In this video, we're going to be talking about when an all-base whole life insurance policy makes sense. And again, if you're watching this for the first time, just know that majority of the content that we make around life insurance is case studies and different ways that people can utilize life insurance. We're talking about max funding, overfunding, creative ways where people can use their life insurance, protect their families, and get all kinds of benefits while they're alive. And a lot of times, we don't talk about all-base. or we come across as like, this is a typical way of doing it. This is a better. And I'm really grateful for you, Austin, because you are going to play devil's advocate in this one and say, hey, it always depends. And there are some scenarios that an all-based policy could make sense. And with that, I'm going to hand it over to the man himself, Austin Williams. Thank you very much, Caleb. Yeah, this one is a little bit of a deviation from the way our videos normally go on this channel, but I'm always drawn to those areas where, you know, maybe we haven't. visited enough or that people might assume that we wouldn't be interested because ultimately, our mission as a company is we want to help people live intentionally. And for some people, I think living intentionally is going to be best served within an all-based policy. Now, obviously, this is not for everyone. This is not a blanket statement. I'd say we fairly loathe those things here at Better Wealth is that there's not one thing that's right for everybody, but obviously, everybody could be served by different things. And so an all-based policy, maybe you're listening in and you're like, hey, what the heck are you talking about? an all-based policy. I don't know anything of what that means. We'll slow down. You know, I got you covered. No worries. We're going to we're going to go into a little bit of like, you know, some of the history of life insurance and, you know, what are the constituent parts of life insurance? And we're even going to end up looking at an all base policy versus a more kind of overfunded policy that you might have seen on our channel before. So there are three constituent parts of modern premium. You don't usually see the words modern premium together, but that's. pretty much as close as they could get to like what I'm actually trying to communicate here is that in a modern policy, premium are the dollars that you are contributing into the policy. And ultimately those dollars are buying death benefit. And those dollars could be made up of three things. And it could be usually a blend of these three things is that it could be base, which is buying the minimum amount of death benefit needed to keep the policy active. It could be term, which is increasing the death benefit at minimal cost. So that number three, we could put paid up additions into this policy. policy and the paid up additions are obviously increasing the cash value of the policy. So this is kind of the blended approach that we normally take, but this hasn't always been the case because these things haven't been around forever. They're actually fairly new. And so since the 1700s, life insurance policies were actually pretty much all base. There's only been relatively recently since term and since paid up additions were kind of blended into whole life permanent insurance products. So a couple... important events on this timeline here to talk about this is that in 1979, the first universal life policy was created. And, you know, obviously there's a lot of fanfare around it. And it introduced the idea of paid up additions and paid up additions were back then. All that they were is that the dividends in participating carriers were then used to buy additional paid up insurance. In 1985, some carriers started allowing policy owners to just buy paid up additions inside their whole life policies. And then in 2000, The man, the myth, the legend, Nelson Nash published his book when he kind of broke it all open for us and spelled out how to do it. And that's when paid up additions got really, really popular. So that's that's kind of where it came from. But before that, before 1979, all base was pretty much all there was. That's really all that you could do if you wanted a permanent life insurance product. Now, as we'll come to see here in some of the policies that I have created for us is that while they both do the same thing really well, which is, you know, you know, protect. the value that you represent to your family, they do so in different ways. And depending on your situation, you might be better served by an all-based policy. So I have a couple of policies for us, Caleb. We'll go into it and we'll talk about what we're seeing. So this policy right here, this is a 45-year-old male. It says you're age 46 on the end there because that's his end of your age. But 45-year-old male, this is a 23% base policy. So this is the one you commonly see on channel. We're shrinking that base as much as we can. because we want to maximize the paid up additions. So in this one, I'm putting in 65,000 to premium, which that's pretty big. Like this is nothing to sneeze at here. Like this is a pretty big policy. So 65,000 a year is going in for 15 years. And as you see in that cumulative premium outlay column, it's just adding it up for us. And then the cash value right next to it, that is what is available for us to borrow against on a year by year basis. And then on the right hand side is that total death benefit. Now, In year one, you put in $65,000 in this 23% base policy, it's $1.3 million in total death benefit. And that $65,000 is a mixture of base term. and paid up additions. Now, the total cash value is also very high. You put in 65. By the end of year one, you have 52, nearly four, right? So 52,397. And that's honestly really good as far as liquidity. You zoom ahead a little bit further, year five, you've put in 325. You have almost access to that whole thing, 323,475. And the death benefit has risen to 1.86 million. In year six, There's that special break-even point that people talk about. You put in 390, you have access to 403. Obviously, it was at that point that you have access to more. That's the break-even. And also, you have over $2 million of death benefit in that year, another special part of that year. And that trend continues for the rest of the life of the policy. The reasons why we like this policy is that, man, it's incredibly efficient. It's very liquid. It's protecting you and the long-term value that you represent to your family. This policy is really good for a lot of different people. Do you have anything else that you want to add to that, Caleb? The death benefit increases quite a bit, cash values competitive. And this also has a lot of flexibility. And do you know what the minimum premium is for this policy? This policy, so as you said, the 23% base, it was about $15,153 as the minimum goes. And so that was the least you could pay. And then you could put... do up to 65,000. Understood. Yeah. I think it's, I think this is solid policy and, and so no, nothing else that I would add. Yeah. Amazing. All right. So now this is the 100%. Hey guys, I just wanted to interrupt real quick. If you're watching this and have an index universal life policy, a whole life policy, have any type of insurance policy in general. And you're like, I want to know if I'm on the right track. I want to know if this is set up properly. We at Better Wealth want to help you. We want to give you a free policy analysis and show you, Are you on the right track? Is there some things that you potentially could be doing better? And so we have a link down below that you will have access to. We would encourage you if you have a policy and you want to see if you're on the right track, check that out. And if you're someone that's watching this and you're like, I want to talk to someone maybe setting up a policy for myself or I have questions, we would love to serve you. You can also see a link to have a call with someone on our team. Back to the episode. So this is more of the historically normal policy. So a couple of different things you'll see here right away. You'll notice that on the left hand side, it's not 65,000. It's only 20,000. It's like, okay, like 20,000. Okay. So, you know, we're putting in a different number and you might be asking, okay, that's not apples to apples. Like why are we looking at 20,000? And that's because on the right hand side, you're going to see the total death benefit is actually 1.39 million from the get-go. And the reason why is that the most powerful part of all base policies is that you get the most permanent death benefit at the least cost of premium dollars possible in any permanent life insurance product is that. to get the same death benefit as the last one that we looked at. And we had to put in 65,000. We only had to put in 20,000 and we get the exact same thing. Now, this comes with a couple of huge catches. Obviously, you look in the total cash value column, you see a bunch of donuts right there, right? It's a zero, zero. Most of the time, people watching our channel, they're not about that. They're like, hey, that's not liquid. Why would I be giving $40,000? And at the end of year two, I have a big fat zero available. That's a fair, that's a fair. a critique of this because and if you have that critique it's probably not the product for you but there is the type of person that maybe liquidity isn't so much what they're thinking about and instead they're like hey you know maybe i'm a little bit older and maybe i already kind of have an established retirement portfolio and i just want instant death benefit legacy that's not going to go away like a term product you know in year one immediately you have almost 1.4 million dollars of death benefit right away for only 20 000 a year you know this This could be a really strong asset for you if that's similar. Now, once again, there's a lot of things also that you're going to trade tradeoffs essentially that happen is that the breakeven point isn't in your six like the last one. It's actually in your 14, right? So it's almost doubles the length of time it takes to get there. You've put in 280 by your 14. There's 290 available to borrow against. Now, this is key. You don't have to wait until you're 14 to borrow against it. You could borrow against earlier than that, but just realize that. it just is going to grow more slowly inside of that. And part of that is because the dividend is lower is that you're going to get less in dividends inside this policy than in the last policy. But over time, the death benefit has been doing its thing. It's been growing. And by the, by year 15, it's about $1.5 million in total death benefit, which is nothing to sneeze at, right? Like then, you know, that's likely that if you're in this situation is that, you know, you wanted 1.4 million from the get-go and everything on top of that is just a nice little bit of extra. Anything else you want to say about this, Caleb? No, I mean, I see the death benefit does grow, doesn't grow nearly as fast as or at the rate that the other policy grew. I think it's important to know that where this is not apples to apples, this is a $20,000. base premium versus a $65,000 mixed premium with base and PUAs. That's interesting. The other thing that you mentioned is you talked about this is the cheapest way to buy permanent death benefit. I think the counter argument to that could be it's 100% true when it comes to whole life, but you could argue that universal life chassis, guaranteed universal life could be a role, but you may be trading off some of the cash value. And there's always a little bit potentially more risk when you're talking about a universal life chassis. But when it comes to whole life, this is a very common strategy for people who are in pure estate planning mode. And it's all if you look at it a pie, let's just say like you have millions and millions of dollars and you're like, I'm going to carve a chunk off of this to create a multiple. I don't I want it to be safe. I want it to be guaranteed. This is a multiple for the estate to fund the trust and all. A lot of times. this is the route that you're going to go. The outcome is you want permanent death benefit. And so the idea would be, what's the least amount of money that I need to carve out to be able to accomplish that because my other money is able to do something. I just want to point out that is a form of what some people would call infinite banking. That's a form of that. It's just indirect form. You know what I'm saying? Instead of putting three times the premium into this and using, I'm going to keep my money over here, but I still value the permanent death benefit. And so those are my comments and very much love this. You're still giving your dollars multiple jobs. This is just another way of doing that. And this is obviously still a really strong asset inside a larger portfolio. And I think to the right person, they still want to do infinite banking. They just want to do it a little bit differently. This is still kind of applying the principles, just like you said to it, to using this all-based policy. So amazing. So just to wrap it all up, right, is that when you're more concerned about legacy than liquidity, an all-based policy might be the best product for you. It maximizes the most permanent death benefit for the least premium of any permanent life insurance products with your key caveat, Caleb, of, you know, you can make the argument of a universalized chassis. Obviously, you're giving up any cash value when you go that route. But, you know, that is your choice. I'm guaranteeing universal life for sure. And then universal life is a there's a long debate that we're not going to get into on what is better or not. But yeah, yeah. Yeah. It sounds like a future video. And I'll say, you know, more appropriate for people starting a policy later in life. who already have an established retirement portfolio and they just want instant death benefit for their legacy. Well, there is a cash value component to the policy. The time frame until the policy breaks even is much longer. So ultimately, you can borrow against the policy before the breakeven point. You don't have to wait to the breakeven point. And eventually, the policy could fund itself, but that will be a long time because you saw by year 15 and that 20K policy, it had 6,000 a year in dividend. And if you didn't want the death benefit to be affected, you would need to wait until the dividend is at least $20,000 in order to... to not have it be effective. So that would take quite a bit of time. But eventually, if you gave it enough time, it could fund itself. And I just want to point out, this is not just a hypothetical video that we're doing. There are clients that we've served that are better off this route. And they tend to always be legacy focused, usually legacy focused and preservation over growth. They're not necessarily worried at this point or their outcome is not to try to maximize. It's try to preserve. And... Those are usually the two trigger words. And then it comes down to, okay, how do we do proper estate planning? What are some trust setups? How can life insurance be used with other assets to make sure that you're able to most efficiently pass on money to the next generation? And a permanent death benefit unlocks other assets. So it is possible. And there's many, many legends in the space that teach their clients how to leverage. permanent death benefit on a balance sheet to unlock other assets and be able to spend or take more risk in other areas because they have something that's rock solid permanent. I will say though, if that's not like that doesn't resonate with you and someone is sharing with you about an all base, like I just, if, if, if legacy and preservation are not like the two things that you are like most care about, I think there are other ways to fund policies that still give you preservation and legacy, but also give you a lot of early cash value. maybe some more flexibility. And so that would be the point that I would say. And I also just want to give a quick commercial. If you want us to look at your policies, if you have questions for us or want to meet with someone like Austin or our amazing team, there will be links down below. And that's one of the things that we want to be very intentional about is how do we help people just better understand their situation or better understand the policy that they currently have? Amazing. Yeah. Couldn't have said it better myself, Caleb. Yeah. If we can help you. please we'd be honored we'd be honored to serve you if you are like kayla was saying like when this wouldn't make sense for you like if you're 20 years old and you're not already really wealthy and someone is really pitching you hard on an all-based policy, I would definitely get a second opinion at the very least. Come talk to us. We'll be that second opinion. We'd be happy to help. Awesome. I always appreciate how you show up. Love your slideshows. And I also want you all to know if you have other questions or want us to make a video on fill in the blank, let us know. It really helps inspire us to figure out how can we make content to better serve you. And so Austin, as always, thank you for over-delivering and excited to see the feedback. and the results that come from you people watching this and giving us their two cents. Amazing. Thank you so much, Caleb.
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