- We don't object to insurance benefits,
we object to paying for them.
In this educational episode,
I'm going to address how to redirect otherwise payable taxes
to pay for your life insurance.
Now, a lot of times people hear me say that
and they go, "Oh, come on."
No, you don't fill out a form that you submit to the IRS
to get your taxes to be sent over to pay for life insurance.
No, this is an indirect way
that for years I've redirected
otherwise payable taxes to causes I support
including insuring myself.
So get ready.
You're going to be blown away.
(bright music)
So my name's Dougie Andrew.
I've been a financial strategist,
a tax minimization specialist now for more than 48 years,
helping thousands of Americans optimize their assets
and minimize taxes.
And one of my favorite financial vehicles
to accomplish this goal is a max-funded
indexed universal life insurance contract
structured correctly and funded properly.
And if it is done properly,
it qualifies to be called a laser fund.
Now, laser is an acronym that I've used for years
that stands for liquid assets safely earning returns.
This is where I have successfully earned
average rates of return of 9.62% for the last 42 years.
Since it was introduced in 1980,
there are some 10 and 20 year periods
I've earned 11 netting 10, cash on cash.
And there are some one year periods where
I have been credited 16%, 25%, even 61.33%
as of March of 2020 to March of 2021
because of the COVID 19 pandemic.
There are opportunities there
where you can lock in huge gains.
The beauty of indexed universal life is you do not lose
due to market downturns.
Now there's other video episodes that explain that
but I want to address in this episode
how a max-funded indexed universal life can be structured
so that the life insurance that the IRS says has to be there
or else it will not be tax-free,
can actually be viewed as being money
that you would otherwise shell out
in unnecessary income tax, okay?
So let me quickly review with you
how a max funded indexed universal life works.
If you wanted to reposition assets,
and many times, you know, clients would come to me
and maybe they would have $200,000 of money
sort of trapped in IRAs and 401Ks yet to be taxed,
and they realized that was invested in the market
and they wanted to get out the the market
because they were gonna be retiring.
So they wanted to get rid of that danger market,
downturns market volatility.
And they realized that today's tax rates
were gonna be lower than the future
because taxes are likely gonna be higher.
And they also realized that where they had their money
was not going to keep up with or exceed inflation.
So they usually would come to my educational events
in order to eliminate the dangers of taxes inflation
and market volatility,
and the best instrument to do that
is a max funded indexed universal life
because they're tax-free.
I've always outperformed the rate of inflation
during any period of time,
and I do not lose when the market goes down
'cause my money is not invested or at risk in the market.
I get to participate when the market goes up,
but I do not lose when the market goes down.
Now, if this is new to you,
you need to search on this channel for various episodes
that explains indexing.
But people come to me
'cause they want to optimize their assets
by increasing liquidity, the safety,
safety of their money, safety of their principal,
and increase their rate of return.
And they prefer tax-free.
So many times I'll do a strategic rollout
from maybe that money out of IRAs or 401Ks.
And so people would come
and maybe have 200,000 of IRAs or 401Ks
that we would want to reposition using a strategic rollout,
get the taxes over and done with
and put the net into a max funded indexed universal life,
a laser fund.
They might have $200,000 coming out of a rental home
that they sold.
They were sick and tired of being a landlord,
taking out the trash, evicting tenants and fixing toilets,
and they didn't wanna do that anymore.
And so they wanted a place to put in 200,000
that came from the sell of that property.
Maybe they had a hundred thousand dollars sitting in a bank
or credit union and they realized, "Golly,
I'm growing up stream at the rate of one mile an hour,
1% interest in a bank.
The current of inflation's coming down
at 3, 4, 5 times that,
I'm going backwards with money in a bank or credit union."
So if we add up the 200,000 of IRA and 401ks,
200,000 of equity
coming from the sell of their rental property,
maybe another 100,000,
that equals $500,000 that they want to optimize
to increase the liquidity, safety and rate of return.
"Mr. Andrew," they would ask, "what do you recommend?"
And I would show them all kinds of alternatives
but the one that they always chose when they saw the results
was the max-funded indexed universal life
'cause it knocked the socks off
of all the other alternatives
for accumulating the money tax-free
at nice average rates of return between seven to 10%
or higher.
And they were not subject to the market volatility anymore.
And it stayed ahead of inflation historically and on and on.
And so this would require me to structure
an indexed universal life policy
that would accommodate $500,000.
And if they were 60 years old,
you'll learn on my educational videos,
the IRS requires they have to have about double that
in the amount of life insurance.
Now you can buy way more life insurance
than a million dollars for 500,000.
That's not the objective.
You're wanting that 500,000 to grow
at a great internal rate of return where you can average,
let's say, if you averaged 11,
you can net 10 like I have for many 20 year periods.
So you want the cost of the insurance
to only use about one of those percentage points
over the life of that insurance contract, 20 years,
25, 30 years retracted back to day one, okay.
So if you're 60 years old and you wanna put in 500,000,
the minimum amount of insurance is a million.
As you put in your 500,000,
that qualifies as part of the death benefit.
The insurance company is only gonna charge you
for the net amount at risk.
When that 500,000 is in the policy,
they're only charging you for the remaining 500,000
because they're just gonna pay out a million when you die.
That's all you want because you want that 500,000
to generate tax-free income.
In fact,
I've had many clients who have generated 50,000 a year
of tax-free income out of that 500,000.
If you let it sit and grow, 500,000 would maybe double
in about seven and a half years at 9.6% to a million.
Now the cash value equals the death benefit.
And so now the death benefit has to stay ahead
by about 5 percentage points if you happen to die,
but you've basically become self-insured.
Now when I show this to people,
and I would illustrate it,
I would show them, "Here is the alternative that will last
until you're 120 years old.
If you wanted to generate 50,000 a year of tax-free income,
this one lasts until you're 120 over here,
these others, your IRAs of 401ks or these mutual funds
and so forth because they're only tax deferred,
you're gonna have to pay tax.
They're all gonna run outta money at age,
you know, 76, age 82, age 84.
This will last till you're 120, which one do you want?"
And they would say, "Oh, hello,
this one that lasts until I'm 120, what is it?"
And I'd say, "Well, that's a life insurance policy."
"Oh, we don't need any life insurance."
I'd go, "Well, yeah, but which one performs the best?"
"Well, that one, but we don't need any insurance."
"This is net."
"Well, what's the cost of that insurance?"
I'm going, "This is net.
That's the wrong question.
It's not a matter of what does it cost you?
What is it making you?
It's making you far more than the others?"
"Well, we don't need any insurance."
I said, "Okay, then make me the beneficiary.
Choose the one that is the best.
The one that generates the most
for the longest period of time."
And it took them a long time to get their brain around that
that was the net after the cost of the insurance.
And so sometimes I'd say, "Okay."
now we don't object to insurance benefits.
We object to paying for them.
I've never had a widow or a widower
turn down an insurance check.
I've never had, you know, a husband pass away
and I walk in with a half million
or a million dollar insurance death benefit
and had a widow say, "Oh no, no, that's okay."
No, they never turn it down.
We don't object to the insurance benefits.
I mean, if your employer came to you and said,
"Hey we've had a banner year this last year.
We have some additional benefits we're now offering.
We are going to provide some free life insurance
here this next year.
How much would you like?"
Most people go, "Free? As much as I can get."
See, we don't object to the benefit,
we object to paying for it.
So when I would illustrate these
and they would see that if they earned 10%,
they would net nine.
If they earned eight, they would net seven tax-free.
If they earned 11, they'd net 10,
if they earn 16, they'd net 15.
I'd say that's 1%.
That 1% you can think it's a cost, but hello,
if you earned 11 like I have and you net at 10,
that 1% which is the cost of the insurance
that the IRA says has to be there is really not a cost,
it's a benefit because when I die, it's gonna blossom.
But if I were comparing that to IRAS or 401Ks
in the market where most Americans have their IRAs or 401ks,
and if I was earning, let's say 12%,
you know, there are a lot of advisors like Dave Ramsey
that say, "Hang in there you'll average 12%."
Okay. Let's assume you do.
If you earn 12% in a tax deferred IRA or 401k
and you had a million dollar nest egg,
and if you were really earning 12
and you pulled out 120,000 a year,
you're gonna have to pay tax usually of a third of that,
40,000 in tax, you're only netting eight, 8%, 80,000,
and then another 1% in fees,
you're only netting seven, 70,000, what would you rather do?
Try to earn 12% in a volatile stock market
to net 70,000 to buy gas and groceries
or would you rather more conservatively
in an indexed universal life earn 11 and net 10
because then on a million dollar nest egg,
you can have a hundred thousand a year of tax-free income
instead of 70,000 a year of net after tax and fee income
out of an IRA or 401K mutual fund portfolio.
Does that make sense?
It's a no brainer.
The fact of the matter is many people who have their money
in IRAs or 401Ks invested in the market
are only earning about three and a half percent
according to Dalbar.
That's pretty pathetic.
That's why there's a 4% rule
in the financial services industry.
The broker dealers only want you to pull out 4%.
Out of a million dollar nest egg,
they only want you to pull out 40,000 a year.
In a 25% bracket, you're only netting 3% or 30,000 a year.
I can earn 10 and net nine.
How much more is 9% on a million?
That's 90 grand instead of 30,000 after tax
out of a 4% payout on IRAs and 401Ks.
That's three times as much income.
90,000 is 300% more than 30,000.
The difference in that money,
if I'm earning 10, netting nine,
that 1% is money that would've gone out the window
in unnecessary tax if I followed the herd
and put my money into traditional IRAs or 401Ks.
So that's why I say, you know what,
For years, I've let uncle Sam pay for my life insurance.
Now indirectly,
the money that pays for the insurance is not a cost,
it's a benefit,
but that is a minuscule amount of money interest
that would otherwise have gone out the window
in unnecessary tax if I followed the herd
and put money into tax deferred investments
like IRAS and 401Ks.
Is that making sense?
So this is the most powerful concept.
This is how to redirect otherwise payable taxes
to causes you support
including your life insurance protection.
We don't object to the benefit, we object to paying for it.
Let otherwise payable tax cover you for your life insurance.
If this is intriguing you,
I wanna gift you a copy of this book
called "The Laser Fund."
It's 300 pages jam-packed with information like this.
You can pay 20 bucks for it on Amazon.
And if you do, thank you, but I will gift you a copy.
So you claim your free copy of this 300 page book
by going to laser fund, L-A-S-E-R fund.com
or click on the link below,
you contribute a nominal amount towards the shipping
and handling, I'll cover the rest of that cost.
I'll pay for the book.
I'll fire out a hard copy to you.
It's actually two books in one.
This side are all the charts and graphs and explanations,
200 pages.
If you learn more by stories and examples,
you're a right brain learner, you flip it over.
This is about a hundred pages,
12 chapters with 62 actual client stories.
If you wanna use your whole brain, you can read both, okay.
But when you're in there claiming your free copy
of that book 'cause I'll fire it out to you immediately,
check out, you can listen and learn,
you can watch and learn,
and there's even regular online webinars that we teach.
And you can even schedule a time to talk
to an IUL specialist to see how a laser fund
could be designed for you so that you can redirect
otherwise payable taxes to causes you support
including your life insurance protection.
(bright music)