- IUL is like a powerful generator.
In this episode, I'm going to explain
how IUL generates more money than traditional accounts
like IRAs and 401ks invested in the market.
(gentle music)
I'm Doug Andrew.
I've been a financial strategist
and retirement planning specialist now
for nearly five decades.
I started in 1974
and back then I had a series one securities license.
Now, they don't even offer that anymore.
A series one is like a series six, series seven,
series 24, 63, all combined in one.
Back in 1974,
I could sell any stock, bond, mutual fund or whatever.
And so from 1974 until 1980, by the end of 1980
I was responsible for more than 3,000 clients
in 13 Western states.
And I was basically a big buy term insurance
and invest the difference proponent
and I was investing their money in a portfolio
of mutual funds, Pioneer Fund, Templeton Fund
trying to get an average of, you know, 12%.
Now, in actuality, DALBAR says in any 20 year period,
people, if they buy and hold,
they'll probably average 9.14%.
We were trying to time the market.
Now, in actuality, most retirees,
they panic when the market goes down 20 or 30%.
And so they sell low and then they wait, wait, wait
'til the market comes back up again
and then they buy high.
So the average retiree with money
in the market is only averaging
about 3 1/2% according to DALBAR.
That's pretty sad because Wall Street was not designed
to create predictable income, okay?
So I've helped many, many people learn how to participate
when the market goes up.
Back in 1980 with those 3,000 clients
we were trying so hard to average 12%
until all of a sudden we had a wake up call.
Now, my brother-in-law was a manager
of an EF Hutton brokerage firm
and EF Hutton is often credited with being the brainchild
behind the emergence of Universal Life.
They realized back in 1980, well,
even if we could average 12%, because the stock market
is like a person with a yo-yo
hopefully walking up some stairs,
meaning that the market goes up and down.
But hopefully, you know, after 10 years, the S&P,
the Dow Jones is more than it was 10 years earlier.
Well, sometimes that person with a yo-yo
is walking across the flat surface for 10 years.
Like the year 2000 ending in 2010, the Great Recession.
That person with a yo-yo was walking
across the flat surface, the market went up and then down,
then up and then down.
And so we call it the lost decade.
Well, what we were doing back in the 1970s and in 1980
trying to average 12%, it was like playing red light
green light when you were a kid, okay?
Sometimes you would progress 20%.
Other times you would take 12 steps back,
up and back up and back.
But we were trying to average 12 positive steps.
Well, even if we could do that, Hutton realized
if we could really average 12% by timing the market
when our clients had a nest egg of a million bucks
if they were averaging 12%
and they pulled out 120,000 a year, what they're earning
they're not netting 120,000 in a 33% tax bracket
which most people who have money
between federal and state income tax
they're paying out a third in taxes during retirement.
So they're taking 12 steps forward every year
of retirement, but they're taking four steps back in taxes.
So they're not netting 12, they're netting 8.
They pull out 120,000, they're paying 40,000 in tax
and they're netting 80,000 to buy gas,
groceries, prescription, the golf green fees.
Now, if you subtract another 1%
for the asset management fees, they're only netting seven.
They're taking 12 steps forward, 4 steps back in tax.
Another step back in fees.
EF Hutton said, you know what?
We can create more predictable rates
of return by putting their money directly
into the multi-trillion dollar insurance industry.
It's the backbone of America, the backbone of the world.
They're some of the best money managers in the world.
What are we worried about trying to time the market for?
So by putting money directly into insurance companies
they safely earn rates
of return that are usually, you know, more like 10, 11%
back in 1980 with their general account portfolio.
In fact, back then they were earning between 11 to 15%.
What's their general account portfolio?
Those are AAA, AA bonds.
Those are mortgages on shopping malls and skyscrapers.
Back in 1980, interest rates were high.
I never got credited less than 11 3/4% on my Universal Life
from 1980 to 1990.
Some years I got credited as high as 15 1/2%.
Let's round it down to 11.
I was able to earn 11 and net 10,
meaning that only one percentage point was the actual cost
of the insurance that the IRS had to be there
in order for it it to be tax free.
We had many, many clients
in 1980 and thereafter that put in 500,000.
They were earning 11 and netting 10,
and immediately pulling out
50,000 a year, 10% payouts on 500,000 tax free.
A million generated a hundred thousand a year
of tax free income.
Yep and they continued to do that.
Then in the 1990s, interest rates started to come down
as they came out with indexing, Indexed Universal life.
Your money is not invested in the market
but your return is linked
to whatever the market does because your million,
let's say, in the insurance contract is earning
the general account portfolio rate.
But any year you feel bullish about America
you can tell the insurance company to take the interest
on your million and relinquish that
and they can buy upside options in the S&P 500
or any of the in indices that you choose that they offer
and then they have the wherewithal to pay you
if the market goes up.
They'll pay you 12%, 16%, 25%, maybe up to a cap.
But if the market crashes
you don't lose, the options expire worthless
but you still have your million
so your money's not invested at risk in the market.
My 3,000 clients were never happier
than when I got 'em out of the market back in 1980.
And so using indexing,
they're still able to participate when the market goes up
but not lose when the market goes down.
So this is where I compare IUL to a powerful generator.
So when I talk to people as a financial strategist
and retirement planning specialist,
I have helped clients optimize assets
by using existing assets.
It's sort of like we have a dam here
and we have this reservoir of assets
and a lot of people have a lot of different assets
and it's good for boating and fishing and recreation
but you're able to give new life to an existing asset
which creates power for a whole community below
while you still preserve the asset.
Well, a lot of people didn't realize
that by having life insurance
you could use life insurance, not just
for death benefit as an asset, but as a living benefit.
You gave life insurance a new life by using it
for liquid assets, safely earning returns for retirement.
And so it becomes a powerful generator like turbines
at the base of the dam that creates cash flow
so that every million bucks can generate, you know
a hundred thousand dollars a year
of tax-free income or cash flow because
of this powerful generator that generates income
if you live to be 120.
And so this is very powerful compared
to the financial services industry that only wants you
to pull out 4% a year if your money's
in the market, because most people who have their money
in the market, they panic when the market goes down
and they sell low, and then they wait, wait, wait
'til the market comes up and they buy high.
And so most retirees are only averaging about 3 1/2%,
the financial services industry.
They don't wanna be sued for you outliving your money.
So they tell their advisors to only allow you
to pull out 4% a year, a million dollar nest egg.
They only want you to pull out 40 grand.
That's pretty pathetic.
And that's before tax.
In a 25% bracket, you're only netting 3% or 30,000.
Hello, I'd rather have a powerful turbine
where I can pull out 90 or a 100,000.
How much more is 90,000 than 30,000?
It's 300% more.
That's the difference between a powerful generator versus
you know, a battery, so to speak
that goes dead because you're gonna outlive your money
when inflation is 7, 8, 10%, 15%
and you're only pulling out 3 or 4% net.
You're gonna outlive your money.
So this is why I have felt many, many people generate income
for as long as they live
by using maximum funded Indexed Universal Life.
Now, of times one of the favorite quotes
that I have heard is "It's often the view
from where you sit that makes you fear defeat.
Life is full of many aisles
so why don't you change your seat?"
Sometimes people go, "Well, I've never heard of this before.
I've never seen an insurance policy that does this."
Well, that doesn't mean it doesn't exist.
Just because you haven't maybe seen your brain
doesn't mean it doesn't exist.
Well, a lot of times people are viewing something
from this side of the dam and all they see
is this, you know, it's death benefit.
I want you to change your view over
to this side and see this huge reservoir
of cash that can be used for all kinds of purposes
and you can give it a new life by providing power
for generations so that when you ultimately pass away,
now it blossoms and transfers tax free.
Is this making sense?
So that's why many times I will talk about
the difference between a generator versus a battery.
So folks,
if you wanna learn more how to employ this strategy
I want to gift you a copy
of one of our most recent bestselling books.
It's called "The Laser Fund."
It's a 300 page book and it retails on Amazon for 20 bucks.
And then you pay shipping and handling.
I'll gift you a copy, but let me explain it quickly.
It's 300 pages, but it's two books in one.
This side, the white covered side is about 200 pages
and it contains 14 chapters with all the charts and graphs
and explanations of how a maximum funded IUL policy
if it's structured correctly and funded properly
is deemed what I call a laser fund.
Liquid assets safely earning returns
spells the acronym laser.
Now, if you learn more by stories in examples
you flip it over to this book.
This is about 100 pages, 12 chapters with 62 actual clients,
stories of how a property structured IUL policy
is the dream solution, not just for retirement
but for for college funding, working capital for business,
real estate management, emergency funds,
pension maximization, if you're a school teacher
fire fighter, or police officer, okay?
But if you wanna use your whole brand,
you can read both of these books.
You simply go to laser fund, l a s e r fund.com,
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.
I'll pay for the book, I will fire out a hard copy to you
but while you're in there claiming your free copy
if you like to listen and learn or watch and learn,
check out the audio and video options.
They're there for a nominal fee.
Also, check out the free educational webinars we teach
on a weekly basis.
There's no charge for those.
You can even schedule an appointment
with an IUL specialist to see some illustrations
on how a properly structured IUL policy can benefit you
in your particular set of circumstances.
So you can generate income for as long as you live
instead of running out
by keeping your money in accounts like IRAs and 401ks.
(gentle music)