Have you ever been presented
a whole life insurance policy
and think,
this looks horrible,
why would I put money here?
You don't move forward
but then a year goes by
maybe it's 3 or 4 years
maybe it's 10 years
then you see it presented
in a different fashion
and you think,
why was I not shown this before?
I would have moved forward
if someone would have shown me
these types of options.
It happens quite a bit
in the industry.
You know,
a number of years ago
an individual called our office
and it was when our office was very small
we had a number
of part-time assistants
and 1 agent
that to this day
I still can't believe
that she just decided to work with us
because we didn't really have a company
it was me
saying yeah it's great
come on in.
And her nickname today
is Number One
because she's one of the
top agents here.
But she begins working
with this individual
and I helped her out
because she was learning
at the time as well.
But an individual
called our office
and he had looked at
whole life insurance before
about 4 years ago
and he didn't move forward with it.
Now what had intrigued him
what had sparked his interest
around a high cash value
life insurance policy
was the idea of the banking concept.
He spoke with a number of agents
he was really interested
in putting his money into
a cash value life insurance policy
because he saw that
it would continue to compound
and he would not have
to rely on banks anymore.
Instead of going to a bank
for financing and lending
he could borrow from his policy
which he heavily invests in property,
business.
He's got a lot going on
him and his wife are very successful
with what they do
on their career paths
but they also have a lot
going on on the side
so they love the idea
of putting money in this
cash value life insurance
safe, liquid, tax-free
but they were presented it
and said I'm not doing this.
They're looking at $100,000 going in
and they see next to nothing
in cash value in the beginning.
Then they see an option that has
60% cash value
relative to what they paid
and he's still like,
there's too much
of a lost opportunity cost here.
How I grow my business
is by taking capital I have here
I should say how I grow my net worth
is by taking capital I have
and putting that into my business
into my real estate deals
that's how I constantly grow it.
So now
I'm being pitched on this concept
which I love
but to take this huge
hit on my money
like I can't do it
it's not going to work.
So the concept sounded great
but the numbers looked awful.
4 years later
he stumbles across some of our content
when we weren't even marketing
I had some webinars out there
that I started doing
and we put him on Youtube
and he saw one of them
with rich cash values
taking loans
repaying them
how it worked
all that fun stuff
and he calls up the office.
And he said okay,
just to get to the point
I like these options
I can do everything
that I wanted to do before
how come I wasn't shown this before?
He just straight-up asks,
is the commission?
Like, what's going on?
Yeah, it was.
And we just went into details
as far as how compensation works
and full transparency.
We've got plenty of videos
on commission
on our channel.
But what he saw
was more money upfront
and also long-term.
So he wanted to practice
the banking concept
but why he did not move forward
is there wasn't enough cash value
based on his goals
and what he wanted to accomplish.
So,
what he was originally presented
we're going to look at what he saw
and what he did not move forward with
and then what he did see and said
okay, this works for me
here's what I want to do.
So,
on the left
we see a 40/60 split
what that means
is he's got $100,000 going into the policy
of which the premium
is $40,000.
Premium dollars
with a traditional product like this
do not show up in cash value
in the 1st and 2nd year.
Here's why I mention this
$100,000 goes into a policy
here's cash value
that he has access to
$64,000 right off the bat.
Is that a good place to put money?
If I have a real estate deal
that I want to put
$100,000 down
or $80,000 down
if I put it here first
I don't have the money
because $40,000
was directed toward my
insurance premium
which generated a commission
and primarily purchased me
a death benefit.
I have a negative $35,000
almost $36,000 hit.
It doesn't make sense.
The 2nd year
pays in the same $100,000
the funding
is up until age 60 in this example
total of $200,000
he's got $132,000 in
his cash value
grew from $64,000
to $132,000.
That means of the $100,000 he paid in
$32,000 did not show up in cash value
he got about $68,000 back
of that $100,000 payment
in the 2nd year.
That's 2 years
if you tally those numbers up
you're getting close to $70,000 lost
now you've got
an opportunity cost issue.
I wanna touch on something here
every entrepreneur
and business owner
that does very, very well
that I've spoken with
values the opportunity cost
more than anything else.
They like whole life insurance
designed for high cash value
as a means to position their money
that they can access
whenever they want
for opportunities
great alternative
to a bank account in that respect.
What they do not like
and why the successful
entrepreneurs I've met
do not move forward with it
the objections
is this.
They're like, I'm not taking that hit upfront.
There's a couple
that I really, really like
they do about
$85,000,000 per year in revenue
and I remember talking to the couple
the wife said something
she made me laugh when she said it
she goes yeah
we were presented on this before
but we're looking at the values
it didn't make sense.
Fortunately my husband can do math
and he looked at it
and said there's no way
and he said it's the opportunity cost
I don't care what it looks like long term
it's a great alternative
to my bank account
but it has to make sense.
Same thing happened here
that's what occurs all the time
when we look at the value.
In this case,
it takes him 8 years
just to recapture his payments
that's a long time
and then we see it grow over time
but still,
that's what he was presented
he didn't move forward with it.
However,
down the road
here's an alternative we see.
What do we see here?
Same $100,000 going in
this is the same company
same product
same individual
$100,000 in
almost 88% right off the bat
a world of difference.
Now you still have
a negative hit in the 1st year
the premium in this example
is $10,000
so by reducing the premium
you do reduce the compensation
you allow more money
to go towards cash value
which is in the consumer's best interest
because that's what they want
if you're not interested in
a high cash value life insurance policy
it's a different story.
But what do we see?
Time passes
breaking even
year 5
here's your cash value growth
year over year
you get more back
than what you pay in year 3.
What happened in year 3
in the last example?
You get less back
than what you pay in.
So upfront
is when you're going to see
the biggest hit
with a high base premium
compared to a low base premium.
Now as time passes
let's see what happens
he wanted to fund for 20 years.
What do we notice at year 20?
Cash value
with the 40/60 $2,918,000
cash value with a 10/90
$2,978,000.
This
I'm going to circle this in purple
because it is purple
is the cash value difference.
10/90 has about $60,000 more
by year 20
more from start to finish.
Now I want to touch on a point
that can be a bit technical
in black is our cash value growth.
What this means
is year 20
the cash value the net growth
not counting what you paid in
grew by $130,000 in the 40/60
and $120,000 in the 10/90.
Now we've seen
and some people
have brought this up to us that
a 40/60 makes more sense
because you're growing
at a faster rate by year 20
and I heard that
I'm like that
doesn't make more sense
that's one of the
more foolish things I've ever heard
we hear that it's more efficient over time.
While I don't care
if I've got a stronger finishing
kick in the race,
I run track and field
that's why I use that example,
I can have a fast finishing kick
but if someone else
already crossed the finish line
I've gotten more money.
At the end of the day
I've got more from start to finish
which gives me more buying power
more capital
a greater death benefit
and as time passes
a 10/90 just continues to outpace
we've got a greater monetary value
you can tell from the purple column.
And on the 40/60
if you want to make another payment
of $100,000
it would MEC [Modified Endowment Contract].
One thing I neglected to mention
the 40/60 does not have a term Rider
whereas the 10/90 does
a nice big 1-year term Rider
that performs fantastic overtime
guaranteed and non-guaranteed.
So my point here,
this individual
was very, very attracted
to the idea of the concept
however,
he values his money.
Like the cash value
he's looking at it and says
this is what I want to do
I want to make sure
I have the value
maximized from start to finish
and do what banks,
corporations,
the wealthy,
everything I hear about them doing
here's how to do it
minimize expenses
maximize cash value.
So,
I hope you enjoyed this one.
If you have any questions
please feel free to reach out anytime.
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Thanks again.
Hey guys Steve Parisi here.
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