- Does IUL work?
In this series, we are going to talk about how IUL works.
Is it worth it?
(upbeat ambient music)
I'm Doug Andrew, this is my son, Aaron Andrew,
one of the top IUL specialists in America.
He has 100s of clients who he has helped
with max funded indexed universal life.
If you have watched any of my educational episodes
at which I have over 800 educational videos
on my YouTube channel, 3 Dimensional Wealth,
you will understand
that one of my favorite financial vehicles
for all kinds of goals, like retirement planning
or college funding for your kids or grandkids,
maybe it's real estate management
or business working capital.
I prefer to use a max-funded
indexed universal life insurance contract
if it's structured correctly and funded properly,
which many advisors don't know how to do.
That's why we have a coalition or network
where we train advisors how to do this correctly
and fund it properly.
Aaron knows how to do this.
Okay?.
And this is one of my favorite instruments,
I call it a "LASER fund".
Now LASER is an acronym that stands
for liquid assets safely earning returns.
And so the purpose of this series
is to show you actual illustrations
where many times we have members of the general public
where we are illustrating
this as a repository for serious cash,
as an alternative to maybe IRAs or 401ks,
they're trying to optimize assets
and minimize taxes to do what?
Increase the liquidity, the safety and the rate of return.
So when they begin to initiate an IUL policy,
they are structured, and usually there's an illustration
that is generated
and it is done by the insurance company software
and has to comply
with the National Association of Insurance Commissioners.
Okay.
And many times those illustrations in the past
have been done at interest rates during that in environment
or it was done using certain assumptions.
- Yes.
- So here's what people ask, well, this looks good,
but what really happens in real life?
Okay, I wanna see some illustrations
of 10 years into one of these.
Do you have some examples
of where clients have actually done this?
And especially financial advisors sometimes,
and they're naysayers,
and there have actually been advisors that say,
show me one that has ever even come close to performing
like you illustrated when they first took it out.
So are you ready?
We're about to show you several of these,
and Aaron is gonna show you an example
of one of these that was taken out,
what, about 10 years ago?
- More than that, about 13, 2008.
And what's so awesome about this
is they haven't even maximum funded it yet
and it's already way outperformed what it was supposed to do
if they had put in all the premium.
So put on your seatbelt, you're gonna be blown away.
(swoosh) - All right,
well, let's jump right into this.
So this client of mine is a client that's a chiropractor.
And back in the day, you know, it's been a little while now,
so in 2008, this client came to me
and wanted to use live insurance
for not just the death benefit,
but also to use it for a supplement for retirement income.
So they said, hey, I want to be able to use,
as we teach in these videos, use a live insurance contract
or an index universal life
to have not just the death benefit
but to have money in there that in retirement,
they could take out tax free income via the loans
and be able to have it not show up on their tax return
as many of you know how these policies work that way.
So anyways, when you came to us, we designed a plan,
and in this plan, what we designed
as you can see here on the screen,
we designed a plan to put in a little bit of a lump sum
the first year of $52,000.
And then we wanted to put in an annual savings
of 33,000 a year for 10 years.
Okay, so the total we were gonna put in was 350,000.
Now this illustration,
as you can see down here at the bottom is,
this is my original illustration
that was ran on November 14th, 2008 at 4:48 PM.
(chuckles)
So this is exact illustration
of what I ran back in the day for him back in 2008.
So anyways, looking at this illustration,
he wanted the death benefit,
so that's the minimum death benefit
right here of 1.3 million to allow him to put in $350,000.
Now we didn't have all the money to put in today,
he had a little bit of money now to put in,
but then he was gonna save this $33,000 a year
for the next 10 years and then stop,
and then you can see down here,
we were gonna take out $35,000 a year
of tax free income via policy loans,
which you can learn about in the other videos.
So we were gonna take out this 35,000 a year out tax free,
put in this 350,000, he's aged 50 you can see,
and death benefit of 1.3 million.
So just give you kind of a little bit of a framing on this.
So when he opened up this policy,
we started to put in the money,
started to put in annual amounts,
but then he wasn't able to put in all the money.
So through the years,
he wasn't able to what we call maximum fund this.
So if he puts in the 350,000,
that would've been maximum funding the policy,
but he wasn't able to do that.
If we look at here,
but let's look a little bit forward now.
Well, let's go back here for a second
and let's look at what year we are actually in right now.
So in this illustration here, this was 2008.
Let's call it 2009, actually,
'cause at the end of the first year, all right,
the end of the first year we would put in 52,
we'd have $42,000 in there,
about 10,000 because of the fees and expenses
'cause they're on the hook for 1.3 million
if he passed away.
All right.
And by the way, this illustration,
one other thing that we ought to point out real quick
is what was this ran at?
So back then with these different illustrations,
so it can change through the years of what we can illustrate
based upon what caps are and so forth.
So back then we were able to run this illustration
at a rate of 8.5%, okay.
So we had a little bit in this one year account,
but most of the money was right here
in the five year account,
we were running this illustration at an 8.5%
illustrated rate back then.
All right.
So today you won't be able to run that high,
but back then we were able to run that rate
based upon historical, you know, averages and so forth.
So 8.5% is what we were running in this example.
All right, so let's go back down here,
looking at the actual illustration.
So once again, funding it for the 10 years,
taking out tax free income to retirement.
This was done back in 2008, but after one year,
his first annual statement would've been November of 2009.
So that would've been this year.
Okay, the first year.
So this would've been 2010, the second year.
All right.
The next year would've been 20, so 2009, 2010, 11, 12,
13, 14, 15, 16, 17, 18, 19, 2020, 2021 right there.
So right here in year 13, this is 2021 November, all right.
So right now at the time of this recording,
we're more in in 2022 in the springtime,
but right now the annual statement,
the most recent annual statement that we have,
we're gonna look at is at the end of the 13th year.
So without these loans,
'cause he has not taken any loans by the way,
so he has not taken these loans out.
So over here you see our accumulation value.
Let me highlight it here for a second,
458,000 is where we should be if we haven't taken loans.
If we've taken loans,
you'll notice that the surrender value is 384.
So this is before loans.
This number is after loans,
'cause you can see the two numbers
equal each other in year 10.
There's no longer what we call a "surrender charge".
I'm kind of giving you a few things here,
but I want you to remember that 458 is where we should be
if we had paid $350,000 over 10 years, all right.
If we had done that,
and this is where we'd be in the 13th year,
which is where we're at at November of 2021.
All right,
so a lot of framing there, (chuckles)
but now let's go to the next one.
So here's his annual statement from November of 2021.
So if you see this,
this is called a Pacific Index Accumulator Number Three,
This date,
see that this was from November of 2020 to November of 2021,
what happened during that year?
This is an annual policy statement.
Okay, of course I've taken out the client's information.
There's my name as the producer.
This is with of course Pacific Life.
There's many companies,
it's just one company that we can use
with Index Universal Life.
Let's go down here and look at the summary page.
So right here, you can see from this timeframe,
all right, you can see the client's allocation.
This is really cool, kind of shows a summary.
But look at this over here,
look at his average annual rate of return.
His average rate of return in the policy has been 10.86%,
average rate of return since he started this policy
and he's in the 13th year or just finished the 13th year,
he's in the 14th year right now.
But at the end of the 13th year, he's averaged 10.86%.
It shows it right there on the statement.
Okay.
Now look at his cash value here.
His accumulated value,
all right, this is the policy year from those dates.
And by the way, this last year he added $13,200.
Let's go back to the illustration.
He was supposed to be finished funding this in 10 years
with 350.
All right, he's in the 13th year,
and he paid $13,000 in the 13th year.
So basically what I'm trying to say is
he did not max-fund it, he's still trying to catch up.
Let's see what he has paid total.
All right.
But notice this, 484 is what he has in there.
What were we supposed to have at this point
if we go back?
458,000 is what he's supposed to have.
Okay.
So if you notice that we're about $26,000 better right here,
we're about $26,000 ahead of schedule,
but he hasn't funded $60,000 into his policy.
So if we go down here in the annual statement,
check this out.
Right here on this statement,
it says, "Premiums paid since issue."
This client has paid $289,900.
And what's neat about this client is he had things come up,
he wasn't able to put in the 33,000.
So guess what?
IUL or Index Universe Life is flexible.
He was able to back off on the premiums
and not put in the maximum that we were gonna put in.
And he's only paid 289,
he was supposed to pay 350 if you remember.
He was supposed to pay 350,000.
And so that difference is he's short about $60,100 right now
is how short he is of maximum funding it,
and he's three years past
of when he was supposed to fund it all the way.
So if you see what I'm saying here is,
not only has he not put the 60
and he hasn't been earning interest on that.
So he should be way behind schedule on an illustration,
but because the policy has outperformed the illustration,
has performed way better than we illustrated.
Okay, going back up,
let's go back up to here to the summary.
Because he's earned an average of 10.86%,
instead of 8.5.
That's really the bottom line,
he's earned an average return of 10.86 instead of 8.5
of what we illustrated back in 2008.
He is $26,000 ahead of schedule.
And he didn't put in that other 60,000 still.
So he is $86,000 ahead of schedule.
And, but even more than that
because he hasn't been earning interest on money
he didn't put in.
Okay, so pretty cool, oh, but look at this,
right down there.
This last year
because of some of his five year account money
that we moved to the one year earned,
this last year, he put in 13,000,
he earned $119,000 in interest in that one year
because he had some of his five year money come due.
It's kind of complex,
so basically you get returns after five years,
he had 4,000 come out in fees.
He's got 484.
A little update, a few months later,
so this statement now, if you check out this statement,
we've got May of 2022, May 12th,
his account is now worth, okay, going up here.
So May of 2022, he's now at 501,000,
and just this quarter, he earned $5,900 of interest,
$800 of fees went out in this,
'cause if he passes away, his family gets 1.3 million,
all right.
Oh, by the way, he has taken a loan.
I forgot. (chuckles)
He took out a loan,
in the last six months, he's taken out his first loan
and just met with him actually the other day,
he's been super happy, super excited
because the policy's outperformed, he's in retirement.
This money's all coming out tax free.
So he just started taking loans.
So see 6.77% of his money's been borrowed out in the loan.
And this is kind of cool, let's just show this real quick,
he's borrowing at two and a quarter.
All right.
So he's borrowing at a guaranteed rate
of two and a quarter is his loan rate, pretty low,
and his money, the collateral,
so some of his money that's in the policy
'cause when you borrow, you're not withdrawing.
So there's money still in the policy
that is earning two and a quarter.
So see the fixed account, his money earns two and a quarter,
he borrows at two and a quarter,
that's called a zero wash loan
or a zero cost loan in this policy.
There's other loans where you can borrow at like
four or five right now
and your money can keep earning that 10%.
So right up here, this 10.73,
if he wants, he can take another loan,
that's called an index loan
or participating loan where he can borrow right now at 4.4%
with this company and his money can keep earning the 10.
But he's being conservative in retirement,
so he is borrowing at two and a quarter,
earning two and a quarter, zero wash loan.
For example, like a comparison,
most whole life policies
you might borrow at six or eight or you know, sometimes,
and then basically the policy
is earning a lower return than that.
You know, it depends on the policy of course.
But just to give you an example here,
some of these policies,
some of the five year accounts have earned 13%
8.5, 11%.
The fixed account that he used to be in back in the day,
4.6 average.
So he's averaged 10.73 since he's had this policy,
he's way ahead of schedule,
even though he didn't maximum fund it,
it's pretty powerful to show this.
And we got many others we could show.
So I just wanted to give you that quick overview
of how a policy has really performed
that we opened up back in 2008.
Now we're in the 14th year right now
and we're ahead of schedule,
even though the client did not maximum fund the policy.
Thank you for watching.
(swoosh) - So thank you Aaron.
If that didn't blow you away, again, here's a client,
and it proved the flexibility of Index Universal Life
where he intended to put in 350,000
over the first 10 years, he couldn't,
he only funded 280. - 289,000.
- 289,000, and it took him into the 13th year.
So he's still short 60,000 of maximum funding it
and he's already started to access
like 33,000 I think in a loan.
- Mm-hmm. - And
it has outperformed the illustration
which was done at 8.5%
because he's been averaging well over 10%.
And so he actually has way more in there
than what was illustrated, even though he has not put in
the final 60,000 that he intended to put in.
That's pretty awesome.
- Yeah. - Yeah.
That shows the flexibility because you can stop,
you can start and he had to slow down a little bit.
He still hasn't put in the maximum amount of 350, only 289,
but he's got a half a million bucks sitting in there
and that's only 13 years into the contract.
- So if he were to pass away,
it would blossom to the million,
1.3 million death benefit tax free to his heirs
if he happened to pass away early in retirement as well.
- And again, this is just one of many policies
that actually outperform
what was illustrated when they took out the contract.
We sort of like to under promise
and then over deliver as much as we possibly can.
But it all depends on how it's structured correctly
and if it's funded.
So if this is resonating with you
and you want to explore this further,
you ought to read this book
and study it's called "The Laser Fund".
If you have not claimed your free copy,
my son, Aaron my other son Emron
who will be posting several of these videos in this series,
we coauthored this book.
It's actually two books in one.
This white side is about 200 pages,
14 chapters with all the charts and graphs
explaining how a max funded IUL
can perform as a superior capital accumulation tool
for retirement and so forth.
If you learn more by stories like this one,
you can flip it over, this one has about a 100 pages,
12 chapters with 62 actual client stories.
So simply go to laserfund.com or click on the link below.
You contribute a nominal amount
towards the shipping and handling,
we'll cover the rest of that.
I'll fire out a free copy to you.
There's options there to listen and learn, watch and learn.
You can even explore how to talk to an IUL specialist
like Aaron or my son Emron
to see how these strategies
may be very applicable to your goals
in your financial circumstances.
So here is to your brighter future
so that your story (upbeat ambient music)
can be just like the story we just explained.