The dream solution for many financial goals. In this episode, we are going to
address the question "Can IUL be used for financial goals other than for
retirement?"
This is episode 18 out of 21. I would advise you to watch the entire course.
It's a free course that can empower you in about 4 to 5 hours of Education to be
able to accumulate an extra million bucks that can generate 100,000
a year of tax-free income that lasts as long as you do. In this episode,
we are going to discuss and highlight why a max funded indexed universal life
insurance contract something that I affectionately call the Laser Fund in my
most recent book is actually the dream solution. The miracle solution for many
financial goals. In fact, oft times what I speak to live audiences, I will pose this
question: "What would you call something that you put money into and it
accumulates tax-free and it accumulates at great rates of return averaging 7 to
10 percent? Some years higher some years lower. But averaging 7 to 10 percent
tax-free? You can access the money without penalties from the IRS. During
banner years you can put in large lump sums. You can pull money back out a month
later. And when you retire, every million dollars can predictably generate 80 to
100 thousand dollars a year of tax-free income for as long as you live. And when you finally
die, it increases in value. Maybe doubling or tripling instantly in transferring
income tax free to your heirs. What would you call that?" Now, when I ask that long
question, invariably, people especially on the front row go, "A miracle. A Godsend in
this topsy-turvy world of financial markets that are going up and down and
and the market being like a person with a yo-yo." I go, "Yep, but you can't call it
an investment." Because investments in the Internal Revenue Code our subject to tax
sooner or later. It's usually money in investment are subject to
market volatility. I don't want that. I don't want market volatility. I do not
want to pay taxes sooner or later. So, this is why my favorite vehicle, the
laser fund is protected under the Internal Revenue Code under Section 72 E,
7702 and 101 A as I've explained in other episodes. So, many times people say,
"Well, this is a no-brainer that it can be used for retirement. That
every million bucks can generate 70, 80, 90, 100 thousand a year
of tax-free income for as long as you live?" Yep, you compare that to any other
alternative like IRAs our 401Ks in the market. And frankly, if your money is in
the market, they cannot show you a predictable income stream. The most they
will usually show you is the 4 percent payout and you have to pay tax
on that. Here, I can pull out 8% and it's tax-free. Not 4%
and only net 2% after taxes and fees. So, it's a no-brainer for
retirement. But what about other financial goals? The indexed universal
life policy when it's structured for living benefits can be used for real
estate management, college funding, business working capital, emergency funds,
on and on and on. Let me give you a few examples because in my book on this side,
this is actually 2 books in one. This is the left brain side with charts and
graphs. This side contains about 100 pages with 12 chapters of
62 actual clients stories and examples of how the laser fund can be
used for all kinds of other goals. It's the dream solution. So, let me share with
you some of those. So, I've realized from doing this for more than 45 years that
some people learn left brain with charts and graphs. But other people learn by
stories and examples. That's why this side of the book has 62 actual clients
stories of how the laser fund is used for all kinds of goals as the dream
solution. So for example, sometimes people structure it for death benefit and it
actually outperforms whole life insurance to put in less
premium to maximize what you leave behind tax-free. Yeah, you can use it for
that. But a lot of people of course use it for retirement planning like I've
talked about. And that's what most of the examples are in this free mini-course.
But the next chapter is working capital. So, if you're a business owner, I've had
many clients who owned a business. And this is where they have their working
capital so that if they need money to tie up a piece of real estate or to buy
some machinery or equipment, they will have their working capital inside their
laser fund because it's tax-free. You can access the money. I've had clients who
say, "Doug, I need a million bucks." "How soon do you need it?" "Oh, in the next few days." I
send them the form through an email, they fill it out. They borrow. Most of the time
they don't withdraw. Because they borrow at 5% and they continue to earn 10, 15,
even 20 and 25 percent. So, they use it for working capital. They take the money
out. They don't have to pay it back but most do because they're they're putting
the money back from the money they made in their business. But many business
owners will borrow a million dollars at 5% interest on the index loan. And they
continue to earn 15 16 even 25 percent while they're using their money. It's a working
capital account. This is incredible. This is also true for real estate management.
So, when you use it for real estate which is what I have done, I keep on my real
estate equity in my laser fund portfolio. See, I have my equity there because I
continue to earn tax-free rates of return because equity trapped in the
property is not liquid when I really need it. I've learned that lesson. It's
not safe. The real estate can drop in value.
I don't lose with the money in my laser fund due to market volatility.
I also earn predictable rates of return over here tax-free. The real estate is
going to go up or down in value regardless of whether it's full of
equity or has zero equity. Whether it's mortgaged to the hilt or free and clear.
But by keeping my equity separated over here, it's liquid, safe
earns a predictable rate of return and it's tax-free. Whatever the real estate
does is going to do regardless of whether I have the equity trapped in the
property, which i think is dangerous in many situations versus if I have it over
here. So, I participate in the real estate investments and the real estate market
without my money actually tied up or at risk in the real estate, does that make
sense? This is also true and when I'm using the money for any other purpose.
We've had many people who will save for their children or grandchildren college
educations in the laser fund. There's examples in here of that. And it knocks
the socks off of a 529 plan. A 529 plan just allows you to accumulate the money
tax deferred and you pull it out for for your college funding for your kids and
grandkids. The laser fund does that. It's always done that. But hello, if I put it
on me and I happen to die or if I own one on
my adult children and it's for their children my grandchildren's college
education and they die or I die, the college funding is funded instantly with
the tax-free life insurance proceeds. But if I live, I'm able to access the money
tax-free and use it for their college funding or to help them start a business.
I'm not restricted just to college funding for that purpose. So, it has all
the benefits of a 529 plan and a whole lot more.
As you continue, people use it for business planning, for estate planning,
for strategic rollouts. This is probably one of my favorite uses for the laser
fund. So, here's how you do it: Now, many times in my 45 plus year career, people
have come to me with lump sums. Maybe they got a settlement from an accident
or a lawsuit or something. Maybe they inherited money. Maybe they sold a piece
of property and they're going, "What should I do with this $200,000? What
should I do with this half million? What should I do with a million bucks?" I go,
"Well, I would suggest you keep tax-free and that you earn predictable
rates of return averaging 7 to 10 percent. They go, "Wow,
sounds like a dream solution. What's that?" And I would explain a laser fund. So, I
could accommodate lump sums of money that came in from from an inheritance or
the sell of a property or what have you. Maybe they sell their business. But many
times people as they approach retirement, they sort of had their head in the sand
for years putting money in the company's 401K or into IRAs or maybe a 457 plan or
a 403 B for schoolteachers or what-have-you thinking they were going to be in a
lower tax bracket when they retired. And as they approach retirement, they
realized, "Wait a minute, I'm not in a lower bracket." I go, "Yeah, I
could have told you that 25 years ago. Most people are not in lower tax
brackets when they retire." They go, "Well, I always thought I'd be in a lower bracket.
But now, I'm going to to pay tax on all this." And I go "Well, I'm going to have to cure
that tax disease." So, we would perform a strategic rollout. That's where over a
5-year period maybe longer, you strategically roll the money out. Not
roll it over. You roll the money out. A rollover is going from the frying pan
and the fire so to speak. You're taking money out of a 401k and rolling it over
to an IRA and continuing to delay, defer. Procrastinate paying tax. No. You want to
get the taxes over and done with in today's lower tax rates rather than
thinking by postponing and continuing to defer to some future perceived unknown
advantage and withdraw your money down the road when most people are convinced
taxes in the future will be higher. Hello!? Look at government spending. So, once they
see that, the wisdom tells them, "Okay, let me get the money out and the taxes over
and done with." And then we take the net after tax roll out monies and we put it
where? Into something that's going to be tax free from now on. A laser fund. And as
they do that, they're able to ride the markets up when the markets doing well.
But when the markets crashed, they don't lose. They're protected but they're able
to accumulate their money free. And at the end of the day when they
die, it blossoms and reimburses the heirs with the money that you paid in tax by
many-fold. And so they're not out anything by doing a strategic role out.
There are stories in The Laser Fund book in that chapter alone, where you will
read how couples have saved 2 schoolteachers, husband and wife. We saved
them a quarter of a million dollars of unnecessary tax rolling the money out of
their IRAs, 401Ks and 403 Bs. They were so grateful because of that extra
quarter of a million that they would have shelled out an unnecessary tax.
Another gentleman, his wife passed away at age 70 ½ he came in and he
had to take RMDs. We said, "No, don't take the required minimum distribution.
Let's get the money all out in 5 years." We saved him three-quarters of a
million dollars of unnecessary tax. And now he has a sizable laser fund
generating tax-free income of 75,000 a year. Another couple a husband and wife,
both physicians. They were going to pay 2.6 million dollars in tax because they
had over 5 million in their IRAs or 401Ks. You know what their CPA said?
"They can afford to pay 2.6 million in tax." I said, "Well, let's ask them. Would you
like to pay an extra 2.6 million if you don't have to?" Now, I couldn't save them
all 2.6 million that I saved them 1.2 million doing a strategic rollout. What
did they do with that 1.2 million of otherwise payable tax? They put it into
what we call a family bank funded in their laser fund that is generating a
120 thousand a year of tax free cash flow for their kids, their
grandkids, humanitarian, military, religious missions all kinds of goals,
college funding that they couldn't have done if they would have left it in their
IRAs and 401Ks. These examples, we have 62 actual clients
stories in this part of the book. So, I would recommend that you get your free
copy. I'll pay for the book. You go to laserfund.com
laserfund.com. And pay $5.95 shipping and handling and I'll send out
the book to you absolutely free.