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Starting in Charlotte NC in 1996 & now based in Durham, NC since 2007, we’ve been providing professional Insurance & Retirement Planning for thousands of businesses, non-profit entities and individuals!
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Fee-Based (Fee Only) vs Commission-Based
"Big Fat Commissions"
The purchase of an annuity requires commissions to be paid to the individual who sells you the annuity. A fee-only advisor doesn’t earn a commission for selling you an annuity, they don’t earn a commission for selling you anything because they charge you a fee for financial advice and or a fee for assets under management.
The idea is that it’s better to pay a fee for financial advice than to pay a commission to purchase something because when commissions are involved you can’t truly offer an unbiased opinion. “Or so the thinking goes”.
I Guess The Reason For An Annuity Can't..
I guess the reason can’t be a result of the insurance company providing you with a forever guarantee. A guarantee you’ll never lose money due to a market decline or crash.
Surely The Reason Can't Be For LTC?
I guess the reason for selling you an annuity can’t be because it will provide you with a 2.5x multiplier in the event you need long-term care services…. meaning that if you have an annuity with an account value of $250,000 and one morning you wake up and you can’t get yourself out of bed because you had a stroke or you’re unable to perform two out of the six daily living activities…. The 2.5x multiplier would turn this $250,000 annuity into $625,000 that you can use income tax-free to pay for long-term care services.
HSAs Are Triple Tax-Advantaged Accounts!
- Money is contributed to the account tax-free.
- Interest earned on the money is tax-free.
Distributions made on eligible expenses are tax-free, such as: Athletic Tape, Anti-Bacterial Hand Sanitizer, Motorized Wheelchair, Ibuprofen, Aspirin, Condoms, Fitness Tracker LMN, Sales Tax-Taxes on Medical Services and Products, and Tylenol. Over 3,000 Items…
IUL Myths & Facts Explained!
There’s a lot of mystery surrounding IUL’s – Indexed Universal Life Insurance products, as a result there’s an abundance of hype and misrepresentations.
Typically, the information you see advertised for an indexed universal life insurance policy is either one extreme or the other.
Earn $10,000 per month income-tax-free in retirement.
- $54,000 Income Tax Free S – – – – – Benefit.
- $19,000 Income Tax Free via our Tax Deferred 401k
- $18,000 Income Tax Free Roth IRA Distributions
- $19,077 Income Tax Free Life Insurance Distributions
- $10,000 Income Tax Free Via Taxable Investment Acts.
A total income of $120,077 Income Tax Free.
BOLI – Bank Owned Life Insurance.
Cash Value Life Insurance Doesn’t Work? (Really?)
As of 2022 a collection of our nation’s richest institutions is holding 200 Billion dollars in Liquid Cash Value, housed inside of cash value life insurance policies.
“The Banks” …… the top 7 banks combine to own almost $100 Billion dollars in cash value life insurance. (87 billion) Bank of America owns over $24 Billion dollars in cash-value life insurance. As reported by FDIC.gov. I’m assuming it does work lol.
A, CNBC personal finance report showed Grandparents spend $179 billion annually on their grandkids an average of almost $2,600 each year per grandchild!
If grandparents instead purchased a properly structured life insurance policy for $2,600 a year when their grandchild turns 5 months old … and paid on this policy for only 20 years…. then allowed the account to grow untouched until their grandchild turned 65, they would be able to provide that grandchild with almost $4 million dollars of income tax-free money, with no fear of stock market loss.
FBI PROTECTION PLAN
The Foreclosure Bankruptcy Income Protection Plan.
Many people are not aware there is a life insurance policy you can use while you are still living, meaning “You Don’t Have To Die To Use It” This special policy has 4 key components that help to classify it as life insurance you don’t have to die to use. This plan has a traditional death benefit a terminal illness benefit a critical illness benefit a chronic illness benefit along with a guaranteed income benefit.
The LTC Ticking Time Bomb Is About To GO Off!
FIA To Roth Super Combo
Fixed Index Annuity To Roth Annuity Conversion Strategy!
Only Thing Better Than Having a Lifetime Guaranteed Income You Can Never Outlive Is This:
To Receive This Money Income Tax-Free Guaranteed For Life!
Max Funded Cash Value Life
Getting The 1st Step Wrong Could Cost You Thousands!
If you purchase a plan that is not structured properly from day one and three years down the road you realize the mistake, there’s nothing you can do to correct it.
When max-funding any cash-value life insurance policy it must be set up right on day one!
Rent & Invest the Difference vs Purchasing A Home!
What’s the “True Cost Of Home Ownership”
Many people rush to purchase a home without really considering the actual cost of owning the home. Most people only consider the P&I when calculating affordability as if the other expenses are voluntary.
NEWS FLASH-The extra expenses are not voluntary!
The Scoop on Buy Term & Invest The Rest.
The buy term and invest the rest catchphrase/strategy has a nice ring to it. In this report, we’ll explore if it’s a legitimate strategy to follow or if it’s just another catchy catchphrase!
I don’t believe in a “one size fits all Strategy” and I usually recommend clients to steer away from advisors and agents who tend to be a one-size-fits-all kind of planner.
The Fees Are High
The Fees Are High Compared To What?
Not All Cash-Value Policies
Are Designed For Maximum Cash Value Growth!
$20,000 (5 Years)
If using the plan for future retirement income…Funding the policy in 5 years will provide the best results. Funding the policy in 5 years will also result in drastically reduced fees.
With this properly structured policy the fees in the later years in relation to the cash value aren’t even 1% it’s only 0.23%
5,000 (20 Years)
If funding a policy over a longer period of time…As you can see with option two, it will work however you’ll cost yourself over $100,000 in cash value as you can see with this example. You could also end up with double the fees!
$3,500 (29 Years)
The premium paid isn’t high enough in relation to the death benefit to support building cash value and the policy will lapse by age 96 with no cash value.
IUL Max Fund
Are You A Good Fit For A Max-Funded Cash-Value Life Insurance Policy?
Everyone is a candidate for an IUL - But not everyone is a candidate for a "Max-Funded IUL or Max-Funded Whole Life!
Follow my checklist below to find out if you are a good fit for a Max-Funded Cash Value Life Insurance Policy Design!
The Era Of IUL
So What Are The Contractual Guarantees?
1. Guaranteed Premiums
2. Guaranteed Death Benefit
3. Guaranteed Living Benefits
4. Guaranteed Lifetime Coverage
5. Guaranteed Cash-Out Option (Return Of Premium)
Follow The checklist
Remember…
You don’t have to purchase an IUL for cash value growth!
Using an IUL for current & future asset protection needs with contractually guaranteed benefits will certainly help to secure your future.
However, If you are ready to start max-funding an IUL... have you followed the checklist below?
1. Are you and husband “FIRST” maxing out your employers 401k match?
2. Are you and your husband “Next” contributing the max into a Roth IRA?
3. Do you already have 8 months to 12 months of emergency cash?
4. Are your high-interest debt accounts paid off or very close to being paid off?
5. If doing an IUL for maximum cash value growth the above should be accomplished first.
6. If doing an IUL for cash value the ideal situation is to fund the policy in 5 years.
7. The longer it takes you to fund the policy up the higher your fees……….the IRS allows you to fund it up in 5 years.
8. If you have to make smaller payments I guess you can… but you might be disappointed with the long-term growth.
9. If you have a current illustration does it show cash value in year one or do you see a zero! If you see a zero it’s not setup correctly.
10. If you’ve already purchased an IUL and the premium payments are under $500 per month I can all but guarantee you…..disappointment will be knocking at your door if the goal is for maximum cash value growth in the future.
11. If there’s a chance you might need to access the cash value over the next 10-15 years… max funding an IUL would not be a good idea for you.
12. For short term a Max-funded Whole Life would be better and for long term an IUL is better if done correctly. However at the end of the day when comparing the best WL design with the best IUl design….really your only looking at a difference of 50 basis points maybe a little more or maybe a little less.
13. The main difference would be how you access the money. With an IUL you can do a fixed rate zero% wash loan. Many will show you an illustration with a participating loan (allegedly giving you positive arbitrage) This only works if you never have a zero year!
(But we all know you will at some point have a zero year)
So when you have a zero year while using the participating loan your policy most likely will not be able to recover.
An IUL has caps (even when it says you have an unlimited cap you still have a cap lol)
As a result of having this cap you can’t have a 30%+ positive year the very next year to help your account recover as would be the case with a market portfolio.
This is why I would recommend simply sticking with the fixed zero-percent wash loan. (Note: even with the zero % loan if the interest charge is added to the beginning of the loan instead of the arrears, you’ll still incur a charge for the loan.
Even with a Whole Life & IUL almost performing the same over the long haul I still lean more towards the IUL because of the zero % loan but more importantly because of the far more superior living benefits especially for long-term care type services…
If for maximum cash value, all of the above applies…
NEXT:
You don’t have to purchase an IUL just for cash value.
For my practice, I primarily recommend IULs for what they are contractually guaranteed to do not for what they might do..
The contractually guaranteed side of my IUL business represents about 80% of my IUL sales… the cash value (might do side) represents 20%.
I would say 90% of agents who recommend IUL’s don’t follow any of the advice I’ve just presented… while 90% of fiduciaries (Securities 65 reps & CFPs) who recommend IUL’s almost always follow this type of guide.
To be clear and to set the right expectations:
An IUL is not a stock market replacement! ( Can it keep up with the Bonds… Now we are talking)
I personally know of a few Certified Financial Planners (65 reps) who will recommend allocating up to 35% of your money going into an IUL.
I personally think that’s a little high.
I’m typically in the range of no more than 10 – 20% of your money going into any cash value life.
AN IUL IS NOT….
A Stock Market replacement!
An IUL is not a 401k replacement if someone is telling you so please don’t walk away from them but run! & Fast lol.
100% of the time a 401k in combination with an employer match (Free money – free rate of return) should be used first.
There is no rate of return in an IUL that can account for the free money you get via the employer match along with the rate of return on your contributions.
Don’t let someone sell you on the tax-free part of an IUL ONLY- because with a 401k in retirement if you take advantage of the standard deduction which is currently $30,700 (over 65) for a married couple you could potentially have the taxes offset leaving you with zero taxes due on your tax-deferred buckets.
Do not roll money from your 401k/IRA into an IUL unless you don’t qualify for or can’t afford an LTC plan and you currently need an LTC.
An IUL for cash value is “ONLY” a complement to your total retirement portfolio and should never be your primary source of retirement income not even close!
***An IUL for contractual guarantees all day long lol***
Hope this helps!
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