When structured correctly and funded properly and managed efficiently, an IUL policy can earn average
returns between seven to ten percent. In this episode, I'm going to address the question.
Why do some IUL policies earn far better returns than others? Get ready, I'm going to give you
insights into some opportunities that maybe you didn't know existed before.
So, my name's Doug Andrew, I'm an author a speaker, i've been a financial strategist now for more
than 48 years. As a certified speaking professional and this is from the national speakers association
and I realize that I have spoken to audiences of anywhere from 40 to 20,000
now for more than 90,000 hours in my life and generally, people come to my educational events
to understand how to optimize their financial assets and minimize taxes prepare for long-term
goals like a comfortable retirement so they won't outlive their money. But my approach is unique.
I focus on three dimensions and hence this channel is called three-dimensional wealth.
In this episode, what I want to address is a question that has been asked thousands of times because
if people have heard especially financial advisors which I also
train about different kinds of universal life and index universal life people will say, "Well, how come
some IUL policies actually earn better returns than others do?". Well, it's actually pretty simple
but unfortunately, I would say the vast majority of insurance policies even universal life policies
would not qualify to be deemed what I call a laser fund. That's a copy of a book I'm going to give you
at the end of this episode. A laser fund is a properly structured and maximum funded indexed
universal life that is also managed efficiently to perform at the best rate of return. Hear a few
stories where people went to their nephew or their brother-in-law and set up an IUL policy
and they didn't know what they were doing and it way underperformed. How sad is that? So, there's
a lot of reasons why an IUL policy may not perform very well especially if it's designed
by somebody who does not know what they're doing. What is so sad is sometimes at our events or on
my radio show. I have a national radio show for 13 running years now and I will say things like well
another seven and a half years and most people have doubled their cash values inside of their
indexed universal life policies because maybe they've been averaging 9.6% which is the average.
Which means your money will double every seven and a half years. So, people who had a half a million
it doubled to a million in the previous seven and a half years but there are people who had a
half a million in their universal life policies and they call me up or they come up and say,
"Doug, I put a half a million in or I had a half a million in there and now I only have 250,000.
What do you mean it should have doubled to a million? Where's my other 750,000 on this policy and I go,
"Well, I didn't set it up. Let me take a look at it", it takes me about 30 seconds. I open it up I go,
"Who designed this?", "Well, I heard about this and i read one of your books but I went to my nephew
because he has an insurance license or I went to my brother-in-law", and I go, "Oh dear, that was an
expensive relationship. They had no clue what they were doing under TEFRA and DEFRA tax citations.
I'm sure they were happy to accommodate you but they had no clue how to design this. They had
way more insurance than what was necessary to accommodate the amount of money you wanted to
set aside to optimize your rate of return. That was an expensive mistake." It's hard for me to correct
that but I can start them off from that day forward but I can't make up for the mistake their
brother-in-law or their nephew made. So, you have to structure it correctly and fund it properly. Now, of
course, you can choose the wrong company. There's probably over 200 insurance companies that offer
universal life for indexed universal life. I would not put a dime in 95 of them because I know
certain companies design their products better so that it's for your benefit and not for
their benefit to build up their company coffers or whatever, okay/ And so, you want to choose the
right company there's usually only about a half a dozen companies that I would put my money into
and then with those companies, you want to choose the right product. Because some companies might
have two, three, four, five, six, different universal life products or indexed universal life. I would
make sure you choose the right one and usually there's only one or two that perform the best
based upon your objectives whether it's short term or long-term. So, yeah, you got to choose the
right company there's only about a half a dozen I would choose and you got to choose the right
product. Right now there's only three or four that I would put my serious cash into. But again,
sometimes people come and they find out the company or the two or three companies
that I put my money in or that I would recommend and then they find out the actual products
and then they go to their brother-in-law or their nephew and say, "Can you set this up?", but they
do it wrong. So, I would say the number one reason why it does not earn the ultimate best efficient
rate of return is because the advisor was not proficient. So, if this is intriguing you
I'm going to explain what you need to make sure they understand so that it doesn't cost you
unnecessary rates of return. But before doing so, if this is intriguing you and you can think of
somebody who needs to watch this episode. Be sure and share this video, post a comment, click like.
But subscribe to this three-dimensional wealth channel and when you do click that little bell so
you'll be notified every time I post a new episode which I do almost on a daily basis. It's free when
you subscribe. But stay with me to the end because I want to gift you a copy of my most recent
best-selling book the laser fund. Don't pay $20 retail I'll gift you a copy. So, let's talk about
uh what happens if an agent even though they have a license does not know what they're doing they're
not proficient? In fact, from 2003 to 2007 I actually had about 3,000 licensed agents and it
included some CPAs and tax attorneys came through a three-day intensive workshop. They paid 6,000
bucks in tuition to come and learn. I heard from my publisher at the time Time Warner that over 50,000
advisors. Were buying my books in bulk by the case and they were passing them out like loose cannons
and they were selling a bunch of life insurance but they were not structuring them correctly. They
would lose cannons. Even among the 3,000 I trained those that didn't use it they lose it.
And so, in 2008 when the market dropped 40 percent for the second time in a decade people
who had money in universal life policies funded correctly okay and designed right they didn't lose
a dime in 2008. They may not have made very much but they didn't lose they're like go... and then
the first 90 days of 2009 they locked in gains of 16% after not losing a penny. Most Americans
they lost money took four years until 2012 to make back what they lost. Many of our clients
using property structured indexed universal life had ended up with double their money by 2012..
Well, what's the difference? See, if you don't use it you lose it and so I created a proficiency exam.
It's not an easy example it's a hundred questions multiple choice and true and false but there's
also 30 essay questions. Would you believe that over 70 percent of licensed insurance
agents wouldn't even score 30 percent on that exam? They would royally flunk that exam. You
get some of the advisors that are on TV and CNBC and all of those they wouldn't even understand 70%
of the questions. But it amazes me if you do not understand it you'll structure it wrong.
When you structure it with the least amount of insurance you can get away with under TEFRA and
DEFRA tax citations and you put in the most the IRS allows under the TAMRA tax citation it turns
into a tax-free cash cow earning the best internal rate of return possible as soon as you are able.
Meaning that as you get the maximum funded amount in and if you were earning you know 9.6% let's
say. As your money doubles every seven and a half years and you get it in there the rate of return
the cost of insurance will get cheaper as you get older. If you don't understand that search episodes
on this channel that explain how universal life actually gets cheaper as you get older
if it's structured properly and so your rate of return gets better. So, I often say on a universal
life policy you know, if you were to average at 9.6 you should net 8.6 over the life of the policy.
If you earn 11 you'll net 10 like I have. Some years if you earn 25 you'll net 24 and like this year
that I'm recording this episode 2021 we had many clients lock in gains of 61.33 percent. That means
they're netting 60%. Well, folks, that means the cost of the insurance is only draining out one
percentage point and so you're getting the best net internal rate of return. But if it's not
designed correctly you could be earning 11 and only netting six or seven because the cost of
insurance was greater than it needed to be if you structured it correctly and so you want the best
rate of return. I want an internal rate of return within one percent of the gross rate of return as
soon as possible. You do that by doing two things. You fund it as fast as you are able in compliance
with the TAMRA tax citation. Usually, it takes three years and one day or four years in one day
to get it maximum funded and then it will start performing better and better and then you want to
tweak it. You make sure you have the least amount of insurance and you have the insurance qualify as
part of the death benefit and as you get older the insurance becomes cheaper to where in 15 years
many of our clients the amount of insurance that they're being charged for is maybe one
tenth of what it was when they started. By the 20th year it might be 120th of what it was originally.
Meaning that now if you're earning 11% in that year you're netting 10.9. But over the entire life of a
universal life policy you want it structured so that you'll usually earn within about one
percentage point of the gross rate of return. If it earns eight you'll net seven. If it earns 11 you'll
net 10 and that's why some perform better than others do which makes a big difference
in the long haul. So, before I show you how to get your free copy of the laser fund, I mentioned
efficient management. See, the IUL agents that I oversee and train, they learn how to meet with
their clients at least annually to take advantage of certain opportunities like in the year 2021.
See, because of the Covid 19 pandemic the market dropped about 30 percent in March of 2020. That's
when many of our IUL agents told their clients to link to an index with no cap okay one year
point to point and in one year many of them locked in gains of 61.33 percent. We had a client with 850,000
in March of 2020 without adding a dime that grew to a million 380,000 a year later in March
of 2021. That also means that if the market crashed they would not lose one dime with that million
380,000 the next year. They may not earn anything but they won't lose what they made.
That is what I mean by efficient management. You want to manage or rebalance
To learn more about this, I want to gift you a copy of this book the laser fund. This has been
flying off of our warehouse shelves. Don't miss out claim your free copy it's 300 pages. It retails
for 20 bucks but if you go to laserfund.com lasaerfund.com or click on the link below.
You contribute a nominal amount towards the shipping and handling have some skin in the
game. I will cover the rest of that cost and I will pay for the book. I'll fire out a hard copy to you
it's 300 pages two books in one this one and this one, right brain left brain. But here's
the deal, when you're in there there's options there to also listen and learn,
watch and learn. Check out the RBD, retire by design event which we teach live about once a month or
virtually and if you subscribe to the channel this is usually free for you. So, make sure you seize
that opportunity if you want to go into a deep dive and take ownership of your brighter future.