- IUL, what it is.
In this educational episode,
I'm going to address how to determine if IUL,
index universal life, is for you or appropriate for you.
Get ready.
It's probably much greater than what you think.
(bright upbeat music)
So I'm Doug Andrew.
I've been a financial strategist
and a retirement planning specialist now
for nearly five decades,
helping many thousands of people prepare
for a comfortable retirement
so they will not outlive their money.
There's three big dangers that cause most people
to outlive their money:
taxes, inflation, and market volatility.
Now, I eliminate those dangers for clients
and I do that best by using max funded
indexed universal life.
Now, what is max funded IUL?
You can check out a lot
of other educational videos on this channel,
but you're taking the least amount of insurance
that the IRS will let you get away with
under two tax citations called TEFRA and DEFRA
that were passed in 1982 and 1984.
And then, you're putting in the most money the IRS allows,
as fast as they allow,
under the TAMRA tax citation of 1988.
So in a nutshell,
you're able to accumulate your money tax-free
under Section 72(e) of the Internal Revenue Code,
and then you can access money
even before the age of 59 and a half
without triggering any income tax under Section 7702.
And at the end of the day, when you die,
anything left in there blossoms,
increases in value and transfers income tax-free
under Section 101(a) of the Internal Revenue Code.
Now, you have to structure these correctly
and fund them properly
so that you can earn rates of return.
Like, I have realized,
since 1997 I've averaged 11.17% gross
and netted, cash-on-cash, 10.07.
Meaning, I earn 11, I net 10.
That means if I put in 500 grand,
I could pull out 50,000 a year of tax-free income
without depleting my 500,000.
If I have a million dollar nest egg,
it'll generate a hundred thousand a year of cash flow
without depleting the nest egg.
If I have 10 million, which we have some clients,
it'll generate a million a year of tax-free income.
That's what I'm talking about.
A 10% payout without depleting the principle
even in volatile markets,
because indexed universal life,
your money is not invested in the market.
It's not invested in an index mutual fund,
like a lot of advisors think.
It is using a strategy.
Your money is safe in an insurance company
and they're earning a general account portfolio rate.
And so, if you're conservative,
IUL may be right for you because your money
is not at risk in the market.
I'm gonna simplify this.
If you had, let's say a million,
or for every million that you accumulate in an IUL policy,
let's just isolate that million bucks.
Any year that you feel bearish about America,
you think we're headed for recession,
you can just settle for the general account portfolio rate
which might be, you know, 4% or 5%.
So, you could just settle for 40,000 or 50,000 of interest
and that's tax-free.
But any year you feel bullish about America,
you think that the economy is gonna go up,
you're not telling the insurance company
to invest your million of cash value in the market.
That would be like variable life insurance.
No, no, no, no.
I've never owned a variable contract.
I never will.
I don't want my money at risk.
If you're conservative, IUL may be right for you
'cause your million must stay safe in the insurance company
earning let's say, four or five, okay?
What you're doing is you're relinquishing
the interest on your million.
You're saying you don't have to keep my 4% interest
on my million this year,
so that at the end of the year I have now 1,040,000.
I'm willing to give up the interest.
And that will give you the wherewithal, the 40,000 bucks,
the interest on my million, to buy upside options
in the index or indices that I choose.
So, I can choose one, two, three, five indices
or I could choose just one index like the S&P 500,
and I could do a one year point-to-point
and a two year point-to-point
and a five year point-to-point.
I can diversify like crazy, okay?
In just the S&P, let's say.
But see, what happens is if the S&P goes up,
the insurance company is contractually obligated
to pay me whatever the S&P increase is.
If it goes up eight, they have to pay me eight.
80,000 on my million.
If it goes up 12, they have to pay me 120,000.
If it goes up 16, they have to pay me 160,000
which I earned many, many times from 2000 to 2010.
Twice, I earned a 16%, I capped out.
Now, if caps are a little bit lower,
the trade-off is if the market crashes,
if it drops 20, 30, 40%,
you will not lose one dime of the million
that you have in your policy
'cause that's not at risk in the market.
You give up the interest on your million,
those options that they purchased will expire worthless,
but you don't lose.
Well, if you do that,
most decades there are seven up years
to every three down years on a 10-year period.
Even the worst decade, 2000 to 2010
since the Great Depression,
there were five up years versus five down years.
You would've doubled your money.
A million in IUL would've been worth 2 million
because your average return would've been 7.23%
during that 10-year period.
That's just not even diversifying or rebalancing.
Most of our clients rebalanced.
They moved back over to the general account portfolio rate
at 5% in 2003 and 2004 instead of earning zero,
and they did that again in 2008.
So they only earned zero two of the 10 years.
The other years, three of them they earned five,
and the other five years they earned the index rate.
Two of those was 16.
So they actually earned over 11%
in that worst decade, netting 10.
A million was earning an incredible rate of return,
earning between 7.2 to over 10% net.
Most people in America, they lost money.
Still, it took until 2012
before their million dollars came back up to breakeven
'cause they lost 40% twice during that decade.
So, if you want to understand if IUL is right for you,
IUL is not for the financial jellyfish.
If you sock away money in mutual funds,
which are long-term investments,
and you use it like a drive up window at a bank,
like a put and take account,
IUL is not for you.
IUL is a long-term strategy.
Meaning, it's for financial goals five years
or longer down the road.
And if you are disciplined,
then you sock away 500 a month
or a thousand a month and you're very disciplined.
Not that you can't stop if you had an emergency
or a disability or you got sick or something,
but if most of the time you're fairly disciplined
and you don't walk through an RV boat show
and the first boat you look at,
you cancel your insurance and go buy the boat,
which is a hole in the water you pour money into.
You're buying a depreciating asset off times.
If you can discipline and still save money
and then enjoy your toys,
that's the type of individual
that an IUL policy is very good for,
because you sock away 500 bucks a month,
10,000 a year, 50,000 a year.
In IRAs and 401(k)s, you're limited
to how much you can set aside each year into those.
With IUL, you can structure it to accommodate
as much money as you wanna sock away.
We have people that sock away 30,000, 50,000
a hundred thousand, a million bucks a year.
You can't do that into an IRA, 401(k), or a Roth.
So, this has way more flexibility.
You're not obligated to put in two or 300,000 a year
even though you could.
You could put in 30, you can make up the rest
anytime you want.
You can't do that with a Roth.
So, this is way better than traditional IRAs
or 401(k)s or Roths because of the flexibility,
the ability to put in small amounts, large amounts,
stop, restart, and access money
before the age of 59 and a half.
There are so many advantages.
If you like flexibility and you're disciplined
and you want to be able to accumulate access
and transfer your money totally income tax-free,
you should check out IUL.
But let me caution you.
It should be structured correctly and funded properly.
So, here's how you can make sure that is accomplished.
First of all, I would strongly recommend
you study this book.
This is my 11th book.
It's been flying off of our warehouse shelves.
It's 300-pages, jam packed with information.
200 pages are on this side of the book.
This is 14 chapters with all the charts and graphs
and explanations for the left brain learner.
If you learn more by stories and examples,
you flip it over to this side and read this.
This is about a hundred pages, 12 chapters
with 62 actual client stories.
If you want to use both your right brain and left brain,
then read both of these.
But here's how you can claim a free copy
because, yeah you can go to Amazon and pay 20 bucks,
and if you do thank you.
But I'll gift you a copy.
You simply go to LASERfund.com, L-A-S-E-Rfund.com,
or click on the link below
and you contribute a nominal amount
towards the shipping and handling
and I'll cover the rest of that cost
and I'll pay for the book.
I'll fire out the hard copy to you.
But when you're in there,
if you like to listen and learn or watch and learn,
but there's also educational webinars
we teach on a regular basis.
They're at no charge.
But you can also schedule an appointment
with an IUL specialist that can create
some illustrations correctly
on how an IUL policy can benefit you
in your particular set of circumstances.
Because if you go to just anybody,
chances are they will not know how to do it correctly.
And so, this is not about me,
this is about you and your brighter future.
So claim your copy at the LASERfund,
schedule a time to talk to somebody
who knows what they're doing,
and you'll see if IUL is right for you.
(upbeat music)