Most advisors don't know this. In this episode, I'm going to explain IUL indexing simplified.
This is incredible. Get ready. Most financial planners and advisors do not understand this.
So, my name is Doug Andrew and I've been a financial strategist
and retirement planning specialist now for more than 4 and a half decades. So, I've helped many,
many thousands of people optimize their financial assets. One of my favorite vehicles for doing this
is what I call The Laser Fund. Now, The Laser Fund is a properly structured maximum funded
indexed universal life insurance policy that is designed for living benefits where you put in as
much money as the IRS allows as fast as they allow and it turns into a tax-free cash cow
for tax-free income. Okay? When I actually tell people on this channel, "Hey, I've earned average
rates of return of 8.2%, 9.62%, 10.07%; sometimes they sit there and go, "How come I've never heard
of this before?" I've never seen one. So, I want you to search this channel. I have many episodes
that give you proof of hundreds of clients who have earned those rates of return tax0free ever
since universal life was first introduced back in 1980 by EF Hutton, they weren't an insurance
company. Hello? They were a brokerage firm. But in 1997, indexed universal life came out.
So, I'm going to simplify how indexing works because some financial advisors immediately
think I'm talking about indexed mutual funds. No, no, no, no. An index mutual fund just means you're
putting your money into a mutual fund where they spread your money out over maybe the S&P 500. The
500 companies that represent the S&P 500, Standard and Poor's and your money's in the market and you
can lose 30-40 percent like people did in march of 2020. Or in 2001 to 2003, people lost 40%. It took
4 years to make back what they lost. In 2008, people in the market in the S&P lost 40% again.
Our clients never lost a dime in 2001 to 2003 or 2008. They were cheering. They were like,
"Go! Go!" Because they weren't losing. And the very first 90 days of 2009, most of our clients
locked in gains of 16% tax-free after not losing a dime because of what I'm about to show you.
Indexing where you're linking your returns to an index. Your money is not invested in the market or
at risk in the market. So, get ready. I'm going to explain this in the most simplistic way that
I possibly can. Because it is so powerful and it is not an indexed mutual fund. Here we go.
Let's have a little scenario here. Let's say that you were to walk into a financial institution.
Maybe like a bank or whatever. And you said I'd like to open a long-term savings account
and they say, "Well, we've got a really unique one here. It actually is for very special customers."
"Well you mean, I have to have a lot of money?" "No. We just need to know that you're committed
to contributing money to this for at least 5 years or longer and that your objective is to
have the highest net internal rate of return. And so we're going to send you up to the fifth floor
and this is where a lot of savvy people put their money. Now, what's the difference with this one?
You will be able to link your returns anytime you want to whatever the market is doing if
you think the market is going up. But if you guess wrong and the market crashes,
we guarantee you'll walk out with what you walked in with that year, you won't lose.
But if the market goes up, you'll be able to earn up to you know 11%, 18%. Maybe even as high as 60%
on a one year point to point if you feel like the market's going to go up.
But if it crashes (because nobody can anticipate a crash), you won't lose." Okay? You go, "Whoa!
I've never heard of this before." A lot of people just don't understand. They don't take the time to
learn this. "Now, there's another feature of this account, Mr. Jones. It's tax-free. So, all the
growth on this account will grow tax-free." "Oh, you mean tax-deferred?" "No. It's tax-free. So,
it will grow tax-free. And when you start taking money out, that money is tax-free." "Really?" "Oh,
yeah. There's one more feature. At the end of the day way down the road when you die, anything
that's left in there the day you die will increase it and we will pay out a higher amount tax-free to
whoever you designate as your beneficiary, your spouse, your kids, your grandkids."
"Whoa! Why wouldn't I do that?" "Well, once people understand it. They do do it." "But... Well,
how much does that feature at the end cost that that makes it blossom when I die?" "Nothing's free
but it doesn't cost you anything. It's actually being paid for with a minuscule portion of money
that you would otherwise pay out in unnecessary income tax if you put your money in a regular IRA
or 401(k) down here on the first floor like most people do following the herd." "Well, why would
I stay on the first floor when I can go up to the fifth floor where the multi-millionaires put
their money and earn tax-free rates of return?" "Well, that's what we would recommend." "Well,
do I need a million?" "No. You can sell an account up for 500 bucks a month. It's not what you begin
with it counts it's what you end up with." Now, if the person of the institution told you that,
"This sounds too good to be true". What if it is true? When people say, "Well, sounds too good to
be true." So, I'm probably going to ignore it. I snicker because a lot of things in my life sounded
too good to be true and they actually ended up being true. If I would have ignored them,
I would have missed out. How do you do this? You're using an insurance company that specializes
in indexed universal life. Why universal life? Because it's designed for living benefits. Whole
life was primarily designed for death benefit, okay? Universal life, you will self-insure.
Your cash value will exceed the death benefit when you maximum fund it in as little as 15 years. So,
the cost of the insurance is now 120th what it was 15 years earlier because you're self-insuring.
Your cash is growing to exceed the death benefit in that sort of a time period. Now, I have other
episodes that illustrate this but let me simplify what indexing really does and how it works.
Because you can just sit back and let's say I'm going to take a snapshot in time. Now,
it doesn't matter if you have 10,000 of cash value. You've just barely been putting into your
insurance policy for a year or 2. Or you have 100,000 or you have a million or 10 million.
It doesn't matter. I'm going to use a million as a snapshot in time. Let's say you sucked away
500 bucks a month into a universal life policy for 30 years. You would probably have at least
a million dollars of cash value at age 60 or 65. So, let's take the snapshot in time when you have
a million bucks. And you would like to now either let it grow or you could start taking out income,
have 100 grand a year if you're earning 10%. How can you be earning that kind of a rate
of return by using indexing? So, if you have a million dollars of cash value at this moment,
the general account portfolio yield... This is where the insurance company has their billions
and some of these companies have trillions. I have one company where I have some of my money
that manages about 4 trillion which is as much as the IRS collects in taxes in an entire year.
That's one insurance company. And so, where do they put that money? They put
it out in mortgages, on shopping malls, and skyscrapers. But they only loan about 50
loan to value. They're so conservative and safe, if they ever have to foreclose
on a skyscraper, they come out making money. Okay? They're very conservative.
Very little of their money is in stocks. It's usually in triple-A and double-A bonds and so
forth. This is where banks will take your money and pay you 1%. And take your money and put it
into the insurance company which is usually ranked 6 notches higher in safety (triple-A)
compared to most banks are rated triple-B. So, the bank will take your money increase the safety
and the rate of return by 5 times. They'll pay you one and they'll go earn 5. They'll earn 50,000 on
every million and only pay you 10,000. They're making 5 times as much as they're paying you
to use your money. And they're increasing the safety. So, just bypass the middleman. So, if you
have a million of cash value and in that general account portfolio of the insurance company, now,
from the year 2000 to 2012, the general account portfolio yields and the policies that I own
we're about 6% and the insurance company needs about one of those percentage points for them.
So, I was netting 5. I'm going to come down to 4. This is quite common. So, in a low-interest
environment, they're earning 4%. Anytime I want, I can say just pay me the 4% because I think we're
headed for a recession. I think the market's going to crash. I'll just take 4%, that's 40 grand. Or
I can link my returns to an index or indices that they offer. Most companies offer
5, 10, 15. So, I might choose the S&P 500, the Dow Jones, the Russell 2000, the Barclays U.S
dynamic balance index. I could do a one-year point to point 2-year, point to point. 5-year
point to point. These are all explained in many of my episodes here. I will gift you a copy of my
bestselling book the Laser Fund at the end of this episode where you can learn about this. Here's the
point, if I choose to link to an index, my million has to stay safe in the insurance company earning
4. I don't want my million in the market at risk. I do not want to lose my principal.
What I'm willing to relinquish is the 4% interest on the million, the 40 grand. I'm telling the
insurance company, "You can take that 40,000 of interest. You don't have to keep it on hand.
You can put that in your options budget so that you'll have the wherewithal to pay me
if the market goes up." So, they buy options. If the market goes up 8%,
the 40,000 of options double to 80,000. I earn 80,000 that year. If it's 12%,
I earn 120,000. And people say, "How can the insurance company afford to do that?"
The options triple 40,000 of options triple to 120,000. Hello? The insurance company isn't out
any money. They're big boys and girls. They know what they're doing. Now, they may have to cap you.
Because based upon the price of options, they may say, "Well we can only pay you 3 times. We
can only pay you up to 12% so we're going to cap you at a certain level." But the trade-off is what
if you guess wrong and the market crashes like 2008? When people who had a million in the market,
it went down to 600 grand. It took 4 years to make back what they lost. Our clients in
2008 didn't lose a dime. They may have lost the interest on their million, but not the million
in that one year. The first 90 days of 2009, they locked in gains of the cap which was 16%.
They made 16% on their million (160,000) on top of a million. Most people didn't even have their
million back for 4 more years. That's the beauty of index. And you don't lose when the market goes
down due to that market volatility. You make money when the market goes up because your money is
not in the market. It's in the insurance company. You're only giving up the interest on that, okay?
And so, if the market tanks, the options expire worthless but you didn't lose the principal. You
don't lose the million dollars that you started with. So, folks, this is indexing simplified.
It's amazing how many financial planners do not understand this concept. The money inside your
insurance policy is safe. Anytime you feel bullish about America, you can opt to have the interest
on that money, be put in an options budget and you can link it to the index or indices of your
choice. And the insurance company will have the wherewithal to pay you whatever the market does
maybe up to a cap. Sometimes there is no cap. If the market tanks, you don't lose.
Is this incredible or what? So, how do you learn more about this?
Now, before I show you how to claim your free copy of my most recent best-selling book,
I will pay for the book by the way. If you are intrigued, if you've learned something and you're
going, "Oh, my heck. I know several people who need to watch this episode", be sure and share it.
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about 5 days a week, I answer a financial question in depth like this that people have been asking
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That's why I want to gift you a copy of my 11th book. It's flying off of our warehouse shelves
almost a thousand a week are going out. I'll pay for the book. It's a 300-page book. You go to
laserfund.com. Click below. Laserfund.com. LASER is an acronym that stands for liquid assets safely
earning returns. The Laser Fund is just one of these max funded indexed universal life policies
structured correctly and funded properly so it can perform like this, okay? You can learn how and why
when you read and study this book. You contribute a nominal amount towards the shipping and handling
I'll pay for the book. If you like to listen and learn or watch and learn, there's other
options in there. But I'll fire out a copy of this to you. And this is actually 2 books in 1.
This site is 200 pages, 14 chapters, all kinds of charts and graphs explaining this.
If you learn more by stories of how it works in real life, you flip it over. And this has 12
chapters, 100 pages with 62 actual clients stories of how The Laser Fund can be used for financial
goals other than retirement. College funding, working capital for business, emergency funds,
real estate management, on and on and on. But if you want to read both, I would recommend if you
want to use both the right brain and left brain, you read both books, okay? But the key is get
empowered. Study it. And as you learn more, watch other episodes on this channel and I can point you
to the licensed advisors that know how to set these up correctly so that you don't miss out.