The Lie Too Many Life Insurance Agents Still Tell

Philip, welcome to the Better Wealth Show. Hey, dude, thanks so much. Dude, I'm excited for this conversation. Originally, our producer was like, Caleb, I got somebody who's going to be my term in the best of difference debate. It's going to be great. He's got a YouTube channel. And so, you know, 30 minutes before you pop on, I check out your YouTube channel. You do a great job. I believe you live in Canada and you have wonderful videos. And I watched two of yours and I was like, man, we're probably going to agree more than we disagree. So props on... your your channel what you've done um but i i would love to first of all just set the stage of like tell me a little bit about your your space like why do you feel like you can talk about insurance in general and then i would like to talk about this concept around term versus permanent i think we can talk about infinite banking i think we can talk about other other things and you know i'm coming in from the standpoint of like you're going to take more of the term insurance is superior role. And... Vice versa, like I'm someone that loves permanent life insurance, but I like term insurance for most people. So that's why I think we're going to probably agree more than we disagree. But I think this has been something that we've been requested on the channels. Like, let's talk more about this with people that, you know, have differing opinions. And so that's how we come together. So with that intro, where do you want to take it from here? Sweet, man. Yeah, I'm super excited to have this conversation today. It's been, yeah, it's been a while since I've actually, like, dove into a you know life insurance discussion i had another um you know quote-unquote debate with another infinite bank and uh what's his name again chris something you probably you know him is it chris noggle is it chris noggle um what's his life 180 oh life 180 yeah yep yeah and that was like that was years ago but again like same thing like we came into this and like you know the thumbnails on youtube are like so classic you know it's like infinite banking versus buy term invested like it's always so dramatic who won the debate well i mean no one well that's the thing i'll call chris right now i'll be like hey chris who won the debate i fucking won that but i mean that's the thing is like when we came into that it was and i didn't even tell him what we're doing i just said like hey let's have a discussion because we had like talked on the phone and and you know chatted a whole bunch but like again we like we came into it and it was like this clickbait like okay yeah like you know ibc versus this and but then when we actually get into the video, it's like, We agreed on so many different things. And I mean, there's like extremes for anything, right? And I think there's extremes in the life insurance space where you have like the IBC extreme end. And that's basically like, before we actually hit record here, we're talking about, it's like, yeah, what's the minimum that you put in? And I think you said like 10,000 a year, if you should be comfortable putting that in. But I think like on the extreme end is like, you know, oh, just if you can afford like 50 bucks a month, just like put that into a whole life insurance policy. And that's like there. And then on the other end of the spectrum is the, Gordon, not Gordon Ramsay, what's his name? Gordon, Dave, Dave Ramsay, Dave Ramsay, pardon me, on the other end where he's basically like, whole life insurance is always garbage. It's the worst investment out there, you know, in the world. It's a piece of crap. Don't buy it. If you have it canceled, get rid of that piece of shit. And it's like, well, like, where is the truth in this spectrum of things? And like, I think it's kind of generally in the middle. And like, we've only talked for like a couple minutes now, but I think you're kind of like, lining up with that as well. And maybe you're like, little bit more on this side. I'm a little bit more on this side, but I think that's generally like a good place to start. It's like you can have extremes in anything and like this is probably not a good thing, but over here this is also probably not a good thing. And Lee, I love how you open that up. One of the comments that I'll get that I think is valid that I think we should address is people, like I was telling you when we first got in, like anytime you create life insurance content in general you're gonna have majority of the finance community shun you so i'm like okay i want to be your friends but they don't want to talk to me okay and then and then on the insurance space if you're like i feel like in the insurance space a lot of people dislike what we're doing because we're i i feel like sometimes if education is ever threatening to you that should be like a check in the mirror that should be a check in like oh it's like more information is like threatening to your existence you may we might not be the issue I'll just put it that way, but I'll just say that like that there's there's been friction, but someone made this in the comments and it actually resonated with me when I would like to address it. They said, Caleb, it feels like you're talking out of your, your mouth and both ends. On one hand, you're saying this strategy is great for the ultra wealthy. If that's the case, why isn't it valid for someone that's. Not necessarily ultra wealthy because he's like first principles should be across the board. And so I would love for you to take a stab at that. And then I can give my thoughts. It's like if and we haven't even talked about infinite banking. You might think infinite banking is a scam across the board. But if let's just say someone super, super wealthy stores their money into life insurance and all, like check. Why could it be potentially a good idea for them to do that? And why would it be? Why is it? not hypocritical to say like hey if you have five thousand dollars a year that you're going to invest or save why you shouldn't do that that same thing yeah yeah yeah totally and i've you hear i actually haven't heard this comment on my youtube channel but i hear it in conversations with other like youtubers or you know when you're talking about life insurance it's like and you you probably see it in like ads and like facebook and youtube and instagram where it's like you know learn the secrets of the ultra wealthy you find out where the ultra wealthy are like placing their wealth and i say this in like all my videos it's like well listen just because the super wealthy are doing this type of strategy. I mean, they're also, you know, spending thousands or tens of thousand dollars on complicated like trust setups and legal structures and like places to protect their assets and their wealth, which aren't practical for everyday people. So just because they have money into something like a whole life insurance policy or UL or whatever it is, doesn't necessarily mean that it's right for you at this moment. They've probably already, I mean, in Canada, it's different than the States, but they probably already maxed out a lot of other different accounts and traditional investments. I mean, in Canada here, we have the TFSA and the RSP. And the TFSA, and it works quite a bit differently than the United States, but the TFSA, it's like, this is just 100% tax-free account that, I mean, of course, there's limits. I think it's like $110,000 now that you can put in, assuming that you were age 18 at the time that it started. But it's like $110,000. You can put it in. You can invest it into so many different things, like alternative investments, real estate, you know, stocks, bonds, GICs, anything like that. And it's just all tax-free. You put it in. It's all tax-free. You can take it out and then put it right back in. And it's like when it's like a Roth on steroids, you have to go ahead. You have to pay taxes. Is it after tax? It's so exactly the money that you put into it is after tax money. So you pay tax on it grows tax deferred and you can use it tax free. It grows tax free. You can use it tax free. You can withdraw it tax free. And then once you withdraw it, you can put it back in the next year. There's not like any weird like locked in requirements. Pardon me, where it's like you have to have it till eight. And I think in the States you guys have a lot more. like stringent requirements on your registered accounts with your Roth IRA and your 401k. Oh, yeah. Yeah. In Canada, I think it's a little bit more lenient, especially with the TFSA and the RRSP. I think the TFSA is most equivalent to the Roth IRA and the RRSP is most equivalent to a 401k. You said you can put how much a year into it? No, no, no. Not a year. Sorry. Total. Total right now. Assuming you've never contributed anything into it and you're age 18 when it started, it was like, I think it's like 109. thousand right now. It's indexed. Okay, so it's, okay, in the States, we do it per year. Yeah, and it's still increasing, by the way. So every year, it's going up. I'm just, yeah, stating, like, the maximum contribution right now, but it's indexed. I think it's going up by, like, $6,000 a year, which, like, for, like, an average middle income earner earning $70,000 a year, like, I mean, how much are you putting in investments anyways? Like, you know, between your RSP, especially if you're with, like, an employer who's doing, like, matching. If you're putting some into that and then you're also putting like five to seven grand within your TFSA, that could be 10, 12, 13 grand right there. If you're making $70,000 a year, like how much are you putting into an investment? So, yeah, so I guess, sorry, this is a long winded way to answer your question. Just because like the ultra wealthy are doing something. I mean, they're also buying super expensive cars. I mean, that's like a wise decision for you to do, you know? So, yeah. In a lot of cases, they're spending more money. on a tax strategy than you're saving in a year. So that doesn't it just is like, yeah, it wouldn't be wise for you to spend that type of money on a tax strategy, because you wouldn't get the same results. It doesn't make the tax strategies a scam. Yeah, it's just an example of like, you know, that's just proving the point that we're trying to make. Exactly. And I mean, as your income goes up, you understand, obviously, that your marginal tax rate goes up as well. So it's like, if you're, you know, doing 60 $70,000 a year, your marginal tax rates at like, I don't know, 30. 8%, 36% versus someone who's doing like 200,000 a year, their marginal tax rates at like 50% in Canada here. So it's like, well, if you're saving, you know, 30% versus someone else who's saving 50%, all of a sudden that drag that you get with some other strategies, maybe such as life insurance, you know, policy loans and interest, et cetera, et cetera, at 50%, that doesn't matter anymore. It's like, dude, the tax savings are so good, we don't care. But at 30%, well, you know, maybe now it's time to reevaluate and see if, you know, just paying the 30% tax is maybe a better option to go. What I would say when it comes to the whole permanent life insurance deal is there's also certain fixed costs. So there is something to say like you could put in $50,000 a year and you're just going to get a better policy than if you only have $5,000 a year. Still, some of the principles could be the same, but literally the policy could be performed. better just because of certain fixed costs. So that's like, that's from like an analytical standpoint from a, from a, are you talking, are you talking just like, um, like policy fees or like policy? Yeah. I mean, there's just, yeah. And even like the bands of insurance, like if it's, if we're getting, if you're only getting 150,000, you know, versus like, so there there's, there's that aspect. But then the other, the other aspect is what you're saying is like, if you only have... five to $10,000 a year, let's just say, your options are a lot more than the person that has a first world problem of like, I have so much money, I don't know what to do with. But then the other big thing is like, I'm just a big fan of outcomes. Like, what is your outcome when you do X, Y, and Z? And while insurance, I think is an amazing asset, which we'll dive into, but it solves all your problem asset. It's not a replacement for investments. That's a hot take. For someone that likes life insurance, life insurance is not an investment. A lot of people are selling it as an investment. I don't care if it's IUL, whole life, variable universal life. I still don't think it's a replacement for investments in your portfolio. But I do believe that permanent life insurance, when set up properly, could be a great blend or part of your portfolio and can enhance your other investments. So the point is, it's almost like going back to when people ask me where they should invest their money. and I, if if depending on what you make, my answer is making more money. And it sounds like, oh, that's, that's like, I can't believe you would say that. Well, I did. Yeah. You know, it's like, it's hard for me to like wrap my mind where it's like, hey, where should I, where should I invest my $2,000 a year? Let me think. How about you figure out ways to have more than $2,000 a year? Totally. Yeah. And like the return on whatever is going to be far greater. by you figuring that out, then you making an amazing 12%, thank you, Dave Ramsey, compounded rate time over. So that's just, that's just kind of how I think about this whole deal. And so we really can get into outcomes. I don't know if you have a thought process on that, but then I would like to dive into the buy term and invest the difference. Yeah. I mean, I, I, yeah, I very much agree with what you said there. Just thinking about like, yeah, where to put your money. And I have this conversation, like one, this is something we can talk about later. I'd love to dive into it. And like, maybe there's some math that I just like, don't understand you know because i'm a pleb by term invest the difference kind of guy but i'll have people come to me that have like like outstanding credit card debt and loans and it's like because i made that infinite banking video i'll get people emailing me saying like hey i want you to set me up like an infinite banking policy and you know i want a bit and i'm like sure like tell me a little bit about yourself and like i just had a guy the other day he emailed me he's like oh yeah i'm from nova scotia i'm an electrician um you know i make 65 75 000 a year you know I want to set up an infant banking policy. Like that's all he said in the email. Right. And, and it was like, okay, sure. Like, tell me a little bit more about yourself. What other investments do you have? Do you have any debt? Do you own a house? Like what's going on? Do you have a business? Like, tell me everything. And he's like, yeah, you know, I have, I think like $60,000 in, in like credit card debt and like line of credit debt. And I don't have any TFSAs. I don't have any RSPs and I don't have any investments. And I'm just like, well, like, look at. what your rate of return is right now. So you have, I mean, your credit card debt right now is 19.99%. So every dollar that you don't put on that credit card debt, you're like losing 20%. And I can't find you a 20% investment. Like it doesn't exist. I mean, at least not for me. I don't know of any 20% investment. And if you did, you would, you would, I would keep it to myself. A guaranteed return versus a hypothetical. Totally. So it's like, you know, where do you put your, your next dollar? You know, and I say this all the time in insurance as well. You know, people come And I predominantly sell just term life insurance. And then they'll come in and, well, what about critical illness? And what about disability? And what about, you know, a rider for if I'm in the hospital and I break my leg? And what happens if I hang upside down from a bill? Like, you know, like all the different, you know, if you'll give them money, they will buy insurance, right? Okay, so let's dive right back. Let's dive into it. So I just have to say, if someone came to me with that scenario, I would say put all your money towards your credit card. Towards debt, yeah. And if there's a, and then let's get term insurance because. If that's a play, like I think you and I would both agree that, you know, if you're married, you have kids, let's ensure that. Yeah. If there's people that are financially responsible or yeah, there are people I know and there are videos that are being made that would make it sound like the way, the better way to go about it is to start a life insurance policy, get compound interest of the wealth, blah, blah, blah, blah, blah, tax, blah, blah, blah, blah, blah. And then and it's like, no, you're actually wrong. Like a hundred percent of the time you are wrong with that math. Now, here's the devil's advocate to that, and this is where we can... where we can start the conversation is I do believe that life insurance has other values, not just in the rate of return. So I think to be fair, you need to look at like, okay, when I look at a, let's say a whole life in the States, properly structured, let's say we'll get a four and a half to 5% internal rate of return. Okay. In the United States, that's a tax deferred and you can use it tax-free. So you need to factor in what a tax rate could be if you're comparing it to a safe asset. And then it comes with a permanent death benefit that's in most cases increasing. So that's a value. And there's other values like chronic illness riders, what you mentioned. And sometimes these come with long-term care riders and you get credit protection and all. So those are benefits, but you can't just say that it's unlimited. It's like, what's the value of that? And so in, I believe, whole life, when set up and used properly, The income rate return is going to be anywhere from 4% to 5% right now. When you factor in taxes and when you factor in the cost of insurance and when you factor in other things, I think you could say, if you understand all the other benefits, you could say that life insurance could get you a result return in your portfolio for anywhere from 7% to 9%, okay, from a standpoint. And we could even go a step further to say distribution because the reason you should invest in your money to begin with is for income, for cash flow. And instead of calling it retirement, you should call it future cash flow planning. And you should just reverse engineer all your decisions by what's going to get me the best outcome for income. And so there's many studies out there that are like life insurance could be a better bond. Again, I can't speak for Canada, but in the United States, I think it would be hard for me to pitch knowing what I know about insurance to say you should not put your money in permanent life insurance, but put your money in bonds. So that's just personal opinion there. So that's kind of how I lay the groundwork. But if you're a good investor, you should be able to learn more than that in investing. And then if you understand the concept of infinite banking, which is wildly oversold or talked about in some circles, like the idea, and I've even seen you say this, if you're going to take a loan, you've got to make sure that your activity is greater than that loan. Some of the dumbest things I hear on the internet is like, take a loan, buy a liability, and you're ahead. No, you're not. You're not ahead. You're not. You bought a lot, you know, but If you bought an asset, like now you have the benefit of your insurance and the benefit of the asset minus the cost of control. And you have to factor in the cost of the loan. So all that to say is I am a fan of permanent life insurance when you think of it as a bond alternative for entrepreneurs. I'm a fan of saving it as a safe place to store, use and protect their family. And but but I I try to like I never try to go down the route of it's an investment. So I think that saves us on this side. And then I'm always like trying to like understate like this is not going to be the it factor. I see it as like the foundation. But I want people to understand all the benefits because if you understand all the benefits, it is a more valuable asset than maybe just looking at it as like a 4% long-term tax-free savings account. 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 and 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 now i have so many things to say and i love what you said there um yeah i think about permanent life insurance as like the cherry on top like it has so many benefits that you stated and like yeah if you go to my channel you'll see that i've like so many videos about like buy to invest a difference in term life insurance and this and that but i say in every single one of those videos that like there is definitely a place for permanent life insurance and i heard this one saying a while back where where it was investments make very poor insurance. And insurance makes very poor investments. And I mean, I think that's like you resonated that just in what you said there. But yeah, I mean, like going back to earlier, what you said about outcomes, it's like, yeah, what what are you trying to achieve with this money? And it's like a lot of the rhetoric I hear about permanent life insurance is it is like this is the thing. It's like the secret. This is, you know, the one, you know, golden goose that you got to put your money in. And if you do this and you follow my principles, you're going to be rich. And it's like, no, here's the thing. We talk about rich people. It's like rich people don't grow their wealth. Or sorry, they don't make their wealth from permanent life insurance. They protect and grow their existing wealth that they already have from permanent life insurance. And I had a client, a business owner, and we can talk for loads about permanent life insurance and life insurance in a corporation in Canada because there's a lot of really cool things. that you can do. And she was a very wealthy business owner. She was doing like 1.5 to 2 million a year in net revenue. She had multiple different businesses, lots of investments, lots of capital. lots of real estate, lots of, you know, everything. And I'm just positioned, I think we did like 75 or 100,000 a year in premium. And it's like, okay, we're going to grow the cash flow. We're going to do this. We're going to do that. We're going to do this. And like, we kind of kept going back and forth. I'm like, well, here's the tax benefits. And here's, you know, you can get a loan. Here's all these other things you can do. And at the end of the day, you know, because she was kind of like, well, you know, I don't, I don't really understand like all this. At the end of the day, I was like, listen, you're never going to regret down the road how many different things you can do with this. but you can. If you want to just leave it and like be able to pay some more taxes upon death, you can do that. If you want to put more money into it down the road, because you have more money that you need to just like put into something in your corporation, you can do that. Like you're not going to regret in the future because you already have all of those existing things in place. Like you're not stressing about your annual payment. You're not like, oh my God, how am I going to afford it this year? You have so many other things in place. But for someone who is just like, you know... Again, like that electrician, $65,000 to $70,000 per year, $60,000 in debt, no RSPs, no TFCs, no other investments. That annual payment is going to come up and they're going to be like, shit, how did we get this? Yeah, if you're in the comments and you disagree, I would love to debate you. I actually think a better debate would be for someone who's like a purist on like the infinite banking is a solution. All across the board. I would love to. have a conversation because again we're gonna there's gonna be overlap so um obviously it's a lame video for agreeing on everything so so now philip i need you to start putting on yeah we gotta put on your day ramsay yeah totally yeah permanent life starts i mean we can we can talk about well you guys have crazy ul down down in the states um but we can talk about ul i mean i i think ul is garbage you know i don't know yeah i mean i'm i'm not a fan for the most part of how index universal life or universal life is set up but let's um let's talk about why the what's the pitch for by term and best difference and what would be the pitch to why permanent life insurance is not a good fit for people yeah i mean i guess for me and like i'm sure you do this as well um i wonder if like i mean i'm sure consumers could use this as well but like basically where i kind of where i do the math and i figure out like what and you talk about all the other benefits of permanent life insurance and like sure there is all those other benefits but if we're talking purely from a like Okay, I have $10,000 to invest. Where should I put it? And how much money am I going to have during retirement, right? You can go on the software. I'm pretty sure you can do this down in the States. But in Canada, we can go on the software and we can project, okay, max EDO, $10,000 a year, put a term 10 riders, so we bump the MTAR and we can super overfund this policy, and we put $10,000 there. And then you can write in the software, directly compare it to an alternative investment. And again, if we're going to that individual who hasn't maxed out those Um, those registered counts, let's like compare it to $10,000 into a TFSA per year. Now, obviously, you know, you need to have the contribution room. And then, you know, if it's an RRSP, obviously, there's considerations for that as well. But you know, we just can say, let's say, you know, you have the room in your TFSA, because a lot of people that talk to are these low income to middle income earners that haven't maxed that out yet. And you can just run the numbers and look at retirement and see like, oh, okay, well, with the permanent life insurance, we'll have a cash render value of 600,000. Cool. can't just access that directly. We have to get a policy loan or collateral loan. And we have to pull that out. And by the way, there's an added complication in Canada, where policy loans and excessive ACB are taxable. So but you know, if you repay the loan, you do get that back. But if you're banking on this during retirement, like obviously, there's a lot of complications there. So it's like, okay, cool, 600 grand in there. And then we have, you know, 1.3 or 1.4 million in just like a 6% balanced portfolio TFSA tax-free. So it's like, okay. well, now let's try and like do financial planning and spread that out until death, because we also have the added benefit of a death benefit, permanent life insurance, right? So maybe it's like, okay, it's not the best, you know, vehicle for retirement, but maybe there's that added benefit of, you know, when you die, there's a whole boatload of money there. But again, you just like run the calculations and it's like, okay, well, if you want to pull $50,000 a year from your permanent life insurance policy, this is what the death benefit is going to be when you die at, you know, an estimated age of 85 versus the TFSA, take $50,000 a year, it's still growing at 6%. Again, you die at 85. What's left over? Because the TFSA, there's no taxes upon death with it. It just goes directly to your beneficiaries because you can assign a beneficiary with the TFSA. It doesn't bypass probate, but it goes directly to them. And you can compare those numbers, and the TFSA wins. The pitch is the math works out. However, if you run the numbers with a non-registered account where you actually do have a marginal tax rate and you are investing those dollars into a taxed portfolio, That's where things start to become a lot different and the numbers start to get a way way way closer Depending on your age and you know cost of insurance and all that it can be like life insurance is ahead or this one's ahead But then but then we talked about like all the added benefits of permanent life insurance, you know, that's growing you can take a loan again Instead, there could be added benefits, riders, et cetera. So, yeah, so again, it's like if you have, you could totally dive into that. Yeah, absolutely. No, and you're saying there's a limit. Is there an annual limit or is there just that you can only put X amount? So could someone who's really rich just max out their entire Canada tax-free account in one year? Yeah, so basically I think the account started in 2008. Let's say maybe 2009. I could be totally untalented. They started in 2009. And at the time, I think it was like $5,500 a year. And so that was what you could put in year one. And then every single year, it started increasing. So as long as you were 18, at the time that they started this account, which like for me, for example, I was 18 when they started this account. At that point, then it just gets indexed and it grows every single year. So if you just started contributing at the very beginning, you would have been able to put like 55 to 6000 every year. And that's it, right. But now, now the account's been around for like almost 20 years, the total contribution limit is like $109,000 or $110,000. So depending on if people have ever contributed to it or not, there's like a lot of room there. And yeah, you could just like, you could just put in like $110,000 into that account right now. Okay, so you can, you can just front load it. If you haven't put anything into it. Yeah, absolutely. And even if you have, you can take it out and then put it back in the next year. You're saying right now, it would be hard for you to find a scenario where you would put permanent life insurance, start a permanent life insurance policy without maximizing what we would consider like a Roth solution. But you're saying after that is maxed out, the numbers become more doable because of, okay, so. And it all depends on your marginal tax rate. Like that's another thing too. And within the software, I mean, you can just set whatever your marginal tax rate is. Like that's relatively easy Run calculations for the individual client to see if it's suitable or not. So the two routes that I would go, and this is more of like a discussion. This is where, for better or worse, like people hear how we talk. And I actually think this is more educational than anything else that we could do. Okay, so there's two routes that I think of when I think of like retirement, okay? Route number one is the person that's literally going to put their money somewhere. They want it to grow. where they wanted to grow to get income someday. So in Canada, do you guys do the thing like the 4% rule or what's a common distribution rate in Canada for retirement? Well, like how much to pull during retirement? Yeah, how much to pull? I'm not, I don't do any retirement planning per se. And I would imagine it's somewhat universal. In the United States, the 4% rule is like a common... baseline and what that that means if you have a million dollars in your portfolio you can take about okay four percent every single year have a really good chance of not running out of money but you can't take out eight percent because then like if some bad years happen you could like run out of money and so like the four percent is is kind of like the baseline now the reason i mentioned this is if four percent is the baseline and you have but then there's studies that say if you have five years. volatility buffer, meaning if you have five years of potential income that's not correlated to the market, you could potentially be more aggressive, knowing that if the market is down, you're not selling when the market's down, you're you're tapping into your non, you know, affected, non correlated asset, allowing you to potentially make the argument that you could take out more income now that so with with acknowledging that if I'm talking to somebody that all they care about is income. I'm thinking from the standpoint of that, thinking with the end in mind of saying, okay, where's going to be the best scenario? And I don't know where, I mean, this would be like, I think there's probably some type of mix. And you may go into like, you would have to determine at that scenario. You could easily justify, I'm going to put all my money into the market. And then I might look at getting a permanent life insurance when I get closer to retirement. or like a different, like an annuity or like even like a... high yield savings account, or you could blend it with saying, what happens if I put 75% in over here and maybe 25% into a high cash value life insurance for the reason, not for the short term, but I'm trying to figure out best income long term. So the point that I'm making is I don't necessarily care if one scenario has a higher net worth. I care if I'm saving or investing for the future. I'm asking the question, what's going to get me the most income? And I'm going to be unemotional. That might be all in the market. That might be a 50-50 blend. That might be, and again, we're using our assumptions, but I think like that type of planning is what most people should think about is for most people that are investing in their 401ks and in the States and IRAs and Roths and the market, you know, Bay Street, Wall Street, for the reason of like, I'm going to get to a point where I'm going to, my delayed gratification is going to now be able to. I create a stream of income where I don't have to work for that. And obviously, it sounds obvious for me to say it, but most people have not like even putting you on the spot, like you're like, you're we're talking by term invested difference, but but you're not like an expert at retirement income. Well, that's probably should be part of the calculation when we're thinking about the future, because you a $2 million net worth could be underperformed by a 1.5 million if the 1.5 million is assuming a 10% income stream versus 4%. Now. It has to be with the same logic because a 10% stream could just be a scam. And I know it's like, those are the kind of, that's from like a traditional planning hat. And I think for the most part, people would be better off going majority in the market. And, but like, there's that blend. So that's, that's one, that's one hat. Any questions or thoughts? Yeah. talk about the second i got a whole bunch of things number one i just realized and you're like an expert at this now i realize you're looking at the camera and not at the screen versus i'm looking at you in the screen which makes it look like i'm not looking i'm cheating i have a teleprompter but i will tell you philip okay i've uh for the last six years and i know people might find this crazy yeah i would do video podcasts yeah with no teleprompter oh and i would just look into the camera like a psychopath. imagining what you look like but but it's like i know that you're feeling more heard when you're when i'm looking into your eyes and then so but now i actually like we just got a teleprompter a few weeks ago and i'm like yeah what was i missing out on so what do you mean it's a teleprompter like i can see your face but i'm looking right into my camera oh yeah it's like i mean my camera like if i was looking into my camera and i was like you wouldn't be able to But now I can't. Yeah. And I just realized, like, I was looking at you, but that's the screen, and then I look up and I'm like, how is he doing that? How is he staring right at me? Sorry, completely unrelated side note. Yeah, you said a bunch of good things. I guess, like, I have a question, actually, because you said that, okay, so you said if you had a $2 million portfolio. That you could do a 5% withdrawal versus a $1.5 million portfolio that you could do 10% assuming that one. That's a hypothetical. I'm saying, I'm saying a lot of times we think a higher net worth is better period. And so for example, you could say, I have a $2 million in this account. And it's like, let's say it's tax deferred, where I have $1.9 million totally tax-free. You and I would both choose the $1.9 million tax-free. Why? Because that's actually going to give us a better result. Okay, gotcha. That same example is going into, if we're saving and investing for the future, we have to think with the end in mind of how we're creating income. And that's all I would say is, for most people that are investing for the future, I would want them from the beginning to say, I'm investing. for future cash flow. And so I'm going to do whatever is best to maximize my future cash flow in the future. Gotcha. And you're kind of compared, like when you talk about like the taxable, you're thinking of like a 401k versus like a permanent life insurance option at retirement, because that 401k is going to be taxed at whatever marginal tax. Yeah, but even in a tax free vehicle, even in a tax free vehicle, if you had a million dollars in a tax free vehicle, you can't take it all out. I mean, you can, but you're going to run out of money. So there's some type of calculation you have to think through around a safe withdrawal rate. And 4% is the rate that a lot of people start at. And so if there was a way to get 6%, then it's not unlimited, but someone might be willing to take a little less net worth. And that's where the life insurance conversation could, I'm not saying put all your money into life insurance, but that's where you could justify a portion of your savings or investing is going into life insurance for the idea of like, I want to create more certainty. And this asset is going to allow me to potentially be a little bit more aggressive knowing that I have a few years to tap it. So we're all hypothetical right now, but that is one of the arguments to where you could put money into permanent life insurance. if if you were thinking with the end in mind with future cash flow totally yeah and another argument for it and i apologize and i'm not more argumentative you're canadian i didn't expect i'm too nice i'm too nice right uh you know i actually i'm dual citizen though so okay well i grew up here actually so my mom was born in texas and then and then both her and my dad moved here like before i was born so my mom actually yeah she's been here for longer than She's been in the States now, but... I'm still dual citizen, so I still have that Canadian and Texan. If Trump gets his way, you might be the 51st state. I don't even need to. I have two passports, and so no matter where I go, they basically are like, oh, yeah, welcome home, sir. Yeah, come on in. Yeah, that's awesome. Going back to another added benefit of permanent life insurance, and I say this on my channel. I don't know if you heard me say this or not, but one of the added benefits that I really value for permanent life insurance is the use of a buffer asset. And you kind of mentioned that a little bit before, having that non-correlated market asset, because... If you want to use like 4% as a benchmark, but then it's like, well, you have your, okay, so you, you invest, you know, Dave Ramsey, hardcore, buy term, invest the difference, you get to 65. And now it's like, well, what do I do? I've been invested in like, index funds and the S&P 500 for the last 30 years, which gains either 19% per year or make negative 10, right? So it's like, what do I do now? Do I like get out of the market? And do I invest into like, you know, something a bit safer, like a balanced portfolio, something like super chill that's doing like, you know four percent five percent per year or do i stay in the market and then i still do my withdrawals but you know i have a potential for a negative 10 year and that's where it like i i see the value in permanent life insurance is because like it's a better bond just stay just stay in the market like just stay in the s&p 500 like go 100 in tesla you know it's like it's fine i don't agree with that but yes go go in the keep keep it in the market yeah keep it because if you have a down year then it's like it's fine like pulling income from your life insurance and supplement it that way and just let your portfolio recover. However, you still need the portfolio, right? I agree. And I think that's where a lot of the permanent life insurance infinite bankers are like, no, this is the way. You don't need any of that crap. And I 100% agree. If your goal was to put your money in a place and maximize income, if all your money is in life insurance, you'd get a worse result. than if all your money was in investments. I actually think if I had to pick one, if my whole goal was just to invest my money and then turn on income in a hypothetical future, and I was given, I could put all my money in a whole life or all my money in the market. I'm not going to use any of the benefits of infinite banking, blah, blah, blah. I'm just, it's locked up. I would choose the market. Not even close. What I'm saying is there's a bet. There's a, if you can mix them, you actually get a superior result and safer. That's what I'm saying. So that's for most of the people that do traditional finance. That's period. Work with some type of planner. Work with somebody that you can maximize future cash flow. And don't put all your eggs in one basket. That's for most people. Now I want to address the person that does not resonate with the, I'm going to put my money somewhere and my retirement. They are going to invest in business themselves. They're like, there are people that you and I both know that are like, you know what, I, I want to continue and invest in business, whether that's a good thing or a bad thing. But like, I want control of my money. Then the next question is, okay, then scenario number one is you're going to, your money's going to be saved, put in a checking account or a savings account. You're going to take that money out and invest in your business or an alternative asset. That's, that's scenario number one. Scenario number two is you're going do that via a life insurance policy. And there's pros and cons to that. So it's not like I can't, and you tell me if I'm missing a scenario, but for a majority of people, they're not entrepreneurs. They're not going to do that. They're going to invest their money. And so think with the end in mind from an income standpoint, there's probably going to be some type of blend with insurance investments, probably more investments than insurance if you're especially younger, period. And then substitute with term insurance and you're good. But then there's the entrepreneur side where it's like, okay, I want control of my money. So then the question goes, are they better off putting all their money in a high-yield savings account, withdrawing that money and investing? Or long-term, are they better off putting that into a high-cash value life insurance, borrowing against that life insurance, investing? Over 20, 30 years, are they better off with scenario B or scenario A? And that's where I'll yield to you because I would say that I would much rather be in scenario B than A. But I probably would choose C, which I didn't give us an option for. I'm not a fan of like all or nothing, but that's like, that's a lot of people that work with us. They're, they're literally like, they're like, I'm going to use my money. I'm going to store my money. I'm going to use my money throughout my life and infinite banking is a slower, it's slower for about the first seven years. First seven years, you're actually ahead in option A. For sure. You're actually still ahead in option A if you just look at the rate of return for a while. Yeah. But if you factor in other benefits of life insurance, in about year seven to ten, you're actually, you have more benefits in the insurance side. And then every year that goes by, it's more and more. But what I'm not endorsing is most businesses fail. I'm not saying real estate is the solution. So the faulty narrative in that argument is to assume that investing in yourself, in your business, in real estate, alternative investments is the way. And there's a lot of people that lose their money. But those are like the two paths that I think. And it's hard for me to give the same type of retirement planning advice or hypotheticals to someone who has a totally different paradigm. Totally, yeah. and I don't know the tax laws very thoroughly for the United States, but in Canada, corporations and passive investments within a corporation are very punitively taxed. And so I'm a very strong advocate for having permanent life insurance in a corporation. There's actually a curriculum that I built in Canada here to teach other advisors to work with business owners. And it has like a whole bunch of, you know, how corporations work, how the taxation works, how life insurance in a corporation works, all the different nuances of it. It's accredited here in Canada. So I'm a huge advocate of life insurance in a corporation for like many, many, many, many different reasons. But kind of what you touched on there is like if you have a cash heavy business where they're, again, like constantly reinvesting in themselves and they have retained earnings and they like they don't know what to do with it. And like, you know, I don't know, maybe I put it in the market. Maybe I don't put in the market. Maybe I reinvest it. I want to buy capital. You know, I want to buy more machinery or more land or more whatever. The tax rate for a corporation for passive investments in Canada is like across the board, 55% basically. So if you have, it's like, there's no, it's not a marginal rate. It's just like, if you haven't, whether it's a hundred dollars or a hundred thousand dollars or a hundred million dollars, it's like basically 55%. Now there is in Canada again, that's the real debate. Why, why do you choose to live in Canada? There's, well, there's a few reasons behind it. So, um, and I don't know how geeky you want to get on taxes, but I could like, I could, go down like a rabbit hole, but there's a few reasons behind it. So one of the things is earned income in a corporation under half a million dollars is subject to something known as a small business deduction here in Canada, which is like our like, quote unquote, low corporate tax rate. And in most provinces, it's anywhere from like eight to 12%. Now I know that you guys have like even lower taxes in the States, but in Canada, we're like, we're like, yeah, that's a win for us. You have to pay income tax as well on that. If you take it out as an individual, so then it gets a little bit different. If you take it out as a salary, it's an expense. If you take it out as a dividend, it basically gets equalized that way. You paid some corporately, you pay some personally. But anyways, long story short, yeah, so if you, the way that they tried to equalize the system, so you have that low business tax rate, and then you have after half a million in net revenue, you get bumped to this general tax rate, which is roughly like 25% to 27%, depending on your province. and then it's like, okay, that's, you know, average tax rate, right? So the reason that the government of Canada and the CRA and everyone came up with this tax structure is to try and equalize the playing ground between an individual that just went out, he's like a salaried doctor, whatever, or a salaried engineer, and he makes $200,000 a year, and he's taxed at like, you know, 30, 40% as like an average tax rate and marginal tax rate is like 48% at that point, versus if you're a corporation, you paid like 11% on that 200,000. So you have like 100 and... What, $88,000 left or something like that? Is that right? Yeah, 100. Is that right? Yeah, $188,000? No. $198,000. So the reason that they created this tax structure is through the, it's called the theory of integration. It's like, we want to try and make it fair for the guy that's doing $200,000 as an engineer and paying salary tax on that, income tax, versus the corporation that's doing $200,000 a year and paying only 11%. So that's why that tax rate is so high, the passive tax rate on investments within a corporation, which is roughly like 50 to 55%. But if you take that out as a dividend, they do return some of those to you. You actually get what's known as refundable dividend tax on hand. But in the end, if you have an investment now in your corporation that you're taxed at 55% and maybe someday you'll take dividends, maybe not, that becomes a very, very unattractive place to put your money. And all of a sudden, permanent life insurance becomes a very, very attractive place to put your money. And one more benefit in Canada, again, that small business deduction that I told you about, where you have that lower tax rate under half a million, if your passive investments start to exceed $50,000 in any year, whether that's interest or realized capital gains, that's going to start decreasing your access to this small business deduction at $150,000 in total earnings from your passive investments each year in a corporation. It's zero. So all of a sudden, you lose access to that. and you're paying 26% tax starting at $1 basically. Permanent life insurance and any returns within a permanent life insurance policy don't contribute to that passive investment. So it's a very, very, very good place to put your... Yeah, you should get licensed in Canada and come down here and sell some life insurance. Yeah, no kidding. And that's interesting. We have... And I'm aware that Canada has some weird rules, and so sometimes on the back end it's like life insurance in the States. better tax advantages, I think, long term, but there's for sure some benefits, like what you just mentioned. But that just, I guess that's, you know, that's an extreme example, to my point of like, if you're going to go down a certain path, we can't, it's unfair to then throw in the stock market deal because this person's not going to grow their wealth through the stock market. They're going to grow their wealth better or worse through their business, alternative investments, real estate. And so the question is, is life insurance a plus or a negative in putting that in the middle? And you could make the argument that it could be a negative for some people. You can make the argument that it could be a plus for someone. If someone's thinking long-term though, it would be, if I was thinking long-term, I would rather go the life insurance route, be a little bit slow off the gate, but build a solid foundation. If I cared more about the first five years and quick, like I would not choose life insurance at all. I'd buy term and put the rest in a high yield savings account and go on my way. And so that's for me, like the way that I have the buy term and invest a different conversation. I really break it into these two categories. And it's like for me, it makes it less emotional. and it just goes like logically what path you want to take. And for some people, like there's entrepreneurs that are entrepreneurial and then they're diversifying in the market. There's not a, it's not a one size fits all, but usually that's, that's how I, I try to figure out like what someone's philosophy for what they want in the future. I'm under the opinion that doing it the typical way, even if you put all your money in the market, it's not the, it's not, it doesn't get me excited. It's not like, I feel like there's better ways being an entrepreneur. I feel like there's better ways. And so for me, it's like, I'm obsessed with who do I need to hire? Who do I need to partner? How do I invest in AI? So all that stuff I'm already going to do, but life insurance gives me an ability to create a forced savings. Totally. And it's like, but I'm not looking at it as investment. The growth and wealth is going to be created by how I use my capital, not where it's stored. Yeah. I mean, it's also just like such a perfect leverage tool. especially within a corporation like you nailed it when you started saying like where do i put my money the market doesn't excite me that much like i'm the same way i have multiple different businesses and it's like well i mean i don't have that much money in the market i have all my money invested basically in all my companies because that's what really excites me i mean like i like building things right so that's where i want to put my money so the moral of the story is you suck at debating the other side yeah i do i know that's a canadian in me but um but it does make like and i don't know maybe you guys have different mechanisms down in the states but in canada here. It's not like you can put... you know five hundred thousand dollars into the market and then immediately get a loan against that five hundred thousand dollars it's very very different like it's nearly impossible to do people people talk about leveraging their accounts but the reality is most people don't if you don't have multiple millions in but but i i don't know the laws or rules and how fast you could leverage it um gotcha but most people most people aren't in the states that at the that half a million or less. Yeah, and I mean, I researched it a little bit in Canada, and I couldn't find really any banks or anyone that would lend on it, at least at not any preferential rates. And again, you would have to, like the criteria that they had with like what portfolio you're in, how much fixed income, how much equity is, what percentage they're actually gonna leverage it at. Whereas life insurance is like the cleanest leverage strategy there is. It's just like, sure, 90%, do you want it tomorrow? Do you want policy loan? Oh, collateral, here you go, here's the money. And then the mechanism to repay it is also so clean. And it's like... the life insurance is already in place. You don't need to get a loan on your debt. It's already there. It's part of the entire strategy. So yeah, man, I'm so sorry. This is not much of a date for me. I think we agree more than we, I think the big thing is, there's a lot of people that jump into it prematurely. There's a lot of people that oversell it. And if you're someone that's selling life insurance as the best kept secret, better, it's the best investment in the world. Like I think you're actually gonna shoot yourself in the foot. I think long term that message is not going to compound well. You're going to have people unhappy because they're like, hey, you know where it's like the way that we're having this conversation, it's... It is an attractive asset, but it's not the only asset. And I think that's where I think people get a little too, I won't use the word greedy because I do think that a lot of people have the right intentions, but they really do believe like this is the savior complex. And I think any asset, period, even in your business, if you think that's the only way, like I think there will be a humbling world. And so, dude, I would love to have you back on sometime. And we, knowing not this is your angle, may be reacting to some... Canada stuff or like doing more of a deep dive and maybe like even having you back on explaining how permanent life insurance and corporations in Canada work. That could be really fascinating. So I would love to hear in the comments like what questions you have. What do you think Philip and I are missing? Is there points that we need to double down? If I had Philip back on the show, what would you want me to ask him? Philip, do you have any other final thoughts or questions for me? you know i gave you joke like i joked with you but i i sincerely have enjoyed this conversation i yeah i was oh again like before i looked at your channel i thought like we're in for like a you know i had to explain and it's a breath of fresh air to talk to someone that's like values life insurance which is wild yeah i've i i had i always have fun doing these and but i had a lot of fun with you man and i i love i don't i mean you kind of get in a silo with youtube you know and i just make videos and you know i'm just staring in front of a camera making videos and you kind of you lose that, you know, connection and, you know, be able to actually like talk about it and communicate about it. So it's nice to have that. But yeah, I mean, I don't like, so you watch the infinite banking video that I made at the beginning of the video, I did like a little funny part where I had like a bunch of the little shorts on. I laughed. I was like, oh, this is going to be so good. Yeah, exactly. So yeah, it's, I feel like life insurance is just like one of these, like, I mean, any, anything where the commission is that outrageously high. I mean, the fact that we get paid this much for for what little work we do you know like obviously there's like a lot of marketing and sales and you need to you know educate yourself and put yourself forward but like you sell a hundred thousand dollar a year policy and you're making like you know a high six figures 130 150 160 thousand dollars of commission that's insane so well like well let's talk about that not in the not in the states so the the way the way that the states work is your commission is mostly based off of the base premium. Yep. And so if we're going to structure, like, let's say a $100,000 policy, if you're putting in $100,000, your base, the way that we structure, it's going to be very small. Maybe $5,000, $10,000, maybe $12,000. And then the rest is going to be in paid-up additions and other term riders. And so let's just say this is not for insurance advice, but you're going to, let's say your comp structure is going to be, let's say your target premiums. which target is maybe like what they base commissions off of, let's say that's going to be 14,000. Now, then that 14,000 is based on whatever you're getting paid. And commissions could vary from anywhere from like 55% to above 100%. And so you still get paid well, don't get me wrong. But one of the that's one of the reasons we have people come to us is we're very transparent. We're trying to structure the best type of policy for people. We get paid well for doing it, but we're also getting a fraction of what we would get paid if we did it the traditional way. It's my understanding that in Canada, you guys can structure a high early cash value but still get paid a huge commission, which I don't understand how that works. Yeah, I mean it works very similar actually to how you guys have it in the States. Like we have the same general thing like a base premium, and then you can overfund it versus like additional pocket options. But is your commission based on just the base or on the entire premium? Both, but the percentage on the EDO or the ADO. you know, whatever the carrier wants to call it, is like a fraction of what the commission is on the base. I think probably the largest difference is the MTAR limits. And I think maybe in the states, your MTAR limits are like way higher, whereas like your base policy could be like 10 versus you could dump like, you know, $100,000 into a premium versus ours, I think is like, and I'd have to look at the numbers again, I haven't ran like a whole life policy illustration a long time, but it's like, it's a half of that, or like a third of that, right? So it's like, We just can't dump as much into the actual back end of it. If we're doing like a $100,000 premium, I'm going to go out on a limb and say that like $45,000 of that would be base maybe. And so the early cash value, the best policy that you could design is around 60% cash value. You're talking like day one? Yeah. So, no, I mean, you can structure it. Like, you can put a Term 10 rider on that, and you can structure it, so you're still getting, like, year one, you might be at, like, 85%, 80%. Really? Yeah. It's so interesting to me that they can pay that much and still give you exit. Like, yeah, I don't know. Canadians love giving money away, maybe. I don't know. Like, show me where the money, like. You got to get licensed down here, buddy. Yeah, maybe. Moral of the story is I'm in the wrong. I'm selling insurance the wrong country. That's no kidding. Yeah. I actually, I did get licensed down in the States. Like I went through the whole process and did everything. And then I've literally done absolutely nothing with it. Because your market down there is quite, it's quite wild. It's very different. Send people over to us. We can have conversation offline. I say that sincerely. Like if there's anything that we can do to help, we have an incredible team. Cool man, where any any final thoughts? I mean, we'll link your YouTube channel or anything else you want to link down below sweet Any final parting shots? Um, no, like yeah, nothing nothing crazy I wish I'd like like a zinger to you know, end the video like some sage wisdom But I have nothing, you know, it was great to come on Yeah, if you want me to come on again, i'd love to come on and have some more of these conversations and uh, Yeah, yeah, I appreciate being on I would love to hear people's thoughts in the comments and let's get you a teleprompter. Yeah. I think it's going to change your life. I think it's going to change your life, man. It's changed mine. And I appreciate everyone watching, subscribing. 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