Using the wrong company or wrong product is bad.
But an agent not proficient, worse.
In this episode, I'm going to address the question that I've been asked numerous times
--"How to compare insurance companies?"
And as I show you ways that you can do this, it's not so much the insurance company or
product even though it's very, very important.
It's the proficiency of the agent that is designing the insurance policy based upon
your objectives.
So, I'm Doug Andrew.
I'm here in my radio studio.
I have produced a weekly radio show broadcast nationally now for 12 years.
And prior to that, I began writing books at the turn of the century.
And I've written 11 books so far.
We were so blessed in 2007.
That book was the 4th one I wrote.
It was written to an audience of 78 million baby boomers in this country that were going
to outlive their money if they kept their money in the market because many baby boomers
saw their nest eggs dwindle in value by 40% after 9/11.
2001 to 2003.
None of our clients lost anything.
They actually doubled their money from 2000 to 2007.
And then in 2008 as Warren Buffet would put it, when tide went out, he said it revealed
who's swimming naked.
A lot of people lost 40% again for the second time of the decade.
And it took until 2012 to make back what they lost.
Many of our clients tripled their money by 2012.
A million in the year 2000 without adding a dime to it had triple to 3 million where
most Americans were barely back to break even.
It was more of function of how we designed and structured their insurance policies rather
than the company.
Having said that, I'm going to share with you.
I'm very, very picky on which insurance companies I've put my money.
So, let me share with you the criteria I use to choose the right company, the right product
but it's really most importantly the way it's designed correctly and funded properly.
And I'm going to give you some horror stories to understand this.
So, when I broadcast my weekly radio show here, I'm usually limited to about 12-minute
segments where I can explain everything and that's all I have here.
But I want you to click on the link below and I'm going to gift you a free copy of my
most recent best selling book, The Laser Fund.
It has over 300 pages graphs and explanations.
62 actual clients stories.
I'll pay for the book.
It retails for 20 bucks.
I'll buy the book.
You contribute $5.95 towards the shipping and handling and I'll send out a copy of the
book to you for free and you can learn more.
But let me share with you why and how you can compare insurance companies products.
And then how to fund it correctly.
So, when I'm looking for an insurance company, I want to make sure the company is strong
and so you want to make sure they have high ratings.
What I do is I look at the various ratings that in insurance company has.
Such as the Standard & Poor's rating or Moody's or Duff & Phelps, Weiss, the comdex scores.
So, if that's confusing, I like the comdex scrore.
And that simply takes all of the ratings and assigns a company a score between one and
100.
I usually put my serious cash into insurance companies ranked 90 or higher on the comdex
score.
Which means that 90% of insurance companies are rated less, strong or whatever then the
one I choose.
And so, I'm in the top 10%.
Now, frankly I only put my money into legal reserve insurance companies.
That's the vast bulk of companies.
That means insurance companies that have to have reserves on hand that are liquid and
safe in case of a disaster in the economy or a run on the bank.
And so, that's why insurance companies, legal reserved insurance companies have never not
honored a legitimate claim.
They cross insure each other if one were to become insolvent, all the other insurance
companies license in the state where you live have to any up there prorate of share of the
percent of the insurance.
And that's why there's never been an insurance company not honor a legitimate claim.
They cross insure each other where as banks, credit unions, they pay a premium to the federal
government for FDIC.
Federal deposit insurance corporation.
And there's been times FDIC has been broke.
When we've had a run on the banks.
But you know, government, they know they can tax us.
They know they can print money.
And so people fairly secure.
But do you know where banks, credit unions, many brokerage firms put 30 to 40 percent
of their tier 1 assets for liquidity and safety?
In to insurance companies, okay?
Many banks borrow our money and pay us 1% interest?
And they turn around and they put it into insurance companies and earn 5%.
Every million they pay 10,000 a year in interest.
And they make 50,000.
That's 5 times.
That's 500% returns.
You can do that.
But see, most insurance companies are ranked 6 notches higher in safety than the banks
in credit unions.
Many of them are only rated triple B. Most insurance companies where I put my money are
rated triple A. That's like 6 notches higher in safety.
So, you can choose companies based upon those rankings.
And so, out of all the companies and they're several thousand in America, there are only
a couple of hundred that offer indexed universal life.
And out of all of those, I only put my money in maybe 6 because I'm extremely picky on
where I put my money.
I want it to go into an insurance company where they are benefiting the policy holders
more than their pocket.
They are extremely generous in the rates of return.
They keep a very small portion of the profits for them.
If they're out there earning like I did in the 1980's they were earning 11 and paying
me 10.
They were earning 15 and paying me 14.
See, they were only using 1 of the percentage points for them.
And lately with interest rates at a 50-year low, if I'm earning 6 percent in the insurance
policy, they only use one of those percentage points still.
And I net 5.
But I can link it to an index and they're able to credit me more like 8, 9, 10 percent
some years as high as 25% and it's tax-free.
So, it's how you structure it.
But only about a half of a dozen companies do I really like the product.
So, you choose the right company based on strength and so forth.
And make sure they're generous.
Number 2, you want to choose the right product.
But let me tell you the horror story.
I've had people who came to me and they said, "Doug, we read one of your books 10 years
ago.
So, we wanted to set up an index universal life policy.
But we have a nephew" or "We have a brother in law who is licensed.
And so, we went to them and they said, Oh, I can do that.
And then we heard you on the radio say, well, it's been another 7 years.
If you put a half million into your index universal life, that half a million should
be worth a million now 7 years later.
Should've doubled.
Doug, ours didn't double.
We put in a half a million and it's only worth 250,000.
It should've been worth a million.
Where's the other 750,000?"
And I go, "Well, let me see."
And I sit down and I flip it.
It takes me about 30 seconds.
And I look at their policy and I go, "Yeah.
You used the company, one of the companies I use.
In fact, you used the right product.
But who set this up?"
And they go, "Uhm, our nephew.
He had a license."
I go, "Oh my heavens.
He had no clue what he was doing.
You may have been earning gross 10% but you're only netted 1% and that was gobbling up...
The cost of insurance was gobbling it up.
He had no clue or she had no clue what they were doing."
That was an expensive relationship with your nephew just because they had a license.
So, I have the vast majority of people that have non-performing index universal life insurance
policies or any kind of insurance.
It's because the advisor is not proficient for the reason.
To separate the sheep from the goats back in 2007 and 2008, I designed a proficiency
exam.
It's 100 question exam and 30 additional questions essay.
To be honest with you, most insurance agents, most advisors that you see on TV or so forth,
they wouldn't even score 30 percent on this exam because they're no taught these things.
They wouldn't even understand the questions about Tefra, Defra, Tamra.
I can stump them in less than 60 seconds with my questions.
And so, if you've never been taught, how can you answer a question that you don't even
understand?
Now isn't that something?
And so, one of the things that I've done in my most recent book is I have a chapter in
here that has 14 questions that you should ask a financial advisor, an insurance agent.
And if they can't answer these 14 questions right off the cuff without having to say,
"I don't know but I'll check it out."
If they say that, that's a warning sign.
So, you want to make sure the advisor is proficient.
That they set it up so that if you earn 10, you'll net 9.
If you earn 11, you'll net 10.
So that the cost of insurance is as low as possible.
And that if you put in 100,000 a 500,000, a million, it will double every 7 to 10 years.
And when you retire, every million can generate 70, 80, 90, 100 thousand a year of tax-free
income.
If it's not designed correctly, good luck.
You may earn 10% but you'll only net 3 or 4 percent.
Maybe at best.
My heavens, that's huge.
And so, when people say, "How do I compare life insurance companies, I can show you how
to compare companies based on strength of and everything else.
But I can have you choose the right company.
You cane even choose the right product.
But if your advisor doesn't know what they're doing, you're doomed, okay?
It will not perform.
So, make sure you don't make that mistake.
You can see if the advisor is proficient and is designed correctly.
We can look at that and tell you.
We can audit your insurance policy to see if it was designed right.
But I would recommend you read the book.
So, go to laserfund.com and claim your free copy.
This is a 300-paged book.
It retails for $20.
Now, I will gift you 1 copy absolutely free.
To claim your free copy, you contribute $5.95 toward the shipping and handling.
It cost usually a little bit more than that.
And I will send out a copy of the book free.
I'll buy the book, you contribute $5.95 toward the shipping and handling.
It has 300 pages of charts, graphs, explanations and actually 62 actual client stories.
There is usually one story for every chapter of how it didn't work.
And almost everytime.
It's because it wasn't set up correctly by the advisor.
So, don't make that mistake.
Learn, get your free copy of the book.
See how you can choose the right company, the right product.
But most importantly determine if the advisor knows what their doing.
If they don't we can point you to an advisor who I am confident knows what they're doing.