Wealth Podcast Post

Income Insurance with Hadi Radwan

George Grombacher October 7, 2022

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Income Insurance with Hadi Radwan

LifeBlood: We talked about income insurance, how you’re three times more likely to become disabled than you are to die, how much these policies cost, what they cover, and how you get one, with Hadi Radwan, Founder of Asteya, and InsurTech expert. 

Listen to learn why this insurance is more important than you realize! 

You can learn more about Hadi at Asteya.World, Facebook, Twitter, Instagram and LinkedIn.

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Our Guests

George Grombacher

Hadi Radwan

Episode Transcript


Unknown Speaker 0:15
what’s up? This is George G and the time is right welcome today’s guest strong apart for hot hottie rod watt hottie. Are you ready to do this?

Unknown Speaker 0:23
I’m ready. How are you doing today, Josh? I am doing great excited to have you on. He is a serial entrepreneur and venture builder and insurer tech expert and angel investor. He is the founder of a stay out there an insurance company working to make income insurance accessible to everyone. How do you tell us a little about your personal lives more about your work? Why you do what you do?

Unknown Speaker 0:49
Yeah, so I started my career Early in a consulting firm. And I got really bored by being very structured and process oriented and doing the same thing over and over again. So I decided to become an entrepreneur. And I’ve done that very recently successfully. And before that, I think around with a lot of ideas. But I never was successful, because execution and dedication is key to do that. And with sto, which is our latest venture, we co founded it in 2019. And with one goal in mind, we wanted to make what we call income insurance accessible for everyone in the US. Because we believe that the most important asset that you need to protect is your income, your income generates almost everything you need, it pays for your bills, it pays for your child’s, you know schooling fees mortgage, it can buy your nice clothes, so it’s a very important asset to keep in mind. And in the US. Specifically, you are three times more likely to get disabled than to die during your career, which is the time when you’re producing that income, and probably saving it for your retirement. So we noticed that this is a important

Unknown Speaker 2:12
insurance to make sure people are aware that it exists and that they need in the US specifically, more than 50% are living paycheck to paycheck and less than 15% on a full income protection policy. So you see, there’s a lot of need. There’s a lot of education, and this is what my latest startup is doing.

Unknown Speaker 2:37
So the numbers are alarming. Troublesome. Whatever the number is 50%, two thirds of Americans are living paycheck to paycheck. What was the percentage? It said less than 15? Have some kind of a income insurance policy? Yes, yeah. In general, you know, when you’re working with with an employer, it’s not mandatory that they offer you a disability insurance cover is just an additional benefit. And even if they do that, you’re not allowed to insure more than 60% of your income. So if you’re someone earning, let’s say, $200,000, you might get from your employer 30k protection, okay, great. If you’re not saving, or if you’re living paycheck to paycheck, or you have an a nice lifestyle, a $30,000 we’re not we’re not correct if you’re out of work for the next six months or nine months because of a specific illness. And by the way, a disability is not an accident Only it’s not break falling and breaking your leg. This is only 10% of all the cases of disability 90% are mental illnesses, and things that I mean, you cannot avoid sometimes, and a majority has arise in because we sit a lot. We’re not mobile anymore. We’re sitting behind our desks that creates illnesses like musculoskeletal issue, which can put you out of work for a particular period of time.

Unknown Speaker 4:09
There’s a lot about income insurance, disability insurance, and I think that income insurance is is a great way to describe it.

Unknown Speaker 4:20
Disability Insurance, it’s it’s pretty clunky. I don’t know that any of us think that we’re ever going to be disabled in the same breath. Nobody thinks we’re gonna die, but more of us have life insurance than we have disability insurance. So Did did you start off thinking we’re gonna call this income insurance instead of disability or, or or did you come across that as you were sort of moving forward with the company?

Unknown Speaker 4:50
So we came with the idea before we started the company because we looked at the industry and we saw it’s a 20 billion industry. It’s quite small.

Unknown Speaker 5:00
As compared to life insurance in the US, which is north of 750 billion. And we said to ourselves, if the industry is going to get disability insurance, it’s not actually reflecting what it’s protecting, sub protecting your disability, you still, if you if you’re going to be disabled, you’re going to be disabled, the policy will not protect you against this, but it does protect your income. So the first thing is educating the audience and and everyone who needs this, that this is protecting your income, you don’t care. A lot of people call life insurance, life insurance and not death insurance because of the branding. And they wanted to make it much easier. So why is everyone calling a disability? It’s time for for changing the narrative. So that’s how we looked at it. And we want to just to be transparent what the product is about, not a marketing gimmick or anything of that sort.

Unknown Speaker 5:54
That’s pretty that’s that’s, that’s wild. But the it’s a $20 billion industry compared to the life insurance, which is 750 billion, I certainly I realized that it was smaller, I didn’t realize that it was that much smaller. The if I don’t know if it’s knowable or not the breakdown from personally owned disability insurance income insurance policies versus employee benefits. Do you know what that is? Probably it’s 6040. So I don’t see 60% Is group disability insurance and the rest is individual. And that boils down, because there’s not a lot of awareness about the importance of buying this. And it’s not mandatory. When it comes to car insurance, you’d see that probably all the people who are driving have some form of protection. This is not mandatory. So people only think when they want to buy insurance. Is it expensive? Am I ever going to get paid for or recouping part of that investment? For me, I don’t look at it as an investment, right? The policies and it’s just

Unknown Speaker 7:05
it should sit there just in case something bad happens to you, then you can go ahead and you know, use it it’s not you’re investing in a policy. If you’re investing in a policy, probably you need to put your money in the stock market.

Unknown Speaker 7:20
Yeah, it’s a natural thing to want to say, Okay, I’m going to allocate resources, in this case money towards something, do I get anything out of it? If I don’t use it? Oh, yeah, natural that you want to do that. But it’s, it’s more appropriate to look at the way that you just described it. And also, it’s so interesting that the odds of me dying before, I’m supposed to a very, very low yet I own life insurance. But commonly, the odds of me becoming disabled are three times higher yet, so many of us don’t own disability insurance. But it’s the consequence, that if I do become sick, or I break a leg, I get cancer, I have a mental health consideration, the consequence of that to my family is going to be catastrophic. And we won’t be able to recover from that. So that’s why you pay the money for a policy like this.

Unknown Speaker 8:19
And by the way, they’re not expensive. The policies are quite affordable. We have policies from $6.

Unknown Speaker 8:27
Hmm. So tell us a little bit about that. How, how are the policies actually issued? Is it issued from one company Are there lots of companies

Unknown Speaker 8:38
so we’re basically a full stack company, but we don’t take the risk. So we actually sell it, we underwrite it, we look at the risk profile, and then we can instantly issue it online if everything looks smooth. So you go to our website, you fill out the application, you get underwritten automatically in many instances, and then we have

Unknown Speaker 9:01
the ability to pay and get the policy within your email it’s a few minutes process it’s not days it’s not weeks. That’s what’s amazing about it.

Unknown Speaker 9:12
There are when you’re looking at an income insurance policy, there’s lots of moving parts to it.

Unknown Speaker 9:20
How is how is I don’t know if you want to go into some of those key considerations or with with without kind of getting too far into the weeds but what are the things somebody says okay, you need to have this in your policy because I bet people assume all if I get this policy I’m I’m all taken care of.

Unknown Speaker 9:46
So first of all, there are three things I would look at if I want to buy this policy right. First, I want to look what’s my income today? How much am I saving it? How much

Unknown Speaker 10:00
Am I actually in need in case something bad happens to me. So for example, I would break it down by, here’s my lifestyle expenses that I cannot live without, here’s the things that I can live without. And then I would look at my income. And then I would calculate the percentage here. And that’s probably the minimum I would need to protect, or keep my lifestyle ongoing. So for example, if I earn $10,000 per month,

Unknown Speaker 10:28
and that’s my net after taxes, and I can live on $6,000, then probably, I need to get an income protection up to 6000. So if I go to my website, I would say the benefit amount that I will need a 6000. And then I would from there on fill the application and see the price, I would look at the price and see if it’s within my budget, on average, age should be two to 5% of your total annual income. So if your total annual income is 120,000k per year, in that case, probably don’t want to spend more than 200 $300 per month on such a policy.

Unknown Speaker 11:13
That’s a good rule of thumb right there. So and how, how long does the benefit lasts for should I have to use the policy? And it’s going to last for a long time over five or 10 years or even until 65? How long is the benefit last? So there’s two considerations here. And it varies by product. There are products where you have a fixed policy term. So you say I want to buy this policy for the next two years, or five years or 10 years. And then you have a what we call in the insurance industry, a guaranteed renewable policy, which is an ongoing policy doesn’t have a policy term, or a policy life. As long as you pay your premium, it can still pay you in case of a claim up to a certain age, usually the age is 67.

Unknown Speaker 12:02
Got it? Okay.

Unknown Speaker 12:05
Well, people say, what are some of the biggest

Unknown Speaker 12:09
objections that that that that you get to they say, don’t already have this through work? Don’t I? Don’t I have this through my car insurance company don’t have this through Geico, stuff like that?

Unknown Speaker 12:22
Did he add it is that’s the thing, that disability is not bundled with any other product. So it’s a standalone product, you have to buy it. And the reason is, because it’s not an off the shelf product, there is some form of underwriting because when you buy such a product, and then you’re asking for a benefit to be paid, there is some form of medical consequences that needs to be assessed. So there will be a medical questionnaire saying, Hey, do you have these diseases, and then there’s an underwriting process. So that’s the only reason it’s not bundled. And that’s the only reason as well, it’s not. It hasn’t been sold so widely, because it’s harder to sell, it takes more time. And as an agent, if you’re the major seller of this product, you want to make money as quickly as possible. So probably you don’t want to have a sales cycle that lasts weeks or months, you want something quick and dirty. So life insurance is easier to set takes few minutes. Now with a Stayer, we’ve introduced this element, so the sales cycle is shorter, we can bundle it, we can use our API’s with any distribution partner, so that if they sell car insurance, we can bundle it with disability. But that’s some that’s a practice that will take time for people to realize, yes, I can bundle something that probably at this stage, it’s hard to sell. So it’s an education play. Yeah, it is.

Unknown Speaker 13:46
It is harder to sell for sure. And it’s harder for us to get our brains around. Because

Unknown Speaker 13:54
it’s interesting, because when you sell a life insurance policy, you can sell $1 million life insurance policy pretty quickly.

Unknown Speaker 14:02
And if you’re making $100,000 a year, if you become disabled, and the insurance company is going to be on the hook for we’ll say $60,000 For the next 40 years, that’s obviously more than a million dollars. So there’s just a lot of nuance that goes into properly assessing the risk. And I imagine that as we’re having more conversations about mental health, that that’s going to make that even more challenging from a underwriting standpoint for disability insurance, but for income policies.

Unknown Speaker 14:36
Can you elaborate a little bit on the question?

Unknown Speaker 14:40
My perception is that

Unknown Speaker 14:44
that we’re more comfortable here in America talking about mental health, and there’s more diagnosis about about mental health conditions. And are we going to get to a point where I have a diagnosed mental health condition which will preclude me from

Unknown Speaker 15:00
Raam engaging in my profession of choice, and therefore, will, will the insurance company be happy to pay the claim on me? Even though from the outside looking in, I could go back to work, but because I’ve been diagnosed with this mental health condition? Yeah, that’s a that’s an interesting question. Because when it comes to insurance, as long as you go back to work, they stop paying you the claim, because they consider, okay, that’s a condition that still can allow you to work even though it exists. So the insurance policy is not here to prevent you from having that illness or

Unknown Speaker 15:41
illness prevented from going back to work. The only trigger would be if you can go back to work or not. So it’s, it’s, it’s a sensitive topic, for sure, because the mental illness is something it’s not talked

Unknown Speaker 15:55
too much about. And sometimes people will have it. And on top of the at this, they’re working, when in reality, they need to take care of their health and make sure that they recover properly before going back to work. Yeah, there’s no doubt

Unknown Speaker 16:12
in terms of an so is it? Can I get a policy that says, me doing this really specific job, if, if if I’m a hand surgeon, and I become if I have an accident or something happens, and I can no longer operate on hands, I’m not going to be able to make as much money versus Well, I’m still able to potentially teach or do some other type of work to earn money. How does that work? Yeah, that’s an excellent question. And I always tell people read the fine print, because everything is in the policy, but we trust someone else who’s selling the policy to us. And there is quite an interesting definition. And the disability policy is called own occupation. Some sometimes if that definition is there, it means that if something bad happens to in that occupation, so you’re, you’re a hand surgeon, you’re an Uber driver, and you cannot anymore drive or you cannot operate because you have carpal tunnel syndrome, and you cannot use your hands anymore, then the policy will pay you the benefit, up to the benefit period. So for the benefit period is two years or five years. That means if you’re out of your own occupation for that period of time, you still get paid for it. Even though you might be a podcast host and making millions of dollars, then that doesn’t prevent the insurance company from paying you. So it’s very important that you read the definition and make sure there’s the own occupation definition there, rather than not there, because then they would probably deny you the claim if you go back to work.

Unknown Speaker 17:56
So walk me through the user experience, I come to the website.

Unknown Speaker 18:03
Yes, so the user experience is very straightforward. You come to the website, you can have a quick code. So you put probably few fields like your age, where you live, and then what’s the benefit amount you want, we give you a price. And if that price is something that you think is reasonable within your budget, or you need help with, you still can ask for help check with our licensed sales support. And then if you’re convinced you can start the enrollment process and with enrollment process, there’s around five to 10 minutes of questions. We’ll collect your medical information, your personal information, your lifestyle information, and then we’ll present you with a final price. That final price would would be

Unknown Speaker 18:50
the last thing you would pay because we’ve already done the underwriting process. And then you put your credit card details, you do some E signatures, and your policy should be in your inbox within minutes. Simple, straight and quick. Nice. A lot it

Unknown Speaker 19:08
is the medical underwriting.

Unknown Speaker 19:10
So most of our products online, we do not require medical information, but in certain instances in the case is complicated. And they’ve answered specific

Unknown Speaker 19:24
questions that they have pre existing conditions we might or our underwriters might request those but this is on need basis only. Got it. That sounds pretty easy. I like it.

Unknown Speaker 19:36
Marty, thank you so much for coming on. Where can people learn more about it? Give us the website?

Unknown Speaker 19:42
Yes, absolutely. So we are on LinkedIn on Instagram On Facebook. Our website is www dot astea dot world. It’s a s t e Y a dot world and you can reach us on our support

Unknown Speaker 20:00
desk you can reach us on LinkedIn we are almost always there during working time. Excellent if you enjoyed as much as I did show how to your appreciation and share today’s show with a friend who also appreciates good ideas go to a stay at DOT world a s t e ya dot world and main hopefully we’ve made a case for the reasons why if you don’t currently have income insurance or even if you have a policy why taking another look at it makes sense. Thanks again, Heidi.

Unknown Speaker 20:34
Thank you, Josh. Have a great day. And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai

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