Whole life is the only contract that guarantees your cash value must rise every single year. The only question is how fast. And you have the death benefit, illness riders, tax benefits. When you add all of those and you get bond-like returns, do you have a problem with people calling it a better bond? When I think of my personal planning, I'm 100% equities, real estate, my own business, and then whole life. I don't own a single bond fund. I probably never will. because I'm going to have hundreds of thousands, maybe millions in whole life cash value that is today rising at over 5% net of all the mortality and expense. Like why would I even consider bonds if I can get, you know, a tax free north of five? Let's talk about IUL. It's interesting with the whole Kyle Busch deal. It's definitely made waves. In order for you to believe that that that IUL is going to outperform whole life over the long term. which effectively is getting that same 5% from the general investment account. You have to believe that that call option spread is reliably going to get you six or seven or more forever. And you don't think that the smartest minds on wall street, if they could find a predictable way to get 5% into six or seven, they wouldn't be leveraging trillions of dollars borrowing every dollar they could from around the globe to do that. They're not. Tom wall, you're a friend of the channel. Welcome back. Great to be with you again, Caleb. There is a lot for us to chat about. We have the Kyle Busch deal. We have dividend season. Obviously, you have a growing whole life mastermind. I would just love to kind of get insights on some of the topics that you guys are learning. I also, if we have time allows, I'm building a life insurance internal value calculator that I would love to run by you in real time just to get your thoughts on it. And if you think that we're being misleading in some areas or some areas that can be enhanced. So With all that, with all the news, with all the exciting things going on in the insurance space, tell me where your headspace is at and what have been some of the conversations that you find yourself having recently in the space. And I also know you have an event coming up that I would also love for us to plug. And anyone watching, if you're watching this before January, there's a must-attend event. And I definitely want the details to be below for that. Awesome, yeah. Gosh, where to begin? You know, I think the theme right now, you know, being November is, is it's dividend season. I'm watching all the companies, you know, make their announcements of the dividend interest rate for next year. And the news is continues to be positive. You know, the companies, you know, for the third year straight are now passing through this higher rate environment, which is, which has always been the story of permanent life insurance, but specifically dividend paying participating whole life insurance from all these, you know. major carriers that are still around after a couple hundred years. I actually spent a little time doing some research on my own because I realized, you know, all these companies were found in the mid-1800s. And I was just like, what was happening in the mid-1800s that caused the formation of all these companies? And it was really pretty eye-opening. It wasn't stuff I necessarily didn't know, but there's this whole, it was, if you think about the time, it was a time in our country's history when we were moving west, the railroads were being built. And you think about how at that time, how dangerous. That was, you know, clearing woods and building roads. And OSHA was not a thing back then. There wasn't a very safe environment. So, you know, people would leave their families for months or years. And there was no idea if they were coming home. So, you know, these companies were kind of formed with this idea of almost like a commune, you know, serving each other. And you hear these, you know, story after story. you know, early claims being submitted and, you know, the founders of the company reaching into their personal pockets to make sure that claims were paid so that the company could move forward. And it just, it was just reinvigorating to kind of go through all that. And I think that's a big, that's on everyone's mind right now. You know, there's been these, you know, lawsuits in the news over IUL cases that were, you know, they all had different reasons that they fell apart. And there's this, continues to be this narrative as the market just won't go down that, you know, math-based, you can do better in the market than whole life insurance or IUL. And these people are trying to scam you by buying these vehicles, which is also just so untrue. So there's a lot going on in that world that I've been seeing. And I think this is the best environment to own whole life insurance relative to fixed income or other safe stuff in your portfolio. probably in four or five generations. We're talking something like 80 years since the deal has been this good relative to what else you can do with your so-called safe stuff. And that's just the message I continue to push when I'm talking to anybody. Yeah, Tom, can you unpack that a little bit more? And I know you've been on the channel and you've actually shared presentations. And so obviously those are things that we can reference back. But when you say that this is one of the best times in five plus generations, Like unpack what you mean by that and then unpack the difference between safe assets or your safe bucket versus your growth and risk and how, you know, Ernst & Young has said that, you know, together they can actually enhance, like your growth and safe bucket can actually together produce a better outcome than just one or the other. Yeah. So where that statement comes from, why this is the best environment over 80 years is everything is relatives. So the truth is dividend interest rates are still relatively low historically. It's been about 50 years since they've been this low. Just forget in the last few years. So relatively speaking, they may still seem historically low, meaning in the 80s, you were getting 13% dividends on some of these carriers at their peak. But everything is relative. So when you think about whole life as a fixed income alternative, some people say whole life as a bond alternative. I actually really dislike the whole. whole life as an asset class phrase because it's not an asset class. An asset class, it really defines like equities or bonds or real estate or things that can be bought and sold almost like a secure as a security or like a security and are relatively liquid in that way. Like today, you can go sell it to a available open market, you know, a life insurance contract. You don't sell to somebody else typically that way. And it's a contract with the company. There are levers inside that contract that the company controls. That said, the reason we say it is because if you look at the general investment accounts of all of these major mutuals and probably all carriers, you know, they are holding fixed income, you know, long term corporate bonds. They are statutorily required to hold assets of a certain credit quality. That's why they all have these these, you know, triple A ratings or close to it, because you just can't kill them. They're sitting on tens or hundreds of billions of dollars. You know, you really can't kill them. So. In a season like this, in dividend season, you've got these companies paying upper fives or all the way up to upper sixes, depending on the carrier. When you think about that relative to fixed income, meaning bonds, and for most investors, that means bond funds or bond ETFs or things that have a mark-to-market value that changes daily. When rates kind of hover at a low level or a spike, you see a lot of volatility. You also see relatively low returns. And you also see... taxation on those asset classes. Whole life insurance kind of through the life insurance contract extracts all of that. Now, don't get me wrong. There's some significant upfront expenses, just like buying a house, like all of them closing costs. It's like nobody buys a house and expects to move a year later and have made any money. You know, there's a lot of transaction costs that go into that, you know, but usually by year three or four. In a home, you're starting to build equity and you've got a real property. So the same thing with permanent life insurance. If there is a catch, assuming you're healthy enough to get it, that's the catch. But through the life insurance contract, they smooth out all of that volatility. Whole life is the only contract that guarantees your cash value must rise every single year. The only question is how fast. And that question of how fast is simply the rate at which the dividend is going to be paid. technically is not guaranteed but all these companies been paying it since you know the mid-1800s if you're gonna get one the question is really you know the rate at which you're gonna get paid so that dividend interest rate why I think I think it's a great comparison to fixed income is is that doing an interest rate is derived from the cash flow that the mutual carrier is getting in their general investment account So when a company says they're paying a 6% dividend, they're telling you you're getting 6% cash flow from their investment portfolio. They're comfortable passing through to you as a policy owner. The difference is if interest rates spike tomorrow, let's say they double tomorrow because of some world event, bonds are going to suffer. You know, bonds suffered dramatically. We saw it in 2022. It shocked a lot of people that weren't really expecting it when you saw those kind of losses. You don't get volatility of whole life insurance. It just gets more valuable as that rising interest rate environment, you know. averages into that dividend interest rate. So that's the key is it's not so much higher returns. Whole life insurance should give you corporate bond like returns over time because the insurance companies are invested in corporate bond like stuff. But through the contract itself, they've guaranteed that cash values must rise. They guaranteed away all of the volatility. So once you're into a contract a ways, you know, once you're once you're a few years plus into a contract and you've kind of gotten past those those so-called closing costs. Now you're off to the races and you've got bond-like returns, but no chance of volatility as long as that company continues to honor its guarantees. Well, and you have the death benefit. You have illness riders. You have some tax benefits if set up and used properly that all are enhanced because of the contract. I was going to say because of the asset, but we'll change our language. It's because of the contract that you have with the insurance company. And when you add all of those and you get... Bond-like returns. it then becomes, do you have a problem with people calling it a better bond? No. I mean, when I think of my personal planning, not that that has anything to do with any of our clients is, you know, I'm 100% equities, real estate, my own business, and then whole life. I don't own a single bond fund. I probably never will because I'm going to have hundreds of thousands, maybe millions in whole life cash value that is today. rising at over 5% net of all the mortality and expense. Like, why would I even consider bonds if I can get, you know, a tax-free north of five? Now, I paid my dues. That's not my average return over time. But now that it's a mature policy and I'm adding to it, you know, it's just going to get more and more valuable and move closer and closer to that over time. And I got it. You said it perfectly. All of these pundits online that say it's a bad deal, they're focusing on cash value. but for most people that the real appropriate client for whole life insurance is not the family that's living you know living on a family of four you know with a five-figure income paycheck to paycheck you know these are people that are typically going you know have have real careers have businesses are making investments um and and they will die with money and there is no better place to have an asset transfer than through a permanent life insurance contract so I call it the inevitable gain of whole life. I call it that death benefit. In fact, I coach my advisors that the only, literally the only important number on that page is the internal rate of return on death benefit. Because who's going to cash out of their plan? Like who's going to just, I've never met a client that just completely cashes out 10 years in unless they absolutely don't know what they own. Yeah. Yeah, I had someone tell like, I had someone kind of debate with me and they were saying how like they were using some Limbra number to say how permanent life insurance, you know, a lot of it gets canceled and all. And I think there was a, we are seeing the same number and maybe interpreting things a little bit differently. But there's, it is true that there are permanent policies, especially depending on what company you're working with and how it's designed, could give the entire industry a bad rap. But when you're working in your mastermind, and I can speak personally, we have thousands of clients, and very few, very few over the 10-plus years that we've been in business have canceled. And usually, the most friction is in year one or two. If people are properly educated, it's like, why would you cancel a contract that when you deposit money in, it's literally growing by more, and the death benefit is growing. way more than what you're putting in. It just gets to a point where it's like, why would you do that unless there's just another side of the coin that there's people that are so anti-life insurance that it's, I don't know, it's very interesting. I don't know if you have a take on like, obviously the Dave Ramseys of the world that like just hate on it. But then there's people that really, I believe, are trying to do right by people and they just, They just hate on insurance. And so it'll be interesting to see how those work out. But it leads me to whole life and IUL. But I want to just get your take on what I just said before. And then I want to talk about IUL and your take on that as a retirement supplement, as many people are calling it. Well, there's two things I'd say. So the limer stats, you can make any argument with stats. I would probably expect that. I would expect a lot of permanent life insurance policies probably get lapsed. I'll give you an example of mine. When I entered the business, when I first started as a life insurance agent right out of college, actually while still in college, I remember my dad saying, never saw that coming. Oh, and by the way, I actually bought you a policy when you were two years old, and it was so small. I mean, I was like 21 years old, and I think the cash value was like $1,200. Thanks, Dad. Yeah. I'm like, so I cashed it out. So I think there's a lot of that that goes on. Like that, it just wasn't a meaningful number in my life. And I also think that it's, it's sold frankly, by either unscrupulous or uneducated advisors to people that shouldn't be doing it. So buy term, invest the difference is the best possible advice for those families. I just mentioned, you know, if you're, if you're living paycheck to paycheck and you're, you know, you're feeding a family of four on a, on a five figure income. Yeah. buy some turn, invest a difference, get out of debt, do all the stuff that, you know, these talking heads online are telling you to do. That's absolutely the right advice. But once you have had some reasonable success or you have a career path where you expect, you know, to have the need to diversify and own a lot of different things, you know, that's where permanent life insurance really, really gets exciting. So I think that's where a lot of the lapses happen too, is, is it's not always predatory. I think most advisors are trying to do the right thing for clients. They just don't know. And life changes, you know, you can get unemployed or you can have, have things pop up in, in opportune times. So I think that's where a lot of it comes from. It's not people that owned it for 15 years and they're earning six figures and now they're just like this was stupid. I've never seen that happen. So I think that's one piece. And I forgot the other point I was going to react to, but I think that's the big driver of a lot of that. When we did a series on the top 10 mutual companies out there, and one of the things that we shared is their lapse ratio in each. And they were anywhere from like two and a half to somewhere in like the top like 7%. percent. And so the way I look at that is, and all the major mutuals were under five, um, is the way I look at that is on all the, the, all the policies that they have in their books, which is a lot, 2% are maybe churning a year kind of deal. Is that the way that you read that? Or is, or is lapse ratio different than like when companies share their lapses it just in the first couple of years? Or is it cause the person that was talking to me was trying to make it sound like. Only... 10% of permanent policies get paid out or something like that. And I'm just like, that's just not, we're talking about two separate planets. Maybe you could cherry pick some numbers at one company that that's true. And I do believe that is a fear of IUL is how many of the IUL contracts are actually going to pay out upon death. That means like people are going to have them, but like, you can't tell me that these permanent policies. only 10% payout, unless you know something I know, but they were almost like these insurance companies would fall on their face if they actually had to pay death claims, which makes a point to be like, you're saying that it's a scam, number one, but then you're saying that the insurance companies would go out of business if they had to fulfill on the promises. You're almost indirectly saying that there is a benefit here, even though you're saying it's like, do you see how it's contradictory? Well, that's just wrong. So I don't know about the 10% statistic or what actually pays out. I have to imagine it's way higher than that. But let me be clear, these massive institutions, these major insurance companies, they effectively have no risk on the books. Now, obviously they do, but when their general investment account, when they're holding, you know, $200 or $300 billion in reserve, that's effectively the present value of the claim that they expect to pay. So they're always fully capitalized. I mean, if nuclear war breaks out and, yes, they lose 100,000 policy earnings tomorrow, then, yeah, that's a problem. But short of that, you can't kill these companies. I mean, they're folding the money in reserve. And even in the case of universal life contracts, which have a lot more risk, and that probably has a much higher lapse ratio because of underfunding or misunderstanding or the market doing bad things. Don't get me wrong. The company got all of their dollars. Like on a year to year basis, they charge you a mortality charge based on your probability of dying that year. So, I mean, and COVID had almost no impact whatsoever on mortality for all these carriers, by the way. So like short of quite literally like a, you know, war where there's just millions of people dying across the globe, you really can't kill these companies. I'm not sure where that comes from. That sounds like somebody when they asked to grind, that's just making statistics up. You know, you could say the same thing that less than 2% of term policies ever pay out. Is it still a good idea to have the insurance, right? So for me, so a properly planned financial plan with permanent life insurance should have a 100% payout if it was sold appropriately to the right client who actually needs it. I agree. And neither myself or you are endorsing getting an insurance policy and then canceling it 10, 15 years later. that would be really dumb just a public service announcement okay uh let's talk about iul and uh it's it's interesting with the whole kyle bush deal um it's definitely made waves and um the other day we reacted dom and i reacted to a social media account that essentially like is calling in these iul carriers with the client's permission and just drilling the customer service person and the common theme was like, man, the customer service person did amazing, but it's just the whole situation sucked. Like the, you could tell that the client was upset. This person was asking questions and kind of like baiting. And it was just like, it, it, it's a disaster brewing. And I can just see that with this lawsuit, I believe that there's going to be more lawsuits to come. And now you're starting to see like a lot more people talk about how especially IUL is misrepresented. And you have these multi-level marketing companies that are building up people that are just getting licensed, don't know anything, getting their friends and family and then getting out. And it's just like it's like a perfect storm, Tom. Talk to me about the difference between IUL and whole life. And we should maybe be charitable and say IUL done with a financial professional. all that. staying around knows what they're doing. Like there's one thing and then there's the, everything else is being sold. Um, I know I threw like 15 questions at you in one. So why don't you just take the whole IEO and whole life and conversation when take it where you want it, where you want to go? Yeah. So I think a big, I mean, there's a lot that goes into that. First of all, calling customer service and expecting them to have good answers on how this stuff works is, is inappropriate and it's unfair to the customer service person. These are typically entry-level employees who I mean, they're changing addresses and premium payments. They don't know how the inner workings of the actuarial science works. At the end of the day, on any life insurance plan, your customer service person is the agent who sold it to you, or it should be. And this is definitely controversial in this space, but I'm all for insurance agents requiring more regulation or at least acting in a better standard than what's suitable at the time of sale. The truth is, in the insurance world, you can sell a life insurance policy. They buy the policy, they own a product, and you have no responsibility to ever call them ever again. And there's a lot of advisors that churn through, and you'll see them, the successful ones, you'll see them 10 years into their career with 1,500 clients. You can't serve that many clients, do annual reviews to make sure a universal life policy is working out, which is required to make sure that it works out. So that's the unfair part of, I think, the industry is that advisors that are selling these plans, whole life or universal life. have no requirement really uh you know to stay on top of that with their client and they're complicated even whole life insurance has complexities you know you need an advisor who understands this stuff uh to hold your hand for the rest of your life and have and if and if it's not going to be that advisor because they're in their 60s and they want to retire there should be some continuity in there you know for for a junior advisor so i think that's a big reason that the black eye is happening in this in this industry uh having been an advisor you know years ago you You sell a policy and you're on to the next one. Even with the best of intentions, I always loved my clients and did the best for them. But, you know, I was paid to continue to push product. So that's an issue in the industry. Personally, I think that's a big part of it. That said, you know, I've never understood IUL. I've never understood the attraction to it. I understand the psychology behind the selling of it. It's upside potential with downside protection. Who doesn't want that? I mean, that's just that sales pitch alone. Sure, tell me more. I want upside potential without the potential for loss. But the truth is you have unlimited potential for loss. Yes, you have a year-to-year credit and guarantee, but the mortality and expense charges don't stop. Even if you get 0% in one year, the market loses 30%, but you're capped at a 0% loss. That sounds so good, but you're still paying mortality and expense. It's a sub-zero return. You're losing money that year net. and then you got to dig out of it and people always say you know zero is your hero in an iul but i say the cap is the trap you know once you get behind that cap of 10 12 whatever the cap is it doesn't matter what it is it can be moved yeah it means that yeah i mean we live in the modern era every recovery in the market has been v-shaped so even like the pandemic we lost all that money in the market and it was back a few months later in the case of an iul you know you don't get that 30% swing back up, you know, you're capped. And if you actually do a historical analysis, you're shaving off a ton of upside to protect yourself against those relatively infrequent downsides. And when you understand, and we won't get into this on the podcast here, but when you under, unless you really want to, but if you understand the crediting method, like how the companies do it. They're buying a call option spread to get you a return in the market between zero and 10%. They're not actually investing your money in the S&P 500 or whatever index is on that illustration. So if they're taking money from their general investment account, earning 5-ish percent and buying a call option spread, in order for you to believe that that IUL is going to outperform whole life over the long term, which effectively is getting that same 5% in the general investment account, You have to believe that that call option spread is reliably going to get you six or seven or more forever. And you don't think that the smartest minds on Wall Street, if they could find a predictable way to get 5% into six or seven, they wouldn't be leveraging trillions of dollars and borrowing every dollar they could from around the globe to do that? They're not. If you believe in even somewhat efficient markets, and you should in the age of AI, then your best case scenario in an IUL is what you're going to get in that whole life anyway, but without any of the guarantees long term. So to me, IUL makes no sense. It looks really good on a spreadsheet the same way VUL does when there's no volatility and you can just project something forever at static returns, but that's not real life. And a big part of what we do here is not. trying to chase an extra 50 basis points on return, a lot of what we do is actually managing the behavior of our clients and building portfolios that work in any environment so that we can stay more fully invested. Because as the old saying goes, timing the market doesn't work, but time in the market is what generates, you know, the term compounding and results. So I want a policy that's guaranteed to go up in value. you know every single year so that i know that a piece of my portfolio is always rising um and that and even like the last week we saw some volatility in the market earlier this year we saw some i i don't think i turned on cnbc once because i don't care i've got plenty of money invested in the market but i don't care you know i i know that i've got a big piece of my portfolio rising and that's the missing piece is it's not about rate of return and that's what all the the financial entertainment and all the people around their calculators try to get try to back you into but It's not a math problem. It's way bigger than that. Yeah. What are your thoughts on people calling it retirement tax-free income? I've been told probably four or five years ago we just avoided showing income at all on an illustration. When I first got in, though, Tom, that was how I was trained is like talk about this, all this stuff, do the pony dance show, and then be able to show the tax-equivalent income, blah, blah, blah. And it was in whole life, but I regret doing that. because I just am like, it's, I'm projecting something out 30, 40 years on, on it. It just, it just didn't, it, there was something even inside of me that was just like, I don't know if I love this, but then, so then we went away from it. We talked more about it as an, as it will, I'll keep calling it an asset, but maybe as a contract, as a part of your portfolio and how it works and, and all these other things. But then you start, I even watched some of the people, IUL people talking about the Kyle Busch and how they're dancing around it. And they're still using in the same video is like, well, tax free income and all this stuff. And I'm just like, guys, I think that that is one of the biggest issues that is being used. And I think that's going to be when we talk about regulation. I see a world where people are not going to be able to project income, especially on IUL contracts. You can manipulate it to look so much better than it will actually happen. I do feel like it's somewhat criminal to be able to show someone. income that's going to be like three to four times bigger than what it actually is going to be. And the fact of the matter is they can print it on paper with a billion dollar insurance company's name on it, giving them a lot more credibility than their Excel spreadsheet. Yeah. Well, I'll put it this way. If you can borrow money at 4% and put it in an asset that's growing at 6%, how much would you borrow? 100%. As much as you could get your hands on, right? So that's how those illustrations work. I have no problem with showing income. I mean, frankly, if I'm going to put tens of thousands of dollars per year into an asset, I'm going to want to see how the money comes out. And it's actually a really great conversation for clients. I mean, whole life insurance has unbelievable tax advantages. The first one that everyone forgets is first and first at accounting. It's one of the few places where you can make money and the IRS doesn't tax you on those gains first. You can actually get your contributions back first. And then, you know, through surrenders and loans, you can get many times what you paid in income tax free during your life. So I think that's a great story. But I think a lot of people are selling whole life insurance only for that. It's almost like, oh yeah, by the way, there's a death benefit too, but we don't really care about that. You know, when in reality that's for most successful clients, you know, the clients that are going to retire with a seven figure net worth, which sounds like a lot to people, but that's like the starting point to even be able to retire now. You know, there will be a death benefit paid, and that death benefit is your permission to spend. You know, that's knowing that my family, my loved ones, my kids, my spouse are taken care of. Then I can spend everything down. I can give my money away. I can die broke otherwise knowing that my obligations perceived or otherwise are met in my mind. So that's the problem with the retirement income solves is it's a lazy sale. It's usually... uneducated or I say uneducated and unscrupulous. Sometimes there are the unscrupulous advisors that are just out to line their pocket. That's just unfortunately the nature of the beast. And by the way, that's not unique to you to insurance. The investment world is the exact same. But. I think a lot of times it's a lazy sale. They're afraid to talk about life insurance. It's a complex conversation because death benefit is only valuable if you understand it in relation to all of the other assets that you own. And it's hard for a new advisor who just started. And I should say new agent. They may not even be an advisor or have any other credentials aside from a life insurance license. That's a complicated discussion for them to have. So they kind of rely on these sales tracks. if you will, where they kind of just talk about, you know, this is how the money goes in. This is how it comes out. How much would you like? Tom, you're in a lot of rooms. You're friends with a lot of powerful people, especially in the life insurance space. Do you have any predictions on what we can expect for the near future and the future when it comes to just life insurance companies, mutual, whole life insurance, IUL? Like what is, do you feel like it's going to boom? Or do you feel like there's going to be a lot of mass exodus of people getting out of the space? Do you think there's going to be more regulation? Do you think insurance companies are going to continue to get more attractive? What do you think is going to happen in the future? If you're an advisor looking to accelerate the growth of your whole life sales, or if you're an advisor who has established themselves, but is looking to get a little bit better at the conversations around whole life and serving some of the advanced markets, I have the event for you called the Fast Start Forum. My name is Tom Wall and I have been in the business for 22 years and I have watched advisors succeed at levels I never thought possible. The Fast Start Forum is coming up the third week of January with arrivals on January 19th. This will be a room full of almost 400 advisors, thought leaders that write the white papers that a lot of us rely on for the data, performance coaches who work with top advisors and advisor teams. We'll share with you exactly the strategies that they're using with these clients, exactly the science and the data behind what we do. and language, actionable words and language that you can take to your clients to move clients to action. Because at the end of the day, this business is all about leadership and leading clients through the process so that they feel confident and powerful on the other side. The event is in South Florida in January, third week in January. It's called the Fast Start Forum. You can check it out at faststartforum.com. And there's no chance if you go that you don't walk away better and that the event pays for itself 10 times over. This will be an event where you can network with the best in the business, hear from the best in the business and simply get better. all in one place and make 2026 your best year ever. It's hard to say. All of these major carriers have stood the test of time. I mean, think about how much has happened in the last 175 years since most of them were founded. We've got major world wars, Great Depressions, just complete technological change. Everything has changed, and yet they still chug along. So I don't think that's going to stop. I think the biggest issue, and I think some of these... headline lawsuits are going to create. And they're just beginning. You know, like the Kyle Busch lawsuit is the big news out there right now. But, you know, there will be more class action soon. So there will be more to come. And I think that's a black eye for the industry because we know the difference. You know, all the advisors know the difference, but the customer doesn't. They just see permanent life insurance. They see insurance scam. And all it does is it fuels these very loud voices with millions of followers online saying, see what I mean? Like this is this all this stuff is all BS. And in reality, you know, I know just working with it, working with some very big advisors around the country. I sometimes I'm on calls with their clients and these are very successful. These are people that work on Wall Street and manage funds that are buying whole life insurance, you know, for a whole host of tax reasons and asset protection reasons. And you can't tell me that these smartest guys in the room that work literally on Wall Street are somehow stupid or being misled. So I think it's just a lot of it comes down to the quality of the advisor and the moral quality of the advisor to build the plans right. That's one of the things I love most about you and your team and what you do is you build contracts the right way. So they work no matter what. and you have conservative projections of what's going to happen. And you don't need the stars aligned for your plans to work. They're going to work. It's just how well are they going to work, but they will work. Whereas a lot of these illustrations look really good on paper, but so many things have to go right for that actually to play out that way. And that's not what insurance is for. It's called insurance. It's supposed to be rock solid. Go play elsewhere. You know, it doesn't make any sense there. Right. All right, Tom, you ready to look at this calculator that I'm working on? OK, so just here's my disclaimer. This is not a this is not we're not ready for the public. We're still working on some calculations here. One of the things in your you know who Todd Langford is. He has a calculator. called the funding calculator. And when I first got into the space, it's funny. A lot of people are like, don't don't show IRR because it's a bad like it doesn't it makes life insurance maybe look smaller than it is because it's only one benefit. And I appreciate that mentality because life insurance as a contract is so much more valuable than the IRR that's in the policy. One of the things that Todd did is he showed the IRR and then he started factoring in other benefits and then Then he had an equivalent value that increased when you factor in those other benefits. And he was very clear, just like I'll be in this, that insurance doesn't get you 6% or 7%. But he's saying in an equivalent account, when you get all the benefits that you're getting in this contract, you'd have to earn X, Y, and Z for this. And so then when you start thinking about the safety of this, even like we're working on right now, the risk-adjusted return. you're not taking on any risk in this contract. Whereas if you have to go maybe get something else, you'll have to, it would be probable that you'd have to take a little more risk. So when you start looking at this, life insurance is a pretty valuable thing. And so what I'll just let you in real time, like the policies that we design, we're getting anywhere from the interim rate of return around four to 5%. I don't know if you've seen things different. But what would you like to use as an IRR for just this example? It's all about time horizon. But yeah, if you go out 20 years, then I think four, four and a half percent is probably realistic based on what we're seeing. Okay. So I'm going to do four and a half percent. And I don't know, again, this is like, do not be polite, Tom. I know you're East Coast, you're a PhD. Beat the heck out of this thing because this is not for me trying to be right. This is me transparently saying we're trying to create tools. to get people to think differently. And so below, I looked out over the 30-year high-yield savings account, and over the last 30 years, the average high-yield savings account earned 2.5%. So we currently were in a higher yield, but we have to remember that there was a day that you'd be lucky if you got half a percent in a high-yield savings account. So right now, over a long period to time. and life insurance policy, the interim rate of return, not doing anything, just looking at the rate of return is, is going to compete or out-compete a high yield savings account. I have the 30 year aggregate bond index at earning 4.75%. What is, do you think that's low? Do you think that's high? I just literally took the middle of, of when I did research, I just took the middle and obviously bonds are earning greater than. 4.5% interest rate return, what would you put as the bond if you had to look back on just 30 years, the average bond return that you would bank on? I don't even think you need to do that. I mean, the expected return of a bond is effectively the coupon rate right now. So if you're looking at 30-year bonds, I'd use that. So 4.5%, 5% seems totally appropriate. Okay. Okay. So you can see right now you couldn't even make the argument when we talk about life insurance and all the benefits on. how it's right there up there with with bonds but now what what we'll do is we'll start factoring in some of these other things like taxes management fees cost of insurance if we want to really get crazy we can add an equivalent to an illness rider which could be some people could talk as like a long-term carol uh hybrid i we again we could choose not to do this in some states creditor protection is really really good in life insurance and so some Sometimes we could factor this in, and then we're working on the risk-adjusted return as well, and I'll explain that. So from a tax perspective, obviously, if we're comparing this to a savings account or checking account, we could look at ordinary income tax. If you're comparing this to bonds, that may not be fair. And so what would you like to use as just an alternative tax rate? I know you're talking to very wealthy people in states that have high state tax as well, but… What would you like to use from a tax rate, Tom, in this example? So the tax rate you should use is at the margin, you know, because this is not going to be your entire plan. So some people will focus on effective tax rates of, you know, 15 or 20 percent. But in reality, you probably should be using 24 to 40 percent. You know, I live in Massachusetts, a high tax state, not the highest, though. You know, I live in, like, California. Wealthy people are paying over half in taxes. So. It doesn't really matter, but I think to be fair, you know, 30% or something like that, I think. And the reason you're saying that is if we're, because if you eliminate tax, you have to give them the benefit of the highest tax bracket. And so I agree with that. So we'll just say, we'll just say 30%. Now, what this does is now it. puts an equivalent return again where i want to be very clear that this is not life insurance is not getting you 6.4 percent what i am saying is if you fact if if over a long period of time if you're showing an internal rate return of four and a half and then you're factoring in that you're not having to pay tax on that in an equivalent account you would be paying you would have to to earn 6.4% just to keep up with this whole life insurance policy. Now, the cost of insurance is another interesting thing. If you run just 30-year examples like buy permanent, invest a difference, and you run what we did is we ran lots of different examples of what whole life would buy you permanent insurance-wise. And then we would say how much of that premium would we have to take to buy the equivalent of term over 30 years each year essentially. And that was around 10%, 10% to 15%. But then you have to factor in that that term death benefit expires, and most of the time it won't pay out. So we could use 15 we could use, let's just say, 12% as the equivalent to a 30-year term. But if you use if you want life insurance till 85 or looking at, like, guaranteed universal life, like a guaranteed universal life policy, which is you're essentially not getting any cash value. You're just getting pure permanent death benefit. you're looking at anywhere from 30 to 40 percent tom whereas you know if you if the death benefit was really if you educated your client on the importance of a death benefit from an estate tax purpose it would be very reasonable to say that if you factor out over age 85 which oh by the way life insurance only gets better over time um that you would anywhere from 10 to 40 percent would would we would factor in for cost of insurance. And what we're essentially doing is now you'd have to earn over 10% every single year. Why don't you beat this up? Do you have any questions on what I'm doing with the cost of insurance? Yeah, I don't quite agree with that part. So when I look at cost of insurance, that cash IRR, 4.5% or whatever it is, is net of mortality and expenses. So that's effectively what's actually showing up in your cash value. So my assumption is that this cost of insurance is to compare it to what you would be paying elsewhere for insurance. So if you think about the alternative of that million dollar whole life policy being a million dollar term policy, in my experience, it all depends on how the whole life is built. But it's probably about, you know, one fifteenth or, you know, call it call it eight percent, seven or eight percent of the total premium that you're paying. So, yeah, you're saving money on owning term insurance separately. But I think sometimes that gets overstated because. Well, Let's unpack this. What I'm doing is I'm, let's say you said 1 15th and we should run some of the numbers because maybe the way that we're designing it, maybe with overfunding and all, it's more around 10%. What I'm saying is if we are assuming that you're going to buy term, that money has got to come from somewhere. And if you purchase permanent policy, we're not. in this assumption, we're not assuming you buy term insurance. And so it's, it's, it's reasonable to say that you would have to earn more if you're factoring in term insurance in one scenario and not in the other. That's right. Yeah. And so all this would be, and what we could also do is work on net numbers. So we're using just percentages, which can be tough. We could easily show like a $20,000 premium and then show like, okay. That's actually what Todd's calculator does, but then you have to run all the numbers, and this is like a back-of-the-napkin deal. So are you cool with us just using 10%? Sure, yeah. Okay. Do you have a follow-up question? Because all I did with the 30% is saying if you looked at a guaranteed universal life, what that would cost from a percentage of your whole-life premium, which is still not going to be close to 100% because whole-life builds cash value and others, but it would be a lot more than 10%. right. Yep. Okay. Now the, the fee, this, this is something that could, some people don't want to factor fees at all. If you're looking at any type of portfolio management and all like we, you, you could put 1%, we could put lower, we could put higher. This is just an equivalent of like, we're now talking about again, by term invest a difference. You have your alternative portfolio and all again, I'm not. What I'm not saying is that life insurance gets anywhere near 8%. I'm just saying when you factor in, in this example, a 30% tax, a 1% fee, and then you assume that you could buy term insurance for the next 30 years for one-tenth. the cost, you would have to earn in a side account 8.3% every single year. And we still have not factored in the illness rider and credit protection. And we won't do this in this video because these are really tough. I'm still working on the proper way to factor this in. But then in addition, Tom, I'm working on figuring out the risk adjusted because life insurance... you're to get this four and a half percent, you're really not taking on risk. You may not get to that in prior term because we're dealing with on guarantees here, but you're not taking on risk that you're going to like to lose your money in a market volatility. And so there's got to be some if you were comparing to say like eight or nine percent. You would have to there would be some assumption that you would have to take on some some additional risks in the life insurance. And that might not be a lot. but that needs to be factored into this equation. I know this is the first time you're seeing this. When we first hopped on, I said, I'll throw something at you. So again, in real time, what are your thoughts on even using a tool like this to not tell people that life insurance is going to get you 8%, but start elevating? Because Todd's whole deal is everyone's trashing life insurance, life insurance, life insurance. But when you start just educating some of the other benefits that this contract does for you, you start realizing that the rate of return, it's not an investment at all. We should never compare it to an investment. But all the benefits and jobs that it does for your dollar, it actually is a really solid performing contract that should be looked at very positively when it comes to your portfolio. Yeah. I'll give you two thoughts. So I think you nailed it. When I think about the IRR and cash value, there's three things that enhances it. A, it's... It's tax-free to a degree because technically if you cashed in the policy, you would pay taxes on gains. So the way you access those dollars is important. But that IRR on cash value is really understated because you're right. In a taxable world, what are you going to pay in taxes? There's definitely people that say, well, I can get long-term capital gains at 15% if I just hold my stocks for a year. A, stop right there. We're not comparing this to stocks. So I love that you actually compared this to. high-yield savings or bonds because that's what it should be compared to. Somebody with just a 100% appetite for stocks and risk, sure, maybe this isn't for them. In management fees, you can knock down to half a percent or you can make it darn near free if someone's index fund investing. Cost of insurance, you could say maybe it's 1 20th. You can make it 5%. So bump the tax rate down to 15%. Let's just say someone... Let's just be as fair as we possibly, like over the top fair. You know, that's a very realistic. So where else in the world today, in today's world, are you getting 6% with no volatility and no market risk? Like it's just not going to happen. And the thing I like about, and that's a good comparison today because, you know, whole life insurance dividends are roughly what you can get on a long-term corporate debt anyway. So they're kind of, they're almost at parity. So the illustrations are relatively fair the way you're running it right here. But I'll give you a different framework. I'm actually working on a white paper right now. So this is going to be broadcast, but don't tell anybody. The way I like to think about it and the way I'm going to couch it is economists talk in terms of expected return. So I'll give you an example. Let's say you have a 50-50 portfolio of stocks and bonds. You expect your stocks to get 8%. You expect your bonds to get 4%. So the way expected returns works is we take 50% times 8. That's 4. and 50% times four, the bonds, that's two. Two plus four is six. My expected return on that portfolio is 6%. Make sense? Yes. If you think about that in terms of life insurance, there is a death benefit that never gets recognized. There is a chronic illness, right, that doesn't get recognized. There is credit protection, hypothetically. I won't go that far. But what I want to do is I want to take a life insurance illustration, and even if the IRR and cash value is only... say 3% at that time, there is a chance in that 10 year period of time was 15 year period of time that I died. So in year one, I want to, I want to look at my expected return. Maybe it's 0.1% times the million dollar death benefit plus 99.9% cash value. And my expected value of the policy, when you combine the chance that I die or chance that I use it while I'm alive. is more appropriate. And it'll always give you a more accurate representation of what it means for your economic pictures, thinking like an economist in expected value. And that's my attempt to help the industry think about all of the benefits. And if you fast forward 30, 40 years, you could factor in the chance that that year you have a long-term care plan costing $100,000 per year. What is the value of that benefit being on the contract? So that would be version 2.0 or 3.0 or whatever. But I think that's how I think about life insurance and the economic value of it. When it comes out, let's have you on the show to promote the white paper and maybe we can walk through it. Because a lot of times. people are just valuing the cash value and the increase of cash value in the internal rate of return. And the death benefit is one of those just like side elements. But what you're saying is not that anyone wants to die early, but if hypothetically you were to die in the first couple of years, the IRR on the death claim is insane. So that needs to be factored in to your overall economic decision when you're thinking about your holistic. balance sheet hey guys I just want to interrupt real quick if you're watching this and have an indexed 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. Yeah. So I think it's great. I think this is, this is helpful. I mean, people need to think about all the other stuff. It's not just, it's not just rate of return versus rate of return. There's so much more that goes to it. And any discussion of IRRs and cash value totally cheapens the contract by not recognizing all of the other other impacts at play. Yeah. And you even look at this conservative, if we take a 15% tax, 0.5 management fee, and 5% cost of insurance, we're not looking at chronic illness rider, we're not looking at credit, we're not factoring in all the other benefits that life insurance as a contract still gives you. You can't really factor in safety into this whole thing. But it still is, it's more attractive just from an equivalent return standpoint than what someone would be expecting bonds. And so it's, it is a, again, this is just, just a tool in, in production, but we're, I want to create more tools that just get people to think differently. Um, but the problem with this is, um, in the hands of people that are not ethical, you can, this is my challenge. Tom is like, you, you create things to help people like, and I, you probably, you probably get this too, is like people that are you would not endorse that might be promoting something that you hate, but using your name and your book and your research. And so it's kind of a double-edged sword. I know that there are people that use my book and these videos to push their own agenda, but I feel like we just need to fight it with more information, more speech, and not try to go after people or shut people down. That's just my take. I don't know how you manage that when people twist your words. There's two things that come into play. I mean... But any comparison, to be fair, you have to look at risk. You know, what are you comparing the asset to, but also timing. So whole life is a really bad deal if you're using it for two years to save up for a house and then cash out. Like, that's not a good deal. The deal gets better every year that you own it. You know, so it needs to be a long time frame. So the struggle I had when I was writing my dissertation on whole life as a fixed income alternative was timing in the early years. It's a front-loaded fee structure as opposed to the investment world where you're paying a flat fee of 0.5% to 0.1% every single year forever. In fact, if your assets are being managed professionally, you're typically over the course of your life paying far more in investment management fees than you are to any life insurance contract. No one talks about that either. And you can also make adjustments on the other side too. You could just look without any thoughts and look at the S&P 500 and say, you know over time you average 12 and a half percent which you actually did arithmetic average but when you factor in geometric returns and what you're actually paying in taxes and fees you know your most most smart financial advisors are going to put you in the seven to nine percent range at best um because of because of all those forces so i think i think what you're doing is great to on the other side you know boost up the value of whole life insurance at least in in the eyes of the clients. Tom, you got an event coming up that is... I'm going, I'm actually sponsoring. I'm excited to be a part and just support what you're up to. Talk to us about how people can get involved and some of the things going on. I'm really excited about this. So if you don't know who I am, so for the last four years, really my whole career, I've been on stage just talking to advisors. But about four years ago, I decided to go out on my own outside of the employment of any of the major mutuals. And I'm in a different city every week. It's also, it's grown to almost two a week where I'm in different places around the country speaking to advisor audiences, talking about how whole life insurance works, where it fits in financial planning, how to confidently talk to your clients about it and connecting these advisors with top 1% advisors, some of the thought leaders in our space that write the white papers and consult for major institutions. And I've just been blessed in all my travels to... just know all these people and have become connected. So I created a group called Whole Life Masterminds, which is hard to believe, but it's grown to 1,600 active users today and it continues to grow. I don't think we're even close to done growing. And it grew to a point where at the beginning of this year, I said, let's do a live event. I think the world is kind of zoomed out and they would love to just get together and network and hear live. The other thing I noticed in my career is all of these events are very expensive. I can time. running an event myself. It is extremely expensive. So what happens to these events is you get sponsors. There's plenty of companies that want to be evolved, but they also want stage time. So you go to these conferences and half the time that someone trying to sell you software or some company just launched a new annuity with this rider that saves you 10 basis points. It's silly stuff, but that's how they pay for the events. And I just wanted to create an event where there's two full days of just people practicing this stuff, people studying this stuff, coaches, coaching top advisors. giving you all of their best information with nobody else on stage with any agenda. And I think the response to my first event was tremendous because of that. And it was such a great response. We're doubling the size. So we're going to have over 400 advisors in South Florida. We're taking over the Hard Rock Seminole Hotel in Hollywood, Florida, right outside Fort Lauderdale. You know, I think we have, so we're nine weeks out today. And we have over 300 committed to go and they just keep rolling in. I'm watching my phone actually blow up right now with people buying tickets. It's going to be a huge event and it's first class all the way. So we've got Michael Phelps as our keynote speaker. I've got, you know, company number ones on stage. So top advisors from companies. I've got some of the thought leaders that grace the stages of the biggest events in the industry that I've just curated myself to make sure that the content is as high level as possible from people that are actually doing it day to day. So. You know, if you're in the insurance space and you want the event to go to, to really just make yourself better, surround yourself by other folks who are trying to get better. And it's not a ring full of newbies either. I mean, these are typically people that have been in the business for several years and have proven they're not going to fail. Some of them are actually, you know, multimillion dollar advisors who are still going to sharpen the saw. This is the event you want to be at and it's at the perfect time of year It's it's the third week It's called the fast start forum as a nod to let's get off to a fast start this year With all the tools and resources and ideas that you need Let's also go to Florida because where else would you want to be in January in the United States? So it's gonna be sunny and you can wear shorts and it's gonna be you know You can't a casual environment so you can you can hang out and get away from the cold weather then the rest of the world has. I live in Boston, so I can tell you I will be itching to get out of Boston in January. Anywhere I can go. And that's it. I'm kind of pinching myself. I find myself at the middle of all of these amazing people in the business. I continue to learn every day from them. And I share my wisdom, what I've learned along the way back. And it's just been a great environment. And I hope to be able to continue to do this for the foreseeable future. So if you're watching this and this resonates, get your tickets. We'll make sure the link is somewhere down below. I'll be there. So if we've not met, I would love to meet you. I'm not only going there, but we're sponsoring just as Tommy, like you're an amazing life giver to our, our industry and profession. And I just am excited to see this thing grow and be a part of it. So anyways, check, check out information below and Tom, thank you so much for coming on on your busy schedule to just jam on all the fun and exciting things that we talked about today. I appreciate you a ton. Yeah, I appreciate you. And if you want to just check it out right now, it's FastStartForum.com. You can check it out. You can buy tickets right there. And we are not sold out yet, but by the time this airs, we may be getting close. And I think the first thing we will sell out is hotel rooms. So hotel rooms, as you can imagine, in South Florida are not the cheapest in January, but we were able to lock in a pretty great rate way back in March. So yeah, hop on that now if you're thinking about it. And if you have any questions, you can always reach out to my team at info at whole life masterminds.com and we'll get you whatever you want. All right. Thank you so much, Tom. Thank you, Carol.
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