FAQ

Yes. I like to be conservative but you can expect to earn 4.5% on your money as the Internal Rate of Return over the life of the policy. But like we spoke, the policy isn't going to make you rich. Yes, it's better than a savings account at the bank because you don't pay taxes on growth, you never withdraw the money and you never pay fees, but it's what you do with the money out in the marketplace that will make you rich.

Hopefully, I can be an asset to you as someone to bounce ideas off of as you invest those dollars so you can be earning on both sides of the coin; in the marketplace and inside your policy.

Attached on Page 9 of the illustrations. The illustrations depict you depositing the maximum for the first few years and then dropping down to just depositing the base premium. 

But like we spoke, you have the right but not the obligation to make that maximum deposit. It's completely flexible depending on your financial situation that particular year. I always ask though; would rather compound on a large number or small number?

You actually can't withdraw the entire death benefit as the death benefit is always larger than the cash value until Year 121 when the policy endows (cash value = death benefit). If you actually make it to age 121, the insurance company will actually just cut you a check and say, "Wow, you're 121 years old. Freaking way to go." LOL. 

So your policy never actually closes. You would just take a policy loan for whatever amount (in the later years, you can actually turn on policy loans as a stream of tax-free cash flow) and you'll continue to earn on your principal amount of cash value while there will just be a growing lien on your death benefit. Does that answer your question?

That initial $20,000 can be deposited on an annual basis or monthly basis ($1,667/month). Making annual deposits, monthly deposits, or a hybrid of both. It's really whatever way is easiest/convenient for you and your family. 

That cost essentially goes to the insurance company for insuring your life. It's somewhat of a substantial risk in the very first year. For example, you can initiate the policy by depositing $1,667 in the first month and that puts Ameritas on the hook for your death benefit. 

If you had a bad day at work and died, Casey would receive a check for $1,492,504. A 895,000% return in your family's favor if something were to happen to you. So that initial cash drag, from an actuarial standpoint, is the amount of illiquidity needed to insure your life. If that answers your question.

There are no annual fees. Any amount you deposit becomes a part of the total amount of $ that compounds for you. You'll see how those numbers work on Page 9 of the attached illustrations. 

Remember, when you become a policy holder, you become an equity owner of the insurance company. So you participate in the profits. The lower the fees and costs the insurance company can make for their policyholders, the more profit they can generate. Essentially, this strategy challenges us to think like owners, NOT customers. 

The 40% cost goes to purchasing that death benefit of $1.492M. That's the smallest amount of death benefit we can receive without the policy becoming a Modified Endowment Contract (which is a taxable policy). 

Remember, the whole point of this policy is to stuff it full of as much cash as possible while suppressing the death benefit down to the IRS minimum. That $1.492M is the IRS minimum.

Nelson made me understand that I am either borrowing someone else's money and paying them interest or I am using my own cash and giving up the ability to earn interest on those dollars. So I have become a huge believer in "not stealing the peas".

If and and when I use a policy loan for a down payment on a building or am purchasing a new vehicle, I actually create a promissory note to myself charging myself a rate of interest. Reason being, I want to treat my money with the same respect as the bank does when I borrow their money. The only difference is that when I use a policy loan, it becomes a LOC I own and control. I want to be an "honest banker", by repaying the policy loan with interest. I've attached an example promissory note I use and one that I share with clients.

If/when you invest in a syndicate, I would encourage you to borrow from your life insurance policy, deploy the cash into the deal and as the cash flows back into you, you refill your policy and attach interest. All the while, your cash value is continuing to compound tax-free in the background as if the capital never left. So you're earning on both sides of the coin.