106 How To Save Money On Insurance In Retirement

Sound Retirement Planning Podcast

Jason and Kevin Krieger with Geico Insurance discuss how to save money on insurance in retirement.

To learn more please visit Geico.com- Get to know Kevin Krieger

Below is the full transcript:

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Announcer: Welcome back, America, to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement. Now here is your host, Jason Parker.

 

Jason: All right, America. Welcome back to another round of Sound Retirement Radio. I’m so grateful for your listening ears. Thank you for being here. I want to let you know we’ve got a webinar coming up this month. It’s going to be me presenting this time. I’m going to be talking about retirement cash flow, how to create a retirement cash flow plan. As always, you can sign up for the webinar at soundretirementplanning.com. On the right-hand side, you’ll see the opportunity to sign up for that.

You’re listening to episode 106. I’ve got a great guest on the program for you. The title of this show is How to Save Money on Insurance When You Retire. I think you’re really going to get a lot of value out of this.

Before we get started, as you know, I like to get the morning started right by renewing our mind. I think one of the best ways we can do that is with a verse. This is Psalm 55:22: “Cast your cares on the Lord, and he will sustain you. He will never let the righteous be shaken.” That’s awesome.

Then, of course, I want to give you a joke, something you can share with the grandkids, if you’re going to go visit with them today. This is what did one wall say to another wall? I’ll see you at the corner. Oh, man. I have to tell you. I’ve read that thing 3 times this morning. It’s so stupid that it just makes me laugh. There you go, something to share with the grandkids.

All right. Let’s get started with episode 106: How to Save Money on Insurance When You’re Retire. It’s my good fortune to bring Kevin Krieger on the program. Kevin is with Geico right here in Silverdale. His office is right across the street from mine actually. Kevin Krieger, welcome to Sound Retirement Radio.

Kenin: Hey, Jason. Thanks for having me.

Jason: Absolutely. I’m looking forward to this one. Insurance isn’t something that most people get too excited about, Kevin, but the idea of maybe not paying as much money for insurance; you’ve got some great tips to share with people. I’m looking forward to getting into that. Before I do, as we were talking this morning, one of the things that you shared with me just really blew my mind, and that was this statistic that you shared about fatalities. Would you go ahead and just share some of those numbers with our listeners this morning?

Kevin:  Yeah, you bet. The National Highway Traffic Safety Administration has reported a 7.7% increase in fatalities for 2015. Washington State, along with Oregon, Idaho, and Montana, is actually having a 20% increase in fatalities.

Jason: Boy.

Kevin: One of the reasons they think is gas prices are so low, so people are driving more. Therefore, more people are going to have accidents. Yeah, it’s a big spike.

Jason: That is a big spike. I guess what really boggles my mind about these increased fatalities is we have all these new safety features on cars; cars that break so you don’t run into people and cars that if you start switching lanes, they’ll notify you and backup cameras and side cameras, so as you’re turning … How in the world could we have all these new technology and still see an increase in fatalities? That just, to me, boggles my mind.

Kevin: Yeah. I’ve read and had discussions with different people in the industry. Like anything, they collect data and then do some reports later. There’s been many people saying that it’s because of, for example, legalizing marijuana, more people are driving longer and, as I mentioned, gas prices. It’s not the weather in Washington. Summer didn’t come early, so it wasn’t that. We really don’t know the answer yet.

Jason: It does make me wonder, though, if a portion of this could be related to people that are texting and driving, talking on their cell phones and driving, looking at Facebook and driving. They’re just doing all kinds of crazy things.

Kevin: Yeah, I’m sure that has a lot to do with it. You bet.

Jason: Technology is a double-edge sword there. It’s helping people in some ways, but maybe causing some other issues. It also brings up this new self-driving cars that everybody’s talking about. Uber’s rolling them out next month. Ford says within 5 years, they’re going to be launching cars that have no steering wheel or gas pedal. You’re just going to get in these things and go. It makes you wonder if you’re going to be safer in a vehicle that is completely controlled by a machine. What do you think?

Kevin: Oh, yeah, exactly.

Jason: Do you have any opinion on that?

Kevin: Those days are coming. I just enjoy driving as do many other people. They are always rolling out something else until the technology gets just right. There’s going to be issues and problems and learning curves, but it’s amazing what they can do now.

Jason: Yeah. Let’s talk about this issue of saving some money because one of the things that we do here at Sound Retirement Radio, Kevin, you may not know this, but our show is focused all around people getting ready to retire, people who’ve recently retired. One of the things we teach is retirement is all about cash flow. It’s your income that will determine your lifestyle in retirement.

There’s 2 pieces to a good cash flow plan. One is making sure you have the income coming in, the other one is making sure you have a hand on the expenses going out. Insurance is one of those things, especially automobile insurance, something most of us have to pay for if we’re going to choose to drive. What are some of the tips that you have for helping people cut back on some of those expenses?

Kevin: Your insurance, a lot of people, they never review it. It’s something that you should review, like your retirement plan. Are you saving enough? Are you investing enough? What’s your investment mix, et cetera? Insurance is the same type of deal. The rates are based on many, many things, including the zip code where you live, amount of miles that you drive every year, if you commute to work each day.

When your lifestyle changes, it would affect your insurance premiums, if you’re not commuting to work every day, you’re driving less miles, your exposure is a lot less because you’re not out in traffic every day on the same route with all the other people commuting to work. If you sell your home and move to a different zip code, there’s more expensive zip codes, more people, more accidents, more theft, more vandalism. There’s all these little things that people may not realize that affect their premiums.

Jason: That’s interesting. Is there any way to get that data before you move? I’d just be curious to know if you’re moving into a high insurance expense area.

Kevin: Yeah, of course. You should be able to call your insurance company, your agent, and they can do a preliminary price for different addresses for you.

Jason: That’s interesting. Is there a magic break point in terms of the miles you drive? If you get over certain miles, you’re going to pay a lot more versus if you’re under a certain number of miles?

Kevin: It’s industry-specific. Every company isn’t the same. I could speak towards Geico, but I don’t know all the other companies out there. They’re all trade secret-specific.

Jason: What about for Geico? With your experience, is there a magic break point there for people, if they’re driving a fewer number of miles?

Kevin: Average, if you’re commuting back and forth to work, it’s 12,000 miles a year. 7500 miles or less and then there’s breaks less than that, but if you’re more than 7500, less than 7500, there’s a good break there.

Jason: Are you guys seeing any of this technology roll out in the insurance space, where if you put a little black box in your car and it’s tracking your breaking and your speed and those types of things, you could pay less money in insurance? Are you guys seeing any of that?

Kevin: I’ve read about it. Other companies are trying it. It’s on a voluntary basis. Now we have not implemented it, and so we don’t have any of the statistical data that show its affecting people’s driving habits.

Jason: It is interesting. My wife just brought this up to me the other day actually. What was she saying? There’s a way to track the number of miles you specifically drive and then pay insurance only for those miles, I think is what she was saying she heard something about.

One of the things we talked about or that you wanted to bring up is making sure people understand what happens when they pay off their mortgage, because that’s also another transition period for a lot of people. That happens for a lot of people when they’re getting ready to retire. Will you take a minute and talk about some of the things that they should be thinking about from an insurance standpoint with that?

Kevin: Yeah. It’s something that came across early in my insurance career. People, a lot of times, they’ll have an escrow account where on your monthly payment for your principal and interest on your loan, some of the money is held in an escrow account and it is paying your insurance and your taxes every year. When you pay off your home, you no longer have an escrow account.

The insurance company has always sent the bill to your escrow account, whatever you had your loan with. If you don’t have an escrow account and they send the bill to the bank of … Whoever had your loan, that’s not paid. Your homeowners insurance is cancelled. Many people don’t realize that their insurance wasn’t paid. They’re just going without insurance.

Jason: Make sure that if you’re paying off your house, you’re not mistakenly going without insurance. Let me ask you about going-

Kevin: You need to call your insurance company and make sure that they bill you directly for the premium, not your mortgage.

Jason: Now insurance-

Kevin: All those pieces of paper that you signed when you sell or buy a home, nothing in there you signed says to cancel your other policy or to change the billing to you instead of your mortgage.

Jason: Kevin, I meet some people that are just … They’re crazy about insurance. They really don’t want to pay for some insurance. They just think they’re never going to need it. Once the house is paid off, there’s not a mortgage on it anymore, people aren’t required to have homeowners insurance, right? They could go without it.

Kevin: That’s correct. It is. They would lose everything.

Jason: The house burns down and they don’t have insurance. They’re on the hook for rebuilding it.

Kevin: Yeah, they lose all their personal property. They would have to pay to tear it down. There’s a lot of county and city ordinances that they could get fined. It’s not a requirement if you don’t want to protect your asset, but it’s something that, for the cost, you could lose your $300,000 home over $50 a month.

Jason: What’s crazy to me is most people think of that as a pretty logical argument. They say, “Of course I’m going to insure my house,” but when it comes to their health and potentially needing something like long term care, people think their health is never going to change. They believe more strongly in insuring a house that might never burn down, but they won’t buy insurance to protect their health in case their health changes. That, to me, just seems crazy, but it’s one of those things we want to bring to people’s attention.

I want to talk about some of these different courses you mentioned to save money on automobile insurance. Will you take a minute and talk about some of these other little nuances for saving money on automobile insurance?

Kevin: Yeah, you bet. There’s some defensive driving courses. You can go to a class on a Wednesday night somewhere, or you can go online and take the courses. They also have substantial discounts on most all insurance carriers if you’re 55 or older.

Jason: Oh, really? 55 or older that you’re going to get a pretty substantial discount just by taking one of these courses.

Kevin: Yeah, it lasts with us for 3 years.

Jason: Oh, wow!

Kevin: You don’t have to take the course again. Every 3 years, you could do it and get a great discount.

Jason: When you say great discount, what are we talking about?

Kevin: It’s all relative to your premium. If you’re paying $300, the discount might be $50, but if you pay $3,000, then the discount could be $300. It’s all relative to your total premium, not just one car.

Jason: Do you have some links, some resources we can … In the show notes, we can point people to some of these courses, if they’re interested in saving some money?

Kevin: You bet. geico.com.

Jason: Okay, great. You guys have some links right there at Geico where they can learn to take this defensive …

Kevin: Yes.

 

Jason: Okay. We’ll make sure we’ll put a link to that in the show notes, but pretty easy one to remember. geico.com. The other thing you talked about are association discounts. What are some of those that you’ve run into?

Kevin: We have some marketing discounts with different associations: many colleges, universities, University of Washington, UWSU, a lot of credit unions, societies, fraternities, sororities, Mensa. You get a discount with your auto insurance with us.

Jason: There are so many moving parts here, Kevin. How do people even know where to start? They just say, “Hey, I graduated from such and such college. I want to see if there’s a discount for me,” or do they say, “Hey, am I eligible for any discounts?” How do they start that conversation to find out if there’s anything there for them?

Kevin: When someone contacts us, there’s a process we go through of questions. One of the questions is your education. We bring up these questions that then allows us to ask the next question about the discounts. You can call our office, you can go online, or you can call a 800 number 24 hours a day, 7 days a week.

Jason: I’ve even heard recently that sometimes insurance companies are using people’s credit score. That plays into the amount of insurance they pay. Is that accurate?

Kevin: It is. There’s an insurance score off of a credit bureau. A lot of insurance companies give different discounts. For example, there’s some military companies out there that you get a discount if you are active duty military. Another discount is an insurance score. Statistically, the better the credit, the better risk you are as far as accidents and tickets.

Jason: It’s interesting to me because what that means is that the choices you make throughout your life are going to impact you in a lot of ways that you may not even be realizing. Things like filing for bankruptcy, not making payments on time, not only does that hurt you in a lot of other ways, but it’s going to hurt you just fundamentally in terms of how much you pay for everything, maybe even insurance.

Kevin: Oh, yeah. Exactly right.

Jason: I’m also really happy that people are being rewarded for proper, appropriate behavior in our society. That’s the way it should be. If you’re not smoking, you shouldn’t have to pay higher health insurance rates, frankly. I think if you are smoking then you should have to subsidize that. I think you should have to pay more money. You may be offended by that, but, I’m sorry, I don’t like having to pay for other people’s health.

I really get cranked on this health insurance thing, Kevin. I don’t know about you, but we’re paying through the nose for health insurance. It does almost nothing for my family. It’s really, really … Now it’s a lot that I have to pay for, or I get penalties from the IRS. It’s something I get a little bit irritated with.

Kevin: Yes. I love a lot about the world we live in, and there are some things that I don’t, but it is the world we live in.

 

Jason: It is. Let’s transition here to talking about liability and umbrella coverage. Will you take a minute and help our clients understand? Umbrella isn’t just for those of us that live in Washington and have the joy of experiencing rain all the time.

Kevin: That’s funny. An umbrella policy covers you against any liability exposure on your home, your car, your boat, your motorcycle. If you accidentally bump somebody off a railing in a hotel in Florida and they get hurt, it covers you for any liability exposure. We live in such a litigatious society now. The cost of having a million-dollar liability is 4 or 5 trips to Starbucks a month.

Jason: Oh, is that right? Pretty low cost in order to get some coverage.

Kevin: It is, yeah. It is.

Jason: Have you seen any situations, have you heard any stories where this is actually … People’s lives have been impacted by either having the liability coverage or not having the liability? Has there any time in particular that you can remember where this has been an issue?

Kevin: Yeah, you bet. Washington State has a very low minimum for liability insurance. If you hit somebody, the state minimum is $25,000 per person, $50,000 per accident, and $10,000 property damage, meaning the car you hit or the fenced post. If you cause more damage than those numbers and you carry the minimum, they come after you – your house, your assets, they can garnish your wages. If you happen to hurt somebody and you rear end them, they’ll take your assets for possibly the rest of your life. It’s a tragic situation, and people don’t realize the impact until it’s too late.

Jason: Wow! That’s a big deal. Is that a strategy then for helping reduce things like those coverages on your insurance, you maybe take the lower limits, but then buy the liability coverage – it’s pretty inexpensive – in order to make up the difference? Is that something people would want to consider?

Kevin: One of the requirements of having a liability umbrella policy is you have to have a higher limit of liability. When you’re planning for your retirement, you can save and invest and have a nice little nest egg, and one little accident can make it all go away. It should be a part of you protecting your assets, definitely.

Jason: For our listeners out there, I have to tell you I’m a believer in umbrella liability coverage. I carry it myself. I think you’re crazy to … Like Kevin was saying, in this world we live in, everybody wants something for nothing. A lawsuit is a way that people can do that.

I want to remind you you’re listening to episode 106 at soundretirementradio.com, or find us at soundretirementplanning.com. We archive all these programs for you and are transcribed for your reading enjoyment as well as your listening enjoyment. Remember, we’ve got a webinar coming up later this month on retirement cash flow.

Remember … I sound like a broken record. Retirement is all about cash flow. It’s your income that will determine your lifestyle and retirement, not your net worth. You want to have a really good income plan as you’re preparing for retirement. I’m going to take you, walk you through step-by-step what that could look like and the type of planning that we do for a lot of people. Sign up for the webinar. Go to Sound Retirement Planning, look for the link that says “webinar registration”.

Kevin, I want to transition again here into overseas coverage. A lot of times when people are getting ready to retire, when I ask them what they are looking forward to the most, one of the answers I oftentimes hear is travel. Will you take a minute and talk about overseas coverage, why this is important and what people need to be thinking about there?

Kevin: Yeah. Thanks. One of the things about traveling is a lot of your coverages doesn’t extend to other areas in the world. Many people, again, don’t realize that until they need it. Auto policies, for example, most companies, you have to get your own coverage in Europe, and they have different limits. Some of the liability limits in Europe are unlimited. They don’t have Washington’s $25,000, $50,000. It’s unlimited. That’s how bad it is.

Health insurance is the same thing. You should contact your carrier. Your life insurance is something that pretty much covers you worldwide. Going to another country, you definitely need to talk to your insurance carrier to find out what is covered.

Some of the things about insurance, Jason … For example, there’s a story out there that many people believe that a red car costs more than a different colored car. That’s a misnomer. It’s not the red car that gets speeding tickets, it’s the personality of the person that wants to drive the red car that gets speeding tickets. The red car doesn’t have anything to do with it. It’s not the color.

Jason: I would imagine, though, if you’re buying some hot rod, super duper sports car, you would pay a higher premium than you’re going to for a little-

Kevin: It doesn’t matter if it’s yellow or red or blue. People think it’s this color red. It’s the same car, it’s just a different color. It’s not a red car.

Jason: Is it for the supped up? If you’re buying a sports car, you’re probably going to pay more than a Toyota Prius, I would imagine?

Kevin: That’s another thing. A lot of things, like a Hummer, for example, they’re very heavy. They cause a lot of damage when they hit something. That vehicle is more because it causes more damage. The sports cars get the bad reputation because their parts are very expensive to repair. A Mercedes, a Porsche, they’re very expensive, the parts are. To repair them, they cost more. That’s why.

Jason: Folks, again, you’re listening to episode 106. I have Kevin Krieger on the program. He’s with Geico Insurance right here in Silverdale. Kevin, you want to tell people the best way for them to get a hold of you if they’re interested in maybe talking to you more about trying to reduce some of their insurance expenses as they’re getting ready for retirement?

Kevin: Yeah, you bet. You can call us at the Silverdale local office at 360-692-1117. You can stop by Monday through Friday, from 9:00 to 5:30, and Saturday, 10:00 to 4:30. You can go to our website, geico.com/silverdale. You can email me. Even if you have any basic, generic insurance question, if you don’t have insurance with Geico, I’ll try and help you.

Jason: Awesome. Real quick, less than a minute, give us your best safety tips to keep people out there safe as they’re driving down the road this morning.

Kevin: Pay attention. Eating food while you’re driving, texting while you’re driving, looking at your cell phone, make sure your seat belts on. A lot of accidents are because people just don’t pay attention. It’s standard. If you fall off the roof, if you’re painting your house, if you’re in … You’re just not paying attention.

Jason: Folks, accidents are up, fatalities are up. You wouldn’t think that’s the case at a time when all this technology is present, but I think it may have to do with technology. Again, this is Jason Parker. I want to encourage you to attend our webinar this month on retirement cash flow. Kevin Krieger, thank you so much for being a guest on Sound Retirement Radio.

Kevin: You bet. Thank you, Jason. I enjoyed it.

Jason: All right, until next week, folks. This is Jason Parker signing out.

Announcer: Information and opinions expressed here are believed to be accurate and complete, for general information only, and should not be construed as specific tax, legal, or financial advice for any individual, and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program.

Parker Financial, its representatives, or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk. Jason Parker is the president of Parker Financial, an independent fee-based wealth management firm located at 9057 Washington Avenue Northwest, Silverdale, Washington. For additional information, call 1-800-514-5046, or visit us online at soundretirementplanning.com.

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