A zero wash, zero cost loan,
sound too good to be true? It isn't. In this episode, I'm going to teach you reason number
3 out of 5 to borrow money instead of withdraw money out of an IUL policy. By the
end of this episode you will understand what a zero cost or zero wash loan is and how they work.
So, my name is Doug Andrew I've been a financial strategist, retirement planning specialist, for more
than 48 years helping people to be able to prepare for a comfortable retirement and achieve other
long-term goals and it's more than just the money. If you look at this channel three-dimensional
wealth only one dimension has to do with money. But this episode, we'll talk about one of my
favorite financial instruments that allows you to accumulate access and transfer your money totally
income tax-free and you have to simply follow the rules to be able to make sure that all
the income you ever take out if you retire at age 65 and you live to be 120 is totally tax-free. The
IRS will know you're receiving it and they'll know it's not even worth auditing because it's been a
sacred tax-free cash cow in the internal revenue code for over 108 years, okay. So, as we proceed here
get ready because I'm going to gift you a copy of my most recent best-selling book at the end
of this episode. But my favorite vehicle I call the laser fund and the book I'm going to give to you
is called the Laser Fund it's 300 pages and it's been flying off of our warehouse shelves. But laser
is an acronym this stands for liquid assets safely earning returns. What is a laser fund?
It is a properly structured maximum funded indexed universal life insurance policy. People go, "What?
I've never seen an insurance policy that has a very good rate of return", well, then you haven't
seen one done correctly. Because I have earned average rates of return of 9.62% on mine since
1997 and there are some years like 2017, thousand of people who have indexed universal life
were able to earn 25%. In 2021 because of Covid 19 many people earn 61.33% and even 153%
tax-free on their index universal life. Yep, we have one client that started out in the year 2020
March of 2020 when the market dropped 30% that with the indexed universal life he had a balance
in March of 2020 of 800 and let's say $50,000 it was a little bit more than that. But a year later
he had a balance of a million three hundred and eighty-two thousand. He made
over a half a million bucks tax-free in his index universal life policy
and there are naysayers out there that say, "I've never seen one do that".
They don't even know what they're talking about. This is my favorite instrument to be able to not
only accumulate money tax free but when you retire and you don't have to wait till you're you know
older than age 59 and a half to retire. Now, that's why I don't like traditional IRAs and 401ks
because you're going to have to pay tax on them and they're subject to market volatility. Indexing
means you get to participate when the market goes up and you don't lose when the market goes down
and so you want to watch other episodes on this channel to understand indexing. But in this episode,
I'm talking about reason number three why you want to borrow money instead of withdraw money
when you need to access money out of an IUL policy. When you borrow in the second reason
episode I talk about it's a phantom loan, it's not doing payable during your lifetime.
So, let me just make sure you understand that let's say that you have a million dollars accumulated.
It doesn't matter if you have 100,000 or 10 million. But if you have a million dollars accumulated
and if you're able to pull out 10% a year which many of our clients do. they can take
out 100,000 a year without depleting principle because of the indexing and because of
what I'm going to teach you in this five-episode series. A million dollars and at 10% you want to
pull out 100,000 a year and it's tax-free. Now, it's tax-free even if you withdraw it until
you've recovered your basis what you paid in. But after that, if you kept withdrawing your money
you would trigger unnecessary tax, that's dumb. You want to do it the smart way and the IRS actually
says, "If you'll just borrow the equivalent of your interest from the insurance company
you won't have to pay tax", because loan proceeds are not deemed to earn passive or portfolio income.
It's been that way for years. If I have a million dollars in there and it's earning 10 percent and
I borrow 100,000 from the insurance company and they have my million as collateral
and it's earning 10 percent then I'm not withdrawing. So, my million is going to grow to
a hundred a million one hundred thousand at the end of that year and my hundred thousand dollar
loan is subtracted from the million one hundred thousand at the end of the year and my net is
a million which I would have had I pulled it out the dumb win paid tax on that 100,000.
But by borrowing I don't have to pay tax on that income. So far so good? Now the IRS says in order to
have it be a true loan the insurance company has to charge at least a minimum statutory interest
rate. So, that's been about two percent the last several years. So, the insurance company is
charging you two percent interest on the loan. So, you're pulling out 100,000 a year
for retirement income is tax-free because it's a loan proceed and they're charging you two percent
interest on 100,000 the next year's 200,000 plus the interest and three
hundred thousand. But over here your million is growing to a million one million, two million, three
and it's being credited with the same interest rate. The collateral is collateralizing the loan
is the same two percent. That's called a zero washer zero cost loan. So, it doesn't cost you
anything to call it a loan. The IRS knows you're receiving it but they say if you'll do it that way
it's tax-free. So, that's called a zero cost or zero wash loan and they deem it a true
loan because the insurance company is charging you interest on a ledger. That loan is not doing
payable during your lifetime as I explain in reason number two, okay. It's washed away
down the road when you die. But you have this phantom loan balance and it's offset
by this cash value balance and this minus this equals the same amount of money a million if
you're just living off of the interest and it's tax-free and so the magic behind it is you are
simply using what the IRS says in order to have tax-free income because it's not deemed earned
passive or portfolio income. It's that simple. This is not a loophole people sometimes say,
"Oh, when the IRS finds this out they'll close that loophole. They're the ones who basically dictate
the rules", okay this is not a secret. It is to a lot of financial advisors. So, if this is intriguing you
I would recommend first of all subscribe to this channel, it's free. Click on subscribe and click
that little bell because then you'll be notified every time I post a new episode which I do almost
on a daily basis. I don't want you to miss out. This is about you and your brighter future. It's
not about me, I'm 70 and no I don't color my hair but I've made a lot of mistakes in my life. I don't
want you to make the same mistakes. I want you to learn from mine and so that's why I do this and I
have over 730 episodes on this channel as of the recording of this episode to not go to my grave
with all this wisdom still trapped in me and that's why I have this channel. This is about you
it's not about me and so be sure and subscribe and click like or post a comment and share it with
somebody who would benefit. So, let's connect the dots. The IRS does not deem money that is borrowed
as income whether you borrow for a house, you borrow for a car, or you borrow money out of your
insurance policy. Why would the insurance company loan you money? Because they have your money.
A bank would do that. If you had a million dollars in the bank and you said, "Well, I can withdraw a
million or I want to borrow a million and leave my money there", oh, they'll loan you a million because
they have your collateral. But with a bank they only are crediting you one percent and then
they're charging you five percent to loan you money with the insurance company it's almost
the opposite, okay. When you borrow money out of the insurance company they'll loan you the money and
charge you two percent and they'll credit you two percent so it's called a zero wash loan. But I want
you to watch the next reason number 4 out of 5 reasons to see how savvy smart people do it
and they actually ask the insurance company to charge them a little bit higher interest. Because
then they can earn 10, 15, 20, percent and this is called arbitrage. It's going to blow you away. So, by
following irs guidelines all income is tax free and it doesn't have to cost you anything.
The loan is not doing payable during your lifetime. It says zero washer zero cost loan if they charge
you two percent and they credit you two percent in this example. Is this peaking your interest?
You don't know the rest of it. You're seeing the tip of the iceberg. Here's how you can claim a copy
of my book The Laser Fund. So, this has been flying off of our warehouse shelves. We send out 100 to
700 of these a week, don't miss out. You simply go to laserfund.com click on the link below.
You contribute a nominal amount towards the shipping and handling. Have some skin in the game
then you'll appreciate it and read it. I'll cover the rest of that cost and I'll pay for the book.
It retails you know on Amazon for 20 bucks. No, I'll pay for the book. I'll fire out a hard copy
to you. There's options there to listen and learn watch and learn. This is two books in
one. This side is 200 pages 14 chapters with all the charts and graphs for the left brain thinker.
If you're a right-brain learner or thinker you flip it over and read this one. This is a
hundred pages 12 chapters with 62 actual client stories. But if you want to use your whole brain
I would read both of these books, okay. This is about your brighter future and you will learn
how to take money out of an IUL policy the smart way by using loans instead of withdrawing money
and search the other episodes on this channel because I want you to understand all five
reasons why you should borrow instead of withdraw money out of your laser fund.