- Using multipliers,
you can earn up to more than double what the market does.
In this episode
I am going to show you how some IUL owners
earned 153% tax free in one year using multipliers.
Get ready.
This is gonna blow you away.
You wouldn't believe how many financial advisors
do not understand how to use a multiplier on an IUL policy.
Not only to earn maybe 60% returns in one year
but to be able to earn 153%
like many people did in the year 2021.
Get ready.
(upbeat music)
So I'm Doug Andrew.
I've been a Financial Strategist
and a Retirement Planning Specialist now
for more than 48 years.
And I'm gonna show you why my favorite financial instrument
that allows people to prepare
for long-term goals like retirement is a Max Funded IUL.
What I call a Laser Fund
if it's structured correctly and funded properly.
So I'm gonna give you a few basics.
And if this is going to fast for you
I would recommend you search on this channel
for other episodes.
I have over 730 educational videos.
And as I go through this,
if you can think of somebody who could benefit,
be sure and share.
Click like, post a comment, but stay with me to the end.
I want to gift you a copy of my most recent
300 page best selling book called "The Laser Fund."
So as a financial strategist,
people usually come to me wanting to accumulate money safely
at the most tax advantaged method
that they possibly can rather than thinking deferring
until they retire in a traditional IRA or 401k is gonna work
They begin to realize
they're not gonna meet a lower tax bracket when they retire.
Sometimes I have to show them that.
So my favorite vehicle is a Max-Funded IUL.
It's the brainchild of E.F Hutton
cleared back in 1980 and back then interest rates were high.
And on my universal life policies from 1980 to 1990
I never earned less than 11 or three quarters percent.
I could earn 11 and net 10.
And the 1% was not tax
that was the cost of the insurance
that the IRS had had to be there
in order for it to be tax free.
But in the nineties,
the late nineties interest rates started coming down.
And so they came up with Idex Universal Life.
And from that point forward
I was able to earn average returns of 9.62%,
some years as high as 25% and even 61%
and 153% in the year 2021.
Now you can search episodes on this channel to see these.
So and if it sounds too good to be true,
it actually is true.
So folks, when EF Hutton came up with this idea,
they realized that in the Internal Revenue Code,
for decades back in 1980,
under section 72 of the Internal Revenue Code
your money accumulates tax free
inside of a life insurance policy.
And back then there was only whole life and term.
And the rates of return were pretty pathetic
only two and a half or three, three and a half percent.
So I would tell people to buy term
and invest the difference.
And I think you can earn nine to 12%, pay the tax
and you'll outperform that.
Well, EF Hutton said,
"What if we started to accredit people
what the general account portfolio yield is
with these insurance companies on their investments?'
AAA, AA, bonds, mortgages and skyscrapers
and shopping malls and some stocks and so forth.
Well, it was 11 to 15% and so it's tax free.
So this is why they realized under this section of the code,
if you are earning interest in an insurance policy
it's tax free, it's a sacred sort of tax free cash cow
in the Internal Revenue Code
because you're taking pressure off of the government
to provide for your retirement if you live.
But if you die,
the government doesn't have to take care
of widows and orphans
if you have an insurance policy.
So 7702 is a section of the code that says
if you withdraw the money the smart way,
if you access money, the smart way,
your income will be tax free, including all the gain.
And when you ultimately do die
anything left in there will blossom,
increase in value and transfer income tax free.
But Hutton was using it as a living benefit primarily
as they death benefit on a secondary basis.
Okay?
And so they introduced that.
And then in 1982,
under the Tax Equity Fiscal Responsibility Act,
it spells the acronym TEFRA
and they didn't quite know what they were doing,
off times the IRS doesn't understand or Congress doesn't.
And so they changed it two years later
under the Deficit Reduction Act DEFRA.
TEFRA and DEFRA simply explained the minimum amount
of life insurance that had to be a attached
to the insurance contract, so to speak
so that it would not violate these tax free
sections of the code
because if you violated TEFRA and DEFRA,
then it would move over to a taxable section of the code,
like an investment.
These are tax free.
And so you had to have a commensurate amount
of insurance coming along for the ride.
But at age 60, if a 60 year old had $500,000
they wanted to optimize to use as a living benefit
and they wanted to put in 500,000
and I had many clients that did back then,
they could withdraw 50,000 a year, 10% a year
and it was tax free.
Now you could buy a ton of life insurance for 500,000.
That's not the objective.
You wanted the least amount of insurance.
The IRS would let you get away with
and put in the most money the IRS allows.
So let's say it was 500,000.
There's nothing magic about that number.
But I had many, many clients who put in 500,000
and immediately started pulling out 50 grand a year tax free
without depleting principle.
It was incredible.
And when TEFRA and DEFRA were passed,
the minimum death benefit,
let's say if you were 60 was two and a half times that.
So you had to have a million, 250,000 of life insurance
in order to be able to sock away 500,000
and have it grow at a net return of 10
if you are earning 11 and have it be tax free okay?
Well, there was a massive exodus of money leaving
the banks and the brokerage firms into these
'cause they're safer.
They pay higher interest
they're tax free and they blossom when you die.
There's not a bank around that does that with your money.
And so the banks and credit unions wanted to slow the flow.
They couldn't compete.
But they didn't wanna kill these
because this is where they put a lot of your money
that you deposit in the bank.
Did you know that?
They pay you a measly 1% right now
as to the recording of this episode
and they turn around and put it into insurance companies,
earning five.
They make 50,000 on every million
they put in insurance companies.
They only have to pay 10,000 to you
to use OPM other people's money.
And so you can bypass the middleman.
So TEFRA and DEFRA said you had to have a certain amount
of insurance, but they gave parody.
The older you were, the less you had to have a required
because you could be 80 years old and earn 11 and 10
just like a 22 year old athletic marathon running female.
So it gave parody
it doesn't matter how old you were.
And if you structured it correctly
the insurance got cheaper as you got older.
If you've never seen an insurance policy
that gets cheaper as you get older,
you haven't seen one of these.
TAMRA said, oh, you have to slow the flow.
So TEFRA and DEFRA have to do
with the amount of insurance that has to be attached.
TAMRA has to do with how fast you can fund it
after June 21st, 1988.
I compare this metaphorically to a bucket.
So let's say an IUL policy is like a bucket.
You're designing this to accommodate
the amount of money you wanna put in there.
And I've been using 500,000
but let's say you're a male aged 60
and you wanna put in a hundred thousand.
Now, you can't put in more than that in the first 11 years
under TEFRA and DEFRA, which are these tax citations.
But you put in a hundred thousand,
over four years and one day.
You could put in 20,000, the first day of the first year,
first day of the second year, another 20.
And after four years and one day
you can put in the last 20,000.
So what ends up happening is
you're filling up your insurance policy
to comply with TAMRA.
This helps the banks not see all the money
leave them all at once to go into these.
And so they were trying to slow the flow.
But they didn't want to kill this
because this is where they put a lot of their money.
The minimum death benefit again for a 60 year old
is about two and a half times that.
As you put this money in, this qualifies as part of that.
So pretty soon if this a hundred thousand doubles
like mine has every seven and a half years
on the average earning 9.6, when that doubles to 200,000
the only amount of insurance they're charging me for
is the remaining 50,000.
When 200,000 doubles to 400,000,
now it pushes this ahead
and the insurance is costing less than 120th
what it did when I started.
This gets cheaper as you get older.
But it's actually this spigot,
which is the cost of the insurance
is watering a nice little money tree at the end of the day,
that when you die
it's gonna blossom and transfer tax free.
So that is how Max Funded IUL works.
Now, in 1997, Indexed Universal Life was introduced
because interest rates came down.
This is where, let's say you have a million dollars
of cash value.
It doesn't matter if you have a hundred thousand,
10 million, you can extrapolate from this.
But if I have a million of cash value
at a given point in time, the general account portfolio rate
with interest rates being low, the last decade or so,
let's say is four or 5%.
If they're earning on their general account portfolio,
this is on mortgages on skyscrapers
and shopping malls or on triple A and double A bonds.
If they're earning 5%,
they need about one of those percent each point's for them.
They're in business to make a profit.
But they'll pay you the net of four, that's 40,000.
You can settle for that if you want.
But if you feel bullish about America,
like, well I think the economy's gonna be higher,
grow more than 4%,
you can relinquish the interest on your million
but your million is still safe in the insurance company
earning four.
You're just saying,
you can take the interest on my million
and buy options in an index that I choose that you offer.
Most of these insurance companies offer
like the S&P or the Dow Jones or the Russell 2000
you can diversify,
but that funds an options budget.
They buy upside options in the S&P.
And then if the S&P goes at 8%,
the options allow them to pay you 80,000.
If it's 12%, they pay 120,000.
Maybe up to a cap, okay?
But you won't lose if you guess wrong
and the economy crashes and it drops down 30%.
You still have your million
you didn't lose one dime of your principle.
That's the beauty of indexing.
You benefit when the market goes up.
But if the market crashes
you don't lose the money you started with that year
you only relinquish the interest on your money that year.
Okay.
So what does this mean?
People say, well, Doug,
I don't like all my eggs in one basket.
I'm going, oh, you wanna diversify right?
Why do you wanna diversify into inferior investments?
Well what do you mean?
Well, where are you gonna diversify?
Well, I'm gonna put some money in the bank.
Why?
This is where the bank is putting your money
some of your money okay.
Well I want to earn,
a safe return over at the Credit Union
at 1% inflations at 15, you're going backwards.
Here's how smart people diversify in superior investments.
So this is where people can diversify
between three different index accounts.
This is a statement.
You can't see this, I'm gonna read it.
This year they divided up $6,100
and they got 9% on a portion.
$6,300 got 12%.
Another $6,100 got seven and a quarter.
And this 18,000 got credited 60.33%.
They actually diversified in four different indices.
You can do that.
That is superior diversification
by diversifying between different indices.
But let me show you how many times people
they start out with 872,000, this client in 2020
March of 2020, when the market dropped 30%
and my son said, "Hey, link to a note cap
one year, point to point."
And they got 61.33% on 872,000.
What was that?
535,000 tax free.
They ended up one year later
with not just 8 72, but a million, 387.
And if the market were to crash the next year
they would not lose one dime
of the half a million they made the year before
that's called lock in and reset.
So when you use multipliers, this is gonna blow you away.
If you let them take the interest on that million,
remember that was 4%.
That's 40,000 to fund an options budget,
that means if you guess wrong and the market drops
you didn't make anything, but you didn't lose anything.
You still have your million.
But if you're pretty sure the market will likely head up,
you can use a multiplier with some companies.
So this is what the company will do.
They'll say, well, if you want,
you can for a seven and a half percent fee.
Seven and a half percent and a million is how much?
75,000.
What they're gonna do with that
is they're gonna take 75,000 out of the million
and fund a bigger options budget on top of the 4%.
If you do that, you're capping your loss.
So if the market lost 30 or 40%,
the most you're gonna lose is seven and a half percent
on your million.
But if the market goes up,
the insurance company has more to pay you.
And so they'll pay you 2.7 times
that's called a multiplier,
whatever the S&P did, or the indexes that you chose.
So let's say you earn 10%.
They're gonna pay you 2.7 times that are 27%.
They're gonna subtract seven and a half from that
and you earn 19 and a half percent that year.
Does that make sense?
That's pretty good.
Well, based upon what I just showed you,
our clients who linked and multiplied
instead of getting a half a million, okay.
Instead of getting 61%
they got 2.7 times that, subtract seven and a half.
They got credited 153% return in one year tax free.
Now, what if you don't wanna risk
seven and a half percent of your principle?
You can say, well,
I'm willing to risk 5%.
50,000 on my million.
They'll pay you 2.14 and they'll subtract 5%.
These are called multipliers.
I can probably tell
you've got this deer in the headlight look right now.
And you have no idea how powerful this is
but if you don't learn it, you're gonna be lifting the dust.
So here's what I want you to do.
Claim a free copy of my most recent bestselling book
to learn about this.
It's called "The Laser Fund."
It is how to diversify
and create the foundation for a tax free retirement,
using my favorite vehicle
a Max Funded IUL structured correctly and funded properly.
Therefore it qualifies as a Laser Fund liquid asset
safely earning returns.
In here, there are actually two books.
This one is 14 chapters, about 200 pages
with all the charts and graphs and explanations
if you're are a left brain thinker.
If you're a right brain thinker,
then you flip it over and you read this side a hundred pages
12 chapters with 62 actual client stories.
If you wanna use both the right and left brain, okay
your whole brain, read both.
But claim your free copy.
You simply go to laserfund.com,
L-E-S-E-Rfund.com.
Click on the link below.
You contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost.
And I'll pay for the book.
I'll fire out a hard copy to you.
If you would like a digital version
or you'd like to listen and learn or watch and learn,
there's even an 18 hour master class
that goes way deeper than the book
that my two sons who co-authored the book with me,
we teach for 18 hours.
While you're in there, check out the options
to learn from our virtual webinars and seminars online,
Retire by Design,
because this is about your brighter future
and not outliving your money
so that you can seize the opportunities
to earn 10% tax free.
But some years as high as 61%, maybe 153%
like many people did in the year 2021
that owned Laser Funds.
(upbeat music)