The Worst Insurance Products: Agent Reacts to George Kamel

Speaker 0 | 00:00.112

All right, today I'm going to be reacting to Insurance Agents Will Hate This Video by George Campbell himself, a Dave Ramsey personality. And of course, with the title, Dave Ramsey Personality, got to react to this. We'll say two things. Number one, I will be giving my take in real time. So we'll see my thoughts. I would imagine we're going to agree more than we disagree. And then the second thing is, George, if you're watching this, I would love to have you on my show. I'm sure we agree on way more things than we disagree, but I think we could have some really healthy. conversations about insurance and debt and Bitcoin and maybe some other topics. I did reach out to your team at the beginning of this year. I actually sent one of my video cards that I do to special people and your team acknowledged it in a great way, but did say that right now is not a good time and they're going to pass. And if anything does change, would love to have you on the show. I'm in Tennessee. I'm close to your guys' office. I'd be more than happy to make it as convenient as possible. Without further ado, let's jump in.

Speaker 1 | 00:54.669

The insurance industry is a lot like a gas station bathroom. It's highly sus, and should be approached with great caution, trepidation, and a lot of TP layered on the seat. So in this video, you're going to find out which pointless and predatory...

Speaker 0 | 01:04.415

I'm in the insurance space and I have to say I agree with this point.

Speaker 1 | 01:07.216

Insurance policies you can stop wasting money on. Plus, stick around to the end to learn which two popular insurance add-ons are complete scams. To start, quick reminder, the purpose of insurance is to transfer the financial risk to the insurance companies for things that we can't cash flow out of pocket. So you don't need flat tire insurance, but you do...

Speaker 0 | 01:22.888

I tend to agree with this idea of transferring risk to a third party. I think at the very end where it talks about cash flow aspects, that's where we could debate. But essentially, it's transferring risk, your chance of loss, to a third party, and there's a lot of reasons why you'd want to do that.

Speaker 1 | 01:38.839

You need car insurance because you can handle the cost of a flat tire, but the cost of your car and potentially someone else's, probably not. Now that we're on the same page about the purpose of this stuff, let's look at the first insurance you should not buy, credit life and credit disability. Here's how this works. Let's say you take out a loan on a fancy jet ski. But when you take out the loan, the lender says. Well, in order to get this loan, you also need to buy insurance on your life. That way, if you die, it'll pay off the old seed. That's how credit life insurance works. And it's the same thing with credit disability. If you become disabled, it'll pay off your loan. Now, here's the problem. It's basically life insurance and disability insurance, but it's 50 to 100 times more expensive. So the cost of a $10,000 life insurance policy on your $10,000 loan could have bought a million dollar term life insurance policy. And if you're still not following here, getting 10K when you could have got a million is a bad trade. Not to mention, some of these lenders make more on the sale of the credit life insurance than they do making the loans. which makes selling you insurance somehow scamming earth and selling you debt. A plot twist, not even Tom Clancy saw coming. Clancy fans, where you at?

Speaker 0 | 02:32.455

Dave Ramsey loves debt and insurance. You combine those together and you got talking points for days. I would say I 100% agree with where George is at. Normally, they're a lot more expensive because they're issuing it immediately. So you're not going through heavy underwriting. And so obviously, it's going to be a little bit more expensive. But the other thing is, like, even... And even if something crazy happened, there's chances that it wouldn't even get paid out because of having to find the paperwork. So I think a lot of these companies just bank on the fact that you're just going to be disorganized. And so even if the chances of paying out are going to happen, which are super low, the chances of you sending a claim for it could even... It's almost like getting gift cards and having gift cards being lost. These companies make a ton of money on people just getting gift cards and never redeeming them. there's an aspect of this as well. And so overall, all the points that George made and then those points above would not recommend that.

Speaker 1 | 03:30.233

You're dead, aren't you? You're all dead. I'm not dead yet. Next up on insurance that you should not buy is mortgage life insurance, which is very similar to our last insurance villain because it pays off your mortgage if you should pass. And that might sound like a good thing, but this is super gimmicky and targets our emotions. A salesperson will say something like, well, if you go out in a freak pickleball accident, how will your spouse pay the mortgage? But what they failed to mention is that the mortgage life insurance is 10 to 20 times It's more expensive. than regular life insurance. And here's the math. If you've got a $400,000 mortgage and you buy mortgage life insurance, you could have bought $4 million to $8 million worth of term life for the same exact price. Now, one caveat here is that mortgage life often doesn't require a medical exam to qualify. So if you're uninsurable because of health issues or because you're Ryan Gosling stunt double, mortgage life is a viable option because at least you can get a little bit of life insurance that you couldn't otherwise. But remember, you are paying a pretty penny for it. Next one.

Speaker 0 | 04:16.065

Yeah, I agree with George on this point. I think Like, a lot of times they're... follow the mortgage. And so it actually decreases over time. And so if you look at it, you'd be way better off if that's your outcome, just getting a level term policy that just covers the mortgage immediately. And then you could say, if you die 10 years in, you're actually, it's more than paying it off. A lot of times that will be just as cheap. And a lot of these term companies are making underwriting fast. I mean, some of these carriers that we represent, you don't even have to go do a health test. It's called accelerated underwriting. And so Some of the benefits of not wanting to go through that whole process could be eliminated if you go through that, and I tend to agree with the idea. I do think mortgage insurance is a good idea, and it bundles quite well, but from an execution standpoint. 100% agree.

Speaker 1 | 05:08.187

Double indemnity and accidental death, which sounds like it could be the subtitle of a Jason Bourne movie, only this time starring Jesse Eisenberg. Plot twist, the villain is his social awkwardness, but he will overcome. He will succeed. I have like a lot of anxiety about this. This type of insurance only pays out if you die by accident. So if you only have accidental life insurance covering you, but you die of a heart attack, your family will get precisely zero dollars. Now, a lot of people are still tempted to get this because it's really cheap, but it turns out it's so cheap because there's hardly any probability this accidental death... is actually going to occur. So the bottom line is you don't need more or different life insurance for your family if you die by accident. So just stick with term life insurance, which will cover you regardless of how you go to that big budget meeting in the sky. And let's get the guidelines real quick on how much term life to get. You want to get 10 to 12 times your annual income in a term life policy.

Speaker 0 | 05:49.632

Susie Orman would disagree, George. Susie Orman would say 20 times plus.

Speaker 1 | 05:54.179

So if you make 50 grand, you want at least a half million dollar policy and you want that for a 15 to 20 year term. The key is if you follow the plan that I teach on this channel, 15 to 20 years from now, you're going to be self-insured because your nest egg, your assets, your home will be paid for. You're going to have plenty to cover your family's income should you pass. All right,

Speaker 0 | 06:08.936

next type of- All right, so let's talk about double indemnity. I agree with his point. I think it is super cheap. And one thing to say is, okay, the likelihood of you dying period is small, but the likelihood of something crazy happening, and if a few dollars annually just create an increase. There's some people that we've worked with that want to include that. I would say majority of the people that we've worked with don't include it because we are, again, I don't want to just add writers just to add writers, but there's, there's something to be said about like my chance of dying in the next 20 years are pretty, pretty light, knock on wood. But, um, is, is there a chance that something crazy could happen? And would I want there to be, um, I don't know, like you could, you could make the argument, but I just even think the fact that I'm like talking out loud, it's, it's, it's something that we don't put. for a reason. And then George also mentions about how much life insurance do you need. I've had plenty of reactions to this whole need-based versus want-based. And I would say if you're just going off of like the bare minimum, yeah, his 10 to 15 times deal is a fine guideline. I think it's probably on the light end, even from a needs perspective. But I think if that's the goal is to be self-insured and you want as little as possible, sure. But again, I'm a... your ability to create is your greatest asset. And a lot of times in your financial plan falls apart if there's not the wealth creator. And so he's looking at the bare minimum, like, what do you need? And I think the opposite way to look at this is like, what would you want in a perfect world from a planning perspective? And the fact of the matter is you are going to earn a lot of money throughout your life if you lived. And so you have the ability to lock that in versus not. And so those are the two philosophies. Obviously, George is in one camp. I'm probably more than the other. But I think he articulated it well for if someone's jamming with that side.

Speaker 1 | 08:04.634

Insurance to avoid is cancer insurance, which, as the name implies, pays you if you get cancer. But guess what? Your health insurance will cover you if you get cancer. So cancer insurance is just unnecessary. Now, getting cancer is one thing. But if you are a cancer, here's your daily horoscope. Oh, boy. I don't even know if I should read it. I don't know if you're going to.

Speaker 0 | 08:20.193

This is what George. This is why George is awesome. Is he he makes insurance videos funny.

Speaker 1 | 08:26.349

You know, cancer is going to be. Trust your heart's gentle guidance every moment. Today you'll feel calm and hopeful as small joys guide your choices, bringing confidence and clarity into your day with simple smiles and honest feelings. Your natural empathy shines today, helping you connect with friends and family in a warm, genuine way. Trust your gut when making plans and stay open to small, spontaneous, joyful moments. Balance rest and action, and you'll find optimism and steady energy to move forward. As a Gemini, I've had enough.

Speaker 0 | 08:47.833

No,

Speaker 1 | 08:47.943

I'm not even a Gemini. I'm a Taurus. Don't get it twisted. You boys built for tough. All right, I apologize for that. But we needed something a little lighter after the cancer talk. A lame attempt. at humor, swing and a miss. Next up on terrible insurance.

Speaker 0 | 09:00.580

I'll say I agree with the cancer. It feels very much like that accidental indemnity. I would say, yeah, I would say that the cancer insurance isn't something that quite frankly, I've never seen in real life. So I know it's a thing, but I would, I would put my stamp of something to avoid.

Speaker 1 | 09:19.037

He paid burial insurance. Now, quick disclaimer here. I do believe in pre-planning your funeral to take that burden off of your loved possible. And my loved ones already know to lay me down on a bed of lens wipes in the president casket by prime via Costco.com. So by all means, pre-plan, pre-arrange, work out all the details you want. Just don't prepay. Because listen, the funeral industry is making way more money collecting your money now and investing it for 40 years before you die than they are burying people. Don't believe me? Well, let's pretend that you're 40 years old, you're a regular at the Y, and you eat your Oikos triple zero every morning. You're healthy. So there's a high probability you will make it to the age of 80, at least. But the good people at the funeral home are selling prepaid burials for only $5,000. So you decide to go for it so your family won't have to worry about the cost when you kick the bucket 40 years down the road. But what if instead you took that $5,000, you put it into a good growth stock mutual fund that averages 10% over that 40 years? Well, that $5,000, without adding anything else to it, would grow to around $268,000. thousand dollars which is exactly how much i plan on spending on my funeral i want a bounce house i want dj khaled there barring any future drama dj khaled i reserve the right to remove dj khaled from my funeral if scandals were to arise you just got to be safe you smart you very smart anyway that's what the funeral home is doing with your money and if you had invested instead of paying for this prepaid burial you'd have a quarter million more dollars to leave a legacy to your family which i'm gonna guess they would prefer to have over the prepaid burial We've had a lot of death talk for the last little bit, so let's take a moment for a palate cleanser to talk about something you can do to make the most of your life.

Speaker 0 | 10:35.439

Yeah, so here's what I would say about that is agree. I think, I don't know many 40-year-olds that are planning out their funeral. I think if you're in your 60s and you want to just take that burden off your family, yeah, you can. Part of planning is also just arranging everything, but yeah, I mean, you could plan everything, give a checklist, and then, you know. when, when something happens, it's, it's paid for. Obviously if you're 40, if you're 50, even if you're 60, don't necessarily think you need to be prepaying. If you're in your 70s or 80s and it's, it's a convenience thing. I think his whole, you know, 10 plus 10% annual growth and all like, there's an aspect of you want to get that taken care of. But I do agree. If you're, if you're under the age of 60, do not prepay for any of your funeral stuff. Fun fact is one of my My first business idea was to create a call center to do burial insurance. And actually after having many conversations with many people, including funeral homes and all, I decided against that because there's a lot of people that sell this insurance. And then it doesn't even get implemented or the families don't know. And it's almost it goes back to they don't get redeemed. And so you get a lot of seniors that get taken advantage of because they're getting sold these policies. They're getting guilt-tripped. They're buying, but then it's so disorganized or they end up canceling because of disorganized. So overall, I think this whole sect. is a red, it's not adding value in the grand scheme of things. And so that's what I would say. And so, so far, George, we're agreeing on all the points that you're making. You're just a little bit funnier than I am.

Speaker 1 | 12:09.315

Next insurance on the list that you can skip may come as a surprise to you, dental and vision. Now, it's not because your teeth and your eyes are not important. I mean, they're on my list of most important body parts, just above brains and right below heart. No, it's because if you go and buy dental and vision insurance on your own, and you actually run the numbers out on it, it's almost never worth it. Mathematically, you could have just saved up and paid for your dental visits, cleanings, x-rays, the occasional root canal, wisdom tooth removal, or whatever you need without insurance. Same goes for eye care. So I would just tell you to self-insure unless it's subsidized or covered by your employer, in which case, take it. That's a sweet deal. Next insurance to skip is probably- I agree,

Speaker 0 | 12:41.693

and we do the same thing with our family.

Speaker 1 | 12:43.771

...something your neighbor Jeff is known for peddling at the cul-de-sac barbecue, and that is whole life insurance. If you're unfamiliar, whole life insurance covers you for your entire life. instead of a term policy, which covers you for 15, 20, 25 years. And whole life also includes a savings account called cash value. The idea is that part of your monthly payment goes toward your death benefit, which is the money your family would get if you die. And part of it gets saved in this cash value account. Sounds kind of nice. But then again, so did having your toddler help feed the dogs. She ate it all. She ate all the dog food. The baby human ate the dog food. The question is, what does she know that we don't? Are mush peas that bad or is dog food that good?

Speaker 0 | 13:16.430

People need to know.

Speaker 1 | 13:17.711

Whole life and any other kind of permanent life insurance is a terrible idea. For starters, it costs way more than term life insurance, could be as much as 17 times more. And that's because it's trying to be two things at once, insurance and investing. And it does both of them very poorly. Not to mention, the cash value in most accounts only grows at 1% to 2%, which FYI isn't even keeping up with inflation. Here's the kicker. When you die, your family doesn't even get the cash value in most cases. They only get the death benefit. Who gets the cash value? The insurance company. No bueno. So next time you find yourself getting cornered by Jeff by the condiment station, remember, whole life agents get big commissions, sometimes up to 90%. of your first year's premium. That's why they want to push it over term life. They make money whether it's good for you or not. In this case, it is not. Okay, we're rounding third headed towards.

Speaker 0 | 13:57.161

All right. So George, we had a good stretch and this is where I push back, but I want to share what I agree with at first. I think whenever we're looking at big parts of the population, you could look at whole life insurance. I'm sure George would also say indexed universal life would be bundled into this, even though he just highlighted whole life. I would say he would probably say permanent life insurance is a bad, bad, bad product. And I think for the most part, if you look at if you zoom out and look at all the life insurance that's that's sold with all these different companies, a lot of network marketing style companies and then a lot of traditional policies, you're actually not that far off. And that's where in the past I've kind of like taken a little bit of like I've taken a step back because just like I don't want to do all black and white, all is good, all is bad. I have enough awareness to be like, yeah, there's a lot of permanent life insurance that checks a lot of these boxes. For example, the talking points that are always made from the Ramsey folks are...

Speaker 2 | 15:00.534

Basic whole life policy is accumulating at under 2%. When you die, they keep your money. Whole life does not grow tax-free unless you lose money. Whole life is 20 times more expensive than the same amount of term on the same person.

Speaker 0 | 15:16.042

Number one, you only earn 1% to 2%. That's horrible. I would agree that that would be bad. And then when you die, your life insurance keeps your commission or they keep your cash value. And so they steal your cash value. So you've worked so hard, they steal your cash value. That's the other talking point. And then the other talking point is high commission. So let's talk about this. You maybe are not wrong, but any type of permanent life insurance policy is that I'm setting up and a lot of my colleagues in the industry are setting up, especially if it's used as an asset, is earning more like 3% to 5% in-term rate return. So that's like 100% to 200% greater than what you're representing. The second thing is they steal your cash value when you die. Well, most of these life insurance policies that we're setting up, the life insurance death benefit is increasing greater than what the premiums that you're putting in. In other words, You're only getting the death benefit, but the death benefit is far greater than the original death benefit and what you've put in. So in other words, you can say they're stealing your cash value, but the net result is it's the death benefit. What you get is a greater than the initial death benefit plus what you put in. That's a tongue. tie or that's a word that's a mouthful uh but you get the point and then last thing when it comes to commissions you're totally right this is this is one of the reasons why many people come to us and are drawn to our message is because we're very transparent with how we design these things and you see firsthand that we make a fraction of what we could make um if we set this up the typical way and but we believe that's one of the value props and so you're not wrong as it relates to that that's why we're probably in agreeance and i'm never going to change your mind because it would be detrimental to the Ramsey brand to say, okay, there's a couple aspects that permanent life insurance could be a good fit. So I respect the fact that you guys have to take a hard line. My hope would be that people, especially that are, you know, affluent, can look at this and not just black and white and maybe can say, okay, there could be some elements that life insurance could enhance my situation. At the end of the day, it goes from the efficiency framework of what is going to help me be more efficient. And there are some cases that... You shouldn't have permanent life insurance because it does not help your retirement, your future savings, your estate be more efficient. There are some aspects that it does. And so that would be my two cents as it relates to that. The other thing that I would just point out, all the insurances up until this point are expense, are expense, are expense, are expense. Whole life insurance, regardless of what you want to say, is not because it's a permanent deal. It's not just a pay for it. and then hope you never use it. It's an asset. You might say it's a bad asset, but it's an asset. So that's the other difference between whole life insurance and all the other insurances that George said. So in summary, I don't necessarily disagree with a lot of points that you're making, but it's frustrating from a standpoint of being on the other side saying, hey, we've built a whole brand calling those same things out, but saying we're different. And I respect the fact that you have to keep the hard line.

Speaker 1 | 18:17.379

There are two more insurance add-ons that people are often popped into getting and spoiler. total scams. The first is return of premium or ROP. You'll see this add-on on almost any kind of insurance these days. And basically it says, if you don't use the policy you have, the insurance company will give you your premiums back and the policy will have been for free. But of course you have to pay extra for it. So was it really free? So same story as before, if you take that amount, you would have paid extra for ROP and invest it. It would more than return your premiums, whether you use the policy or not. The other scam is the add-on or rider called.

Speaker 0 | 18:44.693

I wouldn't, I wouldn't call it a scam. I would say that from an efficiency standpoint, I would tend to agree. And again, that's all I'll say. There's actually someone that told me that whole life was a scam, but you should do return of premium term insurance. And I told him, like, isn't that just a more inefficient version of whole life? And I was like, I saw lightbulb moments going off on firsthand. But yeah, I would tend to agree. Return of premium term insurance is not something that we would sell or talk to people about.

Speaker 1 | 19:13.777

Waiver of premium, which is similar. It says, hey, if you become seriously disabled and can't work, we'll waive your premium payments. and still keep your insurance active. And again, this one sounds like a good move, but just know this costs extra and there are strict rules around what qualifies as disabled. Insurance companies do be picky like that. So what's the smarter option here? Just get long-term disability and don't fool with this crap. Okay, we just talked a lot about the insurances you don't need to pay for, but what...

Speaker 0 | 19:34.844

Okay, so I would say waiver of premium is one of those aspects that if you buy into permanent life insurance structuring properly as part of the cornerstone of your portfolio, you could say that waiver of premium could be a beneficial thing. If you're going to subscribe to the whole buy term and invest a difference and all, 100% agree. And I would say on our policies, we always give our clients the option and looking at the pros and cons. And many people choose not to do waiver of premium because they look at the differences. But some people choose to do waiver of premium because they like the fact that even if something happens to them and they get disabled, which every company has a different definition, they would have a part of their insurance get self-funded. and they see that as an asset and they... They like that. So you can see the pros and cons. I would not call it a scam, but I would call it tradeoffs and looking at the differences. So overall, George, we agree on more than we disagree, but obviously the life insurance conversation is one of those that I would love to have a more in-depth combo and even show receipts, like show typical life insurance versus non-typical life insurance or the stuff that we deal with and like from companies. because I think, not that I would agree, have you guys endorse anything that we're doing, but I think what you would say is like, okay, still not a fan of life insurance, but if you're going to do permanent insurance, God forbid, this would be the way that you would want to do it. I think that's the angle that I would try to go with is like, could you see a world where some people would want permanent life insurance if these are their values? And that would be the conversation. And we probably would still disagree, but that would be the thing that I would love to talk about as well as debt, as well as some other other philosophies right here on this channel. If you're a fan of this show, just know every time you view this, you help me become more relevant so that I can get the Georges of the world. And if any of you know George and want to make an intro or bump my request up, please let me know. But again, thank you. And if you have more questions about insurance for yourself personally and want to learn more, there will be links down below.

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