The Complete Defense Strategy to Protect Everything You’ve Built

We spend about 6% of our income on insurance every year. Yet most people have no idea how it works, why it exists, or whether their coverage actually fits their life. Insurance is something you should not set once and forget. Life changes. Businesses grow. Families expand. Coverage needs shift. Your insurance should reflect where you are now, not where you were five or ten years ago.

In this episode of The Roy Matlock Jr. Money and Business Hour, Roy dedicates the entire show to the complete insurance checkup. This is the defense — protecting your income and your assets. Roy breaks down every type of insurance you need, how it works together, and how to identify gaps in your coverage. Most importantly, he shows how to become self-insured so you can free up money to invest while still protecting what matters most.

You Are an Income Machine — Protect It

Roy uses a powerful metaphor. Imagine you woke up every morning and looked on the counter. There is a toaster oven. Inside that toaster, there are $3,000. You reach in and take it. Two weeks later, there are $3,000 more. You keep going back to that magical toaster, pulling out $3,000 every two weeks.

After a while, you realize this toaster is incredible. You would do anything to protect it. You would lock it up. You would insure it. You would make sure nothing happened to it.

That toaster is you. You are an income machine. You make deposits into your bank account maybe twice a month. That is your magical toaster. Life insurance protects the toaster. You are the toaster that produces the income. If something happens to you, that policy protects your family’s ability to maintain their lifestyle.

Understanding Insurance — It Transfers Risk

Insurance does one main thing: it transfers risk. Roy meets with people all the time who have their house paid for, and he always asks, “Do you have homeowner’s insurance?” Of course they do. Why? Because they are unwilling to take the risk of their house burning down.

Think about your lifetime. How many people do you personally know whose house burned down? Probably one or two, if any. The risk is low. But people do not want to take that risk, so they transfer it to an insurance company.

One major financial event can devastate somebody. If you owned a house and it was not insured, that could be devastating. So people buy policies. But very seldom do people have what Roy calls a complete insurance plan. Most people have pieces — a little life insurance here, some car insurance there — but not a coordinated strategy that protects everything.

The Types of Personal Risks You Need to Protect Against

Roy breaks down the major personal risks that can devastate your financial life. Understanding each one helps you build a complete plan.

First, death. If you are an income machine, what happens when that machine stops? Term life insurance protects against this. It is the cheapest insurance you can buy. If you have kids, debt, a mortgage, and responsibilities, you need coverage. For someone in decent health, $100 per month can get you massive coverage.

Second, disability. Roy says being disabled could be worse than dying because you are in a position where you cannot take care of yourself. You are still there. You still have bills. You still have a family. But you cannot work. Disability insurance protects you in the event you get disabled.

Roy gives an example. He knew a surgeon who had back problems from doing major surgeries. He could not do surgery anymore. So he was able to get disability insurance. But that did not stop him from working — it stopped him from doing what he was trained to do. Disability insurance is occupation-based. It would typically pay you until age 65, and then you pick up Social Security and retirement.

Third, accidents. You could damage your property or someone else’s property. You could get sued. That is why you need liability insurance. Liability insurance protects you from being sued and losing everything.

Fourth, illness and sickness. Healthcare costs are unbelievable. Roy had a client who left a job and needed to replace the company health insurance. The premium was $2,500 per month. That is $30,000 per year just for health coverage. You need health insurance to protect against the catastrophic costs of medical events.

Fifth, long-term care. You could live to 102 like Roy’s mother did. You do not want to be outliving your money and running out of retirement money at age 85. Long-term care insurance protects you in the event you need nursing home or assisted living care.

Become Self-Insured — Take on Risk and Invest the Difference

The goal is to get to a point where you are self-insured. What does that mean? It means you take on part of the risk of insurance. When you become self-insured, you can save money on premiums and invest that money instead.

Here is how it works. When you take on the risk, you no longer pay the insurance company to cover that risk. You do not have to pay for their big buildings, their employees, their premium collections, and all the administrative costs. Instead, you take that risk on yourself and invest the money you save.

Roy gives a real example. One of his clients just reviewed their home and auto insurance and saved $125 per month on their coverage including all their liability. That is $1,500 per year. If you invest $1,500 per year, over a 10-year period at average returns, that money will double. That one simple idea turns into about $30,000 in savings over 10 years. Then it continues to compound.

But you can only do this if you have prepared to take on the risk. You have to have an emergency fund. You have to have money set aside. Once you are in a position to take on risk, you can raise your deductibles on your insurance and invest the difference.

Life Insurance — Term, Permanent, and Variable

Life insurance is the foundation of protection. Roy recommends starting with term life insurance. Why? It is designed to be cheap and protect your family.

Here is how it works. You decide when you want your term to end. Maybe you buy a 20-year term. For 20 years, your family is protected. Your income is protected. If something happens to you, they get paid. After 20 years, the term ends. At that point, you have either become self-insured — meaning you have enough money set aside that you do not need insurance — or you buy a new policy.

You might add some permanent life insurance to that term policy. There are two types of permanent insurance. One is called a universal life or indexed product. Roy likes variable life because it includes the indexed products too. Variable life is something you can keep. You can use it as an additional retirement plan. It has benefits. You can keep it all the way until death.

Some people buy whole life insurance. Roy is not a proponent of that. He has always said, “Buy term, invest the difference, get yourself self-insured.” But if you do want something to keep, you have different options.

Disability Insurance — Protect Your Ability to Work

Disability insurance is often overlooked. But it is critical. Disability insurance is designed to protect you in the event you get disabled. It may be that you get disabled, not to the point you cannot walk or move around, but maybe as an example you are a surgeon and you have back problems and you cannot do surgery anymore.

Even though you could do other work, disability insurance is based on your occupation. It protects your ability to do the work you are trained to do. It would typically pay you until age 65. Then at that point, you pick up Social Security and your retirement.

Annuities — Guaranteed Lifetime Income

Annuities are designed for retirement income protection. They create guaranteed income and they work similar to a pension and Social Security.

Here is an example. If you retire, your Social Security will pay as long as you live. If you are married, you are guaranteed one of the two Social Securities after one person passes. So if you are both making $2,000 per month getting Social Security and one passes away, you just lost $2,000 per month. At that point, you might want something else. If you do not have enough cash set aside, you might want to put something in place that would allow you to have continual lifetime income.

You could buy an annuity. An example: somebody 65 or 68 years old might be able to get a joint annuity that would pay 7% for the rest of your life no matter what happens. The goal when you buy an annuity is for you to run through all the money. You say, “Well, why would I want to run through all the money?” The reason is if you live a long time, you want to outlive your money. That is what you want to do. If there is money left over because you did not draw it as long, that means you died. You do not want that.

There are also annuities for long-term care. You might put $100,000 in. It gets a small interest rate. If you do not use it, whatever the annuity grew to goes to your beneficiaries. But if you go into a nursing home or have Activities of Daily Living needs, depending on the policy, it might pay three times that amount.

Annuities do not take care of everything. Roy hates this, but there are a lot of insurance people who think annuities are everything you could ever need. They are not. What you do is couple annuities with investment accounts. In many cases, if you are in a really strong financial position, you may not have an annuity at all. You may just have your money, pulling small amounts off your retirement plans. You do not even need the annuity.

How Insurance Works Together — Not in Competition

The problem Roy sees is that people are buying insurance, but the insurance does not complement each other. In some cases, they compete with each other. In some cases, you are paying for two things but can only collect on one.

Insurance is an indemnification agreement with an insurance company. What does indemnification mean? It means bringing you back to the same. You cannot make a profit on insurance. If you make a profit on insurance, it is called insurance fraud.

What happens is you hand over premiums to protect yourself. Insurance is not designed to make you rich. It is designed to keep you from becoming poor. That is the whole point.

Roy does an analysis of everything together. He looks at your defensive position — protecting your income and assets — and your offensive position — growing your wealth, cutting taxes, and being able to retire comfortably. Everything works together.

Most People Have Pieces, Not Plans

The average American has pieces put together but no complete plan. Maybe they have some life insurance but no disability insurance. Maybe they have home insurance but no umbrella policy. Maybe they have a 401k but the allocations are wrong. Maybe they are saving money but have no emergency fund.

Roy never sees anyone get excited about insurance premium payments coming out of their check every month. It is just like taxes. People do not like to think about it. But if you do not pay attention, you end up either under-insured or paying too much for coverage you do not need.

That is why Roy recommends getting a complete insurance review. Not just looking at one policy in isolation, but looking at everything together. How does your life insurance fit with your disability insurance? How does your health insurance work with your long-term care protection? Do you have an umbrella policy? Are your deductibles appropriate? Are you paying for junk fees and coverage you do not need?

Ready for Your Insurance Review?

If you have not reviewed your insurance in more than a year, you should. If you recently bought a home, vehicle, or property, you should. If you started or expanded a business, you should. If you had a child, got married, or experienced a major family change, you should.

Roy and his team can help you review your coverage and identify gaps. They can show you options that may better fit your family, business, or budget. They can help you become self-insured so you can free up money to invest.

Visit roymatlockjr.com/insurance-review-and-planning or call 615-843-2999 to request your free insurance review.

Watch the full video on YouTube: Insurance Review and Planning

Business Owners on the Air with Roy

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