What happens when a smart investment advisor starts questioning the very system he spent 20 years promoting? That's exactly what happened when a veteran in the financial space came to me and Better Wealth looking for more freedom, control, and liquidity in his life. And in this video, I'm going to take you behind the scenes of how we structured a plan that gave him all three, using overfunded whole life insurance, and show you the exact design he ultimately chose and why. All right, so let's start from the very beginning. When we first met this past summer, He only had term insurance in place. He told me that he hadn't necessarily considered seriously overfunding her life insurance until he found our content here on YouTube while he was searching for a way to maintain control and liquidity and some long-term value. And so between he and his wife, they earn about $550,000 per year, and they're sitting on roughly somewhere in the neighborhood of $2.5 million, mostly in traditional liquid assets, primarily the 401k. And yet, his total life insurance coverage was only $800,000. dollars. So even before talking to me, he already knew that he was underinsured. But as our conversations progressed, he admitted something even deeper than that. That while he's grateful for his career and the lifestyle that is provided, he started to feel like he's been kind of drinking the Kool-Aid, if you will, kind of following the traditional path of go to school, get a job, climb the corporate ladder, max out the 401k, so on and so forth. I'm not here to say that that's a bad thing for any stretch of the imagination. In fact, I think it's more good than not. But for his particular situation. This is how he felt. This was his own personal realization. And the more that he reflected, the more he realized he doesn't want to rely on hope and a prayer of someday living off of his 401k. He'd rather build cash flowing assets that give him real freedom, real control that he can start building upon today. Now, when it came to repositioning money into life insurance to accomplish his goals, he wasn't sure at first how much he'd want to contribute. So. I kind of helped walk him through it using two key questions. First, when it comes to his goals of control and time freedom through cash flowing assets, the question was, when will these opportunities likely show up and how much will he need to seize those opportunities? In other words, when opportunity strikes, how much cash will you need available? Second, after you've covered all of your bases for daily life, where are your dollars going right now? And how closely does that align with the goals that you've laid out? Because the truth of the matter is this, right? A life insurance policy is only as powerful as your ability to fund it, right? It's only as valuable as your ability to fund it, especially if you're looking for cash value. And so I went on and gave them this example. If someone says that they want to build a real estate empire, but only contributes $1,000 a month just to kind of, quote unquote, dip their toes in the water, the math just simply just won't add up. We have to fund the policy in proportion. to the goals that you set for yourself. And so throughout that conversation, he determined that he wanted to front load somewhere in the neighborhood of $100,000 to $300,000 and then fund about $50,000 per year after that. And so with that clarity, we could actually get to work designing the right policy for him. So I showed him two main carriers. The first carrier that I showed him was a company named Guardian. And the second one that I showed him was a company named Penn Mutual. Both of them are very excellent options with their own pros and cons. And more specifically, throughout the process, what I did was I shared with him a screen share prior to our next meeting, very similar to what I'm about to show you right now. So let me go ahead and show you the very first option in that screen share video that I shared with him prior to our next meeting. So this is with a company called Guardian. And so there's a lot of numbers on the screen here, but ultimately what we're going to be looking at is this net after-tax outlay. We'll be looking at the cumulative net outlay as well. We'll take a look at the net cash value, and we'll talk about the death benefit probably briefly as well. So in short, Ultimately, he wanted to contribute $300,000 in that first year is what I want to illustrate for him. And the benefit of this is that he has $276,414 available in cash value. And these are end of year values. And if you look at it from a standpoint of percentages, we're looking at over 92% liquidity by the end of that first year, which is pretty incredible. And then the question is, well, if we're looking at $50,000 per year, well, at what point does your cash value get to a point where you have more? capital available to use than you've actually put into the policy. And we're seeing that this happens here in the fourth year. So in that fourth year, $450,000 goes into the policy. He has access to over $452,000 by the end of that fourth year. And then from there, the gap between what he's put in and what he has access to continues to widen and widen and widen and widen because these policies just get better with age. And so if we look at a little bit further down the line, by year 15, he'd be 60 years old. He would have put in $1 million even into the policy, and he'd have about $1.26 million available to utilize for whatever he wishes, whether that's for investments and opportunities for creating cashflow, which is what he wants, or for creating supplemental retirement income, which is what we've also talked about as well. And so it just becomes better with age. Okay. The next one that I showed him was with Penn Mutual, where we're combining a couple of different strategies. We're combining a cashflow policy, meaning that you're contributing some amount every year with the premium deposit fund strategy, which actually pays all or a portion of your premiums every single year automatically. Okay. So in this particular case, $300,000 would go into the premium deposit fund. And if you were to do the math and you took $300,000 and you divided it by 10 years, you would expect $30,000 per year to be deposited into life insurance policy. But because of the 5.5% interest rate, that you're also getting guaranteed within this premium deposit fund every single year, what that results in is $37,725.43 per year going into the policy automatically. And so by the end of that 10th year, instead of $300,000 making it into his policy, there would have been an additional $77,254.33. Let me lead you on down to the actual policy in and of itself. Hey, it's Demetrius. Just want to pause the video real quick and let you know about our education hub that we call The Vault, because the reality is most people have no idea how to evaluate whole life insurance. And so The Vault is a collection of all of our best resources and educational tools to help break it all down. So there's a calculator, a handbook, a crash course, and deep dive videos on all of the numbers. You have all of that in one place and all for free. So go ahead and click the link in the description or the tag comment below to unlock your access to The Vault. Now back to the video. So what we're seeing here is by the end of that 10th year, we're seeing $877,254. And it's like, whoa, whoa, whoa, what is that? Why is the number that much larger than what's actually gone into the policy from the PDF? And the reason for that is pretty simple. It just boils down to the simple fact that he still would have the ability and be very comfortable contributing an additional $50,000 per year. So technically in that first year, there would have in $350,000 going into either the premium deposit fund. and into the life insurance policy in and of itself, right? Taking premium deposit fund of $37,700 plus another $50,000, again, gets us to the $87,700. And then we continue to contribute that same amount every single year, knowing that $37,725 is directly and automatically coming from the premium deposit fund. We're also just showing it's 50 grand. So from a break-even standpoint, what we're seeing here is by the sixth year, what's been deposited into the policy in and of itself was $526,000. And what he has access and cash value, and again, these are end of year values, is $539,353 by the end of that sixth year, right? And of course, I throw a quick caveat in there. These are technically non-guaranteed values, ultimately just knowing that the dividends themselves are not necessarily going to pan out exactly like this, but dividends are not guaranteed, but highly assumed. It's just a matter of how much. Okay. I hope that makes sense. So anyways, once we exhaust all of the premium deposit fund by that 10th year, what we're seeing here is that then the premium drops to $50,000 to adjust to the amount of money that he actually wants to contribute and has been the whole time year after year of $50,000. So by the end of this 15th year, 1.1 million has gone in $1.6 million available by that point in time. So that's the second option that I showed him. And then we have the third option. The third option here is also with Penn Mutual, but you're noticing that the $300,000 is not going into the policy directly all at once. We actually split it across two different years. And we did that on purpose because when you think about the minimum required premium, if we can make that a little bit lower, then once he gets to a place where he's contributing $50,000 per year, less of that is going towards base premium and term rider. And a lot more of it is actually going towards paid up additions. and it ultimately results in a... greater level of cash value at this particular carrier. And you'll notice that he'll have a lot more flexibility with contributions as we go on in a second. So let me talk about exactly what I mean by that. And so again, $150,000 after two years. So we're seeing that by the time $300,000 goes into the policy, we're seeing $255,000 available by that point in time, which is actually still less than what he would have had just by depositing a full $300,000 into the Guardian policy. But he preferred that. He actually preferred that because he knows that the opportunities that he's looking to take advantage of will likely not be for the next two or three years, for one. And number two, when it comes to the deposit that he needs to take advantage of said opportunities, normally he's looking at somewhere in the neighborhood of $150,000 to $200,000 available. So he knew strategically that this would be a pretty decent opportunity for him. Now, we also talked about the simple fact that when it comes to what his actual ceiling is, within this policy, I told him based on how this works with Penn Mutual, $150,000 so happens to be what his full ceiling is in this particular case. And so his ceiling is $150,000 and his floor is about $34,000. And so he knew that $50,000 was quite comfortable and that's what he planned on contributing every single year and he wasn't going to have much of an issue with that. And so when he has the ability to contribute more, he would love the ability to contribute more. not only in the first two years, but also in years three and beyond if you wanted to. And so if you take a look at this, we're looking at $950,000 by the end of that 15th year. And what he has available by this particular point is $1,328,361 in cash value that he can utilize for whatever he pleases. Now, I think it's important for me to compare that to what he would have had by that same kind of point in time with a guardian life insurance policy. And if that were the case at Guardian, what we're seeing here is that $950,000 contributed in total, he has access to $1,176,652. And he would prefer to have more money over the long haul in terms of access and liquidity than he would in the early term. It just matters a lot more to him. Not to mention within the guardian life insurance policy, he goes from $5.25 million of death benefit And it drops all the way down to 2.6 million. And again, it starts to increase again, which is what he liked. But again, if you take a look at the policy over at Penn Mutual, when we're splitting that 300,000 over the course of two years, what we're seeing here is that the death benefit not only is pretty solid by that 15th year, but it's also not having nearly as significant of a drop as you can see here within this illustration. When we reviewed everything together in a follow-up meeting, we went through each illustration and addressed several detailed questions that he had about the numbers and how they work. how the death benefit adjusted, how the liquidity compared over time. And then by the end of that meeting, it was clear that he was ready to move forward. Even while, if needed, we continued to refine the exact design as he went through the underwriting or approval process. And so the policy that he ended up choosing was a front-loaded policy, the one that was split over two years, so $150,000 each year, $50,000 per year premium. And it was designed for a long-term performance and a death benefit that did not. decreased nearly as significantly and in fact started to increase eventually over time, not to mention he had the flexibility to contribute up to $150,000 in the future, which for him, again, was very reasonable. He loved that this structure gave him control. It gave him long-term compounding. It gave him a death benefit that continues to rise. And when underwriting came back, he was approved at Penn Mutual's best health rating, which made the numbers even stronger than what we originally looked at. And here's the most powerful part of the story. He's an advisor. He's a wealth manager. He's an investment manager that went from questioning the system to starting the path to rebuilding it for himself. Now he has freedom because he can access capital whenever opportunities arise without worrying about market timing or penalties, right? He has control because his money lives in a contractual guaranteed environment that grows every single year, regardless of what the market does. He has liquidity. Because the cash value is available to him through policy loans, which he can use, he can repay, he can reuse over and over again throughout his lifetime. And the best part of all of it is that he didn't have to sacrifice his legacy to do it. Right. And by structuring the policy the way that we did, he created a system where he can use the money throughout his life and still leave millions upon millions tax free to his family when that time comes. And so in short, he built a system where he can have his cake. and leave it too, using his dollars multiple times while passing on wealth for generations to come. That's the kind of transformation that happened for him when he stopped playing by the traditional rules and started creating his own system. So if you're watching this and you're wondering how this could look in your situation specifically, you're asking yourself, how could I create more freedom and control and liquidity without giving up growth or legacy? Go ahead and just schedule a call with our team here at BetterWealth. We'll walk you through what this could look like. We'll get really clear on what matters most to you and help you design a strategy that gives you control of your money and peace of mind about the future. Thanks for watching, we'll see you in the next one.
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