Accumulate, access, and transfer your money income tax-free. In this episode,
I'm going to address life insurance. Focus on what it does, not what it is.
So, my name is Doug Andrew. I've actually been a financial strategist and insurance agent since
1974. I've been helping people optimize their financial assets and minimize unnecessary income
taxes for more than 4 and a half decades. Now, I feel extremely honored and blessed to have 12
best-selling books. I just am releasing my 12th book right now. If you stay with me to the end,
I want to gift you a copy of my most recent best-selling book called The LASER Fund. But
I want to share with you how life insurance is the dream solution for many financial goals.
And it can actually accomplish a lot more than what most people think. So, I want to start out
by asking you a question here. You ready? I speak to audiences all throughout America
and just in the last 3 weeks, I was speaking to an audience of 2,000 people
in Louisville, Kentucky. And I asked the audience, "So, what are some uses for baking soda?" Now,
usually, it's the women in the audience that start raising their hands and they go, "Oh,
you can take the odor out of the refrigerator". Now, the guys say, "Well, you can clean the
terminals on your battery from the battery acid". And I've even heard ones like well it takes the
pop out of a pot of beans. But then finally somebody goes, "Oh, it's good for baking!"
Yeah, the obvious. Well, that's how I look at life insurance. See, life insurance the obvious is
it's called life insurance. So, for 4 and a half decades, I've been using life insurance for life,
for living benefits. Too many insurance agents use it for death like it's death insurance. So,
let me share with you how it is one of the most powerful financial instruments to
accumulate access and transfer your money totally tax-free. And so, I say don't focus on what it is,
focus on what it does. I'm going to share with you the many powerful ways that I have used life
insurance myself and also for thousands of clients when we maximum funded their insurance policy.
This was all the brainchild of EF Hutton clear back in 1980. Because I started in 1974. Yeah,
I'm pretty old. I may have an apple watch now but my first watch was a sundial, okay? My first
pet was a dinosaur. So, I've been around a long time. Well, when I tell people you know in 1974,
I was a big proponent of buy term insurance and invest the difference. But then, I learned how to
buy term invest the difference on steroids totally tax-free. And it wasn't an insurance company that
came up with this idea. It was EF Hutton, a brokerage firm. And back then, they were going,
"Why are we trying to make money for people in a volatile market
where we hope to earn an average return of maybe 6, 9 or even 12 percent when they're
going to have to pay tax on it sooner or later even if it's in a tax-deferred IRA or 401(k)?"
We can more predictably earn money tax-free. Because there is a very powerful strategy in the
internal revenue code under 3 sections of the code that have been grandfathered for over 107 years.
Now, what are they? Before I share these 3 sections of the code with you,
if this is already intriguing you and you can think of somebody who ought to watch this episode,
share it. Click like. Subscribe. I post an in-depth answer to a financial question almost
on a daily basis. And at the end, I'm going to gift you a free copy of my most recent
bestselling book. It's called The LASER Fund which is a max-funded indexed universal life insurance
contract which is like a financial swiss army knife as i'm going to show you here. But when
we talk about optimizing assets for people, I've helped a lot of people increase the liquidity,
the safety, and the rate of return as well as the tax benefits by using maximum funded insurance.
Because EF Hutton came up with this idea. "Hey, why don't we try to put in the most
money into an insurance policy that the irs allows and take the least amount of
insurance they will let us get away with?" And so, instead of trying to get x amount
of insurance for the least or cheapest premium to just have insurance to cover you in case you die,
they said, "Wait a minute, look at what it does." It accumulates your
money tax-free it has for decades under section 72E of the internal revenue code.
Under section 7702, you can access money out of the insurance policy while you're alive
and it's totally income tax-free. And when you ultimately die, it blossoms it increases in value
and transfers income tax-free under section 101A of the internal revenue code. Now, sometimes
people say, "Well, is that a tax loophole? Boy, when congress finds this out, they're
going to close up that loophole." No, congress is very well aware of this. Why is it tax-free?
See, the government understands that if people will take ownership for their own retirement,
for their own health care, for taking care if they happen to die in an accident prematurely and they
leave behind a widow and children orphans that if they are trying to be responsible and accountable
and make sure that there is money there to take care of their family have they stayed around,
then the government says, "Why do we want to penalize those people and tax them on life
insurance? Whether they use it for living benefits or for death benefits. We will allow the money
to accumulate totally income tax-free. If people want to access money, we will not charge them tax
because they can use it for retirement often way better than traditional IRAs and 401(k)s. And when
they ultimately do pass away, why do we want to tax and take money away from widows and orphans?"
And so, it's been a sacred tax-free cash cow in the internal revenue code for decades actually
107 plus years now. And so, EF Hutton is the one that said, "Golly, here we have this incredible
instrument that allows people to accumulate access and transfer the money totally tax-free."
But see most people paid the least premium. So, it wasn't a very good savings or investment.
They changed all that. They said, "Well, let's take the least amount of insurance the IRS will
let us get away with and put in the most premium as fast as the IRS allows." And it turns into
this tax-free cash cow. It is where I have earned average returns of 8.2%, 9.6, 10.07 percent. Many
years, I've earned 20 and 30 percent. But on the average, between 7 to 10 tax-free rates of return.
That's because I'm taking the least amount of insurance that I can get away with. Now, let's say
that I want to sock away money for my retirement and I can start saving 500 bucks a month, $1,000
month. So, I've had many clients who saved $500 a month into a max funded indexed universal life
insurance policy for 30 years and they now have a million bucks totally tax-free. That million
dollars can generate 80 thousand, 90 thousand, even 100 thousand a year of tax-free income
for as long as they live. And when they ultimately die, it transfers income tax-free to their heirs.
They're using it more for a living benefit. They've been earning average returns of 9
netting 8. 11 netting 10. Even 7 netting 6. But see, you're structuring it so that the cost of the
insurance is as small as possible. It's actually being funded with a minuscule portion of interest
that would otherwise go out the window in unnecessary income tax. So, when I say don't
focus on what it is, focus on what it does, what would you do if I told you as your employer,
"Hey, we've had a great year this year. We have a lot of profits and so we are offering some new
benefits to all of you employees here. We have some free life insurance. How much would you
like?" Now, the answer I always get is as much as I can get. Do we object to insurance benefits? No.
I've never had a widow or a widower turn down an insurance check. "Oh, no. No, I don't want
that 100,000. No, I don't want that million." We don't object to the benefits. We object to
paying for them. If you can redirect otherwise payable tax to have insurance come along for
the ride, I'll take as much as I can get if it doesn't cost me anything. Now, nothing's free.
But my life insurance comes along for the ride. It's being paid for with a minuscule
portion of money that most people shell out in unnecessary income tax on their IRAs and 401(k)s
at the end of the day when they retire. So, when you begin to understand this concept,
it will become a financial instrument not just for retirement. But it's like a financial swiss
army knife for all kinds of goals. But I call it the Laser Fund because LASER is an acronym that
stands for liquid assets safely earning returns. But it's a max-funded indexed universal life.
I like that one because it knocks the socks off of whole life or regular universal life
and indexing came out in 1997 which allows me and can allow you to be able to earn rates of
return when the economy and the markets go up but not lose when the economy goes down.
And this is where I have earned average returns between 7 to 10 percent tax-free. And I'm talking
about net cash on cash after the cost of the insurance. So, when we talk about using it for
living benefits, it's like this financial swiss army knife that I've got up here on the screen.
It's the dream solution. And in my most recent bestselling book that I want to gift you,
I have a right-brain side of the book that has 12 chapters in it and I have 4 or 5 stories on how a
max-funded indexed universal life can be used for all of these different purposes. So, of course,
it can be used for a death benefit. But if I happen to die sooner than later I've always told
my sweet wife, "Hey, if I go out fishing in Alaska and a grizzly bear eats me, promise me that you'll
look down and look sad at my funeral, honey." Now, she doesn't like me to say that. But see,
within 3 weeks, she's going to be loaded with tax-free money if I happen to die because the
money blossoms and transfers tax-free with the death benefit. But I use it for living benefits.
So, it's very good to be used for retirement planning because you can accumulate, access,
and transfer your money totally tax-free. IRAs and 401(k)s are only tax-deferred. Most people put
money in IRAs and 401(k)s thinking they're going to be in a lower tax bracket when they retire. And
most people are not. If you accumulate any type of a respectable retirement nest egg, you will likely
not be in a lower tax bracket. In fact, a Roth IRA or 401(k) would be a better way to go. But I've
never owned an IRA or 401(k), never will. I've never owned a Roth IRA or 401(k), I never will.
Why would I? Roths only have 2 benefits. You fund a roth with after-tax dollars and if you
think taxes are going to be higher in the future, a Roth is usually 33 to 50 percent better than a
traditional IRA or 401(k) with the same amount of money the same rate of return. Most people don't
know that. But see, a Roth accumulates your money tax-free, you can access it tax-free.
I can do that out of my indexed universal life and I have 4 additional benefits that Roths will never
have. I can put in more money into a Laser Fund. You are restricted on how much you can contribute
to a Roth. If you make too much money, you don't even qualify for a Roth. I could accommodate
$300,000 if I wanted to in an IUL policy. You can't put that much in a Roth. I don't have to
put in 300,000, I could put in 30,000. I could put in the other 270,000 anytime I want in the future.
You can't do that with a Roth. If you don't use the room in a given tax year, you lose it.
But I could put in 300,000 and 30 days later pull out 250,000. I don't get penalized. You would
with a Roth. See, you have to wait 5 years or tell your 59 and a half before you can touch the money.
But I can use indexing and make returns when the market goes up and not lose when the market goes
down. You can't do that with a Roth. And at the end of the day when you pass away, it blossoms.
If I died tomorrow in an accident, every million I would have in my portfolio of IUL policies
would immediately blossom to about 2 and a half million and transfer tax-free to my wife, my kids,
my grandkids, my church, my charity whoever I want. People say, "How much does that cost?" Well,
nothing's free but it doesn't cost me anything. It's coming along for the ride. It's being paid
for with a minuscule portion of money that most people shell out in unnecessary income tax.
So, it's really good for retirement planning. it knocks the socks off of traditional IRAs and
401(k)s. But college savings? This will beat a 529 plan to pieces. A 529 plan, you have to
use it for your kids college. What if your child gets a scholarship and doesn't need the money for
college and wants to use it to start a business? Too bad, you're going to have to pay tax now. See,
the iul is tax-free whether you use it for college or not. But it earns better rates of return. Why
do you want all these strings attached to plans like 529 plans, 401(k)s, and 457s. These all have
government strings attached. I don't like those. How about working capital for your business?
Many business owners will use a max-funded IUL as working capital.
I've had clients they'll have a million bucks in there. They will go access that million dollars.
They can either withdraw it out of the policy with an electronic fund transfer phone call. But
you know what most of them do? They're savvy. They understand how money works. They borrow
from the insurance company a million because it's collateralized by the million that's there.
Why would they do that? Because the insurance company might charge
him 5% to borrow a million. That's 50,000 of interest that year while they keep earning 10,
15, 20 percent. In 2017, I had a client borrow a million. He was charged 50,000, 5%.
But he made 250,000, 25% that year on his policy by using indexing. He netted 20% or 200,000 on his
million while he was using it as collateral to have a million to use in his business.
Hello? We also have real estate management. It's really good to keep your real estate money
there. You'll actually get out of debt faster by accumulating your money in an IUL policy than by
sending it to the mortgage company. You'll get out of debt 2 and a half years faster by not making
extra principal payments against your mortgage. If you will accumulate it here compounding tax-free.
Emergency funds, why would you have an emergency fund in a bank making less than 1% when you
can increase the safety by 6 notches higher and actually have access just as readily available to
you out of an insurance policy earning more like 5, 6, 7, 8, 9, 10 percent. Higher rates of return,
safer. Why would you have an emergency fund just because the bank has a drive-up window? No,
a bank could stall you up to 6 months if things got really bad. Did you know that? From giving
you your money, the insurance industry is where banks put their money for liquidity and safety.
We also have lump sum capital transfers if you get a settlement from an accident, an inheritance. You
can put in lump sums. You can't do that with Roths unless it's a one-time rollover. Estate
planning if you're trying to maximize what you leave behind to fund college, missions,
military service to your children grandchildren into perpetuity. It's what I call a family bank.
Pension maximization, if you're a retiring school teacher, you take the maximum, no survivor benefit
and take the difference the government was going to take from you to give a survivor
benefit. Put that into an IUL policy and you'll end up way ahead of having a survivor benefit
on your pension if you're a police officer, a fireman, a school teacher. You can maximize your
pension income. You can use it for general tax reduction. If this is intriguing you,
let me show you how you can learn more. So, if this is intriguing you, I want to gift you a copy
of my most recent bestselling book called The LASER Fund. If you simply click below or go to
laserfund... LASERfund.com and you contribute a nominal amount towards the shipping and handling,
I'll cover the rest of that cost. I'll pay for the book and fire out a copy
to you. It's 300 pages of charts graphs explanations and 62 actual client stories
of how this is like a financial swiss army knife. But I want you to listen and learn,
watch and learn, but claim your free copy now by clicking below.