- What does tax favorable tax treatment of life insurance
encourage people to do?
By the end of this video episode, you will understand
that because of tax favorable treatment of life insurance,
it encourages people to save
totally tax free for retirement.
(upbeat music)
So I'm Doug Andrew.
I've been a financial strategist
and a retirement planning specialist now
for north of 48 years.
Doing what?
Helping people optimize their assets, minimize taxes,
and empower what I call their authentic wealth.
Most people come to me through the financial dimension
or portal because they want to increase the liquidity,
the safety, the rate of return, and the tax benefits
on where they're setting aside their serious cash,
money that they do not want to jeopardize or lose.
This is usually money that is earmarked
for their retirement or maybe college funding
for their kids or grandkids
or working capital they have to have on hand and liquid
for their business or for real estate management
in case their apartments go vacant
or need to be refurbished or whatever.
They want to be able to have a solution
where they can have their money
that's accessible, that's liquid.
They can get it when they need it
without triggering an IRS penalty or triggering tax.
They want it to grow at a decent rate of return
'cause having money in a bank or a credit union
earning less than 1% is pathetic.
This is why they come to us
to be able to optimize those assets and minimize taxes
and be able to structure an account
that's very, very flexible
to be used for all kinds of goals.
But at the end of the day, a lot of people come to us
primarily for living benefits like retirement income
because a property structured maximum funded IUL policy,
generally speaking, will knock the socks
off of most traditional IRAs or 401ks
where most Americans save money for retirement.
And I can prove that all day long.
There's a lot of episodes on this channel that address that.
But I'm gonna focus on the question I started out with,
what does favorable tax treatment of life insurance
really encourage people to do?
When I begin to educate people
and even professionals like CPAs and tax attorneys,
off times, I'll have a room full of 80 CPAs
or tax attorneys, and all of a sudden they sit there
with their mouths open and they go, "You know, Doug,
I've heard about these sections of the code.
I've heard about these, but you know what,
I've never really checked into it
because I didn't need to understand this
in order to pass the accounting exam to become a CPA.
I did not need to know this to get an LLM degree,"
which is a master's in taxation,
which I think is pretty ridiculous,
but now they're wanting to learn
advanced continuing education and they're like blown away
and they realize they've been advising
a lot of their clients wrong.
They think it's wrong and I say, "Well, no,
telling your client to put money in IRAs or 401ks
or whatever isn't the worst advice.
It's not the best advice, but it's not the worst advice,
but now you know better."
So there's only one vehicle
I teach them in the Internal Revenue Code.
And by the way, people, I have critics that go,
"Oh really, there's only one vehicle that does this?"
And I go, "Show me any other vehicle that does this
in the Internal Revenue Code."
Does what?
Accumulates your money totally income tax free.
Well, there's a lot of vehicles that do that
or tax deferred is what most of those are,
but not totally tax free.
Number two, then allows you to access that money
at any time, any time,
even four days after you put money in,
or you don't have to wait 'til you're 59-1/2,
you can put in money and four months later,
you put in 200,000, you can go grab 100,000 of it
and not have a 10% penalty or trigger tax.
And so you can access that money
totally tax free and penalty free
and if you do it correctly.
And then at the end of the day, when you finally die,
'cause none of us are getting out of here alive,
I mean, out of this life, when we die, it actually blossoms.
It usually increases in value and transfers
totally income tax free to your heirs, your beneficiaries.
Nothing else does that.
Municipal bonds don't do that. RAS don't do that.
And I've yet to have anybody show me what does that.
And so even though they go,
"Oh really, nothing else does that?"
I go, "Yeah, show me anything else that does that."
Accumulate your money tax free,
allows you to access the money tax free,
and then when you die, it blossoms and transfers tax free.
Now, if you don't know what I mean by blossom,
I'll just say it this way.
I'm gonna be 70 here in a couple of months.
And if I died in an accident,
every million I might have in a portfolio of IUL policies,
laser funds, laser fund is a property structured
max funded index universal life,
most IUL policies would not qualify
to be deemed a laser fund,
which is another topic you can learn about on this channel,
but every million that I might have
would blossom to over two million and transfer tax free
to my wife, my kids, my grandkids, if I die,
a church or charity, whoever I wanna leave it to
in the form of a tax free death benefit.
Nothing else does that.
So that's what I mean by accumulate, access,
and transfer your money totally tax free
under three sections of the code.
Then in one form or another
have been around now for more than 108 years
and you have to comply with three tax citations,
TEFRA, DEFRA, and TAMRA.
Those are acronyms.
They stand for the Tax Equity
Fiscal Responsibility Act of 1982,
the Deficit Reduction Act of 1984,
and the Technical and Miscellaneous Revenue Act of 1988.
That tells you the minimum amount of insurance
that must be attached to the account.
You're taking the least amount of insurance
you can get away with to be able to put in the most money
the IRS will allow as fast as they allow,
which is dictated by TEFRA, DEFRA, and TAMRA,
because your primary objective is living benefits
more than death benefit.
You want the least amount of insurance
the IRS will let you get away with
and put in the most money the IRS allows
as fast as they allow
and it turns into this tax free cash cow
used for living benefits.
So when people begin to really learn this
and they understand it, they go,
"Hello, this is a no brainer."
So when they learn of the tax favored treatment
of properly structured indexed universal life,
where I've been able to earn within one percentage point
of the gross rate of return for years at the end of the day,
if I earn 11, I net 10.
If I earn six, I net five.
If I earn 69 net, 15.
There's years like 2020 to 2021,
many clients earned 61.33 and netted 60%.
Yup, using max funded indexed universal life.
When you understand the tax favored treatment,
what does that encourage you to do?
People go, "Hello, can I take money out of a bank
or a credit union that's only earning 1% and it's taxable
and put it in here?"
Yup.
"Hey, I'm tired of being a landlord.
I have this rental property. I just wanna sell it.
I don't wanna take out the trash anymore
and fix these toilets and evict tenants.
Can I just sell and put the money into one of these?" Yes.
"I have money trapped in IRAs or 401ks
and I've now learned it's not saving me
by deferring 'til I'm 72 and taking out RMDs.
I'm actually compounding the tax."
Yup and I show them the math and they go, "This is stupid.
Can I reposition? Can I roll the money out?"
Notice I said roll out. It's not a rollover.
A rollover is going from the frying pan into the fire.
That's taking money out of a 401k
and rolling it over to an IRA and continuing to defer.
No, no, no. You do a strategic roll out.
Can I roll 200,000, 500,000, a million out of my IRA or 401k
strategically over let's see a five-year period
and put it into max funded IUL
so it's tax free from this point forward?
And when I ultimately die, all the taxes I did pay
are reimbursed to my family
because of the tax free blossoming when I die.
Yup, you're getting it!
When people get it,
it encourages them to then set aside money,
save money a smarter way.
By doing that, they reposition underperforming
or non-performing assets into max funded IUL policies.
Does that make sense?
And so you do that when you understand
how to accumulate, access, and transfer money
totally income tax free.
And this is why people get encouraged to use these
and take ownership for their future,
which takes pressure off of the government
to have to provide for you.
So if you outlive your money in traditional IRAs or 401ks,
no, you won't have to be a drain on society.
And if you die and leave behind widows and orphans,
they will not be a drain on social dollars
because you took care of them.
That's why it's tax free.
And if the government taxed those,
they would be shooting themselves in the foot.
And so far, they've been smart enough to leave these alone.
I can't guarantee that
because sometimes Congress does stupid things
when they get greedy for tax revenue, but so far so good.
There have been times like in 1990 they studied
should we tax these and they came to the conclusion,
hmm, let's leave them alone.
It would cost us more than it would make us.
In the short run, we might make tax revenue.
In the long run, it's gonna cost us.
So they've said leave it alone.
This is why I'm so passionate about max funded IUL.
Because when you structure one correctly
and fund it properly, it is now a laser fund.
It's a liquid asset safely earning returns.
If you want to read about this,
I want to gift you a copy of my most recent
300 page bestselling book called "The Laser Fund,"
which is actually two books in one.
This side is about 200 pages, 14 chapters
with all kinds of charts and graphs
if you're a left brain learner.
If you're a right brain learner, you learn by stories,
you flip it over and read this one.
This is about 100 pages, 12 chapters
with 62 actual client stories.
If you want to learn
with both your left brain and right brain,
you can read both, but you simply claim your free copy
by going to laserfund.com, LA-S-E-R fund.com
or click on the link below.
You contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost,
but you've gotta have some skin in the game.
I will pay for the book. I'll send out a hard copy.
There's options there to listen and learn, watch and learn.
You can even check out
some of the online educational webinars.
You even have the opportunity
to talk to an IUL professional that I have mentored
to see how this may apply in your particular circumstances
at absolutely no cost or obligation.
This is about you and your brighter future.
(upbeat music)