Part B “giveback”.)

(Side note #5: These side notes are piling up.)

Extra Help – also known as the Part D Low-Income Subsidy – is a federal government program that offers assistance with your prescription drug costs. Like the Medicare Savings Programs above, your resources and annual income must fall below certain limits to qualify. You can apply for Extra Help through the Social Security Administration.

If you’re not eligible for Extra Help, then Pennsylvania has two programs – called PACE and PACENET – that offer low-cost prescription drugs. Eligibility for either program is based on your previous year’s gross income.

I hope this serves as a good starting point for saving on your Medicare costs. I look forward to sharing additional resources next month!

How to Pay for Long-Term Care, Part 2

Thomas Knoble on August 25, 2025

When it comes to financial planning, long-term care (“LTC”) is a life event that often doesn’t get the recognition it should, given its likelihood and substantial cost. So, in last month’s article, I examined three LTC funding methods:

  1. Medicaid, a government program that assists low-income people. If you’re thinking about Medicaid as your LTC funding source, consider factors like (a) you may have to spend down your assets to qualify and (b) Medicaid’s coverage is limited in several ways. Given its drawbacks, Medicaid is generally viewed as the last-resort option for LTC.
  2. Self-Funding, where individuals use their own assets to cover LTC expenses. To determine if Self-Funding is right for you, consider factors like (a) you retain the risk of paying exorbitant LTC expenses and (b) you risk selling assets in a market downturn, creating long-term consequences for your retirement funds. Given its risks, Self-Funding is viewed as suitable only for wealthy individuals.
  3. Traditional LTC Insurance, which pays a monthly, tax-free benefit for LTC expenses. This method has advantages over Self-Funding and Medicaid, most notably (a) it transfers financial risk to a private insurance carrier and (b) it covers a wide range of LTC services, from home health care to nursing home stays. Unfortunately, such products have two defects that make them unpopular:
    1. First, insurance carriers periodically increase the premiums to account for changes in the projected cost of claims. Some policyholders can’t afford the unexpected rate increases, forcing them to reduce – or even cancel – their coverage.
    2. Second, Traditional LTC Insurance has a “use it or lose it” structure, so policyholders may spend a lot on premiums… and never receive any benefits.

This month, I present a fourth funding method – one that incorporates the positives of Traditional LTC Insurance… and addresses its deficiencies.

Hybrid LTC Insurance combines Traditional LTC Insurance… with Life Insurance. It pays a monthly benefit for LTC expenses and a lump-sum benefit when the policyholder dies. Since the death benefit includes any unused LTC funds, Hybrid LTC Insurance solves the aforementioned “use it or lose it” problem. One way or another, your premiums will produce substantial benefits! Furthermore, since the premiums are locked when the policy is issued, this product removes the above concerns over unexpected rate increases!

Financial planning for LTC requires thorough consideration. The sooner you build (and execute) your strategy, the better you’ll be prepared. Before you speak with an LTC specialist, here’s a list of questions to help you decide which funding method is best for your needs and objectives:

  1. How badly would you reduce your assets to pay for LTC?
  2. Based on your family’s – and your own – health history, can you foresee a need for extended home health care?
  3. Do you have sufficient earnings and retirement savings to afford the cost of LTC without insurance?
  4. Would you be willing to deplete your estate to pay for LTC? Do you have other plans for the money you’ve saved?

For more information, my email address is insuritystreet@gmail.com. The consultation is free with no obligations.

How to Pay for Long-Term Care

Thomas Knoble on August 25, 2025

When it comes to financial planning, long-term care (“LTC”) is a life event that often doesn’t get the recognition it should, given its likelihood and substantial cost. So, in a previous column, I gave you an overview of LTC and emphasized the need to plan for it. Here, I continue the focus on LTC by examining three methods to pay for it.

Medicaid is a government program that assists low-income people. Aside from offering health care benefits, it’s the country’s largest provider of LTC payments. If you’re thinking about Medicaid as your LTC funding source, consider the following:

  • YOU MAY HAVE TO SPEND DOWN YOUR ASSETS TO QUALIFY FOR MEDICAID.
  • MEDICAID’S LTC COVERAGE IS LIMITED. For example: (1) It typically excludes LTC at home, which is significant since older adults prefer to age in place; (2) Only the lowest-grade nursing homes accept Medicaid, which is noteworthy since older adults consider quality healthcare a top priority.
  • MEDICAID MAY GO AFTER YOUR ESTATE TO RECOVER THEIR COSTS. In general, a state can do this in two ways: (1) Seek repayment from your estate after you die; (2) Place a lien on your property while you’re alive.

Given these drawbacks, Medicaid is generally viewed as the last-resort option for LTC.

On the other end of the financial spectrum, some individuals use their own assets to cover LTC expenses. To determine if Self-Funding is right for you, consider the following:

  • YOU RETAIN THE RISK OF PAYING EXORBITANT LTC EXPENSES.
  • YOU MAY HAVE TO USE THE ASSETS YOU SET ASIDE AS AN INHERITANCE TO YOUR CHILDREN, GRANDCHILDREN, AND OTHER LOVED ONES. If your financial legacy is important, you should choose a different funding approach.
  • YOU RUN THE RISK OF SELLING ASSETS IN A MARKET DOWNTURN, CREATING LONG-TERM CONSEQUENCES FOR YOUR RETIREMENT FUNDS. By selling low, your remaining funds will have a difficult time achieving the growth you need for a lasting retirement income.

Traditional LTC Insurance has advantages over self-funding and Medicaid. Most notably: (1) It transfers financial risk to a private insurance carrier; (2) It covers a wide range of LTC services, from home health care to nursing home stays; and (3) The benefit payments are income tax-free. Unfortunately, such products have two defects that make them unpopular:

  • PREMIUM INCREASES. Periodically, insurance carriers increase the premiums – sometimes dramatically – to account for changes in the projected cost of claims. (Side note: Such increases must be approved by state regulators and must apply to a group of policies with similar characteristics.)
  • “USE IT OR LOSE IT”. Policyholders who go through life without needing LTC will never receive any benefits. Instead, the insurance carrier keeps the premiums to pay for other people’s claims. (Side note: Most insurance products have a “use it or lose it” structure. The premiums aren’t meant to generate an investment return. Instead, they afford meaningful protection against potential financial losses.)

Next time, I’ll present a funding method that incorporates the positives of Traditional LTC Insurance… and addresses its deficiencies. In addition, I’ll provide a list of questions to help you determine which LTC funding option is best for you!

Long-Term Care: An Overview

Thomas Knoble on August 25, 2025

When it comes to financial planning, you know about core elements like saving for retirement and preparing for an unexpected death or disability. However, there’s a life event that doesn’t get the recognition it should, given its likelihood and substantial cost. So, in this article, I provide an overview of long-term care and explain the need to plan for it.

What is long-term care (“LTC”)?

LTC encompasses a variety of services designed to meet the medical and non-medical needs of individuals who can’t perform Activities of Daily Living such as bathing, dressing, eating, and toileting.

Who needs LTC?

LTC is primarily for individuals facing health issues like Alzheimer’s disease, arthritis, diabetes, heart attacks, osteoporosis, and strokes. The likelihood of needing LTC is influenced by factors including age, gender, marital status, lifestyle choices (e.g., obesity, smoking, excessive drinking), and family medical history.

Where can I get LTC?

There are two primary settings in which you can obtain LTC:

  1. In the comfort of your home by a family member, friend, home healthcare aide, or nurse.
  2. Assisted living facilities, memory care facilities, or nursing homes.

Why should I plan for LTC?

Planning for LTC is essential for several reasons:

  1. It enables you to make decisions while you’re still able to articulate your preferences. By planning ahead, you improve your chances of maintaining independence and receiving quality healthcare. Additionally, planning reduces the risk of depleting your assets and income, ensuring financial stability throughout the LTC journey.
  2. LTC planning also alleviates stress on family members, as it prevents them from being thrust into the caregiver role. According to studies, family caregivers often experience decreased energy, patience, and time to care for themselves and their immediate family. They also tend to provide out-of-pocket financial assistance to support their loved one’s care. Finally, the family member’s career can be adversely affected, since assuming caregiving duties can lead to reduced productivity, increased absences, and other work-related challenges.
  3. The final justification for LTC planning is the prevalence and cost of LTC, which tell an alarming story. Approximately seven in 10 individuals who reach age 65 will need LTC in the future. Moreover, the average length of time that people use LTC services is three years. Finally, as an example of how expensive LTC can be, the estimated local cost of a semi-private room in a nursing home exceeds $12,000 per month. (Even the average cost of a home healthcare aide is more than $5,000 per month in this area.)

LTC is for individuals who can’t perform Activities of Daily Living such as bathing, dressing, eating, and toileting. The chance of needing LTC in retirement is high, and the cost of it is substantial. LTC planning improves the likelihood of maintaining independence, receiving quality healthcare, and protecting your financial well-being. You can also spare loved ones from the burden of caregiving, which is known to have adverse effects. For more information on LTC, my email address is insuritystreet@gmail.com. The consultation is free with no obligations.