All right, guys, sometimes I feel like my life is not real. I had the crazy opportunity to speak to Tom Wheelwright's Inner Circle franchise group. Tom Wheelwright, if you don't know, is probably one of the most famous CPAs. He's Robert Kiyosaki's CPA. He wrote one of the top books out there in taxes called Tax-Free Wealth, and he's someone that I've been following for multiple years. Recently, I got connected with him. I actually spoke on the same stage he spoke on. It was terrifying because he spoke. did an amazing job. And then I spoke right after him and he's in the back of the room and I'm talking about life insurance and talking about taxation of life insurance. And, you know, it's, you know, I give a ton of talks. I'm, you know, I'm confident of what I say, but it's always a little bit nerve wracking to know, like someone that you look up to is in the back of the room and you're like wondering what their take is. Well, anyways, at the end, he's just like, Caleb, the way that you talked about life insurance is awesome. Like, I appreciate all the things that you said. I thought you made some really good points and we got a friendship, which I'm blown away from. And then you've seen, I've had him on the show a couple of times. Well, he has an annual event and one of the, he had like a pre day before his big annual event. And he has his top franchisees that come, come in one room and they brainstorm. And it's a really, really cool one day. And I had the opportunity to, to go there and speak about life insurance. Now, anytime I have the opportunity to speak, I can give talks or do fireside chats. And he asked me what I would prefer. And I was like, Like, Tom, it would be amazing for you to be doing this with me and hear your perspective. And his perspective is a little bit different than mine, but I would way more prefer that than giving some type of canned presentation. And so what you're going to see is parts of my time with everybody in person. And it was a blast. And if you're watching this and you're like, I would love to talk with your team personally about does life insurance make sense for me? Should I review my life insurance policy that I have? We will have links for you to connect with our team. One other thing that I wanted to say before we jump in is the video quality at times isn't the greatest. The way that this was filmed was something that maybe I would have changed if I could do it over again. But at least we have some of the content. The audio is good. So you'll be able to see that. But I just want to give disclaimer. It's not the highest definition of the content that I've ever shot in my life. But the quality is all that matters. So without further ado, enjoy. Let's talk about reasons that you might use life insurance. Octavio, what would be a reason you would want life insurance? Okay, protect your family. Now we're term. Okay. What's a reason you might want a whole life policy? Maria. Okay, so one is to be your own bank and he's gonna go all into that boy here Here you go this book this book this book Right there's literally a thousand books now on it The originator really was Nelson Nash Nelson Nash the infinite banking concept. He's the guy. Okay, he's in peace I call him the he's the he he's the tax-free wealth guy of the insurance industry just kidding but he has he like started the industry really he started the whole concept of be your own bank and so be your own bank just means well I'm gonna have this policy that does this work for me yes and does is available to me. Now what I like about it from that standpoint is that it's available but I don't have to take it. To me it's a lot like having a HELOC right. So I recently refinanced my house because I figured we were at the top of the market. Okay, I was pretty sure we were at the top of the market and it's coming down and we are starting to see it come down. I want my HELOC as big as I can get it. Am I ever going to use that HELOC? Well, Luann would say, I hope not. Yeah, that's a really good point. Right? And I probably would not because I don't want to... I don't want to, you know, if I found, okay, I've just got this incredible investment opportunity, I need some money. I mean, for example, if I like all of a sudden decided I'm going to not just have, we're just not going to just build a franchise, I'm going to go out and build a firm, okay? Well, that's when I would use a HELOC because guess what? The chance of me losing money buying a CPA firm is like zero. I'm not going to lose money buying a CPA firm. I know how to, I mean, I know how to hire Karen to run a CPA firm. I know how to do that, okay? I can't say I know how to run a CPA firm, but Karen does. And I know how to find people who actually can do that, right? So I'm not concerned if I had an investment opportunity that I absolutely Absolutely go, hey, I'm not going to lose money at this. I'm not going to go take my money and put it into a real estate investment, especially not like a syndication, because I have no control over that. There's no way I would use a HELOC for that. And I hear people talking about that all the time and going, whoa, that is like a really risky idea, because now you've got... You got that obligation that is absolutely you have to repay that now life insurance a little different because You are borrowing now who you're buying from No, you are not You are borrowing from the insurance company. This is a very important point Yes, it is because if you're borrowing from your 401k you were borrowing from yourself But if you borrow from an insurance company, if you borrow against your whole life policy, you are borrowing from the insurance company. Which means if you use that money for a tax-effective investment, that interest is deductible. Because you're borrowing from the insurance company. Okay, you're just using your life insurance as collateral. That's all you're doing. You're just using it as collateral. It would be no different than if you borrowed from a bank and used a CD as collateral, which banks require these days, right? You can't borrow unless you have money. You know, why am I borrowing? So there are times when I look at that, banking yourself, I'm going, I want that availability. And it's a guaranteed availability, right? That's correct. So whatever my balance is, my cash or undervalue is, I absolutely, under the contract, can borrow that money. And what I will add to what you're saying is you talk about pension. Like we want to have a long-term mentality. The beautiful thing is with pensions... you don't have as much flexibility. You don't have the ability to potentially use that capital. The beautiful thing about being your own bank or the ability to borrow against your capital is it gives you optionality, gives you that HELOC functionality from a standpoint that I can use my capital or the insurance company's capital and use my money as collateral guaranteed. So it allows me to be more long-term because I don't have to say see you for the next 30, 40 years. That's the and component of not everyone, we'll talk about later, not everyone should be using their policies. A lot of people are using their policies and getting worse off because of what they're doing with that. But the fact that it gives you that ability allows you to be more long-term. And that for me was like an epiphany in itself where you're like, you're telling me I get all the benefits of insurance, but I don't have to wait till I die. It's the idea of live your life. You can live your life insurance and it's not just the thing that you have to wait for when you die. Well, and here's another way I look at it. And this is actually how I use life insurance for me. Is that if I have this over here, my life insurance, then my other assets, I can do whatever I want. Because I've got this safety valve right here. It's again why I like a HELOC. That's a safety valve, okay? I have a safety valve, which means that if all my assets go down over here, or I invest poorly or whatever, something happens over here, I've still got this life insurance that's available to me, okay? It's protected. It's good asset protection-wise, it's protected. And so for me, the way I use it, Is I want enough insurance so that my family doesn't have debt when I die. That's it. I don't need them to have money. Now I've got one son that I need him to have money but I don't need my family to... I mean Luann doesn't isn't looking for money when I die. She's got her own assets and all that kind of stuff right so that's not her issue. What she doesn't want to do is have debt. She don't want me to put her into debt and have that risk. That's a big concern. And so the life insurance provides that liquidity so that when I die, there's no obligations that can't be met, even if it's property taxes, for example. Not just the actual loans, but the actual, okay, until I can sell this. What I don't want to do is you don't want to put your... your your family into a situation where they have to have a fire sale of your assets you want to give them times you want to give them liquidity and so to me that's what it is so it means all my other assets I can do whatever I want while I'm alive. I've got this over here to take care of those things that are kind of a contingency. So what's another reason for life insurance? There was somebody over here. I think she said that. Okay, investments. What's another reason you might want life insurance? Okay, you guys all have businesses. What's a reason for it in a business? Shalita? I wanted to say, I've heard too, like, technically you don't have to pay back the loans. Is that true? That's technically true, yeah. What is it? Borrow, what is it? Buy, borrow, die. Buy, borrow, die. You have to pay the interest? What do you mean? You don't have to do anything. You don't even have to pay the interest. The interest will compound. And so you have to make sure that you're not over-leveraged because there could be a world where if you took a max loan and then the interest is compounding that you could get potentially a little bit in trouble. But overall, the insurance company is the only institution that allows you to, can allow you to take a guaranteed loan and you don't have to repay it because they have Your death is a liability on their balance sheet. So ultimately, if you die with an outstanding loan balance, your beneficiaries or trust or whoever's getting the money is going to get the death benefit minus the outstanding loan. So that's the... But just to be really clear on Recorded, that I would never tell you not to... You should at least pay your interest back, or at least that should be the goal. I would not want to create a message that's like... Never pay it back because you could potentially be enabling bad behavior. But there's some cases where if you have an investment or something that's earning a greater return, why would you want to sell a greater return asset to pay something off? So there's a lot of cases where people will intentionally choose, because of opportunity cost, to have their outstanding debt potentially compound because their assets over here are growing. But in anything, you have to factor in risk. And that's what entrepreneurs do a typically a poor job of is in creating understanding the real risk adjusted hey it's caleb williams here i'm just interrupting this video quickly to invite you to check out our andesit 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 asset make sense like does this actually help me be more efficient we've put together a 10-minute documentary style video. I think Tessa really, really good job giving the history why the and asset different setups and designs that we use. And then we have an and 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 vault, learn more. So I have a question for you. So one of the uses I hear from the insurance industry is is retirement. Yes. Walk us through that one. Yes. So what is retirement? What I call it is just future cash flow. We want to plan in such a way that we'll have a future cash flow stream to come in whether we're working or not. And so life insurance is a permanent asset that not just has some of the best tax benefits but also My death is going to happen. Like, it's going to happen. And so if you know something is going to happen, and you have something that's ultimately leveraged around that, it gives you options. And so one of the things that when I wrote this book, I could care less about retirement or anything in the future. I was more obsessed about the banking aspect. And then the more I learn about it is there are lots of wealthy people that just use life insurance as a part of their portfolio. that allows them to get more cash flow in the future. So there's a couple ways that they can do this. If you have permanent life insurance, any type of pension, any type of Social Security, any type of annuity, there's different payouts that they can pay. There's single payouts and joint payout. Most everyone chooses the joint payout. That's essentially, I'm going to take less money, but if something happens to me, my partner or spouse will be able to get a stream of income. That is a form of life insurance, believe it or not. It's just a crappy form of life insurance because they're almost bundling everyone and you're getting the worst health in that. If you do the single payout, you get a lot more money up front, but here's the problem. If you die, your spouse gets nothing. So what if I had a death benefit that was millions of dollars that if and when I die, my spouse gets that death benefit that is good for me? So I get more money today and my life is covered. This is called the covered asset strategy. My life is covered or gives me the permission to spend more money from pensions, annuities, other assets, knowing that if and when I pass away, my partner, my spouse will actually get my death benefit, allowing me to spend more money. Does that make sense? It's basically what I was explaining. That's how I use life insurance. is I want to be able to spend more money so that I don't have to worry about... One of my good friends, his name is Tom Wall. He's a PhD in retirement income, which sounds pretty lame, but he's an academic. And his book is called Permission to Spend, which is not a new concept. It's been around for years. He was just smart enough to write a book around it. But his whole concept is, he doesn't talk about life insurance from banking or estate planning. It's all just having life insurance. In his words, he would call it a better bond. Because if you look at the benefits of bonds and you look at the benefits of insurance, Insurance gives you Bond-like returns in a tax, potentially a tax-favored way, protection elements, but also gives you more options, in his opinion, on income. I get that side of it, but what about, so there are some life insurance professionals who would say, but this actually, you can just take a stream of income. Yes. So how would you do that? Yes. Okay, so the second part is you could just take a stream of income from your... from your insurance policies and in a lot of cases what they're doing is they're withdrawing their money up into a basis and then they're taking a loan for the difference and that income is just coming in tax-free cash flow because it's either your you know it's money that you've already put in. So this is not something that I'm an expert in from a tax standpoint so you're saying that when you pull the money out it it's basis first and it's not proportionate. Yes. It's basis first in life insurance. Yes. So if I put in a million dollars. You can take out a million. I can take a million out tax-free, so it's more like a Roth. Yes. Because a Roth's the same way, right? Within that first five years, I can take out the money I put in, and then it's only if I took out the income that it would be taxable on the Roth in that first five years. So life insurance could be used as a supplement. Okay, keep going. Okay. Another strategy that can be used with life insurance is what's called a volatility buffer, whereas if you have money invested in the market or in other assets, the worst time, especially in retirement, selling at a loss can be a really bad thing. And so if you have an asset, whether it's a HELOC, whether it's an insurance policy, whether it's a savings account, if you have an asset that's not correlated to the market that allows you to tap into that and let your assets recover. If you have... anywhere from four to eight years of volatility buffer, what the experts, the experts, the retirement experts will say is you could, in many cases, almost double your safe withdrawal rate. Just, just allow, just so you don't have to. But if you're taking the money out, is that a loan that you're taking out? Yeah, you could take a loan or withdraw. It depends on. You withdraw your basis. I get that. Or take a loan. The point is that you're not selling assets that are down. You're letting your, the assets recover. I get that. But I guess what I'm getting at is, is that I get you can actually withdraw the basis if you want to withdraw. If you want to, yes. Or you can leave the basis in because the reality is your assets inside your cash render value is still growing. Correct. Typically around the same amount, percentage as your loan. Probably 1% less, but yes. Right, but very close. So the spread's not that big. Yes, correct. The spread's not that big. You understand what I'm saying? So the spread between the interest rate you're paying and the interest rate they're paying is typically around 1%. It's not very much. Okay. So what that means is that if you borrow, your borrowing cost is really 1%. It's not 5%. Your interest rate may be 5%, but then you're not paying that back, right? The idea is to have the death benefit pay off. Got it. And just, again, everyone's in a different situation. I would choose to borrow in the future versus withdrawal, because if you withdraw, you can't put that money back in. Borrowing, again, I like optionality and more options. So I like more options because... Who knows what's going to happen, and if I get money somewhere, first of all, a problem, where am I going to put it? I could repay back my policy loans, and that's a pretty amazing place to get dollar-for-dollar liquidity and get all the benefits of insurance. So, go ahead. Yes. Does that have a face value? Yes. It does. Well. Same thing with loans, by the way. Here's another thing I'll let you explain, but I'll give the basics of it. And that is that as you pay a premium, your face value is actually typically going up. Correct. Well, explain that. One of the common things that you'll see Dave Ramsey talk about is they'll say, if you do permanent life insurance, when you die, they steal your cash value because your death benefit stays level. And so his whole deal is you've paid 30 years. your cash value is over here but your death benefit you're still getting the same and so all your cash value is stolen the way that most insurance policies especially whole life that's with the good companies every time you fund a life anytime you fund life insurance the death benefit is increasing it's increasing more than what you're putting in right so that whole concept of your level death if you have a level death benefit you're probably not in a great product um and so that's so easy to push back on because you just show an illustration and if i put in a million dollars into a life insurance policy, my initial death benefit and where my death benefit will be 30 years from now is going to be far greater than a million. Yeah, so for example, so with my policy, I'm at the point now where I have more cash surrender value than the dollar I put in. So if I put in a dollar, I have a dollar ten of more cash render value by the dollar I put in. Yes. but I also have a higher death benefit. So I'm getting and. I'm getting a higher cash surrender value and I'm getting a higher death benefit. So I'm getting both. Well, what that means is my death benefit's going up and I take out that cash surrender value. Well, then the net may still be my original, right? You can plan that out. One of the... So one of the people in the life insurance industry I think has a lot of, has actually done a lot for the industry is Todd Langford. Todd's incredible. Todd is the nerd to Kim Butler, so Todd's Kim's wife, Kim's husband, sorry. And Todd is the nerdy guy in that relationship. Kim is not at all nerdy. But what Todd's done is create all these tools for the insurance industry. And so I highly recommend if you're going to work with an insurance professional, make sure you work with somebody who uses Todd's tools. They're really massive spreadsheets is what they are. I know they've talked about it, but I wish they'd turn them into software because they're not software still yet. And it would be so much better if they were software. But they're basically massive spreadsheets. But what... What some of them allow you to do is actually project this out. What's his last name? Langford. And what I'll do is I'll give you all the resources. I've probably done 25 hours of content with Todd on our channels and all. So there's some really good content that we've done together, and what I can do is prepare a couple. Yeah, you'll love him. He's such a nerd. Yeah, he speaks your guys' language. I can't follow him. I am not nerdy enough to follow Todd. There's really three, there's a lot of benefits, but there's three big categories when you fund life insurance. There's protection, and not just protection of your family, but also protecting your dollars. I mean, Enron executives are still getting payouts from their annuities and life insurance. They've committed fraud, but in the state of Texas. So there's benefits to protection. So if you're planning on committing fraud, it's a really good idea. Good trust and good insurance. So protection. Then there's the use element. which is the ability to utilize your capital throughout your life. I can't tell you how valuable this is. I can use capital and not hurt the protection or the future benefit that I'm going to get. And then the last, whether you call it retirement, I'll call it future cash flow. And so there's a lot of other benefits in my book. I have over 17 that I list out, but the three big categories are when I put money into a life insurance policy, I'm protecting my dollars and my family. and it's growing every year. I'm also not giving up the use of my money throughout my life, which you could say is one of your greatest financial needs is using capital. And I'm also creating a better benefit for the future. And so if I'm working with someone who's not an entrepreneur, I'm focusing on protection and retirement. If I'm talking to someone who's an entrepreneur, I'm bringing in the fact that they can use their capital, protect their family, and have an amazing pension-like asset in the future. And so There's other things like could you save more money if you have access to it? You could argue yes. There's other things, but these are like the three core areas that I would hone in on. And then within that, there's a lot of different subcategories. And protection includes buy-sell agreements. Yes. That's a protection element. Yeah, for sure. Right. So that's one where… We should use it all. I mean, you have a partner, you need a buy-sell agreement, and you probably need life insurance to effectively manage that buy-sell agreement, because what if somebody dies, right? So that's where that buy-sell agreement makes... Yes? Do you mean so that it stays? Is that what you mean? No. So, yes. Well, so... Right, so you don't want to be partners with their spouse or their descendants, right? So in the buy-sell agreement, how are you going to get paid out? If Tom and I are partners and he passes away, we have insurance. That insurance triggers, pays me to the ability to pay. So that he can pay for my interest. Yes. Thank you. Yep. Okay. And I think that's something that's really important. But by the way, we had a Supreme Court case last year. I can't remember the name of it. Do you? No. Where you have to be very careful about those life insurance because you don't want the life insurance included in the estate along with the value of the business. And the case in 2024. I'll look it up and have a... Just get perplexity going, you got it. It's the reason I use this. Best computer ever, especially with AI. So, but having those buy-sell agreements, really important. Really important. You guys should have buy-sell agreement going on, right? With life insurance, because you want to protect... Otherwise, how else are you going to... It'd be so inefficient to not have insurance do it. because then you have to put money. Well, yeah, and the other thing is, let's say Brian dies. You may be fine having them be an owner, but they want the money, right? They may need the money for whatever reason, and they don't want to get money over five years, which may be the way it's set up, right? Otherwise in a buy-sell, right? Where I, you know, when I retire, I'm getting paid out of five years. That's the standard. But instead... You know with life insurance you can do a true buy sell and I think that's a really good reason. The other reason is you might have life insurance just from a liquidity standpoint so that's one I didn't see on there from a liquidity of your three. Well the use and I guess the use and liquidity. So I think about liquidity from an estate standpoint. Okay. Historically back when we had an estate tax exclusion of $600,000. Wow. Can you imagine? We did. We used ILITS, Irrevocable Life Insurance Trust, all the time because we knew we were going to have estate tax. We needed the life insurance to pay the estate tax so we didn't have to have a fire sale. If you haven't done the estate plan, get it out, shame on you. But if you haven't, okay, you'd better have at least life insurance in an ILITS that's outside of your estate so that you can pay those as state taxes.
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