We've all been told that life insurance is boring, something you set and forget, but when you dig deeper, it turns out people are using life insurance in ways that are anything but boring. We're talking about Walmart profiting off employees' deaths, criminals insuring each other before a heist, even filmmakers using policies to fund their movies. In this episode, we're unpacking some of the most clever, creative, and controversial ways that life insurance has been used. With that being said, let's dive in. All right, Caleb, let's have some fun. I think when we're thinking about the end asset, we usually think about just typical overfunded whole life insurance for entrepreneurs, business owners, sometimes for high W-2 income earners that want to maximize it for retirement. And we've even talked about legacy pieces such as the Rockefeller Method. We will be discussing and talking about those in this. So if you guys are here and you guys are not new to this, we will be overviewing some of the same concepts and strategies. but What we also want to do is share some things that hopefully maybe you've never heard of before or you have. And we could just take a little deep dive into some of them. So our goal is to spend one to two minutes at most talking about each of the the categorical interesting ways that people have used life insurance. And what we'll do in another future episode is we can actually take a deeper dive into some of these subjects and make it an entire episode. And so with that being said, let's have some fun. Caleb. I don't know if there's anything you want to say before we get started. Yeah, I mean, we're going to go through 20 different examples. And the disclaimer is we're not endorsing any of the things that we're talking about. It's not a thought crime to think and talk and discuss. And one of the things that I think we need to do a better job is we very often think that life insurance, you know, we put it in a box. Like what you said, there's entrepreneurs, there's high paid executives, there's a retirement box, and then there's a legacy box. Those are. four ways, those are four types of people that could use life insurance as a part of their portfolio. And we're going to just go through some creative ways that some people have used life insurance, some creative ways that people have gotten in trouble using life insurance. Just talk through benefits that don't necessarily show up on a pitch when you're talking about, this is why you should get life insurance, but it's just really interesting. And so this This episode is sponsored by ChachiBT because some of these ideas were generated thanks to AI. But I'll get us started off on these more than 20 ideas that we're going to go through. The first just idea that we're going to cover is Walmart buying life insurance on their employees and actually getting in trouble. So what ended up happening is Walmart, through a trust entity, bought thousands upon thousands of life insurance policies on its regular lower paid ranking file in place. So just like, just think with me for a second, when you go into Walmart, what is something that you think about? It's the greeters, you know, greeters that aren't necessarily the youngest people in the world. I'll just say that. And, back, back in the day, Walmart was buying just life insurance on all their employees as like a key benefit. Um, but they were getting the benefit of the insurance and where they got in trouble was not really disclosing. And so this got, this got. shut down. But it's a really interesting idea because they're just getting group group insurance policies saying that they're key executive like key executives. But really, they're not. It's like if you lose a Walmart greeter, it's not like Walmart is going to, you know, go out of business or even be hurt by that. And so that's where they're challenging to say, do you really have an insurable interest? Because it's one thing if you're insuring an executive where it's like, Yeah, there's... if this person went down in a plane, like this would be a bad thing versus like, you know, insuring somebody that, you know, let's, let's just be honest that a Walmart greeter is not going to make or break Walmart's corporation. And, and so that's where like Walmart use life insurance very creatively. I, it's not disclosed on how much money they made. One thought experiment is they got a group policy. They insured a lot of maybe older people. And then upon their passing, if they did pass, Walmart would get that. death benefit. It's just a very interesting idea when you're thinking about Walmart and the large numbers of people that they employ. Amazing. All right, next one. It's going to be criminals in crime using life insurance. All right, this one is super fascinating because a lot of this stuff happened, I would say, later on. I think insurance companies are getting better about investigating or figuring out if this is involved. But Back in the 70s and 90s, there was actually a very interesting group of individuals that they call this the murder for insurance, like the crime rings back in the 70s through 90s, where they would take like vulnerable people. whether it's like homeless or the elderly, they would build a relationship and they would sell them life insurance. And through that process, they would put themselves as the beneficiary. Right. So they put them as a beneficiary and then they would orchestrate a crazy type of accident, a car crash, fires and essentially just like kill people across from like a victim perspective. There's just like this crazy fraud operation to then have them get the funds when people would essentially die in that instance. So I was like, wow, it's very creative, but also very manipulative and unfortunate. And there's also members where people are part of gangs and they say, you know, let's get insurance on on each other or insurance on partners. Name people beneficiaries in case something does happen. and sure enough they'll either intentionally make sure that they die in the act of or They'll die, you know, because they just go out and commit the murder one way or another. And it's just one of those things that obviously I think today would be a lot harder to do. But I think back then there was a lot easier ways to get manipulative in regards to getting money. So criminals, criminals be criminals. It's interesting. Insurance companies would probably crack down on it or see patterns. And so they would have to. I don't know how smart these criminals are. I mean, it's creative. It's 10 out of 10 creativeness, but really sad. It's one thing, and we're not endorsing any of this, by the way. It's one thing to do insurance fraud and burn down a house or smash a car. It's another thing to actually kill a human being. That's pretty morbid, really sad stuff. But it's like if all these people put their time and energy into actually creating value in the world, these would be some of the best entrepreneurs out there. So interesting, interesting thought. Amazing. All right, let's keep it going. The next one is going to be secret families named as beneficiaries. All right. So this isn't like a I don't think it's a prize, but it is just an interesting way that we're talking about people using life insurance in general. Some of the examples like the examples are listed as the classic double life scenario, the politician with a hidden child. The business tycoon leaves everything to his secret second wife and the pastor with a hidden relationship. And so ultimately, every single one of these stories, as I'm looking and reading through it, is a human that has a secret life that chooses to have an account, pay for the funds, likely through something where somebody else does not know of it. And then until they die and pass away, it is essentially stepped on the rug. But once they die... there's a good chance that there's going to be someone some way that's going to ask some questions that's going to get revealed and so it's all fun and games uh unfortunately uh at the beginning when you know someone is doing this the secret beneficiary but then what does end up happening is it causes probably a lot more hurt and pain because if you're obviously having a secret life in the back end and then a massive death benefit gets paid out to like your secret family well your main family like probably like how do they actually feel especially if you chose not to give the you know, actual funds to the main family, which I doubt that was the case. But it just shows that there's lots of ways that you can do this from a hidden perspective, right? And that's some of the things that we talk about in life insurance in general is it's not necessarily like public in a lot of instances. So it's just one way that people use. It's funny because we're talking about it and all of them so far have been like ill will or, you know, using terrible because life insurance is hidden or off the radar. Yeah, exactly. Yeah. The next. The next point I want to make is using it in divorce. So it's like divorce battles using cash value. And this is actually something I have experience with. So when I first got into the business, sell life insurance, and there was one policy that was sold that wasn't as much early cash value. That wasn't necessarily the play. And what was interesting was this person actually went through a divorce. They wanted to value the life insurance. Well, what's interesting is very few people know how to actually value the life insurance. So what they just did was they looked at the cash value as like the asset when you're like trying to figure out who gets what and dividing and all. And what was interesting is for those of you that are really nerd out on life insurance, you know, like early on you have the least amount of cash value. And then over time, it gets more and more efficient. And then obviously the death benefit is valuable, but... The divorce court or whatever you want to say only looked at the cash value currently, and so they massively undervalued the asset. This person got to keep their policy, and I wasn't involved, but the reality is they felt like they got a they, they're a misunderstood asset got undervalued. And as a result, they, they felt really good about keeping it. Um, but it, it wasn't like one of those where they had to necessarily give up a lot by having it because shocker, most people just look at life insurance just as the cash value and don't see all the other aspects that it's going to get more efficient over time that in death benefit and the other living benefits associated that. So after that happened, And let's just say the beneficiaries got changed pretty quickly. after the divorce official. But again, not condoning that at all. It just is a real life example. And I'm sure in a lot of cases when people go through that, not all assets are created or valued equally. And life insurance, for better or worse, can easily be undervalued on paper. Amazing. Amazing. All right. Next one. It's going to be partners taking out policies on each other for business protection. I think if you are somewhat educated on life insurance, you are familiar with this one. It's usually the idea or the concept of using maybe a buy-sell agreement. Obviously, if you have a business partner and something happens to them, they die, you want to be able to find a way to have their equity essentially come back to you versus having to do business with potentially like a spouse or something of that nature. All right. There's probably nothing worse in business when you're having a really good relationship with your business partner and they are crushing it. And you guys are just going back and forth in regards to growing the business. They die, pass away. All of their attributes, skills essentially go away and they no longer bribe value. But now you're in this quote unquote business bed with their spouse and their spouse is the individual. Now you have to do business with. And so what do you do? Well, the life insurance proceeds can essentially pay and buy out the spouse to protect the business as a whole. And that is a great way to do so for protection for the business on each other. Yeah. If you're partners and your business is actually thriving, this should be something you'd look into getting a buy-sell. And a lot of times funding that with life insurance is a no-brainer. Appreciate that, Dom. Next point is funding a business buyout through a policy loan. I think this is pretty self-explanatory, but you have life insurance that you have. and the cash value can be used for whatever you want. And one of the ways you could use that is acquiring and buying businesses. And the beautiful thing about that is especially if there is a desire to protect you in the process, now you have an asset doing maybe two things, getting you the capital to be able to get this business. But then the second thing is continuing to ensure the potential producer, the potential value creator behind launching the business. And so that is a pretty... self-explanatory, but we have many clients, including yours truly, that have used their cash value for business purposes. And so it's definitely one of my favorites. Amazing. That's your number one way that you have talked about and used this concept. So if anybody knows you, isn't that when your very, very first policy, like that happened like a while ago? I know that wasn't necessarily the first thing, wasn't it? The first thing you ever used a policy loan for was for a vacation or did you use something for a different? So I used my first policy for a missions trip just to like almost like see how it all works. So I'm just just see all now didn't endure it like I wasn't getting rich going on the missions trip, but I just wanted to see how it all worked. But then my next policy loan was actually funding the book launch of the end asset. and the and asset has opened up a lot of doors and has truly been one of the... better assets that I've, you know, invested in if you want to think about it that way. And so that's an entrepreneurial endeavor that has opened up a lot of doors and very much tenfold got paid back from the loan interest that it costs for me to get the book launched. Amazing. I think that is a easy example of people always thinking like, I need to use it. You need a direct rate of return back right away. It's like always using a firm investment. But I think if you can clearly justify like, hey, This book may not have a direct tied out rate of return right now, but there's a high likelihood that it will in the future. Then it's a great investment. And I could I could easily argue that that book is is paid. It's paid its way plus on many dividends. And so. All right. Next one, using cash value to settle lawsuits. I think the important part about this concept just in regards to this title is. Life insurance is a very amazing multi-use asset with flexibility, right? It doesn't have to be used for one thing. It can be used for many things, but it's a storage of liquidity. If you do have your money in something else that is e-liquid, whether it's equity in a home that you can't pull out, or whether it's 401k that you can't pull out, whether it takes a long time, or there's penalties to essentially access it, this gives you ability to use for something like this right and there's many instances of businesses and business owners, whether they're in disputes, they're suing each other. And whether it's a profit agreement share or a, you know, ill will, whatever this lawsuit is for, you can use your policy loan to essentially, you know, get clear in regards of that lawsuit. Another one that I think is just interesting that we don't think about is that there was an example of a doctor that uses policy loan when he had a malpractice gap. And that just shows, it's just another example for having protection for you, your family, your business that most people don't think about. And it just gives you many optionalities in regards to who knows what will pop up in life. And that's, I think, what makes the land asset or just permanent life insurance so great when there's cash value in it. Well said. It really becomes the ultimate emergency fund because it very much can protect you when you get hurt and disabled, potentially, when you die. And if something bad happens to you, it has cash value. And so you can very much see life insurance as that insurance policy, no pun intended, on the many unknowns. The next point I want to make is entrepreneurs using whole life to collateralize bank loans. So when I worked at the bank, whenever there was a business owner that wanted lots of loans, the bank wanted them to have insurance. Now, they didn't care if it was whole life insurance or term insurance, but they wanted to make sure if I'm loaning a bunch of money to you, Dom, and you're the business owner. And something happens to you, i.e. your wife in many cases is going to take over, and I'm not I wouldn't be giving your wife the loan that I'm giving you. And so life insurance would just be a lot of times the bank wouldn't even be the beneficiary of that, but they just like the fact that, hey, okay, you're going to have money get paid to your spouse, and then your spouse will have the money to make be able to pay off this loan if the business goes kaput. And so in a lot of cases, they don't necessarily need to even be. you know, the beneficiary, that would kind of be a red flag, to be quite frank, if banks wanted to be the beneficiary. Like, I think that's pretty unheard of. But they they like the idea of like, yeah, we're going to we're going to make sure that your spouse is on the hook. So they better pay that loan. But insurance will actually make it happen versus you can have as 10 out of 10 integrity. But if you literally don't know what to do there, you know, bankruptcy might be the right option if you just can't make it work. The other aspect is... So imagine having a death benefit and then having cash value that actually can be used as collateral. And this was also used infrequently, I will say, because, again, not everyone uses life insurance, but banks love cash value as collateral. And whether it's a traditional bank or whether it's an actual bank that works with our policies, banks love that because there's no volatility. It's almost the equivalent of having money. in a savings account, but it's way easier to collateralize versus a savings account. It's a lot harder to collateralize because in order to collateralize it, you need to make sure that you're almost giving up access to it. And so by definition, that's harder to do in a savings account where it's easier to do when it comes to whole life insurance. So anyways, those are how entrepreneurs can use whole life in bank loans. Amazing. And that actually goes ties in well to the next one, which is indie filmmakers funding movies with policy loans. There's actually an example of a filmmaker who went to a bank and used his policy as collateral to get a loan to finish his film. And that's just an example of like, it doesn't really matter your business. It doesn't really matter what it is that you're trying to accomplish. if you can find a way to be creative. and you have optionalities to do so, your poli policy can be a great way to move the needle forth and the goal that you're trying to accomplish. And you may even not even have the expectation that you're going to need it, such as there was another, you know, film producer that was in California. They were building out a movie. They were $80,000 over budget. It wasn't expected, right? You have this plan, this business plan. You're like, hey, this is what I'm going to do. This is what the costs are. To come to find out with everything that was involved with the editing, the finishing, the sounds, all that, they needed $80,000 more. And so he had a policy with about $150,000 in cash value, decided to take out about $120,000 to finish the film, get everything taken care of. And then they were late. They were afterwards when it was done, they were acquired by a streaming distributor. So that means they got their payment back, right? They sold, they made all of their money back, right? Then they took the funds and they paid back the loan to their policy, making it this evolving line of credit that they can go do again for in the future, which makes it great because when they needed the funds, right, if they would have had to go to a bank, they would have had to do their required credit checks, the underwriting, explain what the money's for. And a lot of times they're like, well, I don't know if we trust this from a standpoint of like needing to give you money. Our church is actually... in one of these situations right now is like they're trying to expand and go buy a new new building for the church and they can't get a loan right now period because um they don't have enough essentially documentation of income to prove that they are worthy of the loan that they're trying to achieve and they have to go through like this extensive underwriting but if they were to have maybe i mean this is an extreme example because the loan they're looking for is huge but in this example let's say they did have this massive life insurance policy Well, they could essentially use probably part of that as collateral or use that to essentially decrease the amount of loan function they would need to to move the needle forward. So there's lots of examples, actually, of people using their policies to make films and to build interesting businesses. But that's obviously Ray Kroc or, you know, Disney. You know, you just hear a lot of really cool people that are using it to build stuff that's really creative. I love it. Next example is farmers using whole life as an operate operating. capital system. And there is many, many examples of how farmers could use this to finance equipment, finance their farm, and use it very much in infinite banking terms, but then also make sure that they have a massive death benefit for that next generation. And ultimately to protect if something does happen, that the equipment and all can be paid off if needed be. And so Mary Jo Ehrman has written a couple of books about farming, um, without the banks. And, um, I would, I would say farm with the banks with using whole life insurance is it would be, um, you know, amazing. And, and so there can be a lot of power in that. Amazing. this one, that's always fascinating. Like I, I remember our example that we, we had on a YouTube of using, cows and then you hear Mary Jo and you're just like, oh, like. Farmers, this is a way more popularized way to use their loans than you probably would have even imagined, right? Yeah, and farmers take on a lot of risk. For the upside, I feel like they take on a lot of risk. And so having life insurance in general from a death benefit perspective is a need, and most farmers are underinsured. So just by if you can kill two birds with one stone, most farmers that come to us need more life insurance, period. And so it's just a way to potentially kill two birds with one stone. Amazing. All right. Next one is dear and close to my heart. All right. Athletes using Co-Life for long-term wealth preservation. I think this one gets not the love that it deserves because most athletes, when you look at the historical evidence of how they're able to keep money, is essentially nil to none. I think in the episode of 3030, it shows that like... 70 to 80% of people, by the time they're done within a couple of years of professional athletics, essentially go broke. Imagine just being this person that has high status, high funds, high money, and then all of a sudden you're done and then you lose it all. It's like, well, you now went back to this depression state of just like not having an identity. Plus you have no money. It creates a really hard, um, hard place for a person to be in. And so they, they don't, most athletes don't have a foundational place of growing up with money. So therefore, when they get it, they don't have the spending habits to essentially create the things that matter the most, such as lottery winners and why they always go broke right away, etc. And so if what we can do is we can take a large piece of a salary of a professional athlete and redistribute it into a policy over a seven year window, which would be super ideal if that's the case. There's a high likelihood that that athlete would never, ever have to work again. and after seven years would have to contribute any money. anymore with if there was a significant amount of money that was going into the policy at a guaranteed predictable outcome. I think that's one of the more important things is that this gives you the ability to have a guaranteed predictability going into the future. But the other thing is too is it gives you optionalities again. It gives that when a lot of athletes, when they're done, they want to start businesses. It gives people the optionality to borrow against and go start another venture, another business, to do coaching, to do what they love, to start nonprofits. and or to later on for retirement, whether it's they want to also distribute money into or contribute money into an asset based account with this can then be used as a volatility buffer and other things like that. Plus, the protection, obviously, for their family, it's going to be super important. Not a lot of them usually start nonprofits to be able to have the best benefit, be able to give as well. So there's a lot of really cool ways that this can use just for wealth preservation, wealth growth. When it comes to pole life insurance as a general and most most athletes just like most, you know new entrepreneurs that start making money You can become your worst enemy when it comes to all the shiny objects that you could do with your money And you not even spending like spending easy to fall into that trap But even just like new businesses and you feel like you're like crushing it So you're gonna invest in these startups and there's a lot of value and just saying no to a lot of those things as well There was an example in 30 for 30 where the guy invested $500,000. He was an athlete to somebody that presented an idea to him that because he was from Texas and he was used to flooding that when a flood would happen, his furniture would inflate, inflate like a like a like a boat, like a mini boat and balloon. So that way that when they would flood, their stuff would float down the river, float down the water, and they could pick it back up when it got to the very end of the water. And I was like, you cannot tell me that somebody actually paid 500 grand for an idea like that. And it's true. It's the stupidest ideas and just shiny objects. So yeah. Parents structuring conditional legacy payouts via policy. Short answer is you totally can control how life insurance gets paid out. And the easiest way to do that is through some type of trust setup. And so instead of having the money go out to your kids or your spouse, you have to go to the trust and have it be very clear how and when this money gets paid out. And even the insurance company has different options as well. And one of the biggest mistakes people make is trying to make too many financial decisions within the first year of death. And so there's wisdom in... in making sure that you can't blow up someone's whole inheritance overnight, literally. And so lots of different options using trust and using the insurance company on how money can get paid out. Amazing. The next one is going to tie in a little bit of that. And we're just going to combine this one with another one that I was going to potentially think about doing, but we're just going to make it all into one. Creating family banks through generational whole life stacking slash using trust and multi-generational planning across the board. And this is where we have talked about in a few different videos now to this point in regards to the idea of the Rockefeller method. And I think when I share the Rockefeller method with people, I think it hits home extremely well because it makes you realize the true power behind it and how it's almost a... a no-brainer, safe-proof way to keep wealth in the family long-term, generationally ongoing, as long as there's a system in place. But the idea of a grandparent getting a life insurance policy on themselves, and then the parent getting a life insurance policy on them, and then the kid getting a life insurance policy on themselves, obviously they're not going to be the ones getting it, but the parents getting it on the kid. And anytime that a person of the family dies, it essentially replenishes any type of loan that's outstanding. replenishes another business activity, replenishes the ability to buy more policies, creates this stacking of generational wealth. And if you have this waterfall method of top, down, bottom of policy on generation A, generation B, generation C, well, every person is now deemed as an asset to the family. And I think that's important to consider is because if we were one unit using all of the resources, times, talents, resources, energy into one bucket, to grow the wealth, it'll grow exponentially than everybody being separated together. And so if you can find a way to get your family to agree on values, systems, beliefs, and have a plan to keep that wealth in the family and use the generational stacking of assets from businesses to giving to next level ideation for education, and you can keep that going like the Rockefellers have, which is why it's called the Rockefeller method, you can create true generational wealth, unlike the opposite of... You obviously know the story if you guys have been here for a while, the Vanderbilts that had just as much as the Rockefellers once upon a time, but to this day don't have a whole lot of money to their name, period. So with that being said, I think it's just a great way that strategically, if you can grasp it, you can figure out how it could be used within your family. Wonderful, wonderful. Next point is BOLI. BOLI stands for bank-owned life insurance, and there's over 3,200 banks right now that have some of their tier one assets, their safest assets in bank-owned life insurance. Think of bank-owned life insurance as a function of like key employee so that they can buy insurance on executives, but it's also a way to stuff money. So it's, it's. Really infinite banking on steroids because the type of policies are very much high cash value policies. They can use that cash value as reserves when it comes to banking. And if we really want to geek out, banks don't do dollar for dollar reserve ratios. They can essentially lend on a multiple of their reserves on hand. And so they're able to protect their bank, you know, potentially keep, you know. have life insurance policies on key executives, but then also have a place to store their capital that's earning more than, you know, savings accounts that they can also lend again. So that's bank-owned life insurance. Some of the big banks have billions and billions of dollars. The bank that I grew up in, Community First Bank, had a bank-owned life insurance policy. And so it's just really cool to like learn about this, read it, and then realize like, oh, the bank that I'm actually working for has a policy. It was just neat to see that in real time. Amazing. And then transitioning to Koli, which is corporate-owned life insurance. Caleb touched on it a little bit. It's, you know, just breaking it down from a simplistic standpoint, it's where you have the company and they are the owner and the beneficiary of the policy. And then if one of the employees or key people die within it, they receive that death benefit. And it's just like one of the previous shatters that we talked about when it comes to refunding the trust, the home. the ability to keep growing that asset, which is your family bank. It's the same way with finding ways to keep replenishing the business and regrowing the business when somebody within that dies. And along the way, you can collateralize the cash value and use it if needed to. And so it becomes a multi-usage asset, right? Banned asset. It's an amazing purpose, human key purpose etc uh the the market at this point in time um The is valued at thirty seven point six billion in twenty twenty four. So you can see why that's a massive, massive amount of money that's flowing into this. And it's and it's growing. So the next idea is using whole life insurance to pay estate taxes. And, you know, you might think, OK, oh, hopefully you don't have to pay much taxes upon your death. And life insurance is income tax free, but doesn't make it a state tax free. And so if you're really, really wealthy and you have to worry about when you pass away to pay estate taxes on all the money that you have, which I think is criminal, just between you and me and everyone else watching to pay estate taxes. But life insurance can very much be utilized to pay that. And so it's almost like, hey, if I know that my estate taxes are going to be 20 million, well, you could do proper planning and potentially lower that number a little bit. Or then you could say, okay, how am I going to end up doing this? Well, I have a business that's That's worth almost everything. It's like unless it's a public business, I would have to sell this business. Well, what am I going to do for my heirs? Well, let's give them a life insurance policy. And the whole purpose of the life insurance policy is to pay the estate tax so that you don't have to sell the business pennies on the dollar or when you're feeling the most down. And so believe it or not, private businesses can really come under a lot of… problems if you don't do proper state planning and life insurance is one of the most efficient ways to make sure that you can keep your business, keep your home, keep your... property, if you have hundreds of thousands of acres, this is another common thing. It's like, you don't want to sell the farm. For those of you that like the series Yellowstone, this is a similar concept even in that whole series. It's like, hey, in order to do that, life insurance can be the most efficient way to make sure that that can happen. You see what Caleb and I did at the very beginning. We got you all excited about how life insurance can be used in all these unique, creative, mysterious ways. And then we start getting more boring and more boring as we go on. So if you're still here, you're a true G. You're one of the OGs, the people that we love. That means you really are an insurance nerd. We appreciate you all for sticking through this. There's only four of them left. We're going to get to Q&As, and we've got some spicy questions to go over. Yeah, Caleb was getting worked up with the Q&A beforehand. He's like, this is going to be amazing. Amazing Q&A session. And so, all right. So 104, using CoLife to equalize inheritance among heirs. And so if you're at a place right now where you're thinking about like just next generation and you're thinking about kids and grandparent, grandkids, and how you essentially pass down wealth in a specific manner that feels equitable, right? Well, obviously using a trust can be extremely helpful because you can document how you want things to be distributed. But using life insurance is a great way to just equalize this in general, because I don't know if people really know this, but within the beneficiary section, when you're starting a policy, you can give percentages to certain people for dollar amounts. Rather, you want to say, OK, I'm going to give 100 percent to the trust so the trust can then essentially divvy up that essentially the the funds are essentially distributed after that. Or if you didn't use a trust, which, you know, not everybody, I said, has to have one or should have one by no means. You can literally just have four beneficiaries on your beneficiary list of an insurance policy. Say I want 12% to go to Charlie, 13% to go to Ava, 17% to go to her, or you could just do 25% across. And if you're like, all right, well, I'm going to keep these assets over here that I'm going to essentially pass down to, to the church, pass down over to, um, something else, but I'm going to just earmark and bucket, the whole life insurance policy. This. $4 million and I'm going to give $1 million to each of my kids and it's going to be 25% to each and it's an easy way to make things simple. Well said. Next point that I want to talk about is premium finance. And it's just almost using infinite banking with leverage. It's taking the power of life insurance and saying, hey, I could fund money out of pocket or I could go to a bank, finance the premium. And in a way, you're not necessarily looking at the policy. to quote unquote bank with, but you're looking at all the money that you have that you're not putting into the policy. So I know that's, that sounds a little contradictory. It's like, okay, well you could put all that money into the policy and then utilize that. Yes, you could. And for those people that understand that strategy is probably always safer, but there's another way to do it and say, Hey, I want to keep, keep my money and, but I still want the power of life insurance. And so instead of having out of pocket, I'm going to have a bank finance it. It makes a lot more sense if maybe You're worth a lot on paper but don't have a ton of liquidity. And so then you can have your cake and keep your asset. It's something similar to having life insurance pay your non-liquid estates. Premium finance can be used for that. My disclaimer is premium finance can also go south and it can be abused. And so you'd want to make sure that you're really doing this the right way and you want to make sure that you're using it, not that you need it. Anytime you're using premium finance as like a need. It usually is a red flag, but if you're using it from a convenience standpoint or an efficiency standpoint, it can be a really amazing strategy. Yeah, well said. And I do think it is, at least for the strategy, is important that you do have somewhat liquidity, because if you don't, I actually think that the strategy will likely fail. And what I mean by that is there's a percentage chance that you have to pay something if. the policy may not perform in a specific way, especially using IULs, right? A lot of people, sometimes people do use premium finance with an IUL. And if you have a couple down years and you're not essentially like, oh, perform the way that you need, well, you will have to have collateral that's liquid to essentially for every time the loan gets paid more of it, right? So that's the first thing. Secondarily, these interest payments aren't free. And so like if you're getting a 6% loan on a million dollars, that's $60,000 per year that you still have to pay out of pocket every single year. And that's just going to compound. It's going to go 60,000, then you're two, you got 2 million at 6%. So it's just going to get more and more and more. So you have to be somebody that does have money, that does have collateral, because even the delta between the way that we structure policies, you can get 80% of cash value within the first year. So you can use your policy as collateral against the loan. Great. But then there's that 20% delta that you're missing out on that you have to give somewhere. And it has to be some type of liquid funds, whether it's cash, whether it's money in the market, et cetera. And it can't just be like your business. It has to be something that is easily accessible from a liquidity perspective, which is why what Caleb said. It's like this person does need to have money, be sophisticated, understand the pros and the cons. And it may not be for everybody, but you can usually salvage. No matter what, if it's designed right, structured right, you get the best possible terms and you have liquidity, you can always make up for it. But if you don't have any of that, like then it could go south real quickly. So amazing, which kind of ties in a little bit with the next one. It's like using whole life as collateral and large real estate deals. I think when you start looking at like some of the wealthy and we just talked about like using collateral, your policy as collateral to be able to get the loan and being able to use other things as collateral. So it's the same thing in the concept with real estate, right? You can put your policy up as collateral to be able to get more favorable terms, to be able to say, hey, I'll put this down in case that the loan or the deal goes south. You could also put your policy as collateral to be able to get a different line of credit, like Caleb said, as a third party, to be able to use it for different purposes. And I think it's just the power behind it, again. And also having the death benefit used as collateral as the debt if you happen to die pass. Um, you can also have that be paid out too. So you can attach the death benefit to a business as well that you're connected with for also protection purposes. And I think that's another key benefit that's not talked about often. So, yeah. Well, and the last example we're going to talk about is life settlements. And what that means is you have a life insurance policy on something that's going to happen to you. And so if it's designed properly, there's no reason why you necessarily want to sell it. But there are people that have permanent life insurance policies that may not be set up properly or they might need money today. And so they would either cash out their policy. I know you could take a loan, but these again, they're not necessarily thinking this. So they could maybe take a loan and maybe there's $200,000 of cash values. They could have access to $200,000 or less, but they also have a massive death benefit. And there's a market out there that will actually say, you know what? I'll buy your life insurance policy for $300,000. And then I'm going to be responsible for keeping it funded. And so why do I do that? It's because I'm going to get the death benefit when you pass. So instead of that going to your family, I'm going to get it. And so that can be a way to you have more money, but then the investor gets paid upon your maturity, i.e. death. This is something that, again, has to be done properly. It's a cool thought experiment because it tells you that life insurance in this case is valued more than just the cash value. It's a contract that's insuring your actual life, and we are all going to die. And so you're almost creating a guaranteed insurance upon something that's actually going to happen. Like imagine insuring your car knowing for a fact that it's going to crash. Well, you know, you may think. differently about your insurance coverage versus, um, you know, we all think that, Hey, well, I'm not going to be the one that crashes my car this year. So that, that is the life settlement. And, with that, we, made it through the list and I, I would love to hear like, what's your least favorite and favorite, like what's, what's the thing you want us to do a deeper dive on? Because almost any of these, we can do a whole episode talking more about this. Um, and so Dom, I appreciate you, getting this list together. Yeah, no, thank you. Isn't for the life settlement, isn't it a huge piece of like Warren Buffett's strategy or he has in the past? Yeah, there's a it's a great asset class to invest in and because it's not correlated to the market. And in a lot of cases, you can get a double digit return non-correlated to the market. And that's that's great. Now, I the only the only thing like it's kind of messed up. But you you know how you take a life insurance policy health test. In a lot of cases, they want you to do a health test before they buy your policy, but they want to make sure that you're not a really, really, really healthy 75-year-old or 80. You know what I'm saying? And so it's a little bit like because it's all an investment. So there's some things that morally you have to get you got to get through. But if you're actually doing in a free market, you're doing the right thing. Most people have no idea. where to start, or how to really evaluate whole life insurance. That's why we've built The Vault. It's all of our best life insurance resources and educational tools, all in one place, all for free. We have calculators, handbooks, crash course, deep dive videos on numbers. If you want to learn more, click the link in the description or tag comment below to unlock The Vault. All right, back to the video. All right, with that being said, let's go ahead and jump into the spicy hot tamale chili pepper. No, it's not that bad, but we're going to get into some Q&A. I'm excited to hear what Caleb has whipped up in regards to some of the stuff that we read beforehand. We got five questions. And so first one, Mr. Caleb. Okay, this one is a guy by the name of Thomas. He says, there's no way in hell you can use whole life insurance to, quote unquote, get rich. Only insurers and agents can get rich from selling whole life. Clients never do. The product is basically a loss-making black hole, plus it eats up cash flow. I mean, sounds like Thomas knows what he's talking about. I mean, I don't know what to say other than we can agree to disagree. I mean, I feel like there's aspects of truth to that, depending on what agents you work with, what insurance policies you work with, and that's why we make... content. That's why we do what we do to try to separate ourselves to say we're not like all insurance. And it's just not true. I mean, we have plenty of clients to that would disagree. I mean, you're so you know, I get people, people will say whatever they want, they can comment whatever they want. And, you know, I would love to see what Thomas does, how much he makes what he's doing with his money, what strategies he's doing. And I... I think there's, I mean, we're welcoming people to have a conversation and let's better the conversation. So there's not like our way or the highway. I think we've been pretty clear that this is a strategy. It's not for everyone, but it's a strategy that can enhance your situation. And I would just say that if it can enhance your situation, you should do it. If it can't, you shouldn't. And so it really comes down to does life insurance better your situation? if the answer is no, then don't do it. But in a lot of cases, the answer can be yes. And so are you going to be humble enough to say, I'm willing to learn and see if this can actually improve my life? And that's what I would say as it relates to that comment. Yeah. And I would agree with him when it's like the definition of get rich. I think if you were to take so much, you know, 25% of one's income and put it into the whole life and let it... compound over the next 30 years, you will have more money than most people. I think that's, you're going to get a long-term 4% to 5% growth. Are you going to get rich off of that? No, that's not something where you can say like, I'm massively rich and maybe we have to find rich, but you start back during inflation and other things like that, it's different. But then you start looking at the tax equivalent rate and you start to get more of like 67% when it regards to actual growth. You just have a bucket of money that's sitting there for liquidity to use. Now for the next phase of life, now for a business, now for to give back, now for protection, and now for uncertainty, right? I think when we look at financial planning, so often we're just like looking at a product in a box. It's like product A, product B, product, product, product, product. But what we don't, what we fail to look at is that there's so many unknowns that happen when it comes to our money, just due to ShareLife. whether that is a death, whether that is a sickness, whether that is the market going downhill, whether that is a lawsuit, there's a disability. There is so many things that can happen. And the more things that you have in place to limit the amount of factors to prevent you from either going backwards or people taking your funds from you or keeping more money into your household, the better off you will be. If you are going for get rich, you should definitely go chase the highest rate of return. And that's the only thing you cared about is like, I'm going to just be greedy for money, get as rich as possible, and I'm going to not care about any of the potential other factors that come with it, well then, yeah, never ever consider this strategy and go chase the 20% to 25% to 30% rate of return on the Ponzi scheme that potentially will get you that. Otherwise, this is an incredible product that millions of people have used over a long period of time to build generational wealth because it's one of the things that you said, Caleb, it enhances everybody's situation that has used it to some degree or another. Yeah. And what I would say is going for a greater rate of return can work great. And it also may not work great. And so I would have been if you're greedy, wouldn't you want the thing that like, we'll take your greedy and non greedy people. It's if the one thing is, do you want the better way? And I think it's it's one of the if you're super, super selfish and don't care about anybody else, and you could care less about protection and all that stuff, then yeah, life insurance gets less attractive. And, you know, if you're really... really, really care about the people around you, I think life insurance gets elevated more. So I think that tells you everything you need to know. It's also like saying a savings account or a checking account is a scam because checking accounts pay zero and savings accounts pay little. It's like, no, they're not scams. They're a tool that you probably shouldn't put all your money in a savings account and just sit on it. But it's like how there's many... billionaires and very successful people that use savings accounts to unlock other things, not because the savings account is super amazing, but because of what it allowed them to do. And I think that that same energy and mindset is what we use when it comes to insurance. All right, next question. Someone said, actually, Fire Craig, who watches a lot of our content, we appreciate that, and commented, he said, earning 4% on 70 grand in five years makes $15,000, and a $70,000 loan at 6%. paid in five years, five year costs, 11,000. I'm taking his word for it that he did the math. And he said interest 15 is greater than 11. How's that not arbitrage? The answer to that is you're not comparing apples to apples. You're one comparing 4% growing on 70,000 balance every single year. So if that, if we just kept it apples to apples and said 4%, but it's. you're only earning 4% on 70 grand, but the interest doesn't compound. It goes somewhere else. And then you're paying interest. You would actually be paying more interest than not. So a lot of cases that you're either looking at one form, you're just looking at a simple interest rate or an amortized interest rate deal. And the other, you're looking at compounding. So I understand this analogy, but this analogy actually is misleading. And it makes you think that earning four and paying six, you're actually getting ahead by default. And that's just not true when you actually compare the cash flows. And depending on when this comes out, there's the episode that we just did, I think, last week. I'm, again, not sure when this is going to come out. We actually talk about amortized versus compounding. And Dom and I get into it a little bit. But it's on this same subject. And so hopefully that episode. breaks down a little bit more of that thesis. And, I'll, the last thing I'll just say is the math isn't wrong, but the assumptions are, they're not apples to apples assumptions. And so, yes, you're, you're probably not wrong with the 6%, no matter if that's amortized or simple interest, but you're not looking at it as apples to apples. And in one case, you're paying, you're paying something down. In another case, you're compounding. And so there, there, it's just not an apples to apples comparison. Amazing. I don't know if there's, More I need to say. I don't want to belabor every comment you are. We'll be late for our meeting, you know. So let's go on to the next one. We got three more. Are you saying if you have more than one policy, you should be contributing at least $10,000 to each one annually? If you have multiple policies that are more than 10K combined, does that make sense? Okay, so I guess I would have to understand the context of where the question came from without just giving you a straight answer. But what I will say is that. You can have multiple policies. I think we don't definitely disagree that having multiple policies is not a good thing. You can get one on your kids, your spouse, yourself. And usually when it comes to a policy that you own and you're using for a purpose such as barring against use for another activity, if you're starting off with a policy, having around about $10,000 to $15,000 per year to contributing on an annual basis is an equitable amount to make the policy suffice to actually use for another activity. Obviously, if you're younger, you have more time on your hands, you can let that compound and you have more access to more funds. But if you're looking at a lot of investment deals and a lot of opportunities, majority of them, the minimum is like $50,000 a year to be able to go actually use to something of that nature or to even see a significant amount of return if you're barring against for an activity. Now, you said if you have multiple policies, more than one, 10K combined. Does that make sense? yeah, if like I had $10,000 in my personal policy and then I had $5,000 for my kids, like, yeah, that makes, that makes a ton of sense. Um, and you, there are lines of credits and banks that will allow you to combine all of your cash value and to make it into one line of credit as well too. And so I think when we're looking at this conversation and having this discussion, there needs to be more context. What are you trying to accomplish? How many policies do you have? Why do you have more than one policy? And if you look at the Nelson Nash, he, he talked about in his book, like having like 20 plus policies and then admitted that it became too much to essentially like balance and try to figure out, cause you'd have one for debt, one for, um, activities, one for business, one for like, they would have one for buying cars. It'd be like one for everything specific. And that created a complexity. And I think sometimes we need simplicity. And, um, so hopefully that answered the question based off what I'm reading, but, yeah, I think having multiple policies that are more than thinking combined does make sense Straight forward. Okay, next question is, should we really take advice from the ones that profit in the business? It's a good question. I think you should do whatever is best for your family. It's straight up. It should not matter. who's profiting from it, you can factor that into the credibility of what they're saying. So I totally understand like, hey, if we're saying, hey, life insurance is really a thing and we profit from, you know, selling you life insurance that should be factored in to the credibility and hopefully by us doing content, we were very transparent and all. And at the time of this recording, people can't just buy life insurance without an agent. So it's like you've got to buy it from some type of agent and we're we're obviously in business for a reason but this whole notion of just because someone's profiting from something makes them bad is just a faulty premise and you should do whatever's best for your family that's i feel like a broken record here but it's like if it's not the right thing don't do it it doesn't matter if we're not like i might be profiting zero like i'm not making anything but if i'm not actually bettering your situation you shouldn't do it and dumb you could be profiting a ton But if you're actually benefiting me, like I'm actually better off doing what you're telling me to do, then I should do it. And I would like to look at this from like a real world example that's more maybe makes more sense. People like, oh, yeah, I trust this profession. You know, if you're going and you need brain surgery and you're like, well, should I take advice from this guy that's about to make, you know, forty thousand dollars to do this surgery on me? No, because he's going to profit. So it's like, OK, well, you should probably go to the homeless person that doesn't profit at all. that doesn't know anything about it. And so when you just look at it conceptually, the ideation around not taking advice from the expert, the one who actually is going to benefit because they're educating you on it, doesn't make a ton of sense if you're going to essentially use something that's going to benefit you like what Caleb said. Yeah. And there's value in the second opinion. A surgeon might say they might be surgery happy. And so it's never a bad idea to get second thoughts and know that there may be a bias. Like the surgeon might not. care as much about, you know, natural remedies, right? That might not be something that they value as much. And so, so yeah, but it's not going to be like, oh, you're a scam. You're trying, you know, it's like, it's understanding that everyone has biases. And I do think it's wise to have different angles. Dom, do you want to say the last, say the last one, or do you want to wait till next week? Um, we're, we're already here. Okay, let's go for it then. And, We said five, so this will be the fifth one. So let's do it and knock it out. And I think it's a great one as well. They're all spicy. I don't know if Joel had a media decided to do this intentionally, but he made all of the spicy ones that people are finding. So number five says, any cash value is completely trash. An SBLOC, a small business line of credit, is better for loans. A Roth is better for tax-free. A term is better for coverage. And you don't start at zero on day one when you set this up. So there's a lot of passionate people in regards to how they feel about whole life insurance. And I think that is understandable. And so to end this episode with this question, I don't necessarily disagree when it comes to the very end. Right. When it says and you don't start at zero on day one when you set up this up. When you look at traditional most whole life insurance. Yeah, I'd say 90 percent of them are set up where you do start at zero from day one. So if you put in $100,000, you'll have zero in year one. Sometimes you put in $100,000 in year two, you have zero. So that could be correct for 90% of the policies. If you design it a specific way for cash value focused, cash value purposes, you can get a high liquidity policy that in day one, we're essentially starting it within the first 30 days, you can get up to 80 to 94% liquidity right away. So you're not starting with. zero on day one, you're actually starting with $94,000 on day one. When it comes to an SBLOC is better for loans and a Roth is better for tax-free and a term is better for coverage, well, you just essentially just decide to have these three different tools, but you essentially make them into one and you get the whole life insurance policy. And so you can say, okay, well, I want three different things over here, or I can get the one thing and they all function the same way. You we can go into an extensive conversation around term versus permanent right one essentially runs out you don't have that for the rest of your life and so therefore now you have to find the last opportunity cost of like the death benefits your family when you pass the sbloc a lot of times that does not increase the cool part about you know whole life insurance is that does compound over time and it continues to grow you don't have to go back to the bank and increase the line of credit like you would in this instance and you also have the death benefit attached to it And you're also being able to use the dollars for tax-free, which is the next for a Roth is better for a tax-free perspective. Yeah, but the way that you can get access to that money relative from a Roth to a whole life, the whole life is a lot more liquid from the standpoint of being able to use it before specific ages. And so it just gives you a lot more flexibility than something like that as well. So you just said, hey, all of these really cool tools. You essentially just described it in regards to just like how whole life really can function and work. Yeah, and just to point out. Roths are great. I have a Roth. My wife has a Roth. There's nothing wrong with funding your Roth. Just fund it. Fund your Roth IRA and then we can have a conversation around whole life versus term and all that stuff. I will also say a security-backed line of credit you can't use on traditional or Roth IRAs. And so that whole notion in itself is like, the idea is like, let's buy term, let's put money in a Roth, and then let's lend against it with this security-backed line of credit. Great. That doesn't even work on a Roth. And so it works on taxable accounts, but then that just goes to our whole point. So the idea is, again, we're not saying that whole life insurance is better than a Roth. They're two separate things. One's an investment, one's not. We're saying there's a lot of people that can maximize their Roths or backdoor Roth strategies and use permanent life insurance and use term, i.e. you're looking at one person that's doing all three. So we're not. an anti-term insurance we're not anti-roughs we're not anti-permanent insurance um there could be a world where you could have all both and oh by the way have a taxable account too uh it's it's not it's it's it's again it's not because i have a favorite it's like i want the better thing for my overall financial life so anyways thank you so much for tuning in and if you want us to take a look at your policy we'd love to do that and also if you want to talk to someone on our team about setting up a policy, we'd love to talk to you. And so you are a trooper if you made it through this whole episode. And I very much look forward to reading the comments and seeing if we can do a deep dive on some of the things that we mentioned before. I only went for a day and that was my biggest regret because people start to see something in themselves they haven't seen before.
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