Welcome back to the fastest growing life insurance YouTube show on the planet. We may be one of the only YouTube shows on the planet. We'll just keep that a secret between us all. We all appreciate the subscribers, the commenters, and the feedback. It's been great, guys. I'm here with Dom Ruffran, and we got Austin Williams. And it's been a fun journey, guys. We've dived into books. We've had conversations. We've talked about our epiphanies. It has been a fun time chopping it up with you guys. I like chopping it up. That's right. Caleb didn't even know what the word chopping it up meant until literally just recently. Well, I mean, Dom, I think I did learn that from you. That's something that you would. That's what I say. I think it was like two years ago. We've been friends for two years. More than that. I still even appreciate videos that are more than two years old. I appreciate Caleb's past tense of the word dig, which is Duggan. That's that's I think was like the most the best. vernacular that he that caleb pulled out for the time that we've been together that's because caleb grew up doing the dougie teach me how to doggie that's right you don't you don't want to learn from me when it comes to dance but speaking of dancing we're going to be dancing around chat gbt today you like that transition guys we're going to be dancing around chat today because um we are going to ask it to give us the pros and cons to whole life insurance and We're doing this for real time. We don't have notes. Don't have notes at all. Even though I have paper, these are not notes. I promise. These are bad sketch drawings of a project I'm working on that I will let you all know soon. Soon, it's going to be very, very exciting. But yeah, we were just thinking like one of the benefits of this show, it's less scripted. We're just more conversational, is there are so many people out there that are looking to AI and Google to follow what it should tell them. I mean, it's crazy. what people will outsource their brains to. And AI is amazing, and I'm sure we're going to be pleasantly surprised on some of the things that it spits out. But I'm especially curious to hear some of the negatives or cons to life insurance and to see how we would push back on that. And so without further ado, we'll jump in. But before that, is there anything I want to do this in every episode. Is there anything on your guys' mind that you want to talk about before? and Then before we go, I also want to hear predictions on what do you think the number one pro is going to be and the number one con is going to be when we ask it. I guess the question comes down to what is the exact question we ask it first before I give that answer? Because if you say whole life insurance versus life insurance. So I will say, this will be the first question. I'll say, please give me 10 of the best benefits. to why i would want to put my money in max funded whole life how's that amazing the number one or one of the ten no the number one number one you gotta say you gotta also tell it put it in order of most important because it's just gonna then list that put it in order of the most important benefits. It's very scary having my inability to spell on this show. I've never been in charge of note-taking in meetings, and I find myself being in charge of describing this, which is scary. We should have the English teacher do this, but okay. What do we think is going to happen? My number one is still going to be what Austin always puts emphasis on, is even though it is focused on putting cash there, the death benefit will still be number one. Okay. Death benefit. That would be convenient for AI to cover their butt. This is not an investment. And so protection. So you're saying it's going to be some type of protection first. Yep. Okay. Awesome. I I also think that protection is going to come up number one or number two. But because you used specifically the words max funded, I think also flexibility could be really high up there is that not only is it protection, but it's also flexibility. If you had just said whole life, I definitely, definitely see a legacy or death benefit being the number one reason. But possibly it could also be flexibility. There's no way flexibility is in the top five. I bet you it's like, all right, I tend to agree. I think flexibility is something we talk about. So it's something that is important to us. I don't see a lot of people talking about this. I think what's, I think definitely it's going to be up there, but I actually think the tax deferred or tax advantaged growth is going to be probably be number one, because a lot of times when you think of the benefits of life insurance, I see a lot of people talking about the tax free benefit. And again, AI is only as good as what it's reading online. So it's, it's, it's not like it, it's not like it can think for itself. It's just really, really good at getting all the information, ranking it, and putting it. putting it there. But we'll see. My number two is the guarantees. That's yeah. I definitely think guarantees is going to be up there. Cause that is one of the benefits. So here we go. Enter. If it says flexibility, it must have been reading our content. Guaranteed growth and protection. Let's get it. I feel like that's a cop out. Growth and protection. It's like covering all. It says your cash value. Cash value, I told you guys, grows at a guaranteed rate regardless of market conditions and the death benefit, ding, ding, ding, guaranteed for life as long as the premiums are paid. Interesting. And then I'll just read them all and we can talk through them. Then the second one is tax-free death benefit. Proceeds pass on to beneficiaries income tax-free. I like that ChatGPT gets that right. Often outside of probate with proper planning like an islet, it can also be a state tax-free. Wow, ChatGPT. Love it. Living access to cash, other known as liquidity, you can borrow against your policy. I love how Chachapiti gets it right. Against, not from. Borrow against your policy at any time without credit checks, restrictions, or required repayment schedules. Then here we go. I guess I was wrong. Tax advantage growth. Cash value is tax deferred and loans can be access tax free, structured properly. Wow. It's amazing how good the language is. Number five, protection against market volatility. Unlike stocks or mutual funds, your policy value won't drop in downturn. It provides a safe bucket in your financial plan. Number six, here's your word, Austin, uninterrupted compounding, even when you borrow. With policy loans, your cash value continues to grow. I would say, ChatGPT, your cash value and all the other benefits of insurance also grows. Grows to earn dividends as if you never took out. creating long-term compounding number seven is asset protection in many states what i would say number six with the caveat though you know it's they got to have a company that actually pays dividends yeah you just used whole life you know they you weren't specific yeah for sure i think that's maybe the assumption but uh i mean there could be a lots of lots of things i remember asking chat gpt like top companies do infinite banking and it's really interesting to see it's It's a take. Number seven, asset protection. In many states, cash value in whole life is protected from creditors and lawsuits, making it safe harbor for wealth. Number eight, flexibility. See it? Austin. Yeah, it's funny. Number one, Austin. I use flexibility. I was kind of meaning what number three was, which was liquidity. But flexibility can also mean like you have flexibility in how much you contribute. So there we go. I like it. Flexibility with premiums and structure, right? A max funded designed. Minimizes the required base premium and maximizes the paid-up additions, giving you flexibility to stop, reduce, or restart contributions while keeping growth strong. Number nine is Legacy and Estate Planning Tool. It creates an instant guaranteed estate for heirs, charities, or trusts regardless of when you pass away. And then number 10, Alternative Asset slash Private Banking System. It functions as your own financing tool, funding. business investments and major purchases while keeping your money compounding inside the policy, which I feel like is the same thing as number one. It just bundles a lot of them into one. Yeah, a lot of it's bundled. Number six. Number six. So I do feel like Chachapiti is reaching for straws here at the end. I do think the guaranteed growth is very much a solid number one because it is. There's no safer place to put your money. Like just from I guess other than treasuries, treasuries, and then life insurance, but you could make the argument that life insurance is more safe than the government. But if the government goes bust, I don't, I don't necessarily think I think we got bigger problems. So I think both of those are the safer assets. Outside of that, there's really nothing else that can be guaranteed. Greed. Yeah. yeah i think that i just want to uh just say that i uh i won this just to get just to start this out what was your what did you say before You said first one was protection and then second one was guarantees. So they actually took number one and combined it together, you know, but. Yeah, we'll give we'll give you we'll give you that. We'll give you the prize. Give you the brownies. Thank you. I appreciate it. We'll give you the prize here. But I think it's yeah, it's interesting because I think I would have put in they have asset protection and they do have tax free death benefit. But what they don't have is the chronic chronic illness rider. I think that's, that's why don't you, why don't you ask it the question? How come you didn't put the chronic illness? Yeah. And this is what I always do. Chat TV. I like go on these crazy conversations of like, you know, it's like, Hey, you're, you're reaching for straws and number 10, like give me a different one. Yeah. Great catch. I love how chat TV can just kisses your butt all day long. What did it say? You're absolutely right. Chronic illness rider or accelerated benefit rider can be huge benefit. of max funded life, especially since it allows you to access part of your death benefit early. If you're diagnosed with a qualifying chronic or terminal illness, the reason I didn't list it in the top 10 is because I was ranking benefits that, that apply universally to every max funded whole life guarantees, liquidity, tax treatment, writers like chronic illness writers, aren't standard on every contract. It's standard in every contract we do, but that is fair that not everything. Okay, so let's then say what... Other benefits would you put if we were writing with one of the top major or top mutual insurance companies? Okay, so they said they would put... annual dividends. Yeah, that's right. They didn't really say anything about annual dividends. They would talk about, I mean, non-direct recognition loans that this is- Go up, go up to the top though. It says MassMutual, Guardian, PennMutual, and New York Life Lafayette. And then it's so like Guardian, they have direct recognition. PennMutual has direct recognition. MassMutual actually has direct recognition. And so it's like four, three of the five companies have direct recognition, but they're like, hey, Number two, non-directional. Yeah, and that just goes to show like that's a lot of people make a big deal about that. But it's, but it's, we have so many videos. We maybe should have a whole episode on direct versus non-direct. It's not as big of a deal as you might think it is over time. Financial strength and security. Yeah, that's, that's for sure. A member ownership. I guess if you're working with a mutual dividend paying insurance company, you're part owner in the insurance, in that. That's great. long-term policy design expertise. Sure. I guess also in the top 10, they didn't show early liquidity. That would be something that would probably be up there for us. It was not mentioned in the first 10 because again, they don't- I mean, number three, three is kind of, it says liquidity. They probably just assume. Yeah. Living access to cash liquidity, but it doesn't, every life insurance policy has long-term liquidity, but it's like early liquidity. is that that's not all created equal yeah yeah but you could argue that like liquidity is access yeah that one's more so talking about like just the fact that your money is liquid in general not austin don't interrupt me when i'm speaking austin don't interrupt me i'm just kidding go ahead i feel like austin's like i'm like i'm i'm on mute like austin can't hear me at all because i just like austin don't speak over me he just keeps talking it's so funny No, you're not. Just kidding, Austin. Go ahead. I'll just give you a hard time. You need to invest in your microphone, Dom. You are the quietest of the three of us. I'm not very loud on this? I mean, you're not loud. You're not. I can hear you. Okay. Sorry. No, Austin, go ahead. I apologize. I'm just bantering, having a fun time. Go ahead, Austin. Oh, yeah. No, you're good. Now we're at the point where I totally forget what I was even going to say. I think I was going to say something like with the... So flexibility and liquidity is there. They're just talking about liquidity in general versus early liquidity, which is what we sometimes talk about. Because I've, here's what I was about to say. I've talked with, I've met with people who have liquid policies, but they don't break even until you're 13. And it's still liquid, but it's not really liquid. You know, like it's a different kind of liquidity. It's liquid, but if the first couple of years you have zero cash value, then it's, there's no liquidity in the first couple of years for sure. And then even if there is a little bit of liquidity, it's compared to what we're talking. So it's all very valid points. Yep. Yeah. I mean, even an all base policy is slightly liquid eventually, like a little bit. So, yeah, early liquidity is definitely a hallmark of the kind of policies that we make here at Better Wealth. They have enhanced riders assigned chronic illness rider. You can add disability waiver of premium, guaranteed insurability, term rider blends, paid up additions. I feel like some of those are more popular than others. Generational planning. Awesome. Dividing, crediting history. So honestly, ChachiBT runs out of steam after nine. Legacy and estate planning and then alternative asset slash private banking. I would replace that with Chronic Illness Rider and talk about the benefit of that. It does talk about asset protection, which I think is great. I mean, they do allude to the ability to leverage against it, I guess. I guess that could be like the last one. But overall, I feel like it's a good, I mean, maybe you could also add the fact that it's private, the fact that you could access cash without triggering any like income deals. So like there's people out there that are saying your cash value through a loan doesn't trigger taxes or affect social security or anything. So that could also be a benefit if you are reaching for more things. And then this doesn't talk. at all about the being a better bond, potentially increasing your cash flow in retirement. Doesn't talk anything about that, which is interesting. What do you think are some things that could go on this list that Chad GPT would never, ever put on here? Yeah, like what I mentioned, I think talking about retirement income, the fact that it could be a pension optimizer, a volatility buffer, a better bond alternative. But if you said, hey, Chachi, give me 20 more, you don't think they would put that on there? Let's see. Please give me 20 more strategies that I could use. Okay, benefits, but benefits I could have if I had max funded. All right, let's see. Probably listening to us, you know, access to capital without selling assets, private and off the books financing. OK, no loan application for approval process. Policy loans don't impact your credit score. Flexible repayment. Sequence of risk number 11. Alternative taxable accounts, tax diversification in retirement. Add adds a bucket of money that can be accessed without required minimum distributions, mitigation against higher future taxes. Step up in legacy value. That's interesting. A lot of people talk to step up in value, but you get a leveraged legacy. Shield against provisional income tax on social security. Protection against sequence of risk. Protection against policy lapse with reduced paid ups. Okay, that's creditor and lawsuit protection. Stay specific. Protection against disability, living benefits, chronic illness riders. Okay, here we go. Retirement income hedge. Cash value can supplement retirement. distribution, smoothing income over time, college planning tool. Like that. I mentioned that liquidity for business opportunities, bridge of other investments, exit strategy for business owners, guaranteed legacy creation, charitable giving vehicle. Look at this. This is what I was getting at. Look at ChatGPT. It's crazy. I was trying to get out of like, what would they never, ever put on this list? If you just started asking it for more and more and more, and mine was going to be number 26, peace of mind. I was like, I bet you they would never say that. And crazy enough, here they do. Yeah. Now, they don't really talk about it being a better bond, but they talk about a lot of benefits of, you know, volatility buffer, a retirement income hedge, guaranteed legacy creation. But yeah, and that's AI historically. has not done a great job talking about emotional because it's not an emotional deal that's probably why it took a little bit more prompting peace of mind cool uh caleb do we uh do we want to talk about cons yeah um before we get too far into this from yeah before we fall too much in love with ai all right so now let's talk about okay so now i want to know All the disadvantages or cons to putting my money in whole life. Okay. It's exactly the right mindset. Whole life is incredible advantages, blah, blah, blah. Okay. All right. We'll read them all and then we will address all of these. High commitment of premiums is number one. So it just goes against what it's actually interesting. Austin, your number one benefit was flexibility. And the number one disadvantage to what they're saying is high commitment. So it's interesting that your benefit was countering the number one disadvantage. That's actually... brilliant. It tells me that you have lots of conversations with people. Lower early liquidity. So in the first one to three years, policies often have less cash value than premiums paid. Yeah, it's true. And in a lot of cases, it's really, really bad. Caleb, do we want to do the cons of only max funded? Or do you want to do all of whole life? Well, because it's in the same thread. It says disadvantages of whole life, max funded or not. I think it's good to... see them both because we can address, we can address them and then we can do part two if you want. Can I comment on, on the first one here real quick? Yeah. So I was just, I just had a conversation with a guy yesterday that, you know, this is labeled as a disadvantage and it's fine. It's fine to think of it as a disadvantage if you want to, but this was a guy full disclosure. I called them, we had, I talked with him like a year ago and I just was calling in and check and see how he was doing. had a long conversation where he brought up this point in particular as a reason why he didn't, at least initially, like want to go through with wanting to get life insurance. Except as he was talking about it, he was like, you know, I'm putting money into my Roth. He says, but he's like, I wonder if it's actually good that life insurance has premiums every year that like almost feel like they're a bill or, you know, that you have to pay them every year. Because it forces you to put something in, whereas like with a Roth or some other savings strategy, like you can put it in or not, but you're not going to get penalized for not putting it in. And once again, like the max funded models that we're talking about, these policies, they're only as strong as your track record of funding them. I feel like if we build you this amazing max funded policy and it doesn't get funded to the max, like, well, well, then, yeah, it's not going to be as amazing as it could be. So. The high commitment of premiums is actually kind of this like forced saving strategy that goes along with the life insurance policy that actually kind of helps you save more than otherwise you might if you had zero commitments, for instance. So just another thought there. Yeah, I don't disagree with that. I think from a risk management standpoint, flexibility could be a negative thing, but I would still pay a premium for flexibility. Hence why I think in a lot of our cases, policies after year one of funding, there's a lot of flexibility, including potentially paying the next year's base premium without with the policy not recommended. It's not something we're endorsing. But like even from year after year one, there's a lot of different flexibilities. And you could say that's a bad thing because you might be giving someone the easy way out. So I do think you get best of both worlds when it comes like you do have something that It's an ongoing commitment until you want to stop that, which is great. But we have built-in flexibility, whereas some life insurance, you don't have that built-in flexibility for the first couple of years. And so I'm with you. And I do think some people need to be forced to save. And if they don't have that forced nature, they're just not going to save in general. Yeah. The cop-out answer, which is actually a good answer, is it depends for sure. because if you look at the argument of an IUL, It being max flexible, like beyond flexible, where you could even do zero, you could argue that that's really bad because you're going to lapse the policy because you eventually like, well, I don't need to fund it. Okay. And then you're too like, oh, I don't need to fund it. And eventually it's like, well, now you have no cash value and it goes away. Right. So to some degree, flexibility can be amazing because it gives you options, but then also flexibility can be really bad because it gives you options. So, yeah. Well said. Okay. Second one. Lower early liquidity. In the first one to three years, policies often have less cash value than premium paid. And then clients expecting instant access to 100% contributions may be disappointed. My initial take on this is I think it's really well worded. A lot of times we're showing our clients way more cash value than what the typical whole life policy. But one to three years in most cases, almost all cases, you're not going to have all the money that you put in. And so that is really shouldn't be a negative. But if all you cared about was early access to liquidity and potentially canceling in the first three years. Yeah, this is whole life max, even if it's max funded with a great company, not the policy for you. 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. Yeah. Yeah. It's also that second point to clients expecting access to a hundred percent of contributions may be disappointed is that, yeah, like, and I had to, I kind of coach people. This is that you are buying a life insurance product. Like, it's like, you know, this is not just, you have $10,000 and you give this carrier $10,000 and then you go and you can write a $10,000 check tomorrow. Like, you know, you have to put some value on the death benefit. Like you're, you're buying into this long-term strategy of protecting your family. And that's the foundation. And then you're building this super cool liquid savings tool on top of it. Like you don't get access to 100% at first because this is not a checking account. This is a life insurance policy. It's like that has to be the foundation. The number three is complexity of design requires expertise to design properly. High PUA, low base. A poorly structured policy can have weak early cash value, poor flexibility and higher costs. I do think this is legitimate. And it's not a sales pitch, I promise. But you do want to work with someone like us or somebody that really knows what they're doing, setting these things up and then ongoing. Any thoughts that you have, Dom? I mean, it's pretty straightforward. I really do think that complexity of designs. If a person tries to go to the insurance company and says, design this for me, they're not going to be able to get what they want designed. I've had many people try it. And so they may eventually come full circle like, hey, like I decided to call with you guys because I can't get the insurance company to do this. Or they're going to their agent trying to help them design the policy and they don't really know what's going on. But that's got to be so frustrating when you're trying to walk through your financial advisor or life insurance agent how to design a max funded policy. Like talk about lack of confidence that creates. Yep. All right. This one's interesting. A lower returns versus equities. while safer, more predictable, the internal rate of return of cash value typically ranges three to 5% long-term, depending on dividends, not ideal for clients who only care about maximizing market returns. What are your guys' takes on this? So I agree with the first thing is yes, the internal rate of return is generally three to 5%. I agree. And the funny part is that That second point. not ideal for the who only care about maximizing market returns, is what a point that it had brought up in the benefit section, which is the sequence of returns risk, is that it actually helps decrease that. So you might actually be able to get more out of your market-based assets so that you don't have to liquidate them in a downturn if you had a life insurance policy, you had this predictable, consistent asset that's always growing, is never going to have a down year. So it kind of depends on how you define... market returns. Because if you want to have an asset that's not going to lose value in a downturn, your market returns are going to do better because you're going to give them time to recover. So it's actually kind of better to not have all of your assets be super volatile. So just a thought there. What's your thoughts, Tom? I think I went on this crazy roller coaster once upon a time of going all in on... understanding like the market and being like, oh, the market's the way, and then going all the way to like, you know, insurance is the way, and then going all the way of like, you know, the sequence of risk and life insurance, and they can kind of play like pars with one another. And again, I'm like, man, this question is so difficult. You know, it states not ideal for clients who care about maximizing market returns. If that is the goal, then yeah, that's true. Like it's not, you know, it'll you'll point blank. Like if you were just to put money in S and P, you're going to have a higher dollar growth value than putting in a life insurance. Like, you know, and then it'll also depend on like the year. Like if you happen to like be putting money into the market for three years and it takes 50%, you know, it's like, well, then you'll have a little bit more in life insurance probably for the next four or five years until the market starts to recover. So it's like, what year are you at? What is your goals? Where are you trying to head towards? Are you going to use this for real estate, liquidity? You can use it for retirement income. Like, it's a loaded question, really, at the end of the day. Yeah, if we were talking about bucket A versus bucket B, not being able to borrow or leverage against it and what the expectations are, in almost every scenario, whole life insurance will underperform. an index, an S&P 500, especially if fees are kept to a minimum on the S&P. I don't even think it's close. But from a planning standpoint, if that's all you cared about was that route, then you should look at the route of like, what will maximize income and just very much like what you said, Austin, there could be a huge argument to be made that insurance could play a portion of that. But then also, it's like it says it's not ideal for clients who care about maximizing market returns. Okay. I'm glad I said market returns, but we have clients that use their policy for all kinds of great returns. So it's, it's, it's yeah. I mean, it's, it's not, but, but they're ultimately using the capital to then reinvest. So if all, so if, if you had to continue to keep it in the container, I a hundred percent agree. and that's why we're very clear that this is not an investment. We say it a lot because I do believe that it gets overpitched and sold. too much like an investment in too many cases. And so I think it makes good points, but I think it's really easy to get around this if people really want to understand that we're not trying to replace your investment portion of your portfolio in this. That's good. Loan costs. Loans come with interest. If mismanaged, borrowing too much and not tracking policy loans can erode value or even cause a policy lapse. Okay. there's a loan cost to this that for some reason that does sometimes turn people off. They're like, I have to borrow to use my own money. What would you say to that, Dom? If someone's like, why do I need to borrow to use my own money? That's dumb. Kayla's asking a loaded question. So usually it would try to attach it to something that they're familiar with, right? So if it is a real estate investor, et cetera, right you kind of bring up the idea of a heloc and being like well you know do you want access to liquidity to be able to allow it to keep growing while it's intact this is why you have the function of borrowing all right people is more of like a stock market business minded sometimes i'll use the example of elon musk and how he's borrowed his funds to twitter to or excuse me from tesla to buy um to buy x it's like because you're borrowing you get the tax advantages that come with it if you weren't borrowing and you were just using your money It'd be like any other account that doesn't get the benefits with it. So you just kind of try to attach what's familiar with them with not in a lot of instances. And to be honest with you, there's a lot of instances where you're not even borrowing, especially in retirement. You're taking withdrawals early on and then borrowing. So you kind of have to like understand the person, who they are, and then have a conversation that's relatable with them. I think it comes really down to this. If people don't see the benefits of insurance. They don't see all the benefits that you get with it. And if it's just not worth them to borrow against to get all those benefits, they can just withdraw their money up to basis. So I think early on, I would fight people with this and try to educate them on all the benefits. It's like, listen, if you can withdraw the money, here's the negative. You can't put that money back. There's going to be some negative benefits. When I say negative benefits, like less compounding benefits of death benefit and cash value. But if... But if the borrowing is that big of a sticking point, you don't need to borrow. There's nothing in the contract that says you must borrow if you want to access your money. It just gives you a lot of flexibility and, in my opinion, compounds the entire life insurance asset. And that compounding long term far outweighs the cost of borrowing in that season. Another way to say what I would have said, or if you asked again early, it would be like, if you want an asset that continues to keep growing uninterrupted, with a steady growth rate, while you're able to use those dollars and get tax advantages, well, this is what you would use. Otherwise, if you don't see the value in that, like sophisticated investors and sophisticated individuals, then maybe this isn't the best tool for you in that concept. Yeah. Number six. Oh, sorry. One thing on that. I'm going to piggybacking off what Don just said, is that, and this is what Nelson Nash did a great job, I think, opening our eyes to and becoming your own banker, is that there's a cost to doing nothing with your money. If you choose to park your money in a bank account, like you are foregoing the interest that you could have gotten had you had that money somewhere else in some income-producing activity earning something higher, is that looked at in a certain way, you could even see it as, you know, that you're losing money if you're comparing, you know, bank account versus something over here, is that when you put in life insurance, you're essentially raising the bar from, okay, earning 0.0 in your bank account to, you know, whatever the dividend interest rate is inside the cash value of your policy. And what that does for you is that instead of being able to, at least mentally, if it's just in the bank account, you could justify an income-producing activity that has a 2% or 3% rate of return because it's better than your interest rate that you're getting in your bank account. But if you now are having a life insurance policy, you have a higher threshold that you have to meet. for it to make sense to take it out. So it has to be higher than the policy loan interest right now. So it just kind of raises the threshold of what actually matters enough for you to take the money out of your policy to invest in. And so I just think it's going to make you a little bit more choosy and maybe a little bit more intentional about what you choose to invest in. And like, is a 2% or 3% investment really worth your time? In a bank account, yeah. In a life insurance policy, no. So it just makes you a little bit more choosy to give you a higher floor to work from. I actually, and I think there's a big benefit in that as well, is just having a higher standard. It's like, when has higher standards ever backfired on people? Usually people don't regret it. Yeah, my standards were too high. Some people may have that regret. And so some people would be like, yeah, I really missed out on that 5% opportunity. And you're like, okay, sorry about that. Versus that you're totally right. This definitely raises the bar. And I, yeah, I've never even thought about that articulated that way. Awesome. So I appreciate you mentioning that. Absolutely. Number six, not designed for short-term goals. Yeah, exactly. Man, if that's a disadvantage and a sticking point, definitely don't do permanent life insurance. It's definitely for long-term thinkers. I do think we eliminate a lot of short-term disadvantages with how we structure it. But yeah, if you want to be in and out in a few years, this is just... This is just not even something you should consider. It'd be very, very dumb. High opportunity costs if misunderstood. Critics argue that tying life insurance into whole life reduces opportunities to invest in higher returned assets. While safe dollars are valuable, this is still a tradeoff versus higher risk, higher reward markets. My pushback to that is if you really believe in... something that's going to go to the moon, leverage your policy and put it in there. Just know that you're going to be taking on risk. And so I guess early on, if we're talking like we want to leverage every single penny ever done, then yeah, you'd be better off putting your money in a savings account, having 100% liquidity than putting your money all in. I don't think that's number one healthy from a planning standpoint. And in a lot of cases, it's not a big deal. But there are some people that... they want to maximize every dollar and they tend to not be great long term because they're always leveraging every single penny and that and they're one decision away from going backwards in a major way but um i think the big pushback is if you give people access to capital a lot of the opportunity cost conversation goes out the window if you give them at least the opportunity to say yes number eight fees and insurance costs embedded part of your premium covers mortality costs commissions there you go i thought I thought commissions were going to be the number one high commissions. But I think what we said is we already had max funded. I guarantee you if we didn't say max funded, it would be a bigger talking point. And administration, especially in the early years, this makes it less efficient compared to pure investment account. I feel like it's saying the same thing, but definitely is it. This becomes a greater con depending on how it's structured. Yeah. And something else that that didn't get mentioned, which. uh has been implied when we've uh when we've talked with different carriers or whatnot is that some carriers will for instance and they don't you don't might not know this happening they might raise their dividend rates but they also then might raise their expense ratios too so it's like it's kind of like tricky that like oh you think oh i'm getting more dividends this is great but it's actually the exact same time the expense expense ratios are going up and so it's not going to really feel like you're getting more dividend inside your policy so definitely something to think about and be aware of. It's not flexible like traditional investments. You can't just sell it and put all your money instantly without possible surrender charges or tax implications early on. There's not going to be much of that. I agree. If you're used to Robinhood trading and going in and out of things, this is just a different it's not flexible like that. It's flexible in the way that we talk about it, but I guess there's levels of flexibility, and it definitely is not. you know, as flexible as some, some accounts. Um, it's this, it's the same as like technically from a liquidity perspective, it's like, if you really broke it down to like levels of liquidity, levels of flexibility. You know, life insurance is not like the most absolute flexible thing on the planet and not the most liquidated thing on the planet. There are other tools that are better than it just point blank, but it is still very advantageous in, in a lot of ways. Um, you know, you can get a policy loan. I've gotten one as early as 24 hours. Um, and I've also gotten one as late as 17 days. So it really can have a wide variety depending on the individual and the timing, like the company, individual paperwork, things like that. And so when it comes to the flexibility is we even talked about it early on of like, if this isn't for the long term minded individual, then it's it's not for you. You know, if you're using this for in and out stuff in the short term minded person, well, then it may not be for you. And so, again, really, I try to just overemphasize the living life out of this thing. A lot of this stuff is really nipped in the butt real quickly, depending on the person. It's like, yeah, it's not a lot of these cons are for people that have just like a different mindset. And which is why for us, it's always so important to figure out who is the right mindset for the people that we want to work with. Because otherwise, none of this is like you're not going to you're not going to win against that person at the end of the day. Yeah. Yeah. I well said, well said, not flexible, like traditional investments. I feel like it's we. It's like said the same con three different times. Policy performance depends on carrier strength. Okay. Complexity for compliance to understand. I do think that this is a real con. Even when structured properly, these things are not as easy to understand. And we spend a lot of time, money, and energy helping our clients just better understand what they currently have. And it's just one of those, anytime you're dealing with something that's not the norm, you have to go. above and beyond. Someone in the industry called it the racer at the door. When you meet with them, awesome, awesome, and then they leave and they just forget everything you told them, and then every year. So that's why we take education really seriously, because we know we're in this day in and day out. Of course, we understand the talking points, but someone who's not doing this day in and day out, they definitely need to be reminded. And that can be a con, because in a savings account, you don't need to be reminded. Oh, how does this work again? it's like well It's pretty self-explanatory. I also think that there's part of the reason it's more complex is because there's a lot of benefits that you're getting that doesn't include in a savings account. So it's like, how does a chronic illness rider work? That can be complex, but that's just an extra benefit that you get by having this. So I think some of it's not all a negative. If it was a lot simpler, it's like, okay, let's just make this a lot less advantageous. And guess what? It's going to be simpler to understand. So I do think that's a pro and con, but definitely anytime someone's not fully clear on something, I would put that as a, as a con for sure. Yeah. Yeah. It's in my role at Better Wealth here, I'll add that like, this happens semi-frequently where it's like, yeah, people on their policy anniversary, you know, we send out their email, say, Hey, I'm like, Hey, I'd love to meet with you. And then they're like, I did this three years ago. I can't really remember why I did this anymore. Like, why am I putting my money into this? And it's like, We're happy to provide that education because that's ultimately, like we know, like you said, they don't read this day in and day out like we do. And they made a good decision three years ago. And it's just our job to remind them of why they made that good decision and how this still lines up with their goals. And then by the time that conversation is done, they get it. And who knows? Maybe we'll have to have the conversation in another couple of years. But ultimately, if it means that they're more educated, it's a conversation worth having. And number 11 is with the bottom one. That's not just life insurance. That's life. That's marriage. That's business. That's relationships for kids. Yeah. Discommunicationally is the unmet expectation. That's a big one. Yep. I agree. The modified endowment contract risk, obviously, if it's structured properly, you don't have to worry about this. And it's hard to make a policy without knowing. I mean, insurance companies take that pretty seriously. You would really have to be out to lunch and your advisor team would have to be out to lunch to just accidentally mech a contract. But yeah, this is something that you definitely want to understand, especially if you're max funding. But in our experience, this is not, I don't think we've ever had someone accidentally mech a policy. We have had people that have been notified that their policy is going to mech if something doesn't change. But I don't think anyone's accidentally meched a policy without knowing. Well, there are certain circumstances. When it comes to front loading, that can cause that specifically, that's maybe a little bit more unorthodox than what some may see, especially from an advisor perspective. And the reason being is You can fund a policy with a front load with like just the like a bare base minimum. And then you have a window where they're like, hey, you can throw in the rest of it later. And a lot of the times if you throw in the rest of it later, after a 90 day window, there can be then tax consequences from a MEC perspective. And that actually has happened once before where the client funds it base bare minimum. And then after 90 days, they put in a large lump sum and causes a policy to MEC. you Get have a like in some care insurance carriers. They have like a like even a caveat button on it's like hey Be careful if you don't fund this fully because you can click like fund the full amount or not and if you do click not fund full amount And you say hey if they fund it after 90 days this can cause a mech just you know It's unlikely but there can't happen and I have actually seen it happen once did what happened to that person Are they they just were they not able to get out of it like now they have a Mac policy I have to follow up on it. I know that we went back, I think, to the carrier and said, like, hey, like, what is what's going on here? Is this possible reverse? So I have to go back and follow up. Might be a good follow up episode to do on. Yeah, let's definitely look at that. Because I definitely know that that can happen. But I normally we can if that's like a deal breaker for people, usually there's ways out if it's if it's if it's addressed immediately. If it's not addressed immediately yeah that's how you transfer you just could be like hey i It's not that we can do long-term, but within that year, I would imagine. But yeah, that would be a good follow-up. Austin, what were you going to say? There was something that happened in the last two months. I don't know if this is the one that you were talking about, Dom, where the client's policy, I was doing an annual review with them, and I saw in the software that it was a mech. I was like, what's going on here? And what actually ended up happening is that it was a front-loaded policy, and this guy wasn't aware that it was a mech. And so we're like, we weren't informed that it was a mech. Like, what's going on? That there was a change right before issue where our dividend option was switched to Q-term. So it was buying extra term insurance on the policy, but that was not reflected in the software. So it was because the software did not understand how the policy was built. And they were able to go back in and basically just change it from mech to non-mech. Because they're like, oh, this policy is fine. We just didn't reflect the dividend option change in the software. And so everything's hunky-dory. everyone's all smiles and giggles everything's great so that that so that one's a good example mistake on their part yeah yeah and that's a good example but if no one really was monitoring that or watching that and it's like years years go by and it's like that's harder to just change but that's a that's a that's a really interesting um feedback so yeah um okay let's continue going these are honestly a lot lamer than i thought i thought we would have to work over time here and we're not really needing to do that Not always the best for older ages. Okay, if you're 80, yes, 60 plus, I definitely it just it just depends on what you're trying to accomplish. I mean, we don't Dom and I are looking into this whole program that's literally built around positioning life insurance for people nearing or in retirement for retirement and legacy. And so I yeah, if you're 20 versus 60, you're going to get a lot more cash value and death benefit, you know, performance, but that But your also chances of dying over the next 40 years aren't that high. So it's all relative. I do believe if you're in your 60s, like there's a legitimate chance that you might not be able to qualify. Because you may have health stuff that have come up. But I don't know if I really buy that. And then maybe that's why it's not always best. Because yeah, this probably is true. By the way, it's not always best for... 90% of the population. So I think even with all the benefits that we listed, I don't think any of us are saying everybody and their mother-in-law should be putting money into life insurance. That's not the case at all. Yeah. I think the age really then comes down to where they're at in life from a per goal perspective. Because think about this though, if you're someone who's in their sixties, 65, if you've done the things well, and you don't have life insurance, there's likely a high likelihood you have. significant amount of assets. And if you have a significant amount of assets and you want to essentially pass that down to the next generation, well, some of the best ways to help mitigate it from a tax perspective or being able to pass it down well is to be able to use life insurance as a tool to do so. So I think that it actually could be an incredible tool. Now, if you're like, hey, like I want to use this to borrow against to then buy, put it into real estate. It's like, well, yeah, like now you're using the tool in a way that. doesn't make a lot of sense for your age and your what you're trying to get at so i would agree with them it's like if you're a 65 and you're like don't have wealth and you're like trying to gain wealth uh putting your money into life insurance so then borrow against to put it into something else is it probably is it not probably it is a terrible idea Yeah. Well said. Dividends are not guaranteed. Okay. Yeah. That's the talking point there is they've been paying dividends for over 100 plus years. Yeah, they're not guaranteed. And Austin, what happens if a company just totally goes kaput, stops paying dividends and all? Are we stuck with that company or do we have options to potentially get out of that company? So there's a lot of safeguards that are in place for if carriers fail. So if there's a carrier that just... goes belly up, you know, and its finances are just completely bleeding everywhere. That obviously creates ripples across the industry and other carriers will historically, what they'll do is they'll essentially kind of like buy parts of their book of business. They'll kind of get like a collection or a syndicate of them together and they'll step in to make sure that like these policies just don't go unfulfilled because if one carrier goes down, that will create distrust. Yeah. Yeah, across the industry. You're going real technical. So what you're saying is the likelihood of an insurance policy failing, unlikely. I'm even talking about if your policy is underperforming, you can 1031 into, or 1035, sorry. 1035 into another policy and pretty much dollar for dollar goes over same tax benefits and all. Which that is great too, because you're not stuck in any one contract. And again, we're not here saying 1035s are like the way to go for everyone, but that is a way out. Now, caveat, you have to be healthy. If you're not, if you're uninsurable, that's, that's something that's off the table. But you're totally right. The likelihood of an insurance company failing, unlikely. But if you're even, if, if your dividends are not performing the way you want it to, it's not like you're stuck there the rest of your life. You have optionality. And you can always cancel your policy if that's like you want to do that. that's always an option that you have, even though even in an, even if a policy wasn't paying dividends and it was in between keeping it or canceling it, I think there would be a great benefit of keeping it. But I don't know if that's your only option that that would be something to look at. I don't want to kill your train of thought, but I thought, I think you, you're going down a path. Yeah. I was going down a different rabbit hole. And I think, I think it was a good, put the fries in the bag. I think guys with time as well, you know, I think it just, gloss over 15 requires discipline we obviously know long-term thinking have a long term be committed put it in good done let's get it let's go great way to end the episode all right hold on i just want to see sorry fries are still out of the bag i just want to see if you work out of the back see if you weren't max funding that's what i want to see if you weren't max funding but what would some of the cons be very low early cash value that's what we hear all the time much higher opportunity costs, obviously, lower long-term IRR, less flexible, totally. I don't know why CHAPD is so slow. Slow break-evens, yes. I feel like a lot of these talking points are what we actually come against because very few people are actually talking about max-funded, the right way policies. They're a lot harder to poke holes in. More sensitive dividend performance, you're right. Harder to use banking strategies, yes. Higher relative cost of insurance, okay. Harder to justify as an asset. Greater risk of policy lapse. So, yeah, that's normally very low cash value, which also is another talking point of that is high commissions is another deal. But, yeah, guys, this is a lot of fun because this is real life. These are no matter if you're watching this and you are an agent or an advisor or if you're someone that's doing your research or maybe a client of ours or somebody else. This is a This is a fun episode because we're talking in just real talk through these deals. And like always, we appreciate those of you that subscribe, those of you that comment. We want to hear different ideas and we want to hear your takeaways. Is there anything that is missing in the cons or pros that you would put in? And then if you are somebody that has an insurance policy that you want us to take a look at, or if you want to talk to our team about what life insurance could look like for you, we'll have links down below. We would love to serve you. And until next time. Thank you for tuning in to the fastest growing life insurance YouTube show in the world. See you. That's right. That's right. Preach it. Let's go. If you're a high income earner or own a successful business, you're already creating real value in the world. The real question is, are you keeping that money, protecting it, and growing it the way that actually supports your long-term goals? At Better Wealth, we help people like you better keep, protect, and grow their wealth through... various tax strategies, estate planning, specially designed life insurance, retirement planning, and even a fractional family office service. If you're interested in one or more of the areas we can serve and wanna learn more, the next step is to book a free clarity call with us. Click the link in the description or tag comment below to get started.
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