high cash value life insurance policy design right so this is probably the most important
piece to look at with a high cash value policy aside from the company selection right you've
heard us always say go with one of the big four they've paid the highest returns at the end of
the day so when it comes down to the design right at the end of the day our money can go towards one
of two areas it can either go towards insurance premium I'll call that also the insurance expense
this results in a very low initial cash value buys as a death benefit and eventually builds
cash and then we have our PUA stands for paid up additions writer the English translation for
this would be - we just dumped money straight into cash so a question we get frequently is
how do I put all of my money into cash because I don't care about the death benefit we get that
quite frequently and I get it so we cannot put all of our money into cash mainly because of a
tax rule right back if you've got other segments on but a big reason why also or I should say the
other reason due to the insurance company right so insurance companies have limits that regulate
how much money we can pay towards the insurance premium and how much money we can pain to cash
those limits are wherever we set our underlying insurance premium when it comes to our cash the
insurance company will allow you to pay up to ten times that number per year into cash
10x the premium what that means is if I have a $10,000 underlying base premium insurance
expense the company will allow me to pay in up to $100,000 per year at my leisure might
not hit but I've got the option to so that is the insurance company's rule let's look at an
example here what we've got here is just a 45 year old male with one of the big four
companies MassMutual in this example we're gonna take you through their software because when you
look at the raw output they probably look the least like stereo instructions however we use
several companies obviously so we've got a 45 year old male middle the road health rating
that doesn't make a huge difference let's just go to the design here we're gonna show 25,000 a
year going into the policy will show 25k a year for 20 years actually they could go longer as
shorter if you wanted to let's highlight a couple things here where is our money government at the
end of the day we paint money into a policy I can they can go towards our insurance premium
or can go towards cash wherever we set the premium here we've got it at $2,500 that's
about 10% of 25,000 we maxed it out and then we put everything else into our cash component so
we've got an outlay twenty-five thousand these are total cash right off the bat here's our
break-even point between years four and five so if we do everything right we get as much
money into cash as we can minimize the insurance premium what's going to happen will have maximum
cash up front an early break-even point and in addition to that you'll have as much money as
we can attain long term because they're getting money in the account earning interest right away
right so if we look at the same thing here your twenty mark where you paid in five hundred grand
don't you have a cache here seven hundred sixty five thousand we've stuffed this thing with as
much cash as we can it doesn't matter what company we look at if we practice this concept getting
money in the cash you're gonna see a cash-rich account which is the opposite of a traditional
whole life policy which we will wrap up with everything's exactly the same we're going to pay
25k year into the policy we're going to put all of it into the insurance expense it's gonna look
not that attractive at all so 100% of our money's going into the premium up top here let's zoom over
here's our cash right first couple years we've got zero nothing to show for it eventually accumulates
this is an example of an old-school whole life insurance so this is what not to do the last
example is exactly what we want to do high cash value all buttoned up hope this helps more to come