In this episode, we're going to address the question, "How can I tell if an
advisor knows how to properly structure an IUL?" So, when I wrote the book the
laser fund, there's actually a chapter that is titled "What can go wrong?" In fact,
on the reverse side of the book is the right brain side where we have 62 actual
clients stories and examples. And in every one of those twelve chapters, we
might have 4 or 5 success stories. But we include one story in each chapter
of when it went wrong. And it becomes very obvious why. So, what can go wrong?
When you have a complicated product like a max-funded, indexed universal life
insurance contract, it is imperative that it is structured properly and funded
correctly. And so, of course, many times, I will look at situations where they used
the wrong company. There's over 200 companies that offer a universal life. I
would not put my money in 95% of them. There's only about 5 or 6 companies
that I would put my money into. And all of these companies have been around
since the 1800s. They weathered the Great Depression with flying colors. Also, the
right product, if people use the wrong product with the right company, it's not
going to work. So, you have to use the right product. So, the biggest reason that
things go wrong is because the advisor is not proficient. In the book The Laser
Fund, we actually have 14 questions that you can ask a licensed advisor. And if
they say, "I don't know but I'll find out", that's a red flag. They should be able to
answer these 14 questions off the cuff. Are you ready? Here we go. So, at the end
of this episode if you have not claimed your FREE copy of The Laser Fund book,
be sure and do so. But this is actually found on page 195 of this 300-paged book
titled The Laser Fund: How To Diversify And Create The Foundation For a Tax-Free
Retirement. And so we call this the Laser Ready test. So, here's an example of the
questions that you ought to ask an advisor.
What is Tefra, Defra and Tamra? And how do they impact my policy? Now, if they say,
"Let me check on that." Red flag. They should know that right off the cuff. Next,
"Explained to me Internal Revenue Code section 72 E, 7702 and 101 A." If they
go, "Let me look that up." Red flag. They should know that instantly.
What's a guideline single premium? They should know that off the cuff. That's the
amount of money that you designed the index universal life insurance policy to
accommodate over the first 11 years you put money into the policy. That's the
maximum amount allowed into the policy based on how you structure it. They
should know that right off the bat. What factors will the insurance company
consider when gauging the size of my policy besides the guideline single
premium? That's based upon Tefra, Defra, Tamra. That's age gender and
your health. What size policy would someone have on average who is a healthy
60 year old male with a GSP (that stands for guideline single premium. They should
know that.) of 500 thousand? Now, if they've done this at all, they should know, "Yep,
500 would require a minimum death benefit of about a million
two hundred and fifty thousand. They don't need to look that up. They should
know what that quick, okay? Otherwise that's a red flag. What are the rules for
perfecting a modified endowment contract? You can even say, "What are the rules for
perfecting a MEC?" If they go, "What's a Mec?' They don't know what they're talking
about. How can an insurance company earning
5% on their general account portfolio afford
credit a policy 7 or 8 percent? Now, we've answered that question in this
free mini-course here. But if they can't answer that off-the-cuff, that's a danger
sign. How can a policy holders experience 1
to 2 percent higher payouts than the average index they are linked to. We've
answered that in this series. It's by using the arbitrage by borrowing your
money out instead of withdrawing it. And paying 5% and continuing to
earn 7, 8, 9, 10 percent or more. If they don't know that, that's a
danger sign. How about this one? Who runs your policy illustrations? If they say,
"Well, I have someone at the home office do it." That's a danger sign. They should
be running it to tweak how it will perform. This is the next one: If I
maximum fund a laser fund over the life of the policy, what is the expected net
internal rate of return likely going to be compared to the gross rate of return?
They should right off the bat say, "Up 1% thereabouts."
If it's not 1%, they've structured it wrong. Like many of these people I told
you about where maybe they earned 11 but they only netted 6. Why? Because they had
way too much insurance than what they needed to have in there. And the
insurance agent made a bunch of commission instead of you making a great
rate of return. How long have you been structuring these types of policies? If
they say, "Well, I'm just learning how to do it." You better make sure somebody who
understands it is helping them if their relative. Otherwise I would not put your
money into that. Do you specialize in maximum funded indexed universal life
policies or do you handle all kinds of other insurance such as auto insurance,
or homeowners? You want to have a specialist not just a regular property
and casualty insurance person that also sells life insurance. They do not do it
enough to know how to stay sharp. How many insurance companies do you
represent? If they only represent one if they are a captive agent with 1
company, that's usually not a good sign. You want to have 5 or 6 different
companies that they can select based upon your
particular set of circumstances. And the last question: "Is insurance your sole
profession or is it a part-time endeavor?" Sometimes the saddest stories come from
people who maybe give haircuts by day and sell insurance by night. You want to
make sure somebody is doing this as a full-time profession and they've been
spending hours and hours and helping people design these for years. Those 14
questions ought to be asked. And your advisor ought to be able to answer them
that fast to your satisfaction or beware. Find someone who can answer those 14
questions. Satisfactorily for you. So, this is episode 20 out of 21. There's one
remaining episode in this series if you've been going chronologically
through it. You may be be already taken advantage and claimed your free copy of
this book. If not, I want to gift you a copy for free. You simply go to laser
fund.com. it's a 300-page book with all kinds of
charts, graphs and explanations and actually 62 clients stories and examples
of how the laser fund has helped many many people achieve their financial
goals. I'll pay for the book. You pay $5.95 shipping and handling. Let me
fire out a copy for you and I want you to be empowered with education so that
you can have a tax-free retirement.