Imagine being ready to commit $84,000 a year into a life insurance policy, only to find out that the agent who sold it to you left tens of thousands of dollars of flexibility and efficiency off the table. And in this video, I'll show you how one of my clients almost locked himself into a far less effective policy simply because he didn't get the full story from the other agent. And more importantly, I'll show you the simple truth that turned his red flags into clarity and saved him from a six-figure mistake. All right, so here's the story. My client, he shared with me that he was given an illustration from another agent and he asked the prior agent if that particular illustration had the capability of contributing an additional $42,000 on top of the $42,000 that was already there. The agent that he was working with initially said that for whatever reason, the illustration that showed $42,000 a year was actually the maximum and that if you wanted to contribute an additional $42,000, so $84,000 a year, he would need to look at. an entirely different policy altogether, which the other agent also showed my client. Now, I personally don't think that it's an abnormal thing for an agent to say that, including myself, in certain situations especially. But as I kind of peeled back the layers of the onion and had a further conversation with my client, and I went ahead and reviewed the illustration that he was presented with from the other agent, I kind of had this sneaky suspicion that something was off. And so during one of the meetings that I had with the client. I shared my screen. And I walked through with him the analysis of the other agent's policy. And I did so in real time, live time with him on the line. And so I did that just to show him how much more he actually could have actually contributed to that smaller policy that he was presented with from the other agent. And so the other agent effectively said that the $42,000 per year policy would be the maximum that he could contribute to that policy. Then I proceeded to show my client that the maximum paid up additions alone. So just the paid up additions alone, as you guys know, there's the base and as the paid up additions where we're talking about overfunded whole life insurance policies. And so the paid up additions alone was listed as $105,996.96. And then we went on to talk about a handful of other topics regarding all sorts of things like the modified endowment contract and the seven pay test. You know, go ahead and check out the video that I did a few weeks ago if you're curious about the 7Pay and the modified endowment contract. But anyways, back to the story. As the conversation continued to progress, he told me that the other agent was effectively kind of just pushing him toward the $84,000 per year policy. Right. Which in my client's brain also caused some red flags because he felt that there was something just kind of missing. He kind of had this sneaky suspicion as well that something was missing or at least there's something that the. agent wasn't necessarily telling him whether knowingly or unknowingly. And so that feeling that my client had actually was spot on because everything that he wanted to accomplish could have been accomplished with a policy that illustrated $42,000 per year. In other words, yes, he could have contributed $84,000 per year if he wanted to with that first illustration. And I was able to prove that to him again in real time, which is what I want to do for you right here, right now. So here's the policy right here that the other agent designed for my particular client in question here. So you're noticing that there's $117,000 of premium within this policy. And then from there on, it's a $42,000 per year. So ultimately what was happening is this agent basically told my client that, yes, you can put in $117,000 within this policy, but then moving forward from years two to 10, you can actually only contribute, you know, $42,000 per year. And so what I wanted to show him was I was like, OK, I know what company this is. This is Penn Mutual. And I know how Penn Mutual operates. When it comes to the maximum amount of contribution that you can put inside of their policy, they have something listed called the annual payment limit. OK, and so all I needed to do was simply do a control find and I just typed in annual payment limit. And what I found here was that the annual payment limit was one hundred and five thousand nine hundred ninety six dollars ninety six cents. just like I mentioned before. And this is exactly what I articulated to my client as well. And so when you put it all together, what you're finding here is that, again, this annual payment limit is merely just for the paid up additions. OK, and so this twenty five thousand seven dollars and 15 cents, that's the base and that's the contribution for the base and term writer. And so those two numbers combined is actually the maximum amount of contribution that my client could actually make to a particular policy. Now. I do want to say something else here. I do want to highlight the fact that this policy in and of itself, by no stretch of the imagination, is like a terrible design. It's not like the worst design I've ever seen in my life by any stretch of the imagination. And I would actually say, generally speaking, it's a pretty solid, good looking design. OK, because if you take a look here, ninety three thousand dollars, almost ninety four thousand dollars of cash by the end of the year. I mean, I think that's incredible. And when you're looking at this illustration in particular, the year that is finally breaking even. is in the eighth year, which is not super uncommon, right? 411,000 contributed, 426,000 is what he has available by that point in time. So by no stretch of the imagination is this off. It's just a matter of could it be made more efficient? And the answer, of course, is yes. So now what I wanna do is take a look at the $84,000 per year policy that the other agent put together for my client. And so this policy in particular had an annual payment limit of 191,000. $512.52. And so that's a total premium. If you account for the base and term writer premiums, plus the paid up additions premium, that's a total premium of $236,694.78, right? That's over $150,000 more than what my client merely wanted to just see illustrated. So he showed him $84,000 of illustrated value, which is great. They gave him what he wanted. But at the same time, there was so much more room in terms of an annual payment limit that my client could have put into it, which means that this policy was designed with a much higher base, which is not necessarily what my client wanted, given what he's looking to accomplish with the policy, which I'll get into a little bit more so in a little bit. And so and then as you'll see, as we keep going as well, is that what he ultimately ended up landing on and reasonably wanted to contribute. This policy here was over one. $100,000 more than what he wanted to reasonably contribute ever. All right, so here we have it. We have the $84,000 per year policy. Once again, not necessarily a bad design by any stretch of the imagination. I would say given this person's age, it should be able to break even a little bit sooner than year nine. Because what we're seeing here is that by the ninth year, $756,000 has been contributed to the policy. And he has access to $774,000 by that particular point in time as well. Again, not a bad design, but it can be made better for this particular person. You'll see what that looks like in a little bit. Okay. Now, the other thing to look at is just the change in total cash value as well. All right. The change in total cash value, that's another way of kind of taking a look at the health of the policy, how it's growing. Right. And so that really just highlights the simple fact of, okay, in the first year, $84,000 I was just... contributed to the policy? How much did my policy's cash value grow by, right? And we're seeing that that's $48,000 here. In the second year, another $84,000 is contributed to the policy and it grew by almost $54,000. And then $71,000 and then almost $84,000 here. And then finally, in that fifth year, it grew by $93,000. So that's a very healthy thing to see in a policy. But again, given the design and given the ceiling, If you have a higher ceiling with that annual payment limit, that assumes that relative to what you're seeing here, you're actually having a higher base than actually what's necessary. So I'm going to do the same thing. I'm going to simply do a simple control find, type in annual payment limit. And what we're finding here is that that annual payment limit, just like I mentioned earlier, $191,512.52, right? When you combine that with the $45,182 and 20. Six cents, as you see there, what you come up with is a total of $236,694.78. That's so much more than what my client simply just wanted to see illustrated. So after having a full conversation with my client and giving him this analysis, we went into a pretty decent depth there. I wanted to go forth and show him what I would have actually built, regardless of if he would have presented me. with someone else's policy that was designed for him or not. Like regardless of if he would have showed me that or not, this is what I would have built. And so, and by the way, just as an aside, I think it is important to note that if he would have shown me a policy, right, that was very close or especially exactly like what I would have designed anyway, I would have been very upfront and honest about that. And because of the simple fact that my goal and the goal at Better Wealth and all the coaches here at Better Wealth is never to take away business from anyone else who's trying to make a living. That's not what we're trying to do by any stretch of the imagination. That's not why we offer policy reviews and things of that nature. But if we're able to significantly align with our clients goals a lot closer than someone else, a lot closer than perhaps another agent, it's not on me. And it's not on my team to persuade and convince people that we speak with to work with us. It's simply in their hands and it's their choice at that particular point in time to decide and to determine what's going to be best for them. All right. I hope that helps. So what I ended up designing, right, based on exactly what it is that he shared with me that he wanted, actually ended up being very similar to the other agent's $42,000 per year design, right? The minimum contribution on that policy that the other agent created was. $25,007.15. I kind of shared that with you earlier. What I ended up designing for him was a $100,000 per year policy. But the catch is that the minimum was $23,768. Did you catch that? Right? The reason that I want you to catch that is because I shared with him a $100,000 per year policy with a minimum required premium that was less than the $42,000 per year policy that the other agent created for him. There's something to that, right? What that told me and what that directly told my client was the simple fact that that other agent did not design the policy with my goals in mind, knowing that I wanted to have a higher level of cash value for the purposes of me wanting to use the policy for, right? So the problem was this, okay? The other agent said that the most that could be contributed to that $42,000 per year policy was, in fact, $42,000 per year. And based on evidence that I've presented already, That was the furthest thing from the truth. Again, the minimum for that policy, $25,000, just over that. The maximum of the paid up additions that he could contribute was $105,996, $106,000. So in terms of total premium, the maximum that he could have put into that policy from an annual basis perspective was $131,004.11. Okay. Now compare that to the design that I created for him. The minimum for that policy was $23,767.74. And mind you, this was at a standard health rating simply because I wanted to be very conservative in my projections for him. And I do that on purpose, right? Now the maximum was $93,232.82. Now that was the maximum paid up addition. That was the annual payment limit. So this means that there's a total premium that could be contributed to the policy that I created for him of $117,056. Now, the drawback here to the one that I created for him was simply that there's a lower maximum, right? Because if he wanted to go far above and beyond that $117,000, well, then he wouldn't be able to do that because it's capped at a total premium of $117,000. But the benefit is that it fits within the confines of what he told me that he wanted, and it was actually illustrated to him that it was actually possible. So then the question is, Could I have shown him an illustration that shows, you know, let's call it $84,000 per year as the maximum? And the answer, of course, is yes. And not only that, I actually would have done that if that's what he told me that he wanted throughout our conversations. Hey, it's Demetrius. Just wanted to pause the video real quick because if you're a high-earning professional, an entrepreneur, someone who just wants more control over your money, we offer something called a clarity call. It's a one-on-one conversation where we walk you through how an overfunded whole life insurance policy could help. help you build safe, liquid tax advantage foundation for your wealth. There's no pressure, no fluff, no hype, just real clarity on whether this strategy is right for you. So go ahead and click the link in the description or the tag comment below, and we'll walk you through exactly how we can help you. And so for context, the way we landed on that $117,000 was simply because at one point, as you saw with the other agent's illustration, he asked, would it be possible for me to front load. an additional $75,000 on top of the $42,000 per year policy, at least in that first year. And that's what the other agent had come up with. Okay. So what I ended up doing was showcasing an illustration that does the exact same thing, but also illustrates what's possible even after the first year, all within the confines of what it is that my client wanted. So the whole conversation wasn't necessarily a matter of him needing to be persuaded of anything because he had already. convinced himself of the value of overfunded whole life insurance just by doing his own research, right? And ultimately, what he wanted was diversification apart from the stock market, because that had been the primary place that he'd been saving money for years, years and years, right? And he recognized that putting all of his eggs in one basket came with a lot of risk, right? And so he acknowledged the true definition of risk, which is pretty much the possibility of laws. And so life insurance happened to be the diversifying asset that he landed on because it's not correlated with the market, but can also be used as an opportunity fund to invest in real estate, which is what he's wanting to do and actively doing as we speak to invest in business, which is something that he's looking into at some point in the near future and be used as supplemental retirement income, you know, 20 or so years down the line. Not to mention, he also wants a permanent increasing death benefit for his family if he were to die at any point in time. And just to fast forward a few conversations later, after he got approved at the very best health rating at this particular carrier, what we ended up landing on was a policy that illustrates $85,000 per year, okay? With a minimum premium of $27,500 and a maximum premium, I'm talking total premium. of $148,428.87. So let's take a look at that. Okay, so here's what we ended up going forth with, all right? $85,000 per year, like I mentioned. And the reason that he wanted to do this simply was because he wanted to know, based on that $42,000 per year policy, could he contribute about double than that? And so knowing that that was 84,000, we just wanted to round it off, round it off a little bit and just show $85,000 and he was comfortable with that. He also knew that given his investments and given the line of work that he's in, his ability to save will significantly increase over time as well. And so when we went into underwriting, I actually designed the policy with the maximum of around $140,000. And since he came back with the best possible health rating, his ceiling actually increased to that $143,000 that I mentioned just a little bit ago. All right. And so as another thing that I think is important to note is let's take a look at this as well. We are illustrating a policy where this is not necessarily the maximum. So if you're looking at this from a standpoint of how I kind of compared it before with regards to when do you break even, even though we're not even showing the full amount of premium that could be contributed to this policy, what we're seeing here is that even in year six, $510,000 has gone into the policy by that point in time. He has access to 515. So he's breaking even by year six without even maximizing how much he can actually put into it. So if he were to maximize how much he could actually put into it, we'd likely be seeing a break even point of closer to year five. Right. And so just to prove to you and just to prove to you, just like I did with my with my client in question, I wanted to also do the control fine for this one, the annual payment limit. Let's take a look at that. And so for my client in particular, twenty seven thousand five hundred dollars is that. minimum required premium. We have your base premium. You have the premium for the flexible protection rider. And if you take that figure and you add the annual payment limit of the $120,928.87, what you get is a number that I mentioned before of $148,000. And when you take the minimum contribution that you see here within this policy, which is a combination of that whole life insurance base premium and the flexible protection rider, as they call it, pretty much what they call their term insurance writer. You take those two numbers, you get that 27,500 plus the annual payment limit of $120,928.87. You get the $148,000 figure that we looked at earlier. And the biggest key difference is that he's gone into the policy knowing that specifically. He knows that this $57,000 of paid up additions is not the maximum that he can contribute to the policy. But he also loves the fact that. He knows what his limits are. He doesn't necessarily have to go get another policy just to increase the amount of money that he can put into his policy. He can do it all right within the policy. And as time change for the better and his ability to save improves and increases, he'll be able to do all of that in this policy by just adding more. So for my client, it was really just a matter of working with the right agency and working with the right team of people who are going to have his best interest in mind and really listen well to what he's looking to accomplish. all across the entire conversations that we have. So when he asked questions like, what would it look like to see $84,000 in the same illustration? He asked not to abuse the relationship or go back and forth with dozens of illustrations, but he asked in order to satisfy his curiosity. And after getting to know him a little bit better over the handful of interactions that we had, I know that he's a very data-driven person. He's relatively analytical and he comes from a very technical background as he works in software and IT. And he has earned a very healthy living doing so. And so if you just think about it from a conceptual standpoint, right, he's already there. But he wants to make sure that he has a fuller understanding of the mechanics and the flexibility of this particular asset that people like myself talk about on YouTube channels like this one, right? He just wanted to confirm the curiosities that he had and confirm some of the information that's been shared online, but just do so with his own numbers. which personally, I think is a very reasonable request, especially when you think about the fact that he's contributing a very significant sum of capital into a policy like this on an annual basis. And throughout all of our interactions, every single conversation, one of the things that my team and I are consciously aware of is how closely we are listening and our willingness to ask the right questions to pull out the specificity of what our clients are looking for. And for my client that I've been talking about in this particular video, he ultimately wanted to get a policy where he contribute what he feels confident he can reasonably contribute today with the flexibility he desires to contribute more as his cash flow from his job. and investments improve. And so I know I felt like that was a whole lot for one video, but I wanted to just showcase just one example of how we actually operate behind the scenes and how we put the goals of our clients above literally anything else while also inserting our expertise with policy design, funding strategies, carrier selection, so on and so forth, all without sacrificing the efficiency. that our clients desire. And so if you're actively in the process of figuring out who you might work with to get a policy just like this one or very similar to it, I'd encourage you to schedule a call with our team, right? You're going to be able to feel how we put your goals ahead of any other agenda that we would have because we don't have one. We just want what's best for you, even if that possibly means not working with us. And so go ahead and find the link in the description or the pinned comment below, and we'll be happy to serve. So God bless you. See you in the next one
.svg){kind=logo}
