- This is why Universal Life Insurance is my favorite.
In this educational episode,
I'm going to address why IUL knocks the socks
off of other investment alternatives
that you might consider
to accumulate money for long-term goals
such as retirement or college funding
for your kids and grandkids,
a working capital for business,
real estate management, emergency funds.
You'll see why it's the dream solution.
(upbeat music)
So I'm Doug Andrew,
I've been a financial strategist
and retirement planning specialist now
for nearly five decades
helping thousands of people optimize assets,
minimize taxes
and empower what I call their authentic wealth.
My favorite financial instrument bar none
is a max funded indexed universal life insurance contract.
Primarily because on this channel
I have many educational videos
that talk about how when it's structured correctly
and funded properly,
it really does knock the socks off
of a lot of other alternative investments
such as for retirement planning,
IRAs, 401k, S403b, 457s,
pension profit sharing plans.
I can outperform 95% of those
by using a max funded IUL
because I have actually averaged since 1997,
11.17% rates of return,
netting cash on cash over 10%, 10.07 to be exact.
I'm earning 11 and netting 10.
Now people say, well
I've never seen an insurance policy do that.
Well then you, that tells me immediately
you have not seen one structured correctly.
Now, Universal Life was first introduced back in 1980.
It was the brain child of EF Hutton.
They were not primarily an insurance company
they were a brokerage firm
and they realized that even if you could earn 12%
with your money in the market
in a tax-deferred IRA or 401k,
at the end of the day you're not netting 12
in a 33% tax bracket.
You earn 12, you're only netting 8.
If you subtract 1% in fees
from asset management fees of usually 1%,
you have to earn 12 to net 7 after taxes and fees.
EF Hutton said, huh
why don't we just put money into insurance companies,
they're the best money managers in the world.
They manage trillions, okay?
It is the backbone of America
and the backbone of the world.
They're the multi-trillion dollar legal
reserve insurance industry.
This is where banks and credit unions put 30 to 40%
of their tier one assets for liquidity and safety.
And all EF Hutton said was, well
why don't we put the money over there
and let's use the living benefits of life insurance,
the tax-free accumulation and tax-free access
more than the death benefits.
So basically,
instead of trying to get X amount of life insurance coverage
for the least amount of premium,
they flipped that scenario
where you're taking the least amount of insurance
that the IRS will let you get away with
and you're putting in the most premium or money
that the IRS allows
and this turns into a tax-free cash cow
when it's done correctly and funded properly.
Back in 1980, I had clients put in $500,000
and they were able to earn an average of 11 to 15%
but let's just say 11 for a whole decade
from 1980 to 1990.
But they were earning 11 and netting 10
cuz only one percentage point
paid for the cost of the insurance
that the IRS said had to be there
in order for it to be tax-free
because the amount of insurance required
was only about twice as much as the amount of money
they were putting in
and if they were putting in 500,000 bucks
they only needed a million dollars of insurance.
Now you could buy way more life insurance than a million
with 500 grand, that was not the objective.
The objective was to have the best internal rate of return
on 500,000
so that you could earn 11 in net 10, okay.
And so if you were taking out tax-free income
I had clients put in 500,000
and they were pulling out 50,000 a year of tax-free income
without depleting that 500,000 for years.
If they didn't need the income immediately
then earning 10% your money doubles every 7.2 years.
In fact, ever since 1980 until today
I have averaged 9.62%,
rounding that down to 9.6
your money doubles every seven and a half years.
And this is why people who put in a lump sum of 500,000
and they didn't take out any of the income tax-free
it grew tax-free
and it doubled every seven and a half years,
meaning 500,000, doubled to a million
and a million, doubled to 2 million
and 2 million double to 4 million
and 4 million doubled to 8 million in 30 years.
Now some of these people now have 8 million bucks tax-free
and it can generate 600,000 to 800,000 a year
of tax-free income.
Now show me anything else
in the internal revenue code that does that.
And so that's why I say this knocks the socks off
of alternatives because you would have to be earning 12%
to net 7 or 8 in the market
and you would have to again
go buy your life insurance or whatever.
I can earn 11 in net 10 by using a max funded IUL
and the insurance comes along for the ride.
It's not free, but it doesn't cost me anything.
It's 1% that would be otherwise going out the window
in unnecessary tax if I followed the herd
and put my money into traditional IRAs or 401ks
trying to earn 12% to net 7 or 8.
Is this making sense?
And so this is why I absolutely love
max funded indexed universal life
because indexing came out in 1997
in response to the low interest environment in the nineties
because I never got credited less
than 11 and three quarters percent
on my universal life from 1980 to 1990.
But then interest rates started to come down
and they introduced variable universal life.
Well, that means your money is out at risk in the market,
and if you had your money in the S&P 500,
you know index mutual fund,
you would've lost 40% twice
in the decade from 2000 to 2010.
Using indexing, your money is not invested in the S&P 500,
you're linking your returns to the S&P index in this example
if that's what the insurance company offered,
which most do who offer IUL.
And so if you had a million bucks
that's earning the general account portfolio rate
in that decade of 2000, 2010,
most insurance companies general account portfolio rates
were around 6%.
They need one of those percentage points for their profit,
they're in business to make money
but they were paying out a net of 5% or 50,000
on a million dollars of cash value.
Well, you can settle for just 5% if you want
but if you feel bullish about America,
you relinquish the for sure 5%,
your millions stay safe in the insurance company
but the insurance company then can use
the 5% interest on your million, $50,000
to buy upside options and an index that you choose
or indices if you wanna diversify.
That gives them the wherewithal to pay you 8%, 12%, 16%
which I got credited 16% twice
in the decade from 2000 to 2010.
But during the five years that the market went down,
I didn't lose.
In fact, I didn't earn just zero all five of those years,
I simply moved back over and earned the 5%.
I only earned zero two years.
The other three years of those downturn to the market
I earned the 5% general account portfolio rate.
But the other five years
I earned whatever the index did and it only capped out twice
but I averaged over 11%, netting 10%
during the worst decades since the Great Depression.
So this is why it is absolutely
one of my favorite financial vehicles.
If you compare that to most IRAs, 401ks
invested in the market,
those are gonna be taxed sooner or later
whether you go with a traditional IRA or 401K or a Roth.
This knocks the socks off
of a traditional IRA or 401k or a Roth.
A Roth only has two benefits.
A max funded IUL has those two benefits
and four additional benefits that Roths will never have.
And if you don't understand, well what are those?
Check out this channel and I answer those questions
why this is better than a Roth.
So suffice it to say
this has been by far the dream solution
for many long-term goals such as retirement,
college funding, working capital for business,
real estate management, emergency funds,
maximizing a pension if you're a retired schoolteacher,
police officer, firefighter,
estate planning, lump sums, my heavens
you show me anything else
that accumulates money tax-free,
allows you to access that money tax-free
and you don't have to wait
till you're 59 and a half to do it, okay
and then when you ultimately die
anything you leave behind blossoms.
What does that mean? It increases in value.
If I died in an accident tomorrow,
every million in my IUL policies
would double to about 2 million instantly
and transfer tax-free to my heirs.
Nothing else does that.
And people always say, well how much does that cost?
Well, nothing's free, but it doesn't cost me anything.
It's being paid for with that 1%,
that minuscule portion of money
that would otherwise go out the window in unnecessary tax.
So why not, okay?
And so if this is intriguing you enough
that you want to study more about it
cuz you're gonna be left out if you don't empower yourself
you empower yourself with education.
So this is why I've been very passionate
about educating people on this YouTube channel.
But if you like to read and learn
in addition to watching and learning,
I would love to gift you a copy
of my most recent bestselling book called The Laser Fund.
This will teach you how to diversify
and create the foundation for a tax-free retirement,
and it's actually two books in one.
This side is about 200 pages, 14 chapters
with all kinds of charts and graphs and explanations
if you're a left brain learner.
If you're a right brain learner
you learn more by stories and examples,
you flip over and read this one,
which is about a hundred pages,
12 chapters with 62 actual client's stories.
If you wanna use both your right brain and left brain
then read both these books, okay.
But you can buy this on Amazon for 20 bucks
but I'll gift you a copy free.
Claim your free copy by going to laserfund.com
or simply click on the link below.
You contribute a nominal amount
towards the shipping and handling,
I'll cover the rest of that cost and I'll pay for the book.
I'll fire out a hard copy to you.
There's options in there
if you like to listen and learn or watch and learn
for the audio and video version of the book.
There's even an 18 hour masterclass on video.
You can also check out some of our educational webinars
that we do on a regular basis.
They're free.
You can even schedule an appointment with an IUL specialist
that I oversee and mentor
to see how a properly structured laser fund
can be designed for you correctly.
So this is not about me.
This is about you and your brighter future.
Reach out, educate yourself,
and you will soon realize
why this is one of my favorite financial vehicles, bar none.
(upbeat music)