Responding To HARD Objections Against Whole Life Insurance

 All right guys, we are in a series with Todd Langford the founder of truth concepts and we have I've heard so many amazing things from you guys Todd you are a hit. I don't know if you know this but you are a hit in the insurance face and people are living the calculators and one of the things that we're committed to doing is Reading people's feedback and there's a lot of people that have insights and a haze and this would be a very boring uneducatal uneducational content if we just read all the love Comments that we got but there are two comments on our latest video that we did Talking about the life insurance Performance of whole life versus a high yield savings account spawns and more and there's two people that commented one was a little bit more Extreme a little more up in our grill and face and the other person was a little less like just just asked a question I think both questions are valid and what I think would be awesome is for me to ask them to you and for us to just discuss it because this is Whether people are meeting with people in the field? This is really valuable for them to like understand like how you're answering questions like this or maybe there's someone that's actually has life insurance Or thinking about life insurance for themselves. They're watching this video and this will be really help them gain clarity on Is permanent whole life insurance something that they should pursue or not? So any any thoughts before I jump in and hit you with these questions. No, let's go. All right, so the the first question is Somebody who Well, I'll just read you the comment. He said clearly shows how whole life insurance is a scam $27,000 a year for holding your money and giving you a $1 million dollar death policy is extremely expensive what's not mentioned is that To get your cash value you have to follow the life insurance companies rules and restrictions This person also goes on to say I have term insurance for $400 a year through Costco's protective life for $1.25 million dollar death benefit Don't let this sales pitch fool you into thinking a $1.8,000 annual premium for term life insurance and so what what are your thoughts there? I didn't I this might be news to you you might not see yourself as a salesperson Todd, but You know you hear things all all kinds of things on YouTube Well, and you know, it's to be expected because The insurance industry has a bad route, right? I mean, it's got a bad reputation And it's because there have been people involved in the industry that've done some bad things right some of that's deserved and so People automatically go in that direction and it's easier to do that than it is to look at the facts a lot of times And actually look at the math behind it, but you know this opens up a bigger picture that I think is hard to understand Sometimes and so I'm gonna kind of go through it with a little analogy and some other pieces before we get into some math around it, but term insurance and Whole life insurance both have a death benefit Right, so that if you die that pays out the similarities pretty much end there Okay, there's they're they're vastly different and both of them are very useful tools, right? When they're put in place in the right in the right order in the right strategy and so you know I like to kind of compare them to a house and a tent as an example, you know if I've got a tent It provides shelter my house provides shelter and The similarities pretty much stop there, but if we think about this I Couldn't just haul my house into the woods if I wanted to go camping, right? My tent works well for that and That tent is temporary. It's not gonna last for a while I'm not gonna be able to pass it on because it's not gonna make it that long and even inside of that area There's all kinds of different levels of tents, right? We could have a really high-end tent that has a porch on the front of it And even has an additional bedroom inside of it or we could go as small as I had a trip that I went on a Boy Scout trip when I was in elementary school for two weeks in the Colorado and we were the only way in was Hiking or by horseback and we were hiking and I certainly didn't want anything any heavier than what I had to carry because we also had Food and everything else we had to carry for two weeks and so I had a tube tent It was two dollars in those days and all it was was a tube of plastic that you run a rope through to Tie to two trees to hold the top and use your sleeping bag to keep it Wide at the bottom and so it was just a triangle that you could wide up throwing your Pack and go on well it was finished by the end of that trip, right? It's one gonna last very long and I threw it away and so That is a low-level Term insurance policy and you think about term could be at any different area one of the things that we looked at last time with the term insurance I think it was like a $1,100 premium something like that, but that was convertible Term insurance in other words it can be directly Converted in a whole life insurance without even an exam for health. It's it's guaranteed to be convertible As cost co insurance Doesn't have that there's nothing to convert into they don't have a product that does that and you can even get cheaper than that What about your group term insurance you don't pay anything for right and so it can come in all kinds of flavors based on what Kind of benefits and additional pieces are there and So trying to compare one to another without knowing You know ages and other benefits you just can't do that There's one thing. It's true that I learned from my mentor Norman Baker Years and years ago and that is there are no deals in the insurance industry and what that means is not just life insurance All insurance if we look at property Insurance building insurance. There's different prices based on What we want that to cover if we decide we're gonna take the risk on flood and not put flood insurance on our building It's gonna be cheaper premium and so that that holds true with all insurance including life insurance It's just it's just a factor of cost Versus risk for the insurance company as to what the you know what it's it's gonna cost and we look at those extremes now between Whole life insurance and term insurance will term insurance has very little risk for the insurance company because it's designed to go away It's going to go away once we get to a place where the likelihood of collecting on it gets higher Yeah, but a whole life insurance is guaranteed to pay out Whether we outlive it or not in other words if we live past 120 We get paid on it even if we're still alive and so It's gonna pay out. It's guaranteed to be there when we die and as such That's more risk for the insurance company It's gonna have a higher premium, but it also builds an asset and so think about that in terms of the The tent and the house right my tent's very inexpensive, but all I get Is shelter and minimal shelter at that right no air conditioning no running water and none of that But in my house, I'm actually building an asset while I get a place to live yeah, okay It's gonna cost more to do that or it's gonna have a higher premium and then that's what happens But I also end up with an asset that I could pass online that I can borrow against All kinds of other pieces. Yeah, I have many thoughts here Thought number one is No clue who this person is doesn't even have a first name or last name So thanks for thanks for that number two is no idea how long the term is is it a five year term 10 year term 15 year term 20 year term Don't know how old you are how healthy you are And this person ultimately I think proves a point of what we're trying to say if you remember back in the funding calculator You're breaking down permanent whole life and it and we're talking about the internal rate return of the cash value And we're factoring in things like taxes Hypothetically taxes could be higher or lower we're factoring in things like fees fees could be higher or lower And then we're also factoring in the and this is at the very end you're like and Let's you know this this has a death benefit component if people remember back to the video the initial death benefit It was around a million but near the end it was over two million. Okay, so You know, we're we're just and again, I'm It's just one of those like let's just put a 30 year period of time for the age You know, and we want to be conservative So we're maybe not going to be making a quote on like super preferred And we're just proving a point of like there's a cost to that permanent death benefit And that cost is already factored in to the internal rate return And so there's a lot of things that are like again like people It's always interesting to me that people can watch the video and get all super analytical and maybe this this person They can show us that they have a 30 year To you know, and they maybe check all the boxes. Maybe the criticism is instead of us Maybe we lower the premium But like it's such a minor thing and the whole idea is we're not trying to say that permanent life insurance is like the best way to protect your family over a short period of time The purpose of the video was looking at how do we compare A whole life insurance compared to other assets as it relates to your rate or return I don't know if you have thought processes there, but that's the it's the this is not Even addressing the by-term and invested difference which is interesting to me They're just addressing the cost of protecting your family And we're not the purpose of the video wasn't even talking about That this is the most efficient way to protect your family over a short period of time Well and and how they're protected and to what degree and in what circumstances? I mean, there's there's all kinds of pieces as you brought up as to you know what dictates um How much that cost is But what happens is it actually becomes pure cost We hope right on the term it sure outside right on the term insurance We hope that it's pure cost and then we don't collect on it because the only way we can collect on it is if we die Yes, and that's the difference with Building an asset our house or our whole life insurance policy on the other side is That's fine. We're gonna collect on that because it's gonna be there when we die out there A long time from now rather than having to do it in the short haul and as such We're gonna build that other asset that's gonna compensate and and make up for that cost What do you say Todd to the person that says well? I should buy term and invest difference There's actually nobody in the comment section that said that I before I read the next comment there's this was so the next comment was around You know putting your money in the market and borrowing against it We're gonna talk about that in a second But what do you say to the person that says okay, Todd? Let me just use your numbers Why don't I just buy term insurance and invest the difference and I know that this is kind of repeating yourself But I think people need to hear You say or answer this question more than once. How would you answer that if someone was like okay? I get what you're saying Why don't I just buy term insurance? Hopefully it never pays out means I didn't die But the my investments will way out perform Where my whole life insurance would be Hey, it's Caleb William. See, I'm just interrupting this video quickly to invite you to check out our an asset vault You may have been there We've actually re revamping it and if you are somebody that wants to learn more about is life insurance right fit for me Does this and that's it makes sense like does this actually help me be more efficient? We've put together a 10 minute documentary style video And I can test a really really good job giving the history why the and asset different setups and designs that we use And then we have an an asset vault that gives like case studies calculators Handbooks and so much more we are here to serve you whether it's a conversation whether it's education or the video So make sure to go check out and asset.com slash bolt learn more Sure, and this is going to take a bigger look We're going to have to bring in some some extra pieces And I think the number that was used there was what about an account that averages 10% yeah, I think we use something higher before But I think we should go into that and look at that piece and it was interesting on the idea of that 10% It was clearly individual said something effective and they average 10% even though there were ups and downs their averages 10% and You know, it's unfortunate that the media and the financial institution as a whole puts information out like that That's just very deceiving how does how does the average person have the ability to be able to calculate what that really breaks into down to in Real dollars and that's what we're going to do here. Let's look at how those ups and downs impact because most of the time when people are here 10% As an average they hear I earn 10% every year even though it's up or down the effect is our in 10% But that's not what they say it's a 10% average and there's a big difference even if it averages 10% and it just so happens That if we go back 35 years we'll do this in just a minute The S&P without dividends did 9.96 so it'll be a good comparison of how we can do that But for right now what I want to impress on is just how different averages can be from actuals and I'm going to use a way exaggerated example So don't say oh, he's he's not using realistic numbers I know I'm not using realistic numbers. I'm trying to get a point across so that we can understand why that happens when we get into the to the rest of the Analysis but I'm going to use an exaggerated example and what if I was to guarantee you A 25% average rate of return I mean that would be pretty enticing right? I'd be amazing sign me up Yeah, all right and but yet let's break that down and look how I could do that And not get hurt so bad on my end. So what I want to do here is I'm going to put in um A hundred thousand dollars today And if I could do 25% average I probably want to try to borrow money for other people and everywhere else too, right? But if we did that and let's earn So change it from fixed earnings rate to variable there And let's put in a hundred percent rate of return And then the next year I'm going to lose 50% Okay, so look at the bottom of that column and we see our average of 25% and that's the way average those are done We add up all of the ups and downs and then divide it by the number of years So in this case a hundred up minus 50 gets me back to 50 divided by two is 25% But when we look at the actual numbers look where we are at the end of that second year We're right back where we started and if we look at the returns They're at the top we see our average rate of return of 25% and yet our actual rate of return was zero The other thing it's interesting here is we had a hundred percent gain But it only took a 50% loss to wipe out a hundred percent gain The downs really are hard to overcome they have a bigger impact than most people think and that's why our averages and our actuals Are very very different and think about this scenario here Okay, so we ended up at the end of two years right back where we started even though I fulfilled my obligation of 25% average annual rate of return If I Got paid for doing that if I got a commission of say a point and a half for for running this And you had to pay taxes on this you'd actually end up with less than a hundred thousand dollars We could still call it a 25% average rate of return and that's what we're seeing in the marketplace Yeah, I mean, I think that's a I think that's a great great example and and maybe we can go through The historical example where the average rate of return was little under 10% But I think the this person's question was you know, it seemed to them like Instead of doing the whole life insurance What if they put their money in index that average with ups and downs at 10% and then they could borrow against You know because some some Houses will let you do be able to do that And you're not necessarily able to borrow against a hundred percent of your of your money in the market for obvious reasons because of volatility But that's what they're like someone watches that and says well Like what if I did shit to that I still get the tax benefits of a borrowing against nascent Well, it makes sense in their head like it from an efficiency standpoint That would be better and my initial thoughts and I'll hand it over to you is Well, number one We're we're dealing with the napple and orange scenario You know, you would you would need to have other Inchurances in place if you want to do that Properly so this is like the buy term invests a difference on steroids Like you're buying term insurance You're then you're putting your rest of the money in the market and then you're borrowing against that And like that's ultimately what someone's essentially asking is like why wouldn't you do that versus Putting your money into an overfunded whole life insurance policy and then borrowing against that to invest like they see it as a Instead of my core asset earning three and a half to maybe five and a half percent in turn a return What if my asset could earn over 10 now? You just said average versus average versus actual is different But want to hear your thoughts and I'll just hand it over to you to address that My last thought thoughts is just a lot more risky of an approach And I would love to see how many times that actually works out and how many times that actually fails Yeah, so we'll go into that I mean that's a big question and it's gonna take um Quite a bit to answer and I want to I want to think about something beforehand from a conceptual standpoint before we get into it And really so everybody wants to compare Their greatest invest asset against the return on a life insurance policy and the life insurance policy is really not an investment vehicle It's a savings vehicle. It's that certainty asset and So why the difference and think about this so when we have Money in the market as an example if we're following um Modern portfolio theory there's the idea that we have an offsetting Certain the asset to help with those ups and downs that are that are happening on the equity side right and keep Typically that vehicle is a bond And so people don't have an issue carrying a 4% bond that may have a point and a half Management fee on it and having to pay taxes so that bond is actually netting probably less than 1% and yet They're using that as that certainty asset now what we're saying with the life insurance is not necessarily we're not Trying to compete with what that equity side with what that investment is. It's more the bond side It's it's the cash side and we can think about it the same way with real estate right Now there are people that have gotten lucky with real estate and Those people typically aren't in for the long haul okay Long-term real estate people as an example have a lot of cash laying around That's the only way they can survive in that world. What does that cash do? Well the cash is there for those black swan events when we see COVID when we see other things that Impact rinse when they impact all kind of other things storms that take a roof off. What do we do with that? We've got to have cash to keep from losing that whole asset and so we we lean on The cash assets which are typically at you know 0% 1% something like that and the check-in are savings account It's those assets that we could actually use a life insurance policy to handle and we'd have a way better rate of return And it would still be in place for the opportunity side of that investment. So what happens with real estate investors when The market craters. That's actually a good thing for real estate investors, right? If they're in a position to cash And that's another reason a lot of times they will hold cash to be able to take advantage of those times when that comes along So what people want to do is say well Life insurance policy doesn't perform as well as my 25% real estate Well, no, it's not designed to do that But what about all that cash you have laying around that's where that life insurance policy really fits now What's interesting is though? When we look at the market when we look at the equity side and we look at returns Even the life insurance it's designed to compete on that side It's more for the bond component or that that that safety side that certainly side It actually performs Just about as well as what we're going to see in the market without the risk side and so We're going to look at that but understand I don't Particularly like that comparison. Yeah, because it's it's too totally different assets. It's our certainty asset Compared to the return of our risky Yeah, nobody in the comments by the way was comparing to a high yield savings account or a bond long term Just to be clear like these are anyone that usually throws shade Is someone that's talking about an investment to a life insurance which is a savings or a protection vehicle And we're not I don't think we made any statements to say that this should replace Any investments in fact if people watch the series They they will see that you're talking about life insurance with equities So I'm again not speaking for you Todd, but I definitely don't think you are anti any one asset class and all for life insurance and that's the only asset that you should have I think you've been pretty consistent about life insurance makes other assets larger in the presence of life insurance I believe that's a quote. I probably butcher that but it's similar It's kind of it's the essence of the quote that you Yeah, and see think about it for the individuals that Go back to the life insurance so often and they they talk about well. I could do X in the market We've seen it do you know in excess of you know 8% every year. I know I could do 10 or whatever else But they don't talk about the fact what the if you can do that Then why do you have money sitting in your checking account or your savings account Why wouldn't you have all that in the market? Well, it's clearly we can't live our lives like that right? There's other things we have to have that emergency opportunity find and that's for the life insurance cash value really Yeah, has a great role. Yeah So but let's look at it in that light just to answer that question so that we can see what happens. What do you think? I think that's great Okay, so here what we see is so if we look at that second column there It's the S&P 500 with no dividends and it just happens that it's 9.96 percent over the last 35 years I didn't pick a particular timeframe. I just pulled the last 35 years and so we could get close to that Commentary that said you know about the 10% and so We're gonna copy those ups and downs and we're gonna look at it a couple of different ways But what I want to look at first if we pull up the accumulation calculator I want to look at what that 9.96 percent does and I'm gonna do this based on just to try to round numbers out $10,000 a year Okay, so if we put in $10,000 a year and I want to put 9.96 percent Over And what we see on that time frame is that would grow to $2.9 million dollars Okay, and so let's just keep a record of this over here on the side so that as we make changes we can see what's happening I'm gonna actually leave this one in case we want to come back to it and let's just duplicate this to another one and we'll make adjustments there Now Like we saw earlier in our exaggerated examples of averages versus actuals We see that if we earn the 9.96 that this averaged over that time frame it would grow to $2.9 million dollars But what if we put the actual returns that averaged out to the 9.96? What does that mean? And so we're gonna paste those actual ups and downs from the last 35 years So it's not numbers I've made up. It's what happened in the S&P without dividends And we can see at the bottom of that column. There's the average of 9.96 And look what happened to the return It went to $1.8 million So we lost over a million dollars between the average Happening every year and the actuals that made up that average over that time frame And it's really a shocking piece every time I see this it really amazes me that is that drastic of difference And so you would think what that would do is mean that the annual actual annual return was considerably less than 9.96 But if we turn on our rate of return and look what's going on up there at the top What we're gonna see is it actually only changed the yield by in most people's minds what they would call two points That's just the difference between 9.96 and 7.97 and yet losing those two points It's a lot more than two points Because we lost About 30% of the account actually over 30% of the account by that drop there between 9.96 and an actual Return of 7.97 so those ups and downs why they average 9.96 They actually did the same as if we had earned 7.97 every single year And this goes back to what we saw earlier on that Exaggerated example of our 25% rate of return the downs hurt more than the ups help Yeah, and this it's even gives the benefit of the doubt of dollar cost averaging this idea of buying and then getting the upside Of market growth and so if would you would you make the assumption taught if you just had a lump sum You know, it would it would perform worse than us buying in throughout every year It depends which what's interesting is So there's a couple of things that happen When we're doing this and we're putting money in every year dollar cost averaging Where those ups and downs occur Is very impactful on what our end number comes out to be how to Yep, if we only have a lump sum It doesn't matter what order the ups and downs are it's gonna be the same number at the end of the time frame yep Makes sense. So if our losses come late with dollar cost averaging It really has a bigger impact. Yep. Makes sense So Now we can look at this 1.8 and again because of the media because of what's going on out there in the financial industry overall And people talking about these big numbers everybody has it in their head Then it's just that 10% as an example But we forget about all the other pieces we forget about the ups and downs or actually You know, that's something that nobody's ever even been taught for the most part um But what's also left out are the taxes and the the management fees along the way And so that's already included in our life insurance as well as a death benefit on top of there So if we wanted to compare those even though that's not really the type of comparison that's an investment with the savings vehicle I want to do it just to put things in perspective a little bit and so If we go ahead and add a management fee and I'm just gonna use a point and a half And that's also kind of interesting because we lost 600,000 dollars But all that was paid out was 218,000 So the fund manager got 218 but we lost 600 And the reason is unfortunately every dollar that comes out We lose that dollar plus any growth on it for the rest of the time frame So it's way more impactful than even those flow of dollars going out right And then if we looked at taxes and again, you know, some of it's gonna be capital gain some of it's gonna be regular income tax We're gonna have state tax in there If we just select 20% tax rate just to try to simplify this Then you know that took another 470,000 dollars away something like that and so we end up with 818,000 even though just like with the management fees we only paid 235,000 out Yeah, but the impact because of loss of earnings Opportunity that happens internally when we take those notes out It's super interesting because now you you're looking at an actual yield of 4.3 1% Right and no death benefit And no death benefit and this is where this is where again cost-go life insurance type in those numbers But that's another that's another factor that when I even factoring in right now is the permit The death benefit Right and we could do that we could add the term insurance here and just say a $400 Termin just charge per year and it's not you know, yeah, it's just gonna impact what we end up with and that would cut off You know, let's assume that's a 30 year. I don't know like you say We don't know how long that that term insurance was I doubt it was longer than 30 years And if so we cut it off in that 31st year no more cost but understand the death benefit goes away at that point So we lose the death benefit when we stop having to pay the premium and now we're down to 4.13% Yeah And that's where that's where again just to be very clear life insurance is not an investment the pitch is not This is gonna outperform investments, but the idea is we just took the S&P Index essentially the last 35 years and you created a scenario that's not too crazy putting $10,000 a year Uh, adding a fee adding 20% taxes adding a $400 term insurance cost which is way under way we're just you were just appealing Finally, that is tube 10 insurance right yeah, yeah, yeah um and and now you're getting to a place where the Ray to return It arguably potentially could be less than what life insurance could be over the next 35 years Yeah And and here's what's interesting too and I don't want to get into that But when we look at life insurance, you know, we're in a low dividend time right now And so we're gonna assume that it stayed right where it is right now and didn't have any upside potential Which if we went back 35 years would have a better return than what we're seeing today Yeah, but we're just gonna you know life insurance illustrations are based on performance today and going out forward at a very low rate And so even looking at that I think we should kind of compare and just see how those two line up Including Smith benefit. What do you think? I think I think that's great One one thought as we transition over to there It's interesting We can't in the last 35 years say the average internal rate of return on a life insurance policy was x So we're just gonna factor that out We're ultimately taking historically the lowest interest rate environment But then we're we're having to compare it to the historical performance and there's been a it's the market's done a Maint-Mazing In the past and you even have looked at like even an amazing it could there's downfalls to it But it's just really interesting how there is There's contradictory Areas of like what we can say what we can't say but then put what most people we don't know if the future is gonna hold with where Interstrates are at where political areas at where with all the money in the market with people starting to take it out We don't know if the next 35 years is even gonna be the same But yet it's common practice to just look back and and make the assumption that that's something for future Which is just interesting yep. Yeah, it's it's really Again two different comparisons the the excess of the market over the last 35 years to the minimums of what we're seeing right now Going forward on life insurance side right and yet still we're it's still in the ballpark yep All right, so let's use the funding calculator And so here is Policy it's the same policy that we use last time. I'm just using a reduced premium just to keep it at a level 10,000 So we see three hundred eighty thousand dollars of death benefit out here to the end And it grows to seven hundred and seventy thousand dollars over this time frame now what we just saw It's the same policy that we did last time at twenty seven thousand. It's just a smaller one so we can round that number To ten thousand we see three hundred and eighty thousand dollars of death benefit initially That grows over this time frame to a million two So we have an increasing death benefit so think about that you know our analogy earlier with our house and our tent The term insurance to stay in level right and so inflation is actually making that term insurance less and less valuable over time because it's stay in level With our whole life policy we have an increasing death benefit kind of like our asset of our house as it grows over time It's worth more and more and that's what happens with our whole life insurance death benefit So we have an increasing death benefit that we really can't compare to that level term insurance is getting impacted by inflation and actually reducing the value over that same time frame We also see that we have this cash value that grows to seven hundred seventy thousand dollars So that death benefit column is a combination of death benefit and cash value And so we see that we have seven hundred seventy thousand dollars of cash over this time frame and an additional almost half million dollars in death benefit if death Where do occur? All right, so if we look at the return on this as it sits right now What we see is 4.03 percent and what we saw a minute ago on earning an average 10 percent if we use the historical of what the smp index is nine It was 4.13 so a little bit better, but we have the death benefit here that we don't have in that other example So there's a little differential, but if we look at that accumulation calculator again for just a minute Rather than seven hundred and seventy thousand that we see here. I think we had a little bit more And it was seven hundred eighty seven thousand so about seventeen thousand dollars more in cash But we don't have the death benefit So actually not a big difference even from a cash standpoint Over that time frame right all right, so let's go back to our funding calculator and look at the life insurance values And What I want to do is Let's put those same returns on an alternate account and see what would happen if we shifted these dollars We didn't go to life insurance, but we went to the other account just so we can really kind of compare them side by side And so if we turn on this alternate account And we turn on the Alternate account over on the right Malvin I'm going to paste in if we turn off the fixed earnings rate and actually let's do this Let's put our 9.96 up there on the fixed earnings rate first And at that average This account would do substantially Better than the life insurance if it could earn what that average was every single year Unfortunately, that's not what it does and so when we paste in our variable Ups and downs across this time frame we end up with this average of 9.96 just like we saw But we actually end up with a million a and again, that's before taxes and before any commissions or fees on the Uh earnings in our equities. So let's turn on those fees And then let's also add 20% tax bracket And so Here's 779,000 again if we've had term insurance, right So let's pull it in your term insurance Yeah, the cost of your insurance To tend right so we're going to pull that in $380,000 so here's our Term insurance ends up with 751,000 both the account value and the value of the errors because what happens is that drops off the books when we stop paying our term insurance premiums Um over time unlike what happens on the whole life insurance side but Again, you know, we've kind of bunch of numbers thrown out here. It's hard to get your head around What is going on here? So let's look at it from a graphical standpoint and I think this will really you know bring it into focus And turn off the legacy here just let's simplify. Let's look at cash So what we can see here we spent the same amount of money in both scenarios But what we have is this gold line here is actually the by-term invest the different strategy from a cash standpoint And it's going to be ahead of the life insurance cash value on the front end depending on what happens in the marketplace And assuming That the life insurance stayed in this low dividend time from now on so the equities has the advantage of the last 35 years of what happened Whereas the life insurance again is just at a fixed current dividend, but it's still even at that what we see is here when we cross over about um age 53 there actually the life insurance is higher than that equities account And here's what's interesting when we get out here a little bit further so we see that big spike and this is the spike That happened Three years ago Right, we saw this big jump and the next year which was last year or year before last we had that drop Right Well the drop was only 19.4 percent I mean only 19 I mean that's a lot right What are you saying? Our game the next year was 24 percent and the market will get credit for having a 24 percent game and yet it short of where it was before the 19 percent drop Again, it goes back to what happens and those downs hurt more than the ups help right and we can see it right there All right, so overall they're actually pretty similar Except that we've got one curve that's actually smooth and steady and that we can kind of count on Whereas the other one it's going to depend on where we are you know Are we are we in an up year when we need the money or we in a down year and if we're in a down year and we need to pull money We can't make it up by having it up year after that So we really lock in the losses if we have to pull money in the down year or so that can be That could be a problem. Let's look at it on the legacy side instead of the cash Yeah, and then one thing I'll also say if you're if you're looking to lend again something or borrow against an asset Again life insurance you're you're comparing it to The an investment and it's comparing quite well But we're they're they're apples and oranges And if you were even going to borrow against an asset You there's a reason why banks and insurance companies will lend almost dollar for dollar About 90 to 95% of the cash value with no questions versus if you had inequities market And you were going to lend against it isn't the going isn't it like 50% or 60% Yeah, because of volatility And so that there's other factors that are going to like yeah, maybe you even It in this scenario it's even less But even if it was more how much more would it have to earn for you to have the same access to cash Value that you have in the boring whole life insurance based on the access that you have to your money That's another point that I don't want to derail you that's another point that I think of when it comes to comparing indexes versus life insurance when it comes to Barring against it Yeah, I want to address that a little bit deeper here too and just to manage just to So make sure that I come back to it. Okay Yeah When we look at this it's really kind of interesting too from a from a death benefit standpoint see Again, we can't really compare Term insurance to whole life insurance because we have that flat level asset that in this case see we can see where at age 64 It went away So from the standpoint of what goes to the airs it's considerably less At the end as far as what we have Created here to be able to use on the long term. So not only do we have pretty equivalent on the cash side When we get to the death benefit side it's considerably better with the with the whole life insurance versus the by term invested different strategy Okay So let's address what you were just talking about for just a minute if we go back to our accumulation calculator for just a minute So let's look at year 33 age 67 we see 673 thousand dollars there and we see again that year of Almost 27% 26.89 percent that grows that account to 819 thousand dollars So let's say we borrowed against this asset in that year and we did it at our max 50 percent that were allowed So a little over four hundred thousand dollars right Now what if we had what just happened and there was a loss of 19.44 percent So now our value is 658,000 so half of that means we're really only entitled to three hundred and twenty five thousand dollars Yet we have four hundred thousand dollars borrowed what's gonna happen? We're gonna have a margin call yep We're gonna have a margin call right there and now what position are we gonna be in because We're either going to have to liquidate the assets that hopefully we bought with that money that we borrowed and and and it's liquid enough to be able to do that But if it's tied up in real estate or somewhere else What it might mean is we have to liquidate some of this asset to do it and we're gonna have to liquidate it in a Down market, which is gonna have a double-biped because now it can't be fixed And so while yes, we can borrow against this it goes back to what you said It's in a much smaller ratio as far as what we can actually borrow and use And it carries some additional risk because of those fluctuations that could hang us out to dry Yep And if you wanted to buffer that risk you'd have money having to sit somewhere safe And our point is if it's not going to be in life insurance there's an opportunity cost long term of where that could be And so I love that example I didn't even think about if they margin call How you're gonna pay that most likely you're gonna end up selling at the worst time to sell I My mind never went there But it makes a lot of sense and that's probably why the average investor's not earning anywhere near The average returns at the market gets it's because of Activities like this and then emotion Yeah Well, even if you could see to me you're gonna have to make a lot more as an average in the marketplace to make it worth doing because This individual that invested into the marketplace under pretty ideal scenario 9.96 percent But yet when you net it down to 4.13 What's tough to me about that is you had to earn Call it 10% average risk you had to take on that kind of risk to still get only a 4% rate of return I'd rather be in a safer asset if that's all I'm gonna do on that upside in this case, right? I love it and I really appreciate you breaking this down I know that some of this is repetitive But even for me like love you breaking down multiple calculators and walking through Step-by-step and really building the case to the The questions about by term and best difference, but then also the questions of one why You may not want to just put all your eggs in the index S&P and then use that to become your own banker with with the market that that may or may not Turn out super well, and I think this example is really proofs the point to why you wouldn't want to do that Yeah, well and again, you know, it goes back to I don't want to ever knock any asset or anything like that They all have their purpose and their place But it's the same thing with life insurance always gets knocked for what it is if it's the right strategy in the right place Is the right tool but it is a savings vehicle and not an investment vehicle and we need to keep that square We we violated those rules a little bit here by by comparing it to an investment asset um But really it ought to be that bond component ought to be that safe component ought to be that emergency opportunity fine Um, you call it often an and asset. It's a place we can go But when an opportunity comes along we can use it there too because we have access to like you said 90 95% of that cash value to be able to go and do another deal All right guys keep those comments come in maybe maybe if you're lucky and your comments really good You might even come on with Todd one of these days. We'll see We got we got we have a a lot of videos to shoot in the series But excited just for all the people engaging thank you guys for sharing this if you are an advisor if you help clients You help people with their money and you want to use truth concepts as a tool There's some really exciting things that are going to come down the pike later this year And we have a link to for you to learn more about truth concepts And if you're someone that wants to just learn more about should life insurance be something that I should look into and want to learn more We also have resources for you at dive into all the numbers and more on the pros and cons on on life insurance and in some of it being Todd's videos Um in that education path Todd is there anything else that you want to share as we wrap this video up? No, I you know, I think I think one of the things I would though real just quickly is Don't be overwhelmed by what we've gone through um This is kind of a lot of this is revelation to me of playing with the numbers and actually looking at them on In a level playing field not not wanting to demonize any particular asset or hold one better than another if we just look at the math behind them I think we can kind of figure out how they fit where they fit and truly compare apples to apples Awesome