Only one financial vehicle allows you to accumulate access and transfer your money tax-free
and when you transfer it, it blossoms, it increases in value. I'll explain that next. Because I'm going
to answer the question, why is a max funded IUL tax-free during accumulation, distribution, and
transfer? This is going to blow you away. By the end of this video, you will understand how a max funded
IUL allows accumulation, access, and transfer, totally income tax-free and how it blossoms.
So, I'm Doug Andrew, I've been a financial strategist. I actually began in 1974. So, my story
begins clear back in 1974 I'm an old geezer. I mean, you know, I might have an Apple watch today but
my first watch was a sundial. I'm that old. So, what happened in 1974? Actually, I was going to
go through law school to become an attorney and as a means to that end, I got my series one securities
license and they don't offer those anymore. But it allowed me to sell any stock, bond, mutual fund,
or whatever and I got my insurance license. And to work my way through college, I was going out
helping people optimize their assets by purchasing insurance and investing money. It was like buy term
invest the difference but it was sort of forced where they could put money into this instrument
it was called the investor and one-third would go towards insurance to protect them in case
they had a premature death. Because you want to be responsible and accountable if you die
and you leave behind a spouse and children that we're going to rely on your financial wherewithal
to continue to grow and be able to take care of themselves, okay. So, responsible people would insure
themselves with life insurance. But rather than use permanent insurance whole life at the time
it wasn't usually a very good rate of return so we would invest the difference in a mutual fund
or mutual funds of their choice and so I went out and by 1980, I was responsible for over 3,000
clients in 13 western states and then what happened? Huge epiphany and we credit this to
EF Hutton. EF Hutton wasn't an insurance company they were a brokerage firm and they realized that
having their clients put money in the stock market the stock market oft times I describe as a person
with a yo-yo. Hopefully, walking up some stairs and what I mean by that is that the market goes
up and down and up and down, that's the yo-yo. But walking upstairs means you hope that the market
will be worth more the stocks or whatever down the road. The S&P, the Dow Jones, the Russell 2000,
these are measurements of how the market's doing. Are going to be higher down the road when you
are going to use the money the most in retirement or whatever, okay. There are periods of time like
the great recession the year 2000 to 2012. That person with a yo-yo was walking across a flat
surface so to speak. Meaning, the Dow Jones, the S&P, the Russell 2000, we're basically back to where they
were in the year 2000 in 2012. In the meantime, it went down twice 40% and so people
that started out with a million bucks in the year 2000 barely had their million dollars
back in 2012 and that was pretty pathetic. People using indexed universal life actually ended up
doubling or tripling their money. A million was worth two or three million at the end of 2012
and so that is really what happened in 1980. EF Hutton said, "Why don't we use
the multi-trillion dollar insurance industry the backbone of America", they manage trillions. In fact,
some companies manage as much money as the IRS collects in taxes in an entire year. They're huge.
This is where governments go to sometimes for help and so Hutton said, "Why don't we put our
money there and we may not get as big of returns when the market's going crazy at 20% maybe but not
lose when the market goes down because your money is not in the market. You're getting the interest
credited from the insurance company. Now, that was universal life and from 1980 to 1990 I never
earned less than 11 and three-quarters percent. I earned as high as fifteen and a half percent.
Well, what happened in 1997, this was when indexed universal light came out. Because
interest rates started to come down and in order to help people benefit when the market was
doing well but not lose when the market went down is to not put your money in the market
that's like variable life. You want to still keep it out of the market but allow the insurance
company to pay you whatever the market is doing if it makes money but not lose when the market goes
down and it's actually pretty simple, it's called indexing. On a million-dollar nest egg, if you in an
insurance company let's say. I don't care if it's 10,000 or 100,000 you're saying
you know what you're earning on that money that's called their general account portfolio
five percent. Now, they need one of those percentage points for them, okay, they're
in business to make a profit. So, let's say it's in at a four percent, you're just saying you can
pay me four percent if you just want to play it safe or you can go, "You know what, don't risk my
million but take the four percent on my million that you're earning this year 40,000 and
you can finance an options budget", which simply means the insurance company buys upside options
in the S&P, the Dow Jones, whatever index you choose that they offer. Then those options double, triple,
in value and they can pay you 8%, 12% or whatever based upon their options budget.
Now, if the market loses you don't lose your million, your millions not in the market.
Only the interest on your million basically was tied to an option and so this is absolutely
incredible, that's called indexing. So, the point I want to make is we can accumulate our money
totally tax-free inside of one of these max funded universal life insurance policies and
I would recommend index universal life. Because I've earned a 9.62% average ever since the emergence
of index universal life in 1997. But some years my heavens our clients have earned 61 percent like in
2021 and some people even credited 153% tax-free. But if the next year the market crashes
they don't lose a dime of what they made the year before. The three sections of the code that
I'm talking about that EF Hutton realized in the current code are sections 101(a) 72(e) and 7702.
In a nutshell, these basically mean this. Money inside of a life insurance contract accumulates
tax-free under section 72(e). All the interest and dividends you do not have to pay tax on it, okay.
7702 says, If you want to access money out while you're alive you can do that totally
income tax-free if you adhere to 7702 and then when you ultimately die anything left in there.
If you have you know 500,000 left in there it would blossom maybe to a million, I'm 70.
If I got killed in an accident tomorrow every million I might have in index universal
life would blossom to two and a half million and transfer income-tax-free that's section 101a. So,
people go, "Wow". Yeah, nothing else competes with this that I'm aware of in the internal revenue code.
When this came out in 1980 EF Hutton was going gangbusters and the IRS came in and said, "What are
you doing?", and they said, "We're not doing anything wrong", and they went to court EF Hutton won. But
then the IRS went to congress and said, "We've got to change the definition of tax-free accumulation
access and transferability inside of a life insurance policy under these three sections of
the code we think you're overstepping your bounds". And so, in a nutshell, in 1982 under the tax equity
fiscal responsibility act it spells the acronym TEFRA. They didn't know what they were doing
and so they had to redefine it again two years later in 1984 under the deficit reduction act.
Basically, TEFRA and DEFRA is what it's called dictates the minimum amount of life insurance
that you must have on your insurance contract in order for it to adhere to being tax-free
under the definition of tax-free insurance. If you do not do that, if you try to put in a million
dollars into a dinky little ten thousand dollar life insurance policy then the IRS will say that's
an investment and you have to pay tax on it one way or another over here in a different section
of the code. And so, you want to stay under this tax-free definition here and so that means that
however old you are and your health you have to have a certain amount of insurance but TEFRA
DEFRA actually gave parity meaning equality. So, it doesn't matter if you're a 22-year-old athletic
marathon running female or a 60-year-old or 78 year old friend of our family when he came to us.
He had adult-onset diabetes a prostate cancer episode, three blocked arteries, and he
had six sisters predecessive and three brothers but he was actually able to pass the insurance
exams but he was able to get an insurance policy and his rate of return was the same as the
22-year-old athletic marathon running female. The amount of insurance required for him because
he was older and unhealthy was way less than the 20-year-old had to have under TEFRA and DEFRA.
What it means is if you're going to use a max funded insurance contract
more for living benefits you can squeeze down the death benefit. If the 23-year old earns 11
they net 10 and the 78-year-old with one foot in the grave so to speak can earn 11 and that 10.
You wouldn't believe how many financial advisors don't understand what I just said. Now, before I explain
TAMRA, I just want to encourage you. If you can think of somebody who ought to
watch this or you want to post a comment, be sure and do that click like. But I want you to
subscribe, it's free. Just 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. But I want you to stay to the end
because I want to gift you a 300 page $20 book for free, okay. TAMRA happened in 1988. That stands for
the technical and miscellaneous revenue act of 1988 and there was this massive exodus of
money leaving the banks the brokerage firms and the credit union's going over to these because
they were safer. They paid higher interest. It was tax-free and they blossomed when you died
when they were transferred to your heirs. Nothing else did that. But see, the banks of the brokerage
firms they didn't want to kill these because this is where they put about 30 to 40 percent of their
tier one assets for liquidity and safety. A lot of people don't know that and you put your money
in a bank and a bank turns around and puts some of your money right into an insurance company earning
you know or five and they only pay you one. They're making five times what they're paying you.
So, TAMRA basically said, "You got to slow the flow." So, these have to do with the minimum amount of
insurance and TAMRA has to do is how fast you can fund it. So, after June 21st of 1988 what happened
if I compare this metaphorically to a bucket. The bucket is the IUL, the insurance policy.
This represents the amount of money you can put in. TEFRA and DEFRA and TAMRA come into play
where if I'm a 60-year-old male for example and I want to put in $500,000 into this policy
during my lifetime the minimum amount of insurance is a million 250 approximately okay, about two and
a half times that. Now, I can buy way more insurance than that for 500,000 that's not the objective. You
want the least amount of insurance so that the spicket on the bucket which is the cost of the
insurance the IRS says has to be there or it's not going to be tax-free under that protected
part of the code is actually watering a money tree that's going to blossom this to this or increase
the payout. But see, what happens is you don't have to put in 500 it would behoove you to.
Back in 1980, you could throw that in one fell swoop. But after 1988 they said, "No, you the
most you can put in is about a fifth", this is for somebody over age 50. And so, you put in a hundred
thousand and then another hundred on the first day of the second year. But it takes you four years
and one day to get in the 500,000 if you wanted to get it in as fast as you can,
Then you've complied with TAMRA. If you threw in all the money in one fell swoop it only grows tax
deferred and then when you start taking money out while you're alive it's now taxable. People want
tax-free so they comply with TAMRA. So, this is the way that you accumulate access and transfer your
money tax-free because whatever's in here will blossom. If you put in the first hundred thousand
and you happen to die they're gonna pay out a million two-fifty. But this five hundred thousand
based upon actual history will double to a million in seven and a half years and then
a million will double to two million in another seven and a half years. So, in 15 years this is now
worth two million and the death benefit was only a million two-fifty. The actual cost of the insurance
it's 120th what it was 15 years earlier. The cost of insurance gets cheaper as you get older.
Now, if that doesn't blow you away you need to search this channel to find out how can I have an
insurance policy that gets cheaper as I get older? If you haven't seen one you have not understood
how to structure it correctly and a lot of financial advisors, unfortunately, don't know
how to do this. When you start taking money out you want to make sure that it's tax-free
and there's only three types of income Americans pay income tax on in America.
Earned income, passive income, and portfolio income, ever since 1986 tax reform. So, when people have a
million dollar nest egg and they're earning you know nine point six percent. They can pull
out ninety-six thousand dollars a year that's eight grand a month is totally tax-free and
it's not deemed earned passive or portfolio income. The IRS knows they're receiving it
but it's tax-free, it is that cut and dried. So, if you want to learn more let me show you how you
can claim your free copy. So, free copy of what? My most recent best-selling book. This is book number
11 called The Laser Fund. Laser is an acronym that stands for liquid assets safely earning returns.
What is a laser fund? It is a properly structured maximum funded indexed universal life policy.
I would say that 99% of IUL policies would not be able to be called a laser fund because they're
not structured correctly or funded properly. So, I want to gift you this book it's actually two
books in one. This side is 200 pages all the charts and graphs and explanations for the
left-brain thinker. You flip it over to this side and this is for the right brain thinker
100 pages 12 chapters with 62 chicken soup for the financial soul stories, okay. If you want to
use your whole brain you can read both. But 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
and I'll cover the rest of that and pay for the book and I'll fire it out to you. But there's also
options there to watch and learn, listen and learn. There's even an 18-hour master class. But we teach
educational webinars on a regular basis. So, here is to your brighter future. Claim your free copy now.