Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck. Family fun, giveaways, and exciting Kings hockey awaits. Get your tickets now at lakings.com/promotions and create lasting memories with your little ones. It's Friday and on Fridays here at Radical Personal Finance we do live Q&A.

Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less. My name is Joshua and I am your host and today is Friday, May, March 5, 2021.

Here on Fridays at Radical Personal Finance we do live Q&A every single Friday that we can do it anyway. These shows are basically live call and talk radio, so any Friday that I can arrange the technology to be able to record the call properly with the callers, I set it up.

And if you would like to gain access to one of these calls, I publish the phone numbers and the call-in times on the Patreon page. So you can just go to Patreon, search for Radical Personal Finance, sign up to support the show there on Patreon, and you will gain access to these Friday Q&A shows.

You can call in, talk about anything that you want to, ask me questions about your situation, argue with me about something that you want to, anything that you want to, I welcome those comments. Before we begin, two quick promotions. Remember that here in the month of March, I am running a special sale on my courses, which are going to be removed from the marketplace on March 31, 2021.

Those are for sale right now with a 50% off coupon code. If you go to radicalpersonalfinance.com/store, you can buy any of my publicly available courses there and save 50% off of the retail price using the code "changingplatforms". I'm going to be removing those from the marketplace on March 31 so that I can move everything to a new technological platform.

In addition, I am currently doing financial consulting up again as well through the end of March, through March 31. If you would like to save $100 off on a personal consulting call with me, if you listen to this Q&A show and you like the way that I approach financial consulting, I would invite you to go to radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult and sign up for a consulting call with me there.

$100 off per hour is down to $300 per hour there, and that's only available through March 31. On March 31, I will be discontinuing that service and no longer offering consulting calls, at least for now. It may come back sometime towards the fall, but at least for now, that service is disappearing.

So go and book there before March 31. We begin now with PL in Massachusetts. Welcome to the show. How can I serve you today? Hey, Joshua, how are you? Very well, sir. How are you? I'm good. I'm hoping you might be able to provide me the moral of this investing story.

That's what I'm looking for. Okay. So the majority of my investments are either in retirement accounts through work, and I have a brokerage account as well. I have, and I'm going to give you just two specifics in the last year, and I'm curious to know what I should glean from this.

I made one investment in one of the companies that came out with one of the COVID vaccines about a year ago. And after it went up a little bit, I sold it. And had I hold it to today, my initial investment would have approximately quadrupled. And this is also, I think, dumb luck, but I invested in a brokerage account.

This is also, I think, dumb luck, but I invested in Novavax in 2016 when it was trading for a dollar a share. And I sold it a little while later for about even. And had I held on to that today, that would have been worth about half a million dollars.

And I'm curious if there's any lessons to learn from this. Is this dumb luck? Is there some strategic way I can look at investing where I'll be able to realize bigger gains in these in the future? Or is this just gambling? What's your take? And I'm happy to answer or give you more info if it would be helpful.

When you sold those investments, why did you sell? So one of them, the first one was Moderna. So I bought it when in the news they announced they were doing phase one trials of their vaccine. And I sold it. It went up, it was somewhere around 20 or 30% in the course of like two days.

And I said, "Geez, that looks pretty good. Who knows if this is even going to go anywhere. I'm satisfied with the return I've gotten." The other one I bought just based on reading something in the news about it. And I said, "Oh, geez." It had dropped by 50% because they had another vaccine they were trying to make for a respiratory illness that had...

And it didn't work out in this trial in 2016 and the stock price dropped by 50%. And I read an article in the Wall Street Journal or something. I said, "Oh, geez, maybe they'll have better luck in the future." And then it kind of languished for six or nine months.

And I said, "There's no reason to keep the money in this." And I just sold it. Do you regret selling? That one, no. Okay. Do you regret either of them? No, because I don't think there's any way to know what would have happened with any of this stuff. What did you do with the money when you sold it?

Did you reinvest it? Did you make money with it with something else? The one from 2016 or 2017, these are both in a brokerage account. So I can't tell you exactly what I did with the money in 2017. I don't know if I moved it into something that I still hold or what, because it's sort of fungible in that account.

I can tell you with the Moderna, I moved that and I've moved more of the money in that part of the brokerage account more into index and other mutual funds that I'm just going to hold. Right. Well, I think that I don't know what grand lesson there is. I'll tell you my opinions.

For me as a non-professional investor, what I have come to believe is things that I've even spoken recently about on the show, in the normal shows. Number one, I want to make sure that I always have some money that I have set aside in advance for investments that might be more speculative in nature.

Perhaps you're pursuing the strategy where you say, "I want the bulk of my investments in mutual funds. That way there's less individual stock volatility, but I recognize that I still want to have some money set aside to invest." Well, then make sure that you have money set aside and that you've thought in advance about how much you're willing to allocate to that.

I've tried to defend the idea that I think it should be a big enough percentage to be meaningful if you win and a small enough percentage not to be completely destructive and catastrophic if you lose. When you're dealing in the world of pharma, I think that certainly is a high volatility marketplace.

I used to go to roadshow meetings when I was single. I would go to – meaning that before I wanted to be home at night for dinner with my wife – I would go to these roadshow meetings all throughout South Florida where pharma companies and medical companies would come in and they were trying to gin up support for their stock.

I quickly learned that I was just impressed at every single one of them. If I just went to the meeting, I just came out saying, "This company is going to be awesome. They're going to win big time and I wish I could put all my money with them." Then after meeting, after meeting, and company after company, I realized that I wasn't quite discriminating enough to be participating in that marketplace.

Pharma is certainly very volatile. If a trial goes well, if a vaccine goes well, great. If it doesn't, it doesn't. But I would say first of all, have an amount. Number two, I think know why you sell when you sell. Know what you're going for. If you were just going for a 20% gain, great, if that's your trading strategy.

I think that the most important thing is to have a personal investment strategy that you have decided makes sense for your personal temperament and your personal goals and not to just do it on an ad hoc basis. I'm not mad if someone makes some ad hoc investments. That's why I'm encouraging that we all have some money that's just our play money.

The stock tip in the elevator kind of thing or the taxi driver. The taxi driver says, "Oh, you should invest in such and such." We don't know, but yeah, you know what? Why don't I just go ahead and put some money at it? I think that's fine. But the answer from the investing perspective is to have a strategy.

I'm attracted to value investing as a strategy. It's one of the few things that makes sense to me based upon saying, "Here is what I think the actual value of this company is. If I can buy this company at a discount and I can see the long-term value, then I'm going to stick with it." And so you keep buying whenever it's discounted and you wait when it's not.

I think that if you have a trading strategy, that's also fine. You say, "This is the trading strategy that I've developed based upon these cues or these market movements I'm going to get in and out." And you develop some rules for yourself. Otherwise, I would just say that in your financial planning, if it's not going to wipe you out on a certain stock, then it's fine to let it ride.

And if you are happy with your decision that you made money, it's fine to let it go. I have gotten some things really wrong over the last few years. I guess a good example would be something like Tesla. I was never a believer in Tesla. If I had invested in Tesla a long time ago, then I would have sold long ago.

I have been shocked at the performance in the marketplace. And so you have to just look at it and recognize that I could have been wrong. I could still be right and everyone else is wrong right now. And so my only way to protect myself is to do what is to follow my hunches in the things that I do am aware of, follow the things that I do believe in when I'm sure that, "Hey, this is a good investment," and then just protect myself from any kind of worst case scenario.

Other than that, I would just say learn your own lessons, whatever your emotions were. If you're happy with yourself for selling out with a good profit, then don't be greedy. If you're upset with yourself for selling out early and saying, "Man, I could have gone more," then figure out how to arrange it so that next time you'll have the guts to stay with it longer.

Sounds good. All right. Well, good question and congratulations on your success. And I wish you to win some more really good wins. That would be really nice. All right. We go to Trey in Texas. Trey, welcome to the show. How can I serve you today, sir? All right. Thanks, Josh.

So I, on your advice, took your advice late, but eventually did work myself into what looks like is going to be a long-term work from home situation. My wife got quarantined back over Thanksgiving and I just never went back to the office after that. And liking it, we have been on a path towards financial independence that was moderately aggressive, saving like 60 to 70% of our income.

But luckily we have fairly good incomes and pretty cheap taste. So we still live a pretty good life on that. But since I started working from home, I kind of realized that I don't really hate my job, especially the way it is now working from home. I think I got about maybe 60% of the benefit of financial independence just by making that one change.

And so now I've started to think, well, maybe I don't need to, maybe we could afford to even increase our lifestyle a little bit more now. Since my wife is also working towards a work from home position and we can enjoy more now and just get there a few years later.

So the question is, one of the things I've been considering doing is my brother-in-law and my father-in-law and I all have a hunting lease in West Texas and it's fairly expensive. We spend about $3,000 a year a piece on it. And then have your consumables and that kind of thing.

And so what we've always kicked the idea around, we've always kicked the idea around buying a smaller piece of property in West Texas on a really nice river that would be more of a year-round use type of thing that we would own. And I've kind of been a little bit bearish on that in the past because I was working so hard towards this financial independence goal.

But now I'm thinking, if we all went together and bought a $500,000 to $700,000 piece of property that we can swim in the river on in the summertime and hunt in the fall and have a little ranch house on, maybe that's not such a bad idea if it cost me a few more years before I hit the "phi number".

I just wanted to see if you thought that was reasonable or what kind of questions come to your mind about that. It certainly sounds reasonable. You're a thinking man, right? You're a thinking adult. You and your wife can look at your circumstances and at any point in time you can change your goals.

So what you're describing is something like the process that I have gone through previously. I was working towards financial independence as quickly as possible, but then by adjusting the circumstances of my life, I realized that I didn't need to quit my job in order for me to accomplish my lifestyle goals.

So at this point in time, I'm happily spending more money than I would otherwise, knowing that in the fullness of time I'll pivot and I'll eventually reach financial independence, but I don't want to scrimp and save and not take advantage of things at appropriate times just in order to reach some arbitrary financial independence number.

So what I would say is don't make these decisions too quickly and don't be scared to just wait a little bit. I don't know how long you were working towards financial independence, but if you were working towards financial independence aggressively for a period of time and then now for some period of months you've been thinking, "You know what?

This may not be my number one goal anymore." Then just give it a few more months, right? There's these kinds of things you can go slowly with and you can give time for your mind to adjust to it, and if you don't have to make any decision quickly, give it more time to see what you really want.

Time usually does have a way of revealing the things that are most important to us. With regard to getting the hunting lease, I would say there are a couple levels that you should think about. The first thing is recognize that in what you're describing, if you go in together with your father-in-law and your brother-in-law on that piece of land, that is going to limit your options in terms of you having control of it.

I think it could be a great thing to do. It's probably not. Your share of it would be what? $150,000-ish in that range? That's right. Okay. So $150,000, I would guess, based upon what you're describing about how you're saving money, is not going to be a huge percentage of your net worth.

I don't see that as a problem for you to have $150,000 mixed up in a slightly illiquid investment. My concern with it is just simply that when you have to go into business with partners, that brings complications. And if those partners are family, that can also bring complications. And so don't expect, if you do spend the money on that, don't expect them to say all of a sudden, "Yeah, you know what?

You do want to sell, so just go ahead and sell anytime." You're going into a joint ownership situation where you're going to have some partners involved, and that's going to limit your choices. Generally, when someone says, "Should I buy an asset, especially an asset that is the kind of thing that can usually be stable in value or appreciate, something like land or real estate, something that has a stronger value than a car or a TV," it's not that dangerous to buy it because in most situations, if you don't want it anymore, you can just sell it.

Now, you have to assess the liquidity of how quickly could I find a buyer, but most assets, you can find a buyer at some price. And so when you go into it, you just think, "Well, what's the worst that could happen?" Worst that could happen is I need to sell this house.

If you go out and you buy a three-bedroom, two-family, three-bedroom, two-bath house in a suburban neighborhood, and all of a sudden you turn around and two months later, you decide you don't want it anymore, you could probably sell it for whatever you – about what you paid for it, probably, and then your basic costs are your commissions and closing costs and fees, and so you know your downside.

And so when someone says, "Should I buy the thing?" I say, "Well, if it's a mistake, you could always sell it." In your situation, though, what I'm pointing out is it'll be a little bit complicated because of the friends and the family connections. Now, that could be also a better thing that you might go in thirds all across the board, but you should assess their willingness if you wanted to get out of the deal at some point, you should assess their willingness to buy you out and their ability to buy you out.

The other thing I would consider with something like that is when is the best time for us to do it? When is the best time in terms of the family for us to have this? This is something that I am more and more aware of as I just think more freely about financial planning.

Things like lake houses or hunting leases or vacation beachfront condos, there's a certain time in life in which those things are actually the most valuable, and it's probably now, not later. If I have a lake house, I don't want to have that lake house when my children are a year old, but when my children are seven, eight, ten, fifteen, those are the years at which I really want to own the lake house.

And I've seen so many people who look forward to their retirement years when they're going to have so much money, and then they're going to buy the lake house, and they can hardly get their children to go and see them. I looked at a piece of property for a lady near where I live recently, and she was selling this beautiful, beautiful house, a big, big, beautiful mansion.

She built it herself about 20 years ago. She probably has sunk, I don't know, she probably sunk somewhere between a million and a million and a half dollars into building it 20 years ago. The entire thing is a custom home. It's a beautiful mansion, five acres of land. It's just an amazing piece of property.

I don't think you could build it today starting fresh for less than two million dollars, and she's selling it for $700,000. And I was probing her a little bit and asking her about the story and why she's selling it, and I'm looking at it, and I was thinking about buying it, and imagining it.

But the thing that stood out to me the most interestingly was that she built this house for her children. Now her children are grown and grandchildren, but her children have all moved away. And even though she has this beautiful property, they're just not really interested in coming there. They just don't really want to come.

And it didn't seem like there was any bad blood with their mom. It was just, "We don't really want to go down and hang out in the property with mom right now. We don't really want to spend the time. It just doesn't fit our schedule a little bit." So I think there's a time at which it's really worth it to sometimes even stretch financially or adjust things in order to get things at the proper time.

So my comment to you is look at the time in your family and with your relationship with your brother-in-law and your father-in-law, and just ask yourself, "When is this lease going to be the most important?" If you have a good situation of just paying $3,000 a year to go to the lease that's out there, and there's nothing pressing as to why you need to own the land right now, wait another couple of years.

However, if at this point in time with your family, etc., and their families, it would be really valuable to go ahead and start setting up the home place and having the house out there and building those memories for the family, then I would pull the trigger and do it.

But it's based upon the timing and making sure that we own the asset that we want to own when it's most valuable to own. Yeah, that's a great way to think about it. I appreciate that. Just to address a couple of your points, I think that I would not miss the money as far as the down payment.

And we put a pretty big down payment down, so the monthly cost for split-through-a is pretty minimal. I think the biggest thing that would make me regret it would be the day after I sign the papers, there's the opportunity cost of a great investment that comes along. And I miss out on it because I put that $150,000 into this property.

But it's probably going to be a thing that we go into planning to hold it probably our whole lives. It'd be a long-term sort of hold, will it to the children. My wife and brother-in-law would inherit it from, likely inherit it, I don't want to assume, but from their dad.

And then there would just be two partners in it and probably give it to our kids. We are a little bit early in that timeframe you're describing. My brother-in-law has one child who's eight months old and we are expecting our first in August. But that being said, it doesn't mean the adults can't enjoy it in the meantime.

And also it'd be useful. I even thought, especially if my wife ended up getting a work from home job, definitely want to try to find a place that has decent internet access and we can stay out there for a week at a time and work from there and play in the river and all that kind of stuff in the summertime.

So that's kind of what I was thinking. Okay. Well, then here's my thought. As long as your father-in-law is not ailing or ill or something like that, you and your brother-in-law probably are a little bit early in the phase. You're at the point where you can still hunt on leased land just as well.

So start looking at the property market. But if you're worried about being upset with yourself for spending the money on that when you could have bought a better investment, sit down and think creatively and try to figure out if there's a way that you can buy an investment that will pay for your consumption item.

So maybe you peel off $200,000 and you go and buy a rental house that's going to create income for you near your current house and then just identify and say, "This rental house is going to pay the mortgage on the hunting lease." That way you're buying an asset that will pay for your consumption item.

It's not always possible, but I think that it's more possible than people look at a lot of times. And so whenever you're going to buy a consumption item, just look and see, "Is there a way that I can use this? Is there a way that I can get an investment that's going to pay for my consumption item first?" That's what I would do.

Okay. Very Robert Kiyosaki. Yeah, because it feels better. It feels good to know when you're out doing something. It feels good to know how something's getting paid for. If you go buy a ski boat and you recognize to yourself that, "Hey, this ski boat," and I don't even mind if you use debt.

You go buy a ski boat and you finance the whole thing. But if you got a rental house, and I just use rental house because rents are easy to calculate. It can be dividends from a portfolio. It can be profits from a company. It can be whatever you look at.

But if you just think in the back of your mind, "You know what? 634 Elmhurst Street is paying for this monthly boat payment for me." That feels really good to be out on the boat on the weekend knowing that 634 Elmhurst Avenue is paying for the boat. So if you've got the money and if you can make the financing work, just go ahead, take the money.

And again, you got to do the math, but take the money. And instead of putting it directly into a consumption item, where then you have to keep on working and saving up money to be able to buy an investment then, buy the investment first and then use the income from the investment to pay for the consumption item.

- Awesome. I like that idea. Thank you very much. - My pleasure. And I think also just with the age of the children, I think you probably... I don't think you'll miss anything if you buy it three years from now or five years from now than if you buy it today.

You can still go hunting with your family and build those memories together right now and then just wait on the land until it really makes sense and you're sure it's a slam dunk option. And with that, we go now to... Let's go to David in Chicago. David, welcome. How can I serve you today, sir?

- Hi, Joshua. I had a question about liability insurance, like umbrella policy while living offshore. So I know that's something that you recommend and most people highly recommend to hold a significant portion of insurance while living in the US. Now, I don't know if that was needed while living offshore, if that's a concern.

And I know that you're currently living overseas. So I wanted to get your opinion and maybe what you're doing in that regards. - So if you lived offshore, would you keep owning property in the United States? - I would probably keep owning investments in the United States, but not like a home.

- Okay. So I think then it just comes down to what's the appropriate insurance for the investment. So I'll walk you through my thinking on this to give you how I approach it. Number one, you are right that generally the advice in the United States, the advice of do I need liability insurance, the advice is always yes, buy liability insurance.

And so you buy the liability insurance and it protects you from the litigious society that is the United States. As I've said many times, when I was sitting for the CFP exam, my instructor said, if there's ever an answer on the CFP exam that says, yes, buy an umbrella liability policy, it's always the right answer, just check it and move on, because it's always the right answer to buy an umbrella liability policy.

Now, when you move outside of the United States, the legal framework changes dramatically. I'm not aware of any other country in the world that has such a litigious society as the United States. Now, it's a big world, 192 other sovereign nations that you can choose from, but in most places, the liability risks are not nearly so extreme as they are in the United States.

So if you're physically absent from the United States, your personal liabilities will decline. Then you look at your business operations, depending on what your business operations are, if your business operations are outside the United States, your liability obligations will probably decline. The culture that's in the United States where a wealthy guy is just looking over his shoulder all the time wondering if somebody is looking to sue him, that's just not the case in much of the world.

And depending on how you're structuring your travels and your affairs, you could lower those things significantly. So if you hold investments in the United States, and investments like stocks, those don't generate any liability. So if you've moved abroad and you've only kept your paper asset portfolio in the United States, well, that's not generating any liability.

I'm happy now to diminish the liability insurance. If you continue to own something that does generate liability, such as a piece of real estate, then now, yes, you do need to keep protecting yourself against liability exposure, because you continue to have that risk of the liability created by owning a piece of rental property in the United States.

That risk might be very different if you just switch to owning rental property in some other place. And so just keep that in the back of your mind that the cost of doing business in the United States is maintaining that liability insurance coverage. You could then finally just simply do an analysis of your assets and figure out how well protected your assets are.

So if you had a million dollars of assets in the United States, but you had three or four million dollars elsewhere, and if you were physically located elsewhere, well, now I don't think you need to insure $5 million of assets in the United States. You're just going to want to do your best to contain the liability, whatever liability you're exposed to.

You want to contain that as best as possible in the United States. You want to insure the equity that's exposed in the United States. And then I think beyond that, you don't quite need so much liability insurance. That's my answer. So I guess you're not concerned about, for example, traveling to Europe and getting in a car accident and getting sued somewhere in Europe, and then them trying to take your assets in the US is what I'm gathering?

I'm not. Now, again, you should always recognize Joshua's not an attorney. Joshua's nothing. Joshua's a random guy on the internet, and you should ask the knowledgeable legal professionals and pay them the money to get their advice. But no, I'm not concerned about that, and there's a couple of reasons for it.

Number one is you're going to maintain whatever the legally required coverages are when you're in Europe. So if you own a car in Europe, then you're going to have automobile insurance on that car according to European law and custom, just like when you own a car and have liability insurance on it in the United States.

So you have protection there. If you're renting a car in Europe, you're going to have with your rental agreement some amount of liability insurance. You maybe have liability insurance with your credit card, and you should think about that. You always think about what potential liabilities am I creating for myself?

But that said, if you are sued, and this is one of the reasons why the PT theory itself is such a powerful theory, just in the United States, let's talk about the United States. In the United States, the people who have the highest profile and who are the most likely to be the target of a lawsuit are those who have lots of assets and those who have lots of assets that have the potential to be attached by a court, by a judgment creditor.

So if you have a million dollars in your checking account in the United States, you're a bigger target for somebody than if you have a million dollars in a 401k, because the 401k is going to be exempt from the claims of creditors, whereas the million dollars in your checking account is not.

Now, if you have a million dollars in a checking account in Austria, but you have a car accident in the United States, you're going to have a lower profile and be a less tempting target for a lawsuit. And this is important to understand, that there's the level of legal risk, right?

Remember, if you lose a lawsuit, you have to tell the judge about the assets that you own. And if you're there, the judge, you know, you're offshore planning, if the judge can throw you in jail and tell you cough up the million dollars in Austria to pay for this claim over here, great.

You know, that's what he'll do. He'll throw you in jail and you'll sit in jail until you cough up the million dollars to pay the claim. But there's a whole lot of stuff that happens before that. And the first thing that happens when somebody comes to sue you is, there's an analysis of how strong the case is.

And so, to be clear, don't do stupid things that are going to result in liability. Don't drive drunk. Don't drive recklessly. Take proper, prudent precautions to protect yourself just for your own moral good standing, right? But let's say that somebody comes and you've had a car accident in your car in the United States.

If you are egregiously at fault, right, you were driving drunk, texting on your cell phone, you know, with 18 people in the car and you mowed over a crowd of children getting off a school bus, you're going to be sued into smithereens, as you should be, because of your egregious behavior.

But if you just had a car accident where you weren't particularly at fault or it was one of those things is understandable, then the only person that's going to sue you in that situation is somebody who thinks that they can get a lot of money. And so they go and they try to take their court, their case to an attorney.

Well, the attorney has to look at it and say, "Does this person have the money to pay me?" In which case they'd be willing to work. "Or am I going to take this on contingency?" And if the attorney is going to take it on contingency, the only reason they're going to take that case is, number one, they think they have a good enough case to win.

And number two, they think you have assets that they can collect on. And so they're going to order an asset search on you. They're going to try to get some sense of your wealth. So if you were living in the United States and you had a million dollars in your bank account in Austria, then that lawyer is going to be far less likely to find the account in Austria to recognize that you have a high profile than if you had the million dollars sitting down at Bank of America in a checking account.

So you have a lower profile, and thus there's a lower risk. And then secondly, if they actually win the lawsuit, it's going to be more difficult for them to exercise their judgment. Let's say that they go all the way through. The judge awards them their judgment, and they're now a judgment creditor.

They force you to submit to a debtor exam, and they know you have the money. Well, a judge or a lawyer in Texas is going to have a very hard time going to Austria and enforcing the Austrian bank to disgorge the assets to the creditor without your permission, because the Austrian bank is not subject to US-American laws.

Now, that's why I said, what will the judge do if you have a million dollars in Austria and you owe a million dollars in the United States? They'll put you in jail. They'll put you in jail, and then until you call your banker and you say, "Send me a million dollars," then you'll send the million dollars to the United States, where now the US courts have jurisdiction, and then they can force the bank to disgorge the money and pay off the creditor.

So now let's flip it. Now, you're in Europe. Well, first of all, it's my understanding, although this is not actual knowledge that I have, it's just my impression and understanding. It's my understanding that the legal system in Europe is not like the United States. Most countries in the world do not have the same system where lawyers work on contingency.

That's, again, my understanding. I could be mistaken, but that's what I think. And so that's one reason why you have far fewer lawsuits, because you have a legal system that doesn't allow a lawyer to just shop, to put up a billboard and say, "Injured in an accident, call us," and then they sort through the 10 different calls until they find the person with a good case and they find the plaintiff with a deep pocket – with the defendant, excuse me, the defendant with deep pockets.

So if you're in Europe and now your assets are in the United States and you lose your case in Europe, what authority does the Austrian judge have over your assets in the United States? None. They have none. So they may have control over your body, right? They may have you physically locked in prison, in which case you've got a problem if you're physically locked in prison.

But with regard to your assets, they don't have something available to you there – to them. And so the need for liability insurance is going to be lower in the scenario you're describing because of your offshore planning. I'm not saying you don't have any liability. I'm saying control your actions, be safe, be prudent, don't do stupid things that could lead to liability, fix up your properties, make sure that everything is done up to code, just follow the laws, and that goes a long way towards protecting you.

But in the scenario you're describing, if you're offshore, then yes, you do have lower liability exposure, even with your assets being in the United States. And what if you travel to the United States for vacation and spend, let's say, a month, a year there, and all of your financial assets are in the US, would you then recommend to keep some type of liability insurance just for that time that someone is in the US?

Well, it depends on what you're doing that's creating the liability. What are your actions and activities that are actually generating the liability? You're not generally liable. You don't have a lot of risk of liability walking down the street. But if while you're in the United States, you're renting a giant bulldozer and knocking over houses, well, now you're doing things that are generating more liability.

So liability is not this scary thing that just always exists. It's based upon your actions. And so if you're a prudent person who understands the law and who understands the things that you're doing that would generate liability, and you manage your affairs in a way that minimizes the liability, I don't think you need to run out and buy an insurance policy all of a sudden just because you're in the United States.

My question is, what are you doing that's generating liability for you or potential liability? Okay. Yeah, it would just be normal activities like driving and things like that. Right. So what you could do and what you would do is if you're concerned about driving, then you just go ahead and when you're driving, you make sure that you have an automobile insurance policy with high liability limits.

And you might do that, right? You might have something, you know, I own a car in the United States. With my car insurance company, I put the car into storage. It's parked. It sits there. It has – it maintains its insurance coverage. But when I go back, I activate the insurance coverage because I'm taking the car out of storage.

And then that's where I would go ahead and make sure I had ample liability coverage if I'm being exposed to liability because of driving. And so that would be a wise thing to do. And in that circumstance, if you knew that I no longer own a personal house and I no longer have a personal umbrella liability insurance policy, then you might go ahead and you might maximize your liability coverage for your car insurance up to a higher number, right?

You might choose the $250,000 of coverage where previously you would have chosen $100,000 of liability coverage because of that. What I would say though is I think your better strategy is just minimize your liability exposure. So if you're going to be in the United States for a month, probably don't keep a car.

Just rent a car when you come and then use the appropriate rental agency's coverages that cover you there or use a ride-sharing program or taxis so that you can just simply minimize your inherent liability. It's possible to live a very low liability lifestyle. Physical property, you know, raw land.

If you were investing in raw land, you don't have a lot of liability exposure. You don't need to generally keep liability insurance on raw land. Go and make sure there's no open-topped wells or dangerous hazards that neighborhood children could fall in and get hurt. But you don't need to maintain a lot of liability insurance on raw land.

With regard to your personal affairs, right, you could run a business. The business itself could have no employees. Employees generate liability. Contractors generally don't. So you might choose to work with contractors instead of employees. And then with your personal actions and activities, if you ride in airplanes and taxis and ride-sharing cars, etc., you're not doing things that are likely to harm other people such that they sue you.

And it minimizes your overall liability risk just through your actions. >> Okay, great. Well, that was very useful. Thank you. >> Good. My pleasure. Good questions and interesting to—I always love to think about interesting international planning. All right, two callers remaining. We go to the great state of Pennsylvania.

Welcome to the show. Joshua Hunt going to serve you today. >> Hey, Joshua, how are you? >> Well, sir, how are you? >> Doing well. Thank you. Hey, I just recently joined your Radicals. But before I get to my question, I wanted to say thanks for your tip on pursuing a second passport.

I went and realized, hey, my mom was born in Northern Ireland in 1955, and I did some research and applied, and my passport, my second passport for UK is on its way. >> Congratulations. >> That's kind of cool. Yeah, low cost of—not everybody has that ability, but if you have a relative who was born in another country, I mean, that's an easy way to get in.

So— >> Awesome. What do you think you'll wind up using your second passport for yourself, personally? >> I don't know. I think just freedom of movement within Europe once—to travel once everything opens back up. Maybe trying to find a low cost of living area that's safe and that I have access to now.

Not totally sure. It's just kind of a contingency plan for now. >> Yeah, it feels good to have it. And yeah, just even just the ability to go to Europe for extended vacations and not be limited to the 90 out of 180 day restriction for the Schengen area, Schengen zone, for example, is a nice thing.

It makes it so that if you want to rent a house in the south of France for four or five months in the summer, you don't have to worry about your 90 day restriction. So that's great. Go ahead with your question. >> Exactly. So I'm coming up on a big life decision.

Me and my wife are getting ready to leave our W2 jobs in the next few months. I'm separating from DOD, and she is ready to start out on her own. She wants to prepare meals for people like for athletes for CrossFit. She's already starting personal training online with a niche, very niche area.

She is a citizen of India but has been living in the U.S. and has found a lot of women, Indian women are wanting to work out but are afraid to go to CrossFit courses or all this. So she has started up a training site and has been making a little bit of side income on that.

She's ready to quit her nine to five W2 job. I'm ready to go out on our own. We have 10 rental properties we accumulated over the last five years, and we're going to start a property management business, I think. So we have plenty of money in the bank. We're about $200,000 liquid in our savings account.

We have passive income of around $3,000. We have not inflated our cost of living ourselves since our poor 20s, and we can live off of $2,500, $3,000 a month in the U.S. Our ultimate dream is to be able to go to India. Her parents are getting a little older, but they have a nice house we could stay at and maybe stay there three months, six months at a time, and just live off of our proceeds of our rental income.

That would probably be around three to five years in our timeline. So I'm just, you know, wanting some outside thoughts, maybe some focus, ideas that maybe I'm missing or gaps I'm not thinking about as we go forward. Nothing glaring stands out to me other than just a big, hearty congratulations.

Sounds awesome as far as, you know, what you've done and what you're doing. And all I can do really is to answer your question, just kind of walk you through a couple of things for you to think about. So first of all, if you're able to live on $2,500 to $3,000 a month, and you have $3,000 a month of passive income coming in right now just simply from your property portfolio, then that's awesome.

Then everything that you earn on top of that is going to be extra that can be used to pay down the mortgages if you're trying to reduce your debt, or just simply be stockpiled for other further investments in the future. And so you've achieved financial independence. Congratulations. That's really, really awesome.

I think the property management business is a really great way to maximize what you're doing and to gain exposure and a little bit more cash flow with your freed up time. I think that's awesome. As far as going to India, if you like the idea of going back and forth and spending time there, I think it's a tremendous thing to do and really worth doing from a lifestyle perspective, being able to be closer to her parents, spend time with them.

And it can be a good motivating factor for you to streamline your personal business. Once you have achieved a basic level of financial stability and freedom, then I think your next area of planning is to build your life style freedom, to streamline your business. You can optimize the profitability of a business.

And in addition to that, you can optimize the efficiency of a business. And so having a goal such as we want to go and spend four months a year in India with her parents would be a wonderful way of making sure that you've automated and put in place good processes for the management of your personal rental properties and then for your clients' properties as well.

And so I think that can be a useful thing. There's not going to be, from a financial perspective, there's not going to be any tax savings for you of spending time abroad or of your wife, especially not with three or four months a year with your rental properties anyway.

With her income, her business, if her business continues to be successful, then there are some ways that using India as a foundation could be helpful. What I would say to me would be the biggest opportunity is have her keep building on her interest in the Indian, with the Indian culture.

That if she's found this niche in the United States, then of course, exploit that as much as possible. There are many, many, many Indian women in Canada and in the United States who would probably like her content. But in addition to that, recognize that India is a far bigger market.

And so if what she's doing in the United States is helpful and is successful, then look to see if there's some way that using her knowledge of the Indian culture, that she could leverage that even within the Indian nation itself. Because it's a vastly larger, three, four times bigger than, three times bigger than the United States market.

And so if she had or could develop some kind of concept that was successful, even in the Indian marketplace, that could be a very big financial opportunity. Got it. Yeah, I hadn't thought of that. Yeah, the cost of living is substantially lower, as most Asian nations are in India.

So, but yeah, I can bring that up. We'll look into that for sure. I guess I wouldn't worry about the cost of living for you guys too much. You have enough income to cover your expenses in the way that you're doing it right now. And I would expect that with your newfound time to invest into your business, you should very quickly be making significant money.

Even if it's $3,000 a month from hers and $3,000 a month from your property business. Now you're back at a situation where you have plenty of income. I don't think that your goal should just be to live in the lowest cost place. I think your goal should be to maximize your lifestyle and to spend time with her parents and to develop a life that you guys really enjoy.

You've worked hard to get to this point. So build a life you really enjoy. What I would try to do is not focus at this point on, see, here's the risk, right? You're coming from the perspective of we have saved very carefully. We have managed our affairs very carefully.

We've kept our standard of living in terms of expenses lower than many of our peers in order to achieve financial independence. And you've done that. Now you can continue to live that way and that's fine. What I would say though is your opportunity is use your newfound stability and financial freedom to now focus on things that are going to be bigger wins long term.

So look for opportunities that are going to be significant winners. So let's use your wife's businesses for an example. To the extent that she's doing hourly personal training where somebody is, even if it's virtual, she is constrained in a one-to-one model where she's using her muscles to create income.

And that's the lowest standard of, that's the lowest value activity that she can do. It's not to say that she can't enjoy making some money that way, but it's the lowest value activity that she can do. She might make, I don't know, a high paid personal trainer might make $100, $150 an hour.

I don't know all of it, but that would be my guesses that maybe you would have a celebrity trainer that would be able to make more, but she's going to be limited at that number. The market itself is going to constrain it. And so if she develops a specialized niche, then yes, she can charge a higher amount, but the market itself is going to be constrained again, perhaps at that $100 per hour number.

With a food delivery business, to the extent that she is personally creating the food, cooking the food, packing it, packaging it up, and then delivering it to her customers on the agreed upon schedule, that's also going to be a constrained activity because she's using her muscles to create income.

Now she can move up the value ladder, right? She can start to hire employees. She can hire trainers. She could find other very fit Indian women who would like to work with Indian women and she can move up. But the real magic goes if she can go into a business where her work and her profit are unconstrained, where she's disconnected from the one-to-one model and she's on the one-to-many model and where she can take advantage of the power of leverage, especially through digitalization.

So if she can say – if she can prove out the concept of creating Indian-inspired meals that fit the macros of people – of Indian people who want to be fit or of just people who like Indian food, right? I'd sign up any day for Indian food delivery that fits all my macros.

But she can prove that concept and now she can create an educational course, write a book, create a course teaching other women who want to build this kind of cooking business from home how to market it, how to develop their marketplace, etc. Now that moves up to a much higher value add.

That's in the communication strategy where she's making – where she's able to make a lot more money. If she develops a compelling public presence – and I have no idea what the opportunity would be in the Indian marketplace – but if she can move into a situation where she develops something that's useful to a broader number of people and she can digitize it where her time and her muscles are no longer the constraining factor, then there's a much bigger opportunity.

If she creates a membership organization where she teaches people for $100 a month how to create a personal meal delivery service in their hometown with Indian-inspired flavors and she's the one who creates the recipes or she hires chefs who create the recipes, she figures out all the macros and all someone has to do is pay her $100 per month in order for her to get the monthly recipes that are changing and the macro calculations and all of the paperwork and all the literature.

Well, now at $100 a month, if she just gets a thousand women across the United States and Canada and in India or around the world that sign up for her, now she's got a $100,000 a month business. And so that's what you need to do is not just keep – you've bought a financial foundation of freedom through what you've done.

Now invest into those things that are going to have more potential. And then even if they don't make any money now, that's fine. I mean, the business that I just described is eminently achievable. If she has customers that are paying her money for her to make food and deliver it to them, and if she can just simply teach someone else how to do that, someone else who would like to be able to work from home and make their kitchen.

I mean, I'd love it if my – I would buy that for my 15 year old son or daughter and I'd be like, "Hey, you're 15 years old. Here's this lady who for a measly $100 a month will give you a fresh set of Indian meals every month that you can cook.

The instructions on how to do them will teach you how to do the marketing and you can go out and start up a business that's going to make you three or four or $5,000 a month just by finding people in the local area who want to buy Indian food that fits their macros." It's a totally doable thing and that's a $100,000 a month business for her.

So look for those big opportunities and take your time and your energy and look for those opportunities. Yes, sir. That's an awesome idea. Yeah, we'll start documenting and trying to figure out how we're going to do that. So. Cool. It's not easy. It's not easy. I warn you. It's not at all easy, but it can make a big difference and it can very much be worth it in the long run.

And now to round out our show, we've got a couple other callers drop off, but we go to Luke in Miami. Welcome to the show. How can I serve you today, sir? Hi, Joshua. Thanks so much. I wanted to ask a few different questions about disability insurance after listening to all your episodes on disability insurance and questions in Colin's meeting.

So I have a number of questions. I don't know. We may not be able to get through them all, but the first one is just about how a plan to change jobs might impact being able to qualify for disability insurance. So, you know, you gave the example of if you, if you started a new job the day after you sign up for disability insurance, of course, that would, that would look very bad.

But is there a general timeframe that the insurance companies have in mind if they're going to ask you, do you have a plan to change a job? Does it have to be a specific plan? Does it, is it only if you change industries or, you know, what is the, what is the context around that?

Okay. So first it depends on the insurance policy. The first thing that you want to make sure of is that you're actually buying what's called a guaranteed renewable insurance policy. A guaranteed renewable policy means that as long as you pay the premiums, the insurance company has to keep renewing the policy.

That's the key. We'll come to the definition of disability in a minute, but with regard to the job change, although it makes for a funny joke, right? So when I used to sell disability insurance, I would always use this language. I'd be sitting in some lawyer's office and I would tell the lawyer and I was like, listen, this policy is a guaranteed renewable disability insurance policy, which means Mr.

Lawyer, that if you buy this now at a 5A, you know, industry classification where your insurance policy is super, super cheap, you buy this policy today. And then a year from now, you, you leave your cushy, safe lawyer job and you go and you start working as a roofer.

If you fall off the roof and you're disabled from roofing, because we were dealing there with a type of an own occupation disability insurance definition of disability. And I would say, so if you fall off your roof and you're disabled from being a roofer, you're still covered. Now, every word that I just said was absolutely true.

And in all of my years selling disability insurance, I never once had a lawyer who left the legal field to go and become a roofer. So it's just basically a non-issue. Most of the times, if you do change jobs, you're changing from one job to another, and you're usually staying within the same job classification.

So if you're a 4A or a 5A, you're, you know, you're, you work in an office, you're a roofer or you're, or you're a 2A or whatever it is, generally when people change jobs, they generally stay within the same industry and thus the similar industry classification. Now, if you change jobs and you went to a safer industry classification, right?

You went from a 4A to a 5A because you went from being an insurance agent to being a lawyer, then you could just simply apply for an updated policy and try to get your industry classification improved. It's only if you're going to change jobs from a job that is safer and thus has a lower risk of disability to a job that is less safe where this is even a factor.

And most of the time, it's just not a factor. Next, it all comes down to just what is actually true. So if I today, buy a disability insurance policy and I have no intention of changing jobs, but then six months from now or six days from now, somebody makes me a job offer that I can't refuse and I go and take it, then I haven't done anything wrong.

As long as I did not misrepresent myself on the application, I'm fine. And I've done nothing wrong by changing after the fact. It all comes down to what's the representation on the application. What do I actually say and what's actually true? So a better example, I think, would be this rather than changing jobs.

I have always thought that someday it would be fun to learn to fly an airplane. Someday. Okay. That's a common thing. I think a lot of people would say it'd be fun to fly an airplane. I've always thought it'd be fun to fly an airplane, but I have zero plans whatsoever to go and learn to fly an airplane today.

I have never signed up for a flight school. I don't have any plans, et cetera. So I could apply for disability insurance policy today. And when we come to the aviation section, I would say, no, I don't have a pilot's license and I don't have any plans to do one.

Now, if tomorrow I win the lottery and then I decide, hey, that's it. I'm going to go and learn to fly an airplane. I'm going to buy a Learjet and I'm going to learn to fly it. Well, that would dramatically change, but I still have not committed fraud because at the time of application, I've not made a misrepresentation.

Third level is that this stuff generally only comes into play if there's actually an incident. So I could today know that I've signed up for flying classes next week. And then I could today go and get a disability insurance policy and I could commit fraud on the application by misrepresenting my aviation history and my aviation intentions.

That's fraud. I could keep that policy for 20 years. And if I never get disabled, it'll probably never matter. It'll never come out. Nothing ever happens. It's only at the time of disability that I have a problem. So do, so hear me loud and clear, do not commit fraud on insurance applications, but it's just generally not that a factor, generally speaking.

So what you should do is just simply talk to the insurance agent with the company that you're, that you're considering, ask them for a copy of the application, turn to the, read through the questions on the application, look at the questions and see how they ask the questions and what they ask.

And then you'll know what they're going to ask and you'll know what you need to answer to. And so, and then just answer those questions truthfully with whatever the circumstances are. If you do that, everything is fine. Okay. Yeah, that makes sense. And that, and that is, that is one of the the concerns that I have is wanting to make sure that, you know, I don't end up, I don't end up paying a policy for decades and thinking I'm fine and then trying to use it because I need it.

And then finding out that the, you know, the impression that I gave was not, is not considered true. Right. So, so that, but that makes sense in terms of just, just reading the questions, I guess. Hold on a second. You started to break up right when you said, I guess, hold on, hold on, please repeat.

You said, I guess, and then, and then your connection cut out. So please repeat. Sure. In terms of finding an insurance company, I think you said that you can't give specific recommendations, but it would just be looking for, looking for, I guess, local offices. So I can talk to someone in person?

No, not with disability insurance. With disability insurance, and I don't mind talking about companies, it just annoys me that they don't pay me. And since I don't have an insurance license, so many times I think about, I should just go get insurance licenses and just start selling insurance again.

And I may do it. I've actually talked to friends of mine who have insurance brokerages and about signing up as a, as a marketing agent for them, just so I could, so I could recommend specific companies, but I don't mind talking about names. It's just, that's the only reason why I'm often hesitant.

So first of all, with disability insurance, it's a unique product and most people, I don't, I never understood why. I always, I love selling disability insurance. I believe that it was the most important, the most important policy for someone to own. I dropped off. Oh, well, we'll just finish it out.

So you can listen later, Luke. I believe that it was the most important policy for someone to own. And so they should focus on, on getting it quickly, but still insurance, a lot of insurance agents don't, don't do it. They don't, they don't buy it. They don't cover it.

So you can't just go to any insurance agent and expect to do well. The second thing is disability insurance is complex. It's much more complex than life insurance. And because of its complexity, you need to make sure that you make good choices. And so it pays to work with a specialist.

Now this is very, very relevant in some professions. So if you're a physician, for example, or some other specialized, have some other kind of specialized industry, you need to work with somebody that understands it. There are often specialists that work with a certain marketplace. So every doctor gets called by tons of insurance agents who work with other doctors.

That's common. And so you don't just go and find an insurance agent. You go to there. The other thing that you do is you find an insurance company. If you don't have that, or you're not some specialty occupation, like a chiropractor or something, you find an insurance company that provides disability insurance that also provides training.

And so I think the big mutual companies are the place to start. The New York Life's, the Northwestern Mutual, the Mass Mutual, et cetera. I'm biased, right? I used to work for Northwestern Mutual, so I'm biased in that direction. But from all of my experience as an insurance agent, and even after it, I still think it makes sense.

So look for one of those big old mutual insurance companies that sells insurance as their primary business. Call them up. What I say to do is call them up, talk to the local managing director, say, "Hey, listen, I need to buy a policy. I found you in the phone book.

Could you make me a referral to somebody who could specialize in disability insurance?" And there are often disability insurance specialists or some agent that does a lot of work in that way, and they'll often just send you to their agent that does that kind of work. So that's how I would do it.

I know you dropped off, Luke, but I think you're back now. I know you missed a little bit of that, but my answer is go to a company that sells disability insurance and where they train people to do it. Don't just go to any random insurance agency. Are you back, Luke?

>> Sure. Okay. That's great. Yes. Can you hear me? >> Yep. Sounds good. Any other follow-up questions? >> You can hear me? Okay. Yes. In terms of -- so since I'm young now and there isn't -- I have the fewest possible things wrong with me at this time, I figure I want to get as good of a policy as I can get right now, but I'm wondering to what degree can that be changed later other than reduce -- I think you said you can reduce the benefit amount, but can you add and remove riders?

Does that require -- in some cases, does that require the policy to be scrapped and rewritten? >> Yeah. So these are great questions that you're asking, and they're questions that will be easily answered by a competent insurance agent. So I'll answer them for you now, but just know this is what you hire an insurance agent for is to answer the questions, and they should be able to explain them to you.

So when you go to apply for disability income insurance, they're going to calculate the amount of benefit they're willing to offer you based upon your current income. Let's say you make $10,000 a month. They'll say $10,000 a month, we're willing to issue you a policy for $6,350 a month of benefit.

They'll never give you 100% of benefit, and as your income goes up, the percentage that they'll cover will go lower, but they'll tell you the number based upon their financial underwriting. You can submit if you have other sources of income, depending on what those sources of income are. They may or may not be covered by the insurance agency, and so if you have a question on what they'll offer you, you can talk to an insurance agent and do what's called a conditional application or conditional underwriting.

For example, if you're questioning how much they'll actually offer you, you can do it from, you can submit your financial statements for a quote. Now most of the time this is simple, right? If you have a salary, it's very simple. The insurance agent will do the calculation based upon using the company's software.

If you have other sources of income, you have real estate income, etc., or other investments, then you can go ahead and submit a balance sheet and an income statement to the underwriter, and the underwriter will tell you how much they're willing to approve you for. But let's say they come to you and they say, "Hey, you're making $10,000 a month, we'll give you $6,500 a month of benefit." So in that situation where they're giving you $6,500 a month, they won't increase it in the future without more underwriting, but you can put on a certain number of riders.

So most insurance companies, these pretty much all work the same. The first thing is that you can add a rider onto the policy that will allow it to increase with inflation on a predetermined schedule. Sometimes it's just a flat 3%, sometimes it's going to be based upon a CPI offshoot.

And you know, "Hey, this is a consumer price index increased by a certain amount, so we'll increase your benefit." You'll pay a little bit extra for the rider, but what it means is that on the one-year policy anniversary, they will tell you, "Hey, by the way, we're offering you 3% more insurance.

So now instead of $6,500 a month, we'll give you $6,695 per month." You can often choose that benefit. When I used to sell them, I don't know what they are now, but when I used to sell them, it was either 3% or 6% per year that you could choose, and that was called an indexed income benefit.

So that would allow your policy to increase by a certain amount, your policy amount to increase every year on a stated percentage. The other thing that you can do is you can purchase an additional purchase benefit. So an additional purchase benefit allows you to get additional insurance in the future with no health or occupation or avocation underwriting, but with financial underwriting.

So this would be where if you were, you know, let's say I'm sitting in your office and you're making $10,000 a month and you're a promising young litigator, and you're looking and saying, "Well, listen, Josh, $6,500 is nice, but I want $15,000 a month, and I know that your income is going to increase quickly," then I would go ahead and I would recommend to you an additional purchase benefit.

So you pay an extra cost to buy that additional purchase benefit. And then in the future, as your income increases, you can regularly do financial underwriting and they'll issue you more insurance without any more health underwriting. So now if you've gone from $10,000 a month to now, you know, three years in, you're at $30,000 a month, then you can increase your benefits and you'll be able to go up to, you know, $10,000 a month or $15,000 a month, wherever you wind up with the maximum benefit.

That additional purchase benefit that you purchase will be a ratio based upon the size of the policy that you buy now, and then based upon what you think you're going to need. So if you buy $6,500 a month now, you could probably buy another $6,500 a month of additional purchase benefit, or you might talk to the insurance agent and say, "Man, that's really expensive.

I'm not going to pay, you know, $87 a month just for the future thing. Let me just go ahead and buy two or $3,000." And then they'll do the additional, they'll do the financial underwriting, and then in the future, as your income goes up, they'll give you the additional amounts of insurance.

So those are the two ways that it goes. One rider is a rider that automatically increases your monthly benefit before disability. Remember, this is different than having an inflation benefit on your actual benefit after disability, but one is an automatic increase based upon a stated percentage. The other is an additional purchase benefit that allows you to buy more insurance when your income increases in the future.

>> Great. Okay. And I really appreciate you answering that, even as you say. Probably an agent will either talk me through all the details for that particular company. That's very helpful. Could I ask one more? >> Yep. Go ahead. >> Is there any point in, for the health part of the underwriting, is there any point in waiting to make minor health changes, or is it really just based on existing conditions and your general health status?

>> My answer is no. There's no point in waiting to change some kind of health condition. If you're overweight or you have a certain health condition, get the insurance now if you need it. So we're assuming that you need the insurance, or we're assuming that you want the insurance.

So let me explain what will happen. First of all, people often overestimate the impact of a certain condition, and the impact of a condition is different based upon the kind of insurance policy that you are applying for. For example, I'm overweight, right? I've always been overweight, but even though I was overweight when I bought all kinds of insurance, I always got the very highest health ratings because every other test, you know, my blood pressure, my cholesterol, all of my tests, my family history, everything was always perfect.

And so being overweight was, yes, it was a mark that the underwriter would consider, but because everything else came out, I don't have any statistical higher risk of, or I don't have a significantly higher risk of morbidity because I'm overweight. Now, that's different with every condition, and you have to recognize that your risks of morbidity are different than your risks of mortality.

Morbidity is for disability insurance, risk of being disabled. Mortality is risk of dying for life insurance. And so if you need or want the insurance, get it. Now, let's assume that you have a health condition. It doesn't, first of all, it's not going to hurt you to declare the health condition.

That's one thing that people usually look for. In theory, you could, you know, conceal something, right? You could fly to Malaysia for all your health care and then, you know, get some conditions, you know, cleared away and then go back to the United States and then say, "No, I haven't been to any doctor.

Is the insurance company going to find out?" I don't see how they would, but you wouldn't take that. You wouldn't do that, of course, but like in theory, you could. But in general, it's just not that big a deal. Most of the time, any health things that you're worried about are already there in your health information.

Now, when you apply for the insurance, your doctor's records will be entered into the Medical Information Bureau, which is a sharing of health information among insurance companies and a sharing of your application for insurance. So, don't think that you can apply to Company A, they rate you or deny you coverage, and then you can just go six months later to Company B and not tell them about a doctor.

They're going to look you up in the Medical Information Bureau, they're going to find the information, and then with that information, they're going to know that you applied with Company A six months previous. However, the information that the underwriter is going to depend on is already there in your medical records, and so they're all going to be submitted anyway.

It's not really any problem to submit them now. If you have a condition that's improving, that's fine, although usually, they want to see things that are stable. So, what you can do is when you do the underwriting for the policy, the underwriter will look at it, and if you have a negative health event, the underwriter will look at it and will say, "Listen, we're going to give you a rating," and they'll either offer you reconsideration or not offer you reconsideration.

And in disability insurance, they'll do three things. Well, two things with a variation. Thing number one is they may give you a rating. So, they'll say, "Hey, listen, we're not going to give you our very cheapest tier. We'll give you our second cheapest tier because of this condition," and it's going to be either permanent or it's going to be for a certain amount of time.

The second thing that they'll do is they might give you an exclusion. So, maybe you had carpal tunnel syndrome because you typed too much. They'll say to you, "We'll give you coverage for any disability except a disability that's related to this previous condition, the fact that you had carpal tunnel syndrome.

We won't pay a claim if you're disabled due to this carpal tunnel syndrome." Now, if they give you a rating or if they give you an exclusion rider, it's called an exclusion rider. If they either give you a rating or an exclusion rider, that rating or rider might be permanent for the life of the policy or it might be conditional that they can drop it off after two years.

So, you might have a condition that you've been working on with your doctor. They'll say, "Listen, we're going to give you a rating for two years, but in two years, we're willing to give you reconsideration, and all you need to do at that point in time is get your updated medical records, send us your medical records after two years, and then if your condition has improved, we're willing to drop this exclusion rider or we're willing to change this rating based upon an improving condition." Or if it's something more serious, then they won't give you that.

They'll just say that here's the policy. You can always go and apply for a new policy in the future. So, let's say that they said we're rating you into the third classification, the third premium category based upon these conditions that you're facing, and it's permanent. Well, if three years from now you've lost 200 pounds, you've fixed your A1C problem with your diabetes, your heart is in better condition, everything is good, you can just go into that same company or another company and apply for a new policy, and they'll underwrite it based upon the new conditions at that point in time.

So, in summary, it never makes sense to wait on health conditions if you don't have the insurance that you need. And in fact, it's the opposite. If you have a health condition that's actually going to wind up with a rating or a rider or something like that, you want to get the insurance now, get it in force in case things get worse.

Because in my experience, a lot of times things get worse, right? Fat people get fatter, sick people get sicker. And so, things do get worse, and so you get it now. Now, if things get better, then you just go and apply again for a new policy two years from now, but at least you have the insurance.

The only time at which it makes sense to wait on something is if you already have the coverage that you need and you're improving something so that you can replace that coverage in the future. Then, of course, yes, you wait until you've solved the problem, but that's only if you already have the coverage that you need.

>> All right, that's great. And so, when I apply, all of my current medical records, from immunizations to the doctor's notes, are going to be put in a data exchange for the insurance industry? >> Yes. >> Sounds like a great plan for data security. All right. Well, thank you so much, Joshua, for all your answers.

>> My pleasure. No, that is one of the things that is frustrating about the insurance industry, and it's the Medical Information Bureau. You can go and read about what they do share. They don't share, in my knowledge, "No, I need to go back and refresh this. I should pull up the Medical Information Bureau on Wikipedia and look just to see what they actually do share," which I will do as we speak, just to make sure, see what the Wikipedia article is on it here.

But, okay, it doesn't say in that exactly what they share. But yes, in what they do, okay, here we go. "Medical Information Bureau's database does not contain actual medical records, and information is gathered from an underwriting investigation that may include information from the questionnaire, blah, blah, blah." So what they do is it records the information of what is done.

So, "Medical Information Bureau's underwriting services are used by the members to assess an individual's risk and eligibility during the underwriting of life, health, disability income, critical illness, and long-term care insurance policies. These services alert underwriters to errors, omissions, or misrepresentations made on insurance applications." And so they don't have all of the doctor's records there in a central database.

They have the codes that say, "Hey, so-and-so applied to us for information, and we issued him a policy, or we didn't issue him a policy, and here, you know, you should be aware that this guy is flagged as having had some potential issues." So that is the challenge, you know.

If you're going to get the insurance, you're going to disclose to them the information, and it is a breach of data. So you're going to want to have the insurance. No requirement to have it, but if you want it, you're going to play by their rules, and you're going to give them the information.

So that wraps up our Friday Q&A show for today. A great bunch of questions. A great mixture there. I would just say in closing, remember that I'm running 50% off sale. Go to radicalpersonalfinance.com/store. Use the coupon code "changingplatforms" to save 50% on all of my courses. That must be done by the end of this month, because at the end of this month, those courses will be taken off the market, never to be seen again.

I'm not taking them off because the information is bad or out of date. The information is great, and it's fully up to date. I'm just simply updating them with newer visuals, better, more fancier audio, sorry, fancier video, etc., and they're going to be coming out at a much higher price point.

So it's a great deal, and I recommend you go to that. In addition, if you would like to, if you like the way I answer questions on these, I intend for a time to continue this Patreon system that I use for the Friday Q&A shows. But if you'd like to talk to me personally about your situation, get my personal insight, you can do that up until the end of this month as well.

After March 31, I'm no longer going to be providing those hourly consulting services. Why, you ask? Well, just think about what I said to the caller who talked about businesses. I like some aspects of the one-to-one business. I enjoy serving people the way that I have over the past year, but I made a lot more money when I sold insurance policies with an hour consultation than just simply with a straight hourly rate.

And so I'm very focused on the one-to-many business model just for my own financial well-being. So it'll never be as cheap as it is right now. Those services are discounted by 25% down to $300 an hour as well. You can find that at radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult, or radicalpersonalfinance.com/store. Thank you for your patience with my very loud dogs.

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