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Welcome to the money advantage,

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empowering business owners with the permission to thank

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differently about money so that you can

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choose to live a meaningful and fulfilled life

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lifestyle. Our passion is making money simple, fun

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and doable. Helping you feel great about your

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money, and getting your money working for you

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so you can thrive.

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Good morning. Welcome back to the Money Advantage

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Podcast. This is Rachel Marshall and Bruce Wayne.

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Today, we are talking

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about a popular

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life insurance strategy called bi term

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invest the difference.

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Now, if you are in any way at

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any point in your life, if you've ever

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looked for

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whole or for life insurance in general. If

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you've ever said,

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let me figure out how to get a

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life insurance policy

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that will pay out to

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take care of my kids if something happens

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to me. If you ever

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addressed that concern, then you've probably encountered this

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mantra. This

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idea called by term invest the difference. Today,

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we're unpacking what that means

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and where it came from and really what

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the concerns are or the pitfalls of this

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popular strategy.

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And so, Bruce, I'm really excited for this

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conversation today. I think this term alone by

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term invest the difference 5 words has caused

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more confusion in the life insurance space than

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I would like to admit. I think it

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very quickly leads people to form a very

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brief opinion about something that they really don't

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understand or have not thought through fully. And

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so our goal today is really just to

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be able to help you think through

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what your options are, what the opposite of

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buy term investor difference is and really what

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the,

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implications or the

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results are in your life if you go

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down this path of bi term invest the

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difference and really what that means and what

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you can

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what can happen as a result. So, Bruce,

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I'd love your thoughts before we kinda dive

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into what the lay of the land is

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and and this conversation in general.

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I think if you... If you go back

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in history, the origin of this, many people

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believe is from Art Williams.

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And Art Williams,

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in the...

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It was either the late sixties or early

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seventies his father died,

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and we've talked about this on the show

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before.

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It was commonplace.

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Prior to

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the,

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advent of the 04:01 k that people stored

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money in cash value life insurance.

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Specifically whole life.

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And

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a Ar William's father died

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prematurely,

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and he had did have a whole life

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insurance,

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policy.

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And

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Art was to very disappointed. And and to

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some extent, I understand this,

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because he saw his mother struggling because the

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death benefit from the whole life insurance

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was considerably less than if he would have

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had a... Term insurance policy. And as Art

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said, it was the lot... It was a

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lot cheaper that he could have purchased. So

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he said the insurance agent,

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sold him the wrong policy,

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and he made it his life mission to

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eliminate every whole life policy,

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out there,

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no matter what the strategy was and replace

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it with term,

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and then coincidentally,

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you know, you gotta under... You gotta wonder

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his motives.

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He also then

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partnered up with a mutual fund company, and

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thus,

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the entire thing of by term invest the

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difference into mutual funds

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was actually born.

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And he built this huge company up, then

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later sold it

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and

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that Mantra continued through the eighties,

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that company now is not quite

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as prevalent as it used to be, maybe

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because Art no longer owns it and they've

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lost some little steam, but that's kind of

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the origin of the bi term investor difference.

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It was really because of 1 man,

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that felt like,

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his particular father and mother were... They had

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the wrong strategy and caused them

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turmoil. And it and it did. It did,

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but it doesn't mean that

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of...

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That's right for everybody or then the... That

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the strategy could have been tweaked just a

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little bit, and you would have the best

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of both worlds.

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You know, this reminds me of the idea

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that

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if you look at 1 piece of a

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puzzle and then try to

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say this 1 thing fits for everyone else.

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You're gonna end up bleeding people astra. And

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I was specifically thinking about

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in my devotion. We were diving into just

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some concept. Where if you look at... Well,

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Jesus healed a particular way he laid hands

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on somebody in 1 case. Well, you could

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say, well, that's only way that you're supposed

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to be able to bless others is to

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lay hands on them. You could say, well,

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he had this person he's spit in their

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eyes, and that's what caused them to become

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healed. You could say, well that's only way

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it can happen. And if you take a

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tactic or a method and then try to

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say this is the 1 way that everyone

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needs to do it, You're only following the

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wrong

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piece

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and you're not really understanding the bigger picture.

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So,

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bruce, I really appreciate you sharing that story

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because we can never take 1 person's experience

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and say this is what needs to happen

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for everyone. So if you are

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in this position of

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considering the life insurance. Let's just give a

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very, very quick overlay of, what exactly buy

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term investor the difference, what those terms

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actually mean and kind of what is behind

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that. So,

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Bruce, as you said, a lot of people

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used to

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invest or not invest Let me just take

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that word out of my vocabulary here. So

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a lot of people used to use whole

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life insurance as a savings tool, and this

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has been for over a hundred years,

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through

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many

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economic cycles,

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booms, bust through the great depression through challenges

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and hardships, people would save

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in

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tools that allowed them to have safety where

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their money wasn't gonna drop in value, and

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they had access to capital. And so

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Life insurance, whole life insurance specifically was a

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primary tool that people used to do that.

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Now whole life insurance, generally, if you think

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about what the idea of whole life insurances,

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it lasts your whole life. If you purchase

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it today, and then that policy will be

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in effect your whole life, and

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provide a death benefit at the point you

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die, if you die along the way. And

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if you're still living at the end of

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that policy, which today

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put that at age 121.

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It used to be age 100. But if

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you die before that, you will get the

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death... Your family. Will get the death benefit

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payout. If you are still alive at that

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end of the policy, they'll pay you out

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the death benefit.

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So you're going to get a payout with

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full life insurance. There's also an equity component

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where you're building up cash value inside the

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policy.

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Now,

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when you look at,

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that as a savings tool, people were using

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it also for the living benefit or the

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cash value.

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What happened then is Bruce, you mentioned this

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story

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of, on, this gentleman who found out that

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he could have had a cheaper policy with

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more death benefit and that's where he was

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saying, well term insurance would have accomplished that.

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What his term insurance. Term insurance has a

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short time frame can be 10 years,

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20 years, 25, 30 years, 15 years, there's

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a short window of time that you're purchasing

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coverage so that if you died during that

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time,

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then the death benefits

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payout out to your heirs or to your

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family. There's no equity components so you cannot

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access any of the cash value. There is

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no cash value to access and use,

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along the way. So the the

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conversation or the dialogue, the the if... I,

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I'm sorry, the comparison of the contrast we're

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looking at here is

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whole life insurance

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versus

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term life insurance and

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use the savings to put into

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investments. Now there's a whole lot of additional

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history that Bruce will uncover and unpack in

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another episode. We've talked about this as well

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in the past, but through the seventies and

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eighties, some of the

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conversations and the challenges that were around life

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insurance and some of the new products with

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variable life and universal life and indexed, or

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equity indexed, life insurance, There was so many

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different types of insurance that were

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that came on the scene during that time

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frame, we're gonna leave that for mostly another

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conversation. But when we look at 2 ends

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of the spectrum, we have whole life term

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life, and that's the comparison that we're really

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talking about today. Whole life being put a

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lot of capital into a policy,

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build equity, and then get the death benefit

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payout whenever you pass away. Term life,

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short time frame,

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way lower cost of premium,

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death benefit that pays out if you die

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during the timeframe frame, no

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equity.

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So that's the contrast. And when the

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conversation comes about, the idea is well, if

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the 2 things are equal.

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If we're just looking at get a million

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dollars of death benefit, which policy costs more.

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Well, whole life is gonna cost you a

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lot more for a hundred or for a

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million dollars of death benefit then term insurance.

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But if that's all we're looking at It's

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easy to say well term would be cheaper.

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We're gonna save money if we buy the

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term policy, and then let's go ahead and

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use the savings and put that over into

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investments.

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And the idea with that is, well, if

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you can get a higher rate of return

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over here on your savings that you save

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from not putting the money into the life

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insurance policy,

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put that somewhere into investments, you're gonna end

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up ahead in the long run with a

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higher rate of return

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more capital in the end, better ability to

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retire, and there is some idea and some

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merit to this when you say, well, If

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I'm great at investing, and I am really

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excellent at choosing wise investments, and I can

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lower that cost of insurance or the... Premium

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put into a life insurance policy, separate out

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the 2 issues and say, let's put our

277
00:10:06,195 --> 00:10:06,695
our

278
00:10:07,075 --> 00:10:10,305
insurance money here, and let's put our investments

279
00:10:10,682 --> 00:10:11,240
beside that.

280
00:10:13,394 --> 00:10:14,213
You could

281
00:10:14,590 --> 00:10:16,903
do very well with investments. But what we're

282
00:10:16,903 --> 00:10:17,962
gonna do today

283
00:10:18,671 --> 00:10:21,693
is unpack what that difference that that contrast

284
00:10:21,693 --> 00:10:24,555
between whole life insurance over here and term

285
00:10:24,555 --> 00:10:27,352
life insurance plus investing over here and really

286
00:10:27,352 --> 00:10:30,133
what those pitfalls are of that very popular

287
00:10:30,133 --> 00:10:32,913
mantra that's become, like a buzz word in

288
00:10:32,913 --> 00:10:35,316
our culture and society where people just say,

289
00:10:35,635 --> 00:10:37,706
whole life insurance, nope, buy term invest the

290
00:10:37,706 --> 00:10:40,573
difference. And that typically generally means, oh, well,

291
00:10:40,733 --> 00:10:42,898
I'm just gonna accept at face value, that

292
00:10:42,898 --> 00:10:44,566
it must be the more logical route because

293
00:10:44,645 --> 00:10:47,505
I'm gonna save money on premium for the

294
00:10:47,505 --> 00:10:49,809
life insurance, and I'm gonna have all this

295
00:10:49,809 --> 00:10:52,934
money to invest. It's... Clearly or seems as

296
00:10:52,934 --> 00:10:53,434
logically

297
00:10:53,975 --> 00:10:54,475
a

298
00:10:54,934 --> 00:10:57,975
superior strategy, and it's not really so. So

299
00:10:57,975 --> 00:10:59,415
we're gonna talk about why it's not really

300
00:10:59,415 --> 00:11:00,715
so today. Bruce

301
00:11:01,029 --> 00:11:03,355
Anything else you wanna add to that that

302
00:11:03,808 --> 00:11:05,237
scope or the lay of the land, What

303
00:11:05,237 --> 00:11:08,016
is the the contrast? What is the debate?

304
00:11:09,785 --> 00:11:09,945
Well,

305
00:11:10,664 --> 00:11:11,785
before I go there, I think

306
00:11:12,904 --> 00:11:16,044
a lim, which is the life insurance regulatory

307
00:11:16,264 --> 00:11:16,664
authority.

308
00:11:18,592 --> 00:11:21,613
They actually compile statistics and 52 percent of

309
00:11:21,772 --> 00:11:22,272
Americans,

310
00:11:23,204 --> 00:11:24,158
have life insurance.

311
00:11:24,953 --> 00:11:25,453
However,

312
00:11:27,834 --> 00:11:28,813
of those 50

313
00:11:29,511 --> 00:11:30,550
52 percent,

314
00:11:33,426 --> 00:11:34,166
they feel

315
00:11:34,719 --> 00:11:35,037
that's,

316
00:11:35,675 --> 00:11:38,485
78 percent of that 52 percent feel more

317
00:11:38,942 --> 00:11:41,173
financially secure that... Because they do have life

318
00:11:41,173 --> 00:11:42,925
insurance. Mh. So the first thing I'd like

319
00:11:42,925 --> 00:11:43,983
to say is that

320
00:11:45,332 --> 00:11:48,522
It's interesting that people feel more secure by

321
00:11:48,522 --> 00:11:51,234
a lot if they have life insurance, but

322
00:11:51,234 --> 00:11:53,786
only 52 percent actually have life insurance.

323
00:11:54,759 --> 00:11:55,259
So

324
00:11:55,798 --> 00:11:58,355
it would seem that then why doesn't... Why

325
00:11:58,355 --> 00:12:00,433
don't more people have life insurance. Well the

326
00:12:00,433 --> 00:12:02,990
first thing that L found out through questions

327
00:12:02,990 --> 00:12:05,863
is that 82 percent of all people that

328
00:12:05,863 --> 00:12:08,082
are ask about the cost of life insurance,

329
00:12:09,271 --> 00:12:10,302
overestimate the cost.

330
00:12:11,190 --> 00:12:13,750
They think it's a percent more 82 percent.

331
00:12:13,990 --> 00:12:15,910
So they think it's a lot more expensive

332
00:12:15,910 --> 00:12:18,230
than it what it actually is. Mh. I've

333
00:12:18,230 --> 00:12:19,750
always... You know, I've been doing this since

334
00:12:19,750 --> 00:12:20,230
the eighties.

335
00:12:21,360 --> 00:12:24,326
And excuse me. And I really believe that

336
00:12:24,542 --> 00:12:25,042
people

337
00:12:26,053 --> 00:12:28,057
when they are looking at life insurance they

338
00:12:28,057 --> 00:12:29,650
believe they should have life insurance. Just like

339
00:12:29,650 --> 00:12:31,321
they know they share Think... Should have car

340
00:12:31,321 --> 00:12:32,777
insurance and homeowners insurance

341
00:12:33,153 --> 00:12:34,904
and renters insurance and all these other insurance,

342
00:12:35,063 --> 00:12:35,563
but

343
00:12:36,033 --> 00:12:37,940
life insurance, I believe is the hardest 1

344
00:12:37,940 --> 00:12:38,678
to buy

345
00:12:39,290 --> 00:12:41,276
because you have to face your own mortality.

346
00:12:41,673 --> 00:12:43,738
Mh. And when you face your own mortality,

347
00:12:43,897 --> 00:12:45,350
you do not want to

348
00:12:46,057 --> 00:12:48,521
of think about the possibility that you're going

349
00:12:48,521 --> 00:12:48,919
to die.

350
00:12:49,634 --> 00:12:50,985
And so I think that's 1 of the

351
00:12:50,985 --> 00:12:53,211
most more difficult things on this.

352
00:12:54,005 --> 00:12:54,505
So

353
00:12:55,213 --> 00:12:56,749
I think the time period

354
00:12:57,443 --> 00:12:58,956
so that people understand that,

355
00:12:59,912 --> 00:13:03,178
the buy term and invested difference only works.

356
00:13:04,069 --> 00:13:05,663
If you actually invest a difference.

357
00:13:06,700 --> 00:13:08,453
And this is a problem that I've heard

358
00:13:08,453 --> 00:13:09,511
from advisors

359
00:13:10,128 --> 00:13:12,062
that actually do this

360
00:13:13,012 --> 00:13:13,512
strategy

361
00:13:14,049 --> 00:13:16,520
that they complain that, and they don't even

362
00:13:16,520 --> 00:13:17,020
know

363
00:13:17,636 --> 00:13:19,470
that it's kind of it's kinda weird that

364
00:13:19,470 --> 00:13:20,267
they're complained about this,

365
00:13:21,479 --> 00:13:23,796
that that their people are not investing the

366
00:13:23,796 --> 00:13:24,115
difference.

367
00:13:24,755 --> 00:13:27,711
They they changed their goals. They decide offs,

368
00:13:27,871 --> 00:13:28,610
It's really

369
00:13:28,923 --> 00:13:31,383
buy term and spend a difference. I was

370
00:13:31,383 --> 00:13:33,605
gonna say because of Parkinson's law that we've

371
00:13:33,605 --> 00:13:35,430
unpack on this show, the idea that if

372
00:13:35,430 --> 00:13:37,176
you have this extra come, it's...

373
00:13:37,829 --> 00:13:40,466
Very easy for your expenses to rise to

374
00:13:40,466 --> 00:13:42,085
meet that income if you don't have an

375
00:13:42,144 --> 00:13:43,742
a superior strategy or if you don't have

376
00:13:43,742 --> 00:13:45,820
an alternative plan already in place.

377
00:13:46,873 --> 00:13:48,171
Now does that mean that

378
00:13:49,346 --> 00:13:50,484
that shouldn't be the

379
00:13:51,100 --> 00:13:53,892
the strategy? No. It just means that you

380
00:13:53,892 --> 00:13:55,407
have to you have to have a better

381
00:13:55,407 --> 00:13:55,806
adviser.

382
00:13:56,778 --> 00:13:59,967
But I think the the number 1 problem

383
00:13:59,967 --> 00:14:02,141
with buying term and investing a difference

384
00:14:03,554 --> 00:14:04,293
is that

385
00:14:05,162 --> 00:14:07,697
people assume they're going... Their investments are going

386
00:14:07,697 --> 00:14:09,203
to get to a point where they call,

387
00:14:09,440 --> 00:14:11,659
they're calling self insured.

388
00:14:12,309 --> 00:14:14,724
I no longer need an additional

389
00:14:15,420 --> 00:14:17,973
death benefit of a million dollars 2000000 dollars

390
00:14:17,973 --> 00:14:18,691
3000000 dollars.

391
00:14:19,978 --> 00:14:21,564
First of all, I think that's kind of

392
00:14:21,564 --> 00:14:22,619
odd because

393
00:14:23,784 --> 00:14:25,131
it's not that you need it, but you

394
00:14:25,131 --> 00:14:26,638
may want it for your loved 1.

395
00:14:27,210 --> 00:14:29,610
There's no such thing as being self insured

396
00:14:29,610 --> 00:14:31,149
because your investments

397
00:14:31,690 --> 00:14:33,850
are not guaranteed to stay where they are.

398
00:14:34,330 --> 00:14:35,950
And we've seen that and

399
00:14:36,904 --> 00:14:40,241
in a a variety of recessions, the great

400
00:14:40,241 --> 00:14:41,989
recession being a great 1. So let's just

401
00:14:41,989 --> 00:14:42,489
say

402
00:14:42,863 --> 00:14:43,363
in

403
00:14:43,737 --> 00:14:44,690
2008,

404
00:14:45,818 --> 00:14:47,174
you were coming up at the end of

405
00:14:47,174 --> 00:14:48,928
your 20 year term or your 30 year

406
00:14:48,928 --> 00:14:51,261
term, and you feeling really good about

407
00:14:51,877 --> 00:14:53,472
because your investment portfolio,

408
00:14:54,284 --> 00:14:56,354
was... Let's just... So I can put numbers

409
00:14:56,354 --> 00:14:58,345
to this. Let's say your investment portfolio was

410
00:14:58,345 --> 00:15:01,292
2000000 dollars. And now your 2000000 dollar term

411
00:15:01,292 --> 00:15:02,487
was going to lapse.

412
00:15:03,139 --> 00:15:04,730
And it and it was going to go

413
00:15:04,730 --> 00:15:04,889
away.

414
00:15:05,605 --> 00:15:06,957
And let's say it even did go away.

415
00:15:07,196 --> 00:15:08,707
You said, hey, look at this, It's a

416
00:15:08,707 --> 00:15:11,032
nice 2000000 dollars, I don't have to worry

417
00:15:11,032 --> 00:15:13,025
about this anymore. I'm not gonna pay my

418
00:15:13,025 --> 00:15:14,700
term policy. You didn't pay it.

419
00:15:15,737 --> 00:15:18,529
And now 3 weeks later, the recession hits

420
00:15:18,529 --> 00:15:19,906
and your 2000000 dollars

421
00:15:20,298 --> 00:15:22,689
turns into 1000000 dollars because many people did

422
00:15:22,689 --> 00:15:23,189
lose

423
00:15:23,804 --> 00:15:25,796
50 percent of their portfolio at that time.

424
00:15:26,354 --> 00:15:27,093
Well, now

425
00:15:27,564 --> 00:15:30,038
if you even thought about the strategy, I'm

426
00:15:30,038 --> 00:15:32,273
gonna go back and get firm until I

427
00:15:32,273 --> 00:15:33,071
build it back up,

428
00:15:33,789 --> 00:15:35,385
you are now 30 years older,

429
00:15:36,118 --> 00:15:38,511
term insurance is gonna be a lot more

430
00:15:38,511 --> 00:15:40,346
expensive if you can even get it.

431
00:15:41,622 --> 00:15:44,913
And if you now die before that portfolio

432
00:15:44,972 --> 00:15:45,745
builds back up

433
00:15:46,661 --> 00:15:49,789
your loved ones will not receive

434
00:15:51,201 --> 00:15:52,794
the amount of money that they thought to

435
00:15:52,794 --> 00:15:54,888
have a comfortable life. That's why

436
00:15:55,439 --> 00:15:57,676
you can never say you're self insured.

437
00:15:58,714 --> 00:16:00,812
Because insurance is a guarantee

438
00:16:02,403 --> 00:16:04,945
for you and your loved ones where the

439
00:16:04,945 --> 00:16:07,724
investments are not. Mh. Now I'm not saying

440
00:16:07,724 --> 00:16:10,028
it can't happen because if you if you

441
00:16:10,028 --> 00:16:11,004
did the strategy

442
00:16:12,110 --> 00:16:14,190
and you retired in 2015,

443
00:16:15,470 --> 00:16:16,830
then the strategy actually worked.

444
00:16:18,110 --> 00:16:20,602
If you're just thinking about buying term and

445
00:16:20,602 --> 00:16:22,518
having all the money possible to put in

446
00:16:22,518 --> 00:16:24,273
investments. I'm still not saying you can be

447
00:16:24,273 --> 00:16:27,306
self insured, but I'm saying that strategy actually

448
00:16:27,306 --> 00:16:27,545
worked.

449
00:16:28,199 --> 00:16:29,875
So you have to look at the time

450
00:16:29,875 --> 00:16:30,375
period

451
00:16:30,833 --> 00:16:33,946
of when you're actually doing this strategy. And

452
00:16:34,106 --> 00:16:36,682
I I just had a client just yesterday,

453
00:16:37,393 --> 00:16:40,804
that said she's extremely nervous with her half

454
00:16:40,804 --> 00:16:42,335
a million dollars of

455
00:16:42,866 --> 00:16:43,818
money in the market.

456
00:16:44,629 --> 00:16:47,029
And she said, I don't wanna lose half

457
00:16:47,029 --> 00:16:47,269
of it.

458
00:16:48,149 --> 00:16:50,870
And so this is this is what people

459
00:16:50,870 --> 00:16:51,990
have to overcome.

460
00:16:52,964 --> 00:16:55,281
Because that is not a sure thing. Your

461
00:16:55,281 --> 00:16:57,039
investment accounts are not a short thing.

462
00:16:57,678 --> 00:16:59,916
Now remember, we always talk about safety liquidity

463
00:16:59,916 --> 00:17:00,655
and growth

464
00:17:01,208 --> 00:17:02,981
So you don't get

465
00:17:03,436 --> 00:17:06,063
all 3 of those in 1 particular investment.

466
00:17:06,779 --> 00:17:09,724
So that is why the investment part of

467
00:17:09,724 --> 00:17:10,224
it

468
00:17:10,853 --> 00:17:13,081
does not have the safety aspect of it.

469
00:17:14,115 --> 00:17:15,887
And that's why this strategy

470
00:17:16,501 --> 00:17:17,319
hand work

471
00:17:17,949 --> 00:17:19,148
But most of the people,

472
00:17:19,707 --> 00:17:22,025
I would say, just like they say, feel

473
00:17:22,025 --> 00:17:24,342
more secure, 78 percent of people feel more

474
00:17:24,342 --> 00:17:25,621
secure with life insurance.

475
00:17:26,754 --> 00:17:29,071
Well, knowing you have whole life insurance means

476
00:17:29,071 --> 00:17:30,269
you're gonna have it for your whole life.

477
00:17:30,429 --> 00:17:31,707
So that means you're going to have it

478
00:17:31,707 --> 00:17:33,226
for whole your whole life and feel the

479
00:17:33,226 --> 00:17:35,398
most secure. And then our finally, I'll just

480
00:17:35,398 --> 00:17:37,955
say our friend, our podcast for friend, doctor

481
00:17:38,115 --> 00:17:39,793
Wade val has actually done,

482
00:17:41,551 --> 00:17:42,910
mathematical research on this.

483
00:17:43,563 --> 00:17:44,620
Plus qualitative

484
00:17:44,995 --> 00:17:46,926
research from interviews with

485
00:17:47,380 --> 00:17:47,698
people,

486
00:17:48,255 --> 00:17:50,186
and having a well

487
00:17:50,641 --> 00:17:52,254
whole life insurance policy,

488
00:17:53,439 --> 00:17:54,896
will actually enhance

489
00:17:55,672 --> 00:17:57,128
your equity portfolio

490
00:17:57,745 --> 00:17:59,579
because of sequence of return risk. And we're

491
00:17:59,579 --> 00:18:00,934
not gonna get into that. We actually have

492
00:18:00,934 --> 00:18:02,210
a podcast on that, and you can talk...

493
00:18:02,544 --> 00:18:04,464
You can listen to doctor Wade files podcast

494
00:18:04,464 --> 00:18:06,085
with us, and it's a better

495
00:18:06,384 --> 00:18:08,065
explanation. But I think those are some of

496
00:18:08,065 --> 00:18:10,625
the thoughts we can actually build on right

497
00:18:10,625 --> 00:18:11,184
now, Rachel.

498
00:18:12,078 --> 00:18:14,952
Absolutely. I mean, there's so much in this

499
00:18:14,952 --> 00:18:17,107
whole conversation. And so let's go ahead and

500
00:18:17,267 --> 00:18:19,342
I'm gonna cover a couple of additional pieces

501
00:18:19,342 --> 00:18:22,069
here because What's really interesting is that if

502
00:18:22,069 --> 00:18:24,063
you look at the idea of feeling more

503
00:18:24,063 --> 00:18:27,094
financially secure. The reason you feel more financially

504
00:18:27,094 --> 00:18:28,929
secure when you have life insurance in places

505
00:18:28,929 --> 00:18:30,125
because you have that guarantee.

506
00:18:30,778 --> 00:18:31,517
The guarantee

507
00:18:32,053 --> 00:18:34,682
that there will be somebody else taking on

508
00:18:34,682 --> 00:18:37,631
your risk of passing away at any point

509
00:18:37,631 --> 00:18:40,042
in time and guaranteeing that they'll pay out

510
00:18:40,042 --> 00:18:41,880
the death benefit as long as you fulfill

511
00:18:41,880 --> 00:18:43,878
your into the contract and pay your premiums.

512
00:18:44,437 --> 00:18:46,216
Now what happens is that

513
00:18:47,008 --> 00:18:49,791
if you look at it logically, let's just

514
00:18:49,791 --> 00:18:52,733
imagine a short term life insurance policy. If

515
00:18:52,733 --> 00:18:54,164
you had a term policy for 5 years.

516
00:18:54,323 --> 00:18:56,719
So you're healthy 25 year old right now.

517
00:18:56,798 --> 00:18:59,098
And you buy a 5 year term life

518
00:18:59,098 --> 00:18:59,732
insurance policy.

519
00:19:00,684 --> 00:19:02,880
The likelihood of you passing away during that

520
00:19:02,999 --> 00:19:05,094
time frame, especially if you go through underwriting

521
00:19:05,152 --> 00:19:07,463
and you get preferred or even a standard

522
00:19:07,463 --> 00:19:10,333
rating, the likelihood of you passing away is

523
00:19:10,333 --> 00:19:13,055
very low Now the insurance company looked at

524
00:19:13,055 --> 00:19:15,226
that and they call that a mortality risk

525
00:19:15,442 --> 00:19:17,192
and they assess that. And so they're going

526
00:19:17,192 --> 00:19:19,678
to say, well, you are not going to

527
00:19:19,678 --> 00:19:21,755
have to contribute very much into the pool

528
00:19:21,755 --> 00:19:22,255
of

529
00:19:22,634 --> 00:19:25,270
premiums that everyone's paying in order for us

530
00:19:25,270 --> 00:19:28,459
to hedge or to back up our guarantee

531
00:19:28,459 --> 00:19:30,044
that will pay out this death benefit if

532
00:19:30,044 --> 00:19:31,471
you die during that term because we think

533
00:19:31,471 --> 00:19:32,922
it's really unlikely

534
00:19:33,309 --> 00:19:35,941
they're looking statistically and and at all of

535
00:19:35,941 --> 00:19:38,732
the health factors of the people that they're

536
00:19:38,732 --> 00:19:40,567
insuring, and they're saying the likelihood of death

537
00:19:40,567 --> 00:19:42,560
is low. Now if you extend that out

538
00:19:42,560 --> 00:19:45,212
for 20 years. And you say what is

539
00:19:45,212 --> 00:19:48,328
the premium that's gonna be required for that

540
00:19:48,328 --> 00:19:50,246
term in insurance policy. Let's just say it's

541
00:19:50,246 --> 00:19:52,335
the same death benefit. A million dollar death

542
00:19:52,335 --> 00:19:54,643
benefit. You're getting either for 5 years or

543
00:19:54,643 --> 00:19:56,235
you're getting a million dollar death benefit for.

544
00:19:56,952 --> 00:19:58,066
I don't know what I said, 20 or

545
00:19:58,066 --> 00:20:00,393
30. We'll gonna say 20 years. The longer

546
00:20:00,393 --> 00:20:02,631
the timeframe frame, the more likely you are

547
00:20:02,631 --> 00:20:05,288
to pass away because it's extending towards

548
00:20:05,667 --> 00:20:09,039
the end of someone's lifespan. And the longer

549
00:20:09,039 --> 00:20:11,599
you progress through life, the higher likelihood of

550
00:20:11,599 --> 00:20:13,279
death is, and we know that that's a

551
00:20:13,279 --> 00:20:14,660
statistical fact because

552
00:20:15,694 --> 00:20:18,087
people have an average age of passing away

553
00:20:18,087 --> 00:20:20,161
and it's usually not very, very young. And

554
00:20:20,161 --> 00:20:22,793
so if you can imagine then, extending, say

555
00:20:22,793 --> 00:20:24,627
you're 25 years old and you get a

556
00:20:24,627 --> 00:20:27,117
policy that's a 50 year term policy, which

557
00:20:27,277 --> 00:20:28,316
I have never seen that. Have you seen

558
00:20:28,316 --> 00:20:29,754
that, bruce? 50 year term?

559
00:20:30,872 --> 00:20:33,841
No. No. I think so. I believe I...

560
00:20:34,000 --> 00:20:36,150
The the longest 1 I've seen offered is

561
00:20:36,150 --> 00:20:36,788
40 years.

562
00:20:37,425 --> 00:20:37,664
Okay.

563
00:20:38,619 --> 00:20:38,938
But

564
00:20:39,495 --> 00:20:41,088
doesn't mean that doesn't exist, but I haven't

565
00:20:41,088 --> 00:20:41,486
seen 1.

566
00:20:42,218 --> 00:20:44,448
Sure. So what we're seeing is if you

567
00:20:44,448 --> 00:20:46,120
said, well, let's get a 50 year term

568
00:20:46,120 --> 00:20:48,269
policy that doesn't really exist, But I'm 25

569
00:20:48,269 --> 00:20:50,180
now. 50 years, I'm gonna be 75.

570
00:20:50,515 --> 00:20:52,934
The likelihood of passing away during that term

571
00:20:53,154 --> 00:20:55,234
is much more likely than the likelihood of

572
00:20:55,234 --> 00:20:56,835
dying during the first 5 years. And so

573
00:20:56,835 --> 00:20:59,006
the insurance company is gonna say, Well, I'm

574
00:20:59,006 --> 00:21:00,918
going to charge you more for that. And

575
00:21:00,918 --> 00:21:03,228
the way that term insurance premium is set

576
00:21:03,228 --> 00:21:05,459
up is that you pay if you're purchasing

577
00:21:05,459 --> 00:21:08,183
whatever that term is, you're gonna pay, a

578
00:21:08,183 --> 00:21:10,679
fixed amount of premium during that

579
00:21:11,057 --> 00:21:13,393
time frame of the policy that doesn't mean

580
00:21:13,531 --> 00:21:14,031
that

581
00:21:14,489 --> 00:21:15,946
the risk is equal

582
00:21:16,817 --> 00:21:18,567
throughout the lifetime of that policy, but it

583
00:21:18,567 --> 00:21:20,874
means that you already know upfront. When I

584
00:21:20,874 --> 00:21:22,624
purchased this time frame of a policy,

585
00:21:23,340 --> 00:21:25,662
I'm going to pay the same cost every

586
00:21:25,662 --> 00:21:27,335
year or every month until the end of

587
00:21:27,335 --> 00:21:28,929
that term. And what happens at the end

588
00:21:28,929 --> 00:21:30,203
of the term is that if you wanted

589
00:21:30,203 --> 00:21:31,580
to renew that

590
00:21:32,195 --> 00:21:33,948
term insurance policy, you're gonna pay a lot

591
00:21:33,948 --> 00:21:36,272
higher premium beat because the time frame that

592
00:21:36,272 --> 00:21:39,137
you're within is much closer to the end

593
00:21:39,137 --> 00:21:39,615
of your life.

594
00:21:40,411 --> 00:21:42,640
So when we look at that whole idea,

595
00:21:42,958 --> 00:21:45,842
it makes sense why term costs less because

596
00:21:45,842 --> 00:21:47,758
less people are passing away during the time

597
00:21:47,758 --> 00:21:49,615
of their term policy. Whereas

598
00:21:50,153 --> 00:21:52,468
everybody who owns a whole life policy throughout

599
00:21:52,468 --> 00:21:54,795
their entire life is passing away, during the

600
00:21:54,795 --> 00:21:57,495
time frame of their policy. And so that

601
00:21:57,495 --> 00:21:58,471
is simply

602
00:21:59,003 --> 00:22:00,989
just not even apples to apples comparison when

603
00:22:00,989 --> 00:22:02,894
you look at the idea of the short

604
00:22:02,894 --> 00:22:05,606
time frame versus the long time frame of

605
00:22:05,606 --> 00:22:07,669
whole life insurance. And the main thing that

606
00:22:07,827 --> 00:22:10,047
I wanna point out with that is because

607
00:22:10,047 --> 00:22:10,865
term ends

608
00:22:11,649 --> 00:22:13,340
and whole life lasts

609
00:22:14,826 --> 00:22:17,527
because of that reason, you're in a position

610
00:22:17,527 --> 00:22:19,672
where when you have the whole life insurance

611
00:22:19,672 --> 00:22:22,249
coverage you have that security for the whole

612
00:22:22,304 --> 00:22:25,000
for your whole life, which then means that

613
00:22:25,000 --> 00:22:28,107
that security that feeling of financial security. You're

614
00:22:28,107 --> 00:22:29,777
able to make better decisions. You're able to

615
00:22:29,777 --> 00:22:30,675
have more guarantees

616
00:22:31,129 --> 00:22:33,197
during that timeframe frame, and you have the

617
00:22:33,197 --> 00:22:36,115
option of maintaining the coverage because you've already

618
00:22:36,313 --> 00:22:37,925
that coverage in place whereas if you

619
00:22:38,537 --> 00:22:40,762
have a term policy, your option to keep

620
00:22:40,762 --> 00:22:42,748
coverage in place your whole life and maintain

621
00:22:42,748 --> 00:22:46,659
that long term, put complete life guarantee that

622
00:22:46,659 --> 00:22:48,489
no matter when I die along the continuum

623
00:22:48,489 --> 00:22:50,160
of my years from now until the end,

624
00:22:51,433 --> 00:22:53,502
I'll get paid out. There's not a guarantee,

625
00:22:54,153 --> 00:22:56,003
that you'll have the same

626
00:22:56,376 --> 00:22:58,282
amount of premium with that term policy. I'm

627
00:22:58,282 --> 00:22:59,950
not sure if I'm communicating that clearly, but

628
00:22:59,950 --> 00:23:01,720
not only are you having the longer

629
00:23:02,188 --> 00:23:04,575
span of financial security. You also have the

630
00:23:04,575 --> 00:23:06,324
guarantee that your cost is not going to

631
00:23:06,324 --> 00:23:08,790
increase during that time frame in order to

632
00:23:08,790 --> 00:23:09,824
keep it in in place.

633
00:23:11,193 --> 00:23:13,904
Yeah. Our friend Todd Lang has actually run

634
00:23:15,021 --> 00:23:17,914
comparisons on this, both the cost of the

635
00:23:18,610 --> 00:23:19,966
insurance, term insurance.

636
00:23:20,779 --> 00:23:23,416
And the possible payouts. He's also then said,

637
00:23:23,656 --> 00:23:25,574
don't forget with the investments you... And you

638
00:23:25,574 --> 00:23:27,593
also have to pay taxes on the investment

639
00:23:27,812 --> 00:23:29,910
where you can access whole life insurance

640
00:23:30,383 --> 00:23:31,815
cash value tax free.

641
00:23:33,088 --> 00:23:35,157
So he... And then when you die,

642
00:23:36,510 --> 00:23:37,226
the investments,

643
00:23:37,639 --> 00:23:39,705
could possibly, depending on what type of investments,

644
00:23:40,102 --> 00:23:41,850
they, you could get a a step up

645
00:23:41,850 --> 00:23:42,509
in basis

646
00:23:43,439 --> 00:23:45,369
of them if they're actually in a qualified

647
00:23:45,505 --> 00:23:45,743
plan,

648
00:23:46,712 --> 00:23:48,860
the secure act 2 actually made it a

649
00:23:48,860 --> 00:23:49,917
much more onerous

650
00:23:50,371 --> 00:23:50,530
taxation,

651
00:23:51,485 --> 00:23:54,048
on the next generation. So You also have

652
00:23:54,048 --> 00:23:55,724
to take those in into consideration of what

653
00:23:55,724 --> 00:23:56,842
you're trying to accomplish.

654
00:23:57,720 --> 00:24:00,833
I actually prepared something today, Rachel, from really

655
00:24:00,833 --> 00:24:02,404
relate to what you were saying is

656
00:24:02,841 --> 00:24:04,668
I don't think people realize that,

657
00:24:05,541 --> 00:24:06,494
at the very beginning,

658
00:24:07,685 --> 00:24:09,908
term insurance was just 1 year insurance. So

659
00:24:09,908 --> 00:24:12,072
it's what was called 1 year renewable term.

660
00:24:12,231 --> 00:24:13,050
So the act

661
00:24:13,506 --> 00:24:15,838
actually said a 25 year old has this

662
00:24:16,294 --> 00:24:18,444
a probability of dying. So we're gonna... We're

663
00:24:18,444 --> 00:24:21,318
gonna actually... What's charge x amount.

664
00:24:21,952 --> 00:24:24,012
The next year then, that they said the

665
00:24:24,012 --> 00:24:25,755
26 year old, it's a little bit more

666
00:24:25,755 --> 00:24:28,000
likely to die, because they're closer to mortality.

667
00:24:28,240 --> 00:24:30,240
We're gonna charge x plus a little bit

668
00:24:30,240 --> 00:24:32,240
more and so on and so forth. And

669
00:24:32,240 --> 00:24:34,572
so it it actually was like a reverse

670
00:24:34,572 --> 00:24:37,279
pyramid, the premium payment kept getting larger, larger

671
00:24:37,279 --> 00:24:37,757
and larger.

672
00:24:38,792 --> 00:24:41,420
And what the insurance companies founded, at a

673
00:24:41,420 --> 00:24:44,384
certain point, a people said, well, I'm not

674
00:24:44,384 --> 00:24:46,001
paying this big insurance

675
00:24:46,458 --> 00:24:47,517
cost anymore

676
00:24:47,894 --> 00:24:49,489
because it's just too much in my family

677
00:24:49,489 --> 00:24:51,084
but budget, and they would drop it, so

678
00:24:51,084 --> 00:24:53,409
they were losing premium coming in. So they...

679
00:24:53,647 --> 00:24:56,028
That's when they actually went to the the

680
00:24:56,028 --> 00:24:58,091
10 year, the 15 year, the 20 year,

681
00:24:58,250 --> 00:24:59,758
the 25, the 30 year.

682
00:25:00,488 --> 00:25:02,714
Because what they then, they they then determine

683
00:25:02,714 --> 00:25:04,623
is they, yes, they're gonna have to charge

684
00:25:04,623 --> 00:25:05,577
more at the beginning.

685
00:25:06,134 --> 00:25:07,645
But because they got more at the beginning,

686
00:25:07,804 --> 00:25:09,633
they didn't have to charge as much at

687
00:25:09,633 --> 00:25:11,884
the end. Well, guess what? That's exactly what

688
00:25:11,884 --> 00:25:14,205
whole life does. And that's why it's much

689
00:25:14,205 --> 00:25:14,705
more

690
00:25:15,325 --> 00:25:18,144
expensive relative to what people think

691
00:25:18,459 --> 00:25:20,687
at the beginning because the cost of the

692
00:25:20,687 --> 00:25:22,996
base premium does not change for your whole

693
00:25:22,996 --> 00:25:23,314
life.

694
00:25:24,190 --> 00:25:26,043
And so I would argue

695
00:25:26,433 --> 00:25:28,820
Yes. Whole life is more expensive at the

696
00:25:28,820 --> 00:25:30,752
beginning, but it gets ridiculously

697
00:25:31,366 --> 00:25:31,866
inexpensive

698
00:25:32,241 --> 00:25:32,957
towards the end.

699
00:25:33,848 --> 00:25:36,102
And because they have actually

700
00:25:36,639 --> 00:25:38,314
had more of the premium at the beginning

701
00:25:38,314 --> 00:25:39,350
to actually then,

702
00:25:40,865 --> 00:25:42,242
make it work for

703
00:25:42,713 --> 00:25:45,283
the company, which then the mutual

704
00:25:45,738 --> 00:25:48,603
holder policy holders actually benefit from that. Mh.

705
00:25:48,842 --> 00:25:50,514
I've said this before, and it it got

706
00:25:50,514 --> 00:25:52,106
missing on the podcast.

707
00:25:52,599 --> 00:25:54,753
What whole life insurance companies really do is

708
00:25:54,753 --> 00:25:57,227
they buy term, and they invest a difference.

709
00:25:57,626 --> 00:26:00,100
They invest your your premium dollars,

710
00:26:00,674 --> 00:26:02,749
they invested in a fixed income, and that

711
00:26:02,749 --> 00:26:04,744
fixed income then is going to develop a

712
00:26:04,744 --> 00:26:06,500
dividend for you, oh and by the way,

713
00:26:06,659 --> 00:26:08,255
it's a tax free dividend,

714
00:26:08,908 --> 00:26:11,136
So it has the same kind of characteristics.

715
00:26:11,296 --> 00:26:12,967
But what I wanted to show people if

716
00:26:12,967 --> 00:26:15,195
you're on Youtube, now I can share this,

717
00:26:15,513 --> 00:26:16,707
and you can stick it.

718
00:26:18,552 --> 00:26:20,699
This is a 39

719
00:26:20,699 --> 00:26:21,357
year old

720
00:26:21,811 --> 00:26:22,288
female,

721
00:26:22,686 --> 00:26:24,037
and it was a 20 year term,

722
00:26:24,673 --> 00:26:26,343
and you can see that the premium is

723
00:26:26,343 --> 00:26:27,217
1150

724
00:26:27,217 --> 00:26:28,979
dollars. For 1000000 dollars.

725
00:26:29,614 --> 00:26:31,042
And and frankly,

726
00:26:31,597 --> 00:26:32,946
this is this is 1 of our clients.

727
00:26:33,105 --> 00:26:34,795
This is 1 of the money advantaged clients

728
00:26:34,930 --> 00:26:37,888
for and they were actually did a whole

729
00:26:37,888 --> 00:26:39,717
life policy, but then they said I wanna

730
00:26:39,717 --> 00:26:41,490
add term to it

731
00:26:41,865 --> 00:26:44,273
because I wanna get closer to my human

732
00:26:44,273 --> 00:26:44,911
life value.

733
00:26:45,708 --> 00:26:47,862
And the idea is, this is actually a

734
00:26:47,862 --> 00:26:50,733
little more expensive term than you can buy

735
00:26:50,733 --> 00:26:51,951
on the open market

736
00:26:52,342 --> 00:26:55,365
because it has another aspect of it. You

737
00:26:55,365 --> 00:26:57,990
can convert it at any time before age

738
00:26:57,990 --> 00:26:58,706
65,

739
00:26:59,359 --> 00:27:02,019
without any medical underwriting. So it has an

740
00:27:02,079 --> 00:27:02,579
additional

741
00:27:03,119 --> 00:27:05,140
feature to it, So it's a little more

742
00:27:05,279 --> 00:27:05,779
expensive

743
00:27:06,254 --> 00:27:07,690
then if you were just go by a

744
00:27:07,690 --> 00:27:10,640
term that didn't have this convert pop possibility.

745
00:27:11,119 --> 00:27:12,018
Then as we,

746
00:27:12,395 --> 00:27:14,468
I don't mean to derail the whole conversation,

747
00:27:14,548 --> 00:27:16,790
but the convert is... So valuable because you

748
00:27:16,790 --> 00:27:18,933
don't have to go through underwriting again to

749
00:27:18,933 --> 00:27:21,314
be able to convert. So even if you

750
00:27:21,314 --> 00:27:23,218
had health concerns crop up during the timeframe

751
00:27:23,218 --> 00:27:24,194
frame between

752
00:27:24,503 --> 00:27:26,570
starting that term policy and the desire to

753
00:27:26,570 --> 00:27:28,636
convert it over into whole life. You don't

754
00:27:28,636 --> 00:27:30,306
have to go through underwriting, you can just

755
00:27:30,306 --> 00:27:32,213
convert off a chunk of that term policy,

756
00:27:32,611 --> 00:27:34,616
and you have that I mean, you could

757
00:27:34,616 --> 00:27:36,610
almost call guaranteed underwriting because you've already gone

758
00:27:36,610 --> 00:27:38,365
through underwriting before, and you don't need to

759
00:27:38,365 --> 00:27:40,917
go through it again. So super powerful strategy

760
00:27:40,917 --> 00:27:42,113
if you're adding on term insurance.

761
00:27:43,404 --> 00:27:45,085
Yes. And then let's say you don't even

762
00:27:45,085 --> 00:27:45,404
convert it.

763
00:27:46,125 --> 00:27:47,965
Now you get to age 58,

764
00:27:48,365 --> 00:27:50,365
and that's that's where the 20 year term

765
00:27:50,365 --> 00:27:50,684
ends.

766
00:27:51,179 --> 00:27:55,348
The next year, the premium goes from 1150

767
00:27:55,645 --> 00:27:57,001
to 12000 dollars,

768
00:27:57,639 --> 00:28:00,612
then the 13000 dollars, and then this 14

769
00:28:01,084 --> 00:28:02,996
and so and so forth. We get all

770
00:28:02,996 --> 00:28:04,451
the way down here to

771
00:28:06,740 --> 00:28:07,990
8 78

772
00:28:08,109 --> 00:28:09,460
and it's 87000

773
00:28:09,460 --> 00:28:12,243
dollars. We get some mortality, pass mortality.

774
00:28:12,800 --> 00:28:14,651
Now all of a sudden, if you notice

775
00:28:15,185 --> 00:28:16,855
at age 81,

776
00:28:17,650 --> 00:28:21,021
and Your cumulative premiums are actually more than

777
00:28:21,021 --> 00:28:21,820
the death benefit.

778
00:28:22,539 --> 00:28:24,937
And people say people will say see. I

779
00:28:24,937 --> 00:28:26,375
told you this isn't a good deal.

780
00:28:27,109 --> 00:28:29,581
Well we agree. That's why that's why we

781
00:28:29,581 --> 00:28:31,096
say you shouldn't do it like this.

782
00:28:31,813 --> 00:28:34,763
But however, this is actually this actually happens

783
00:28:34,763 --> 00:28:35,720
to a lot of people.

784
00:28:36,293 --> 00:28:38,526
When they have this, we actually had a

785
00:28:38,526 --> 00:28:41,954
dentist out out in Es California that actually

786
00:28:41,954 --> 00:28:43,788
called the money advantage, and I had a

787
00:28:43,788 --> 00:28:46,437
meeting with them. And he was 74

788
00:28:46,437 --> 00:28:48,855
years old and his term had

789
00:28:49,234 --> 00:28:52,190
run out 4 years prior at 8 70,

790
00:28:52,843 --> 00:28:54,678
and we started doing an analysis and he

791
00:28:54,678 --> 00:28:55,635
had some health issues,

792
00:28:56,432 --> 00:28:58,745
and he couldn't get anymore. So he was

793
00:28:58,745 --> 00:29:01,616
actually paying over a hundred thousand dollars a

794
00:29:01,616 --> 00:29:02,116
year

795
00:29:02,588 --> 00:29:03,862
for 800000

796
00:29:03,862 --> 00:29:06,252
dollars of death benefit. And then it kept

797
00:29:06,252 --> 00:29:07,606
going up. And as you can see,

798
00:29:08,403 --> 00:29:11,212
just in this time period between here

799
00:29:11,604 --> 00:29:14,656
and here, that's 1000000 dollars of premium

800
00:29:15,113 --> 00:29:15,853
in only

801
00:29:16,310 --> 00:29:18,703
6 years or 7 years. 7 years.

802
00:29:19,420 --> 00:29:20,638
But Believe this

803
00:29:21,509 --> 00:29:23,913
In this case, you would be penalized for

804
00:29:23,969 --> 00:29:24,604
living longer.

805
00:29:25,397 --> 00:29:27,699
If you wanted to maintain term coverage and

806
00:29:27,699 --> 00:29:29,841
you lived until age 91 or 95.

807
00:29:30,255 --> 00:29:32,095
Or a hundred and 2, You would be

808
00:29:32,095 --> 00:29:34,335
in a position where it wouldn't make sense

809
00:29:34,335 --> 00:29:35,934
because financially, you'd pay more to keep your

810
00:29:35,934 --> 00:29:37,455
coverage than you're gonna get paid out in

811
00:29:37,455 --> 00:29:37,934
debt benefit.

812
00:29:39,466 --> 00:29:41,534
Well, you could say, yes, it doesn't make

813
00:29:41,534 --> 00:29:43,124
sense. If if you if you start that

814
00:29:43,124 --> 00:29:46,146
from your the original strategy. But when you

815
00:29:46,146 --> 00:29:46,941
get to age,

816
00:29:47,433 --> 00:29:50,695
84 and you've already put in 1600000.0.

817
00:29:51,092 --> 00:29:53,479
If you just stop, you don't get anything.

818
00:29:54,369 --> 00:29:56,124
But if you then say, well, I'm gonna

819
00:29:56,124 --> 00:29:58,916
put in another 250000

820
00:29:58,916 --> 00:30:01,070
because lease, now I've paid in 1.8.

821
00:30:01,564 --> 00:30:03,801
If I just stop, I'm gonna lose 1.8,

822
00:30:03,961 --> 00:30:06,039
but if I continue, at least, I'm gonna

823
00:30:06,039 --> 00:30:08,196
recoup a million dollars of the 1.8.

824
00:30:08,516 --> 00:30:10,918
Mh. And that's... And that is the example

825
00:30:10,997 --> 00:30:13,299
I've given with the hot air balloon. This

826
00:30:13,299 --> 00:30:15,704
is what happens with these term policies.

827
00:30:16,157 --> 00:30:18,062
It's like a hot air balloon it's going

828
00:30:18,062 --> 00:30:21,337
up. The premiums getting higher and higher and

829
00:30:21,337 --> 00:30:21,656
higher,

830
00:30:22,372 --> 00:30:24,122
and now I'll sudden the hot air balloon

831
00:30:24,122 --> 00:30:24,997
catches on fire.

832
00:30:25,489 --> 00:30:26,999
And you're like, well, I can't stay in

833
00:30:26,999 --> 00:30:27,817
the balloon

834
00:30:28,271 --> 00:30:29,860
because I'm gonna die from the fire, but

835
00:30:29,940 --> 00:30:32,404
I can't jump out because I'm I'm too

836
00:30:32,404 --> 00:30:33,993
high off the ground, and I'm gonna die.

837
00:30:34,804 --> 00:30:37,299
So you're really in a position where neither

838
00:30:37,996 --> 00:30:40,549
situation, neither decision is really good for you.

839
00:30:40,949 --> 00:30:43,832
Mh. And that is that is why when

840
00:30:43,832 --> 00:30:45,423
you do term insurance,

841
00:30:46,776 --> 00:30:49,004
especially at a young age, a lot of

842
00:30:49,004 --> 00:30:49,902
people cannot

843
00:30:50,356 --> 00:30:50,856
visualize,

844
00:30:51,883 --> 00:30:54,273
that they are their own mortality, and they

845
00:30:54,273 --> 00:30:57,061
may they may need or frankly, they may

846
00:30:57,061 --> 00:30:58,575
want to have a death of benefit.

847
00:30:59,069 --> 00:31:00,745
And the other thing that they have always

848
00:31:00,745 --> 00:31:02,980
heard is well over a long period of

849
00:31:02,980 --> 00:31:03,300
time,

850
00:31:03,938 --> 00:31:07,132
the investments are gonna average 7 8 09:10

851
00:31:07,132 --> 00:31:07,371
percent.

852
00:31:08,184 --> 00:31:10,012
But once again, now we come back to

853
00:31:10,012 --> 00:31:12,873
the time period. What is your time period.

854
00:31:13,191 --> 00:31:15,178
Not over the long period of time, what

855
00:31:15,178 --> 00:31:17,086
is your time period and that is called.

856
00:31:17,579 --> 00:31:18,698
Speak with of return risk.

857
00:31:19,497 --> 00:31:20,855
Yes. I feel like there's so much more

858
00:31:20,855 --> 00:31:22,453
we could unpack Bruce. Was just such a

859
00:31:22,453 --> 00:31:22,953
powerful

860
00:31:23,492 --> 00:31:24,930
visual to be able to see those actual

861
00:31:24,930 --> 00:31:26,540
numbers. And I want you to take 1

862
00:31:26,540 --> 00:31:29,008
thing away if you're watching and listening. We're

863
00:31:29,008 --> 00:31:31,875
not saying term insurance is bad because you

864
00:31:31,875 --> 00:31:33,308
want to be in a position where you're

865
00:31:33,308 --> 00:31:35,473
getting as much... Death benefit as you can,

866
00:31:36,190 --> 00:31:38,500
and you're using whole life insurance to be

867
00:31:38,500 --> 00:31:40,173
able to build up that cash value and

868
00:31:40,173 --> 00:31:43,874
have accessible capital during your lifetime and also

869
00:31:44,094 --> 00:31:46,331
making sure you have enough death benefit that

870
00:31:46,331 --> 00:31:48,009
if you were to pass away, you're in

871
00:31:48,009 --> 00:31:50,007
a position where your family's gonna get as

872
00:31:50,007 --> 00:31:53,957
much as possible to cover your human life

873
00:31:54,015 --> 00:31:56,966
value. That's H v or economic, human life

874
00:31:56,966 --> 00:31:58,801
value. What that means is the amount of

875
00:31:58,801 --> 00:32:00,795
money that you would have made if you

876
00:32:00,795 --> 00:32:02,571
continued working in your

877
00:32:02,961 --> 00:32:04,866
capacity that you're in right now throughout the

878
00:32:04,866 --> 00:32:06,374
rest of your life, making sure that all

879
00:32:06,374 --> 00:32:08,516
of that economic value is transferred to your

880
00:32:08,516 --> 00:32:08,754
family,

881
00:32:09,548 --> 00:32:11,720
if you were to no longer be here

882
00:32:11,720 --> 00:32:14,359
to produce that on your own. So let's

883
00:32:14,359 --> 00:32:16,600
talk really quickly about the idea, bruce you

884
00:32:16,600 --> 00:32:18,519
touched on here with the sequence of risk

885
00:32:18,519 --> 00:32:18,759
returns.

886
00:32:19,732 --> 00:32:21,480
When you put money into a whole life

887
00:32:21,480 --> 00:32:23,728
insurance policy, you have a guarantee

888
00:32:24,181 --> 00:32:27,200
at a very minimum, especially, I wanna clarify

889
00:32:27,200 --> 00:32:29,924
something. If it's specially designed and ideally designed,

890
00:32:30,083 --> 00:32:31,838
you're going to have even more advantages and

891
00:32:31,838 --> 00:32:34,252
benefits, but just even a bare bones

892
00:32:34,629 --> 00:32:37,182
typical whole life insurance policy. You are going

893
00:32:37,182 --> 00:32:39,766
to have a rise cash value that's guaranteed

894
00:32:40,298 --> 00:32:42,387
to be a certain dollar amount or more

895
00:32:42,523 --> 00:32:45,066
at a particular point in time. And when

896
00:32:45,066 --> 00:32:46,710
you use the buy term invest the difference

897
00:32:46,829 --> 00:32:48,601
strategy. There's no way you can guarantee

898
00:32:49,690 --> 00:32:51,598
the dollar amount that you'll have in your

899
00:32:51,598 --> 00:32:53,744
investment strategy. So you can guarantee if you

900
00:32:53,744 --> 00:32:55,254
pass away during the time frame of the

901
00:32:55,254 --> 00:32:56,862
term insurance strategy that you'll get the death

902
00:32:56,862 --> 00:32:58,797
benefit payout, but you cannot guarantee

903
00:32:59,175 --> 00:33:03,003
the amount of dollars in your investment strategy.

904
00:33:03,242 --> 00:33:05,316
And that's because of the

905
00:33:06,129 --> 00:33:08,041
just the different levels of risk. So when

906
00:33:08,041 --> 00:33:08,939
you have volatility,

907
00:33:09,873 --> 00:33:12,423
you have the potential of loss, you don't

908
00:33:12,423 --> 00:33:14,255
necessarily even have a guarantee that you're going

909
00:33:14,255 --> 00:33:15,131
to have more,

910
00:33:15,863 --> 00:33:16,920
then you've invested

911
00:33:17,375 --> 00:33:17,875
or

912
00:33:18,250 --> 00:33:19,761
equal to what you've invested. You can lose

913
00:33:19,761 --> 00:33:21,591
money. You can actually go backwards from what

914
00:33:21,591 --> 00:33:23,183
you've put in your or your seed capital,

915
00:33:23,421 --> 00:33:24,478
your your

916
00:33:24,869 --> 00:33:27,997
your inputs into your investment strategy. And so

917
00:33:28,134 --> 00:33:29,489
when you look at that, I think there's

918
00:33:29,489 --> 00:33:31,241
something that we've talked about multiple times on

919
00:33:31,241 --> 00:33:33,653
the show before, but there's a difference between

920
00:33:33,964 --> 00:33:37,636
a historical average, which is then usually said

921
00:33:37,636 --> 00:33:39,632
something like, oh, well, you can get 8

922
00:33:39,632 --> 00:33:41,228
percent or you can get 12 percent or

923
00:33:41,228 --> 00:33:44,111
you can get 7 percent average because the

924
00:33:44,111 --> 00:33:45,804
stock markets performed average

925
00:33:46,178 --> 00:33:48,086
in the past depending on your timeframe frame,

926
00:33:48,961 --> 00:33:52,325
what that historical average is that averages arrived

927
00:33:52,325 --> 00:33:54,804
at by adding the positives,

928
00:33:55,525 --> 00:33:58,085
subtracting the negatives and then dividing over the

929
00:33:58,085 --> 00:33:59,180
time period. So

930
00:33:59,538 --> 00:34:01,930
whatever the returns are positive or negative. You're

931
00:34:01,930 --> 00:34:04,481
just doing a simple mathematical plus minus calculation,

932
00:34:04,641 --> 00:34:06,953
and then and then dividing over whatever it

933
00:34:06,953 --> 00:34:09,913
was 20 years, of those returns, and that's

934
00:34:09,913 --> 00:34:12,777
a mathematical average. You can't take that number

935
00:34:12,777 --> 00:34:14,980
and expect your investment

936
00:34:15,417 --> 00:34:18,602
to perform on a guaranteed basis with that

937
00:34:18,602 --> 00:34:21,786
positive number every single year, and it's it's

938
00:34:21,786 --> 00:34:22,286
very

939
00:34:23,711 --> 00:34:25,881
malicious. Is that a word? It's a fallacy.

940
00:34:26,415 --> 00:34:27,925
I'm making up words here. It's

941
00:34:28,641 --> 00:34:29,936
it's a problem

942
00:34:30,549 --> 00:34:31,049
to

943
00:34:31,518 --> 00:34:33,688
have its faulty logic. It's

944
00:34:34,062 --> 00:34:36,072
it's improper reasoning

945
00:34:36,447 --> 00:34:38,196
to think that you are going to get

946
00:34:38,196 --> 00:34:41,655
an average, going forward or to assume even

947
00:34:41,871 --> 00:34:43,246
that a positive

948
00:34:43,781 --> 00:34:44,281
average

949
00:34:44,656 --> 00:34:46,940
historical rate of return means that I will

950
00:34:47,298 --> 00:34:50,568
generally average this in the future going forward.

951
00:34:50,967 --> 00:34:51,467
And

952
00:34:52,004 --> 00:34:53,599
I think the easiest way to think about

953
00:34:53,599 --> 00:34:55,275
this is that if you take a hundred

954
00:34:55,275 --> 00:34:55,514
dollars.

955
00:34:56,152 --> 00:34:56,891
And you

956
00:34:57,602 --> 00:35:00,709
get a 100 percent return in the first

957
00:35:00,709 --> 00:35:00,869
year.

958
00:35:01,665 --> 00:35:03,657
That's gonna be we're now 200 dollars.

959
00:35:04,629 --> 00:35:06,786
And now we have a 50 percent loss.

960
00:35:07,665 --> 00:35:08,804
Now we're back to

961
00:35:09,262 --> 00:35:09,981
a hundred dollars.

962
00:35:12,706 --> 00:35:15,490
We've just broken even. If we had returns

963
00:35:15,490 --> 00:35:16,706
of plus 100

964
00:35:16,922 --> 00:35:17,718
negative 50.

965
00:35:18,847 --> 00:35:21,630
We'd be in a position that we would

966
00:35:21,630 --> 00:35:22,903
say, well, this is,

967
00:35:25,545 --> 00:35:27,224
let's look at the the rate of return

968
00:35:27,224 --> 00:35:28,585
on that. So plus 100,

969
00:35:29,144 --> 00:35:31,784
minus 50. That number is 50. Divide that

970
00:35:31,784 --> 00:35:34,119
by the 2 years, of that time period.

971
00:35:34,519 --> 00:35:36,039
That's a 25 percent rate of return.

972
00:35:36,839 --> 00:35:38,440
So I should have more money than a

973
00:35:38,440 --> 00:35:39,559
hundred that I put in right because it's

974
00:35:39,559 --> 00:35:41,659
a 25 percent average rate of return

975
00:35:42,054 --> 00:35:43,654
wrong, we just said we went from a

976
00:35:43,654 --> 00:35:46,214
hundred to to 200 back to 100 dollars.

977
00:35:46,375 --> 00:35:48,694
You have exactly the same number of dollars,

978
00:35:48,855 --> 00:35:50,309
the amount of money that you put in

979
00:35:50,309 --> 00:35:51,429
in the first place, and it could be

980
00:35:51,429 --> 00:35:53,690
argued that you even have less if

981
00:35:53,989 --> 00:35:55,829
inflation has occurred, and you're in a position

982
00:35:55,829 --> 00:35:57,764
where that 100 dollars buys even less 2

983
00:35:57,764 --> 00:35:59,118
years later than it did when you originally

984
00:35:59,118 --> 00:36:01,189
put it in, it was nothing like a

985
00:36:01,189 --> 00:36:02,942
positive 25 percent rate of return.

986
00:36:03,818 --> 00:36:07,335
So as it's very challenging to use historical

987
00:36:07,335 --> 00:36:08,313
averages to

988
00:36:09,166 --> 00:36:11,633
make conclusions about what you think your investments

989
00:36:11,633 --> 00:36:14,035
are gonna do, especially when you don't control

990
00:36:14,035 --> 00:36:16,660
the investments, and you're not actively investing. It's

991
00:36:16,660 --> 00:36:19,699
not something that you are in the... You

992
00:36:19,699 --> 00:36:21,134
you have boots on the ground and you

993
00:36:21,134 --> 00:36:22,490
understand the investment landscape.

994
00:36:22,969 --> 00:36:24,883
So, Bruce, I know that you have a

995
00:36:24,883 --> 00:36:26,318
lot that you probably would add to that

996
00:36:26,318 --> 00:36:27,675
with the whole sequence of returns risk.

997
00:36:29,603 --> 00:36:31,273
So how can we think about that from

998
00:36:31,273 --> 00:36:32,228
a healthier perspective?

999
00:36:33,898 --> 00:36:35,967
Well, I think if you go back to

1000
00:36:35,967 --> 00:36:38,772
what... Doctor Wade fa was talking about is

1001
00:36:38,772 --> 00:36:39,012
that

1002
00:36:39,969 --> 00:36:41,505
there are periods of time

1003
00:36:42,362 --> 00:36:45,711
in in investing in traditional investing that you

1004
00:36:45,711 --> 00:36:47,878
do not get very good rates of return

1005
00:36:47,878 --> 00:36:50,427
or any rates of return or negative rates

1006
00:36:50,427 --> 00:36:50,745
of return.

1007
00:36:51,542 --> 00:36:53,692
This is very prevalent in the 2 thousands

1008
00:36:53,692 --> 00:36:55,046
when you had the dot com crash,

1009
00:36:55,699 --> 00:36:57,851
in the early 2000 and the great recession

1010
00:36:57,851 --> 00:36:58,808
in 2008.

1011
00:36:59,286 --> 00:37:00,960
And if you look at the S and

1012
00:37:01,040 --> 00:37:03,533
P 500 over that time period, I believe

1013
00:37:04,244 --> 00:37:06,344
it was about 0.79

1014
00:37:06,964 --> 00:37:09,844
over that 10 year period, per year, 0.79.

1015
00:37:10,324 --> 00:37:12,484
So then if you... In a retirement,

1016
00:37:13,138 --> 00:37:15,393
situation or just because you need money

1017
00:37:15,770 --> 00:37:17,206
to to to do other things,

1018
00:37:17,844 --> 00:37:20,715
you actually take money off your portfolio at

1019
00:37:20,715 --> 00:37:22,013
456

1020
00:37:22,071 --> 00:37:24,885
percent and it's only growing by 0.79

1021
00:37:24,885 --> 00:37:27,605
percent, then it's actually going backwards and you

1022
00:37:27,605 --> 00:37:30,005
actually have to make a heck of a

1023
00:37:30,005 --> 00:37:33,618
lot more money to overcome the losses just

1024
00:37:33,618 --> 00:37:35,296
to get back to even because you're taking

1025
00:37:35,296 --> 00:37:37,454
money off of it also. So you have

1026
00:37:37,454 --> 00:37:40,192
to to summarize that, you actually have to

1027
00:37:40,411 --> 00:37:41,210
the stock market,

1028
00:37:41,704 --> 00:37:43,456
or the investment has to make up for

1029
00:37:43,456 --> 00:37:45,289
the loss, and it has to make up

1030
00:37:45,289 --> 00:37:46,643
for the amount of money you're taking it

1031
00:37:46,643 --> 00:37:47,679
off of that particular.

1032
00:37:48,889 --> 00:37:51,460
And that is really detrimental in somebody's

1033
00:37:52,075 --> 00:37:55,182
portfolio if they're just going into retirement.

1034
00:37:56,554 --> 00:37:59,191
So they have x amount of dollars. They

1035
00:37:59,191 --> 00:38:01,429
lose a lot early. It's hard for them

1036
00:38:01,429 --> 00:38:03,586
then to make up that loss over the

1037
00:38:03,586 --> 00:38:04,785
next x amount of years.

1038
00:38:05,360 --> 00:38:06,820
However, if the sequences,

1039
00:38:07,440 --> 00:38:09,760
you've gone through retirement for about 20 years,

1040
00:38:10,000 --> 00:38:11,619
and then you have a major

1041
00:38:12,239 --> 00:38:12,559
drop.

1042
00:38:13,372 --> 00:38:15,919
Now because you're closer to mortality,

1043
00:38:16,715 --> 00:38:18,864
it's not gonna hurt you as much. So

1044
00:38:18,864 --> 00:38:21,665
what Doctor Wade says is And he's proven

1045
00:38:21,665 --> 00:38:22,802
it with 50

1046
00:38:23,734 --> 00:38:26,041
monte carlo simulations, which is really just a

1047
00:38:26,041 --> 00:38:27,952
way to back test and see how these

1048
00:38:27,952 --> 00:38:29,702
investments have done over the last...

1049
00:38:30,354 --> 00:38:32,831
X amount of years. He says if you

1050
00:38:32,831 --> 00:38:34,749
would've have not have taken money out on

1051
00:38:34,749 --> 00:38:35,628
the down years,

1052
00:38:36,667 --> 00:38:38,205
then you're actually

1053
00:38:38,598 --> 00:38:41,304
can mitigate the risk of sequencing term risk?

1054
00:38:41,701 --> 00:38:43,690
Well everybody should be shouting at the podcast

1055
00:38:43,690 --> 00:38:45,043
right now And said, yeah, but I need

1056
00:38:45,043 --> 00:38:46,634
my money out of my investments at that

1057
00:38:46,634 --> 00:38:46,793
time?

1058
00:38:47,603 --> 00:38:49,427
And he said, no, what you have done

1059
00:38:49,427 --> 00:38:52,203
over the... Your career is you've actually saved

1060
00:38:52,203 --> 00:38:52,703
money

1061
00:38:53,075 --> 00:38:54,820
in whole life insurance.

1062
00:38:55,789 --> 00:38:57,786
And now on the down years instead of

1063
00:38:57,786 --> 00:38:59,944
taking out of your investments, you take loans

1064
00:38:59,944 --> 00:39:02,341
against your whole life insurance, and you live

1065
00:39:02,341 --> 00:39:03,060
off of that,

1066
00:39:03,635 --> 00:39:06,594
That way, now the the stress on the

1067
00:39:06,594 --> 00:39:09,155
investments is just to overcome the investment loss

1068
00:39:09,155 --> 00:39:11,155
is not the additional money you take out.

1069
00:39:11,889 --> 00:39:14,204
Now if you're an astute person, which our

1070
00:39:14,204 --> 00:39:16,758
buddy fritz always is listening to the podcast

1071
00:39:16,758 --> 00:39:16,838
is,

1072
00:39:17,875 --> 00:39:19,871
you would say to yourself. Now wait a

1073
00:39:19,871 --> 00:39:21,795
minute, But if I would have had that

1074
00:39:21,795 --> 00:39:23,782
extra money that I put in into whole

1075
00:39:23,782 --> 00:39:25,690
life insurance, and I would have been putting

1076
00:39:25,690 --> 00:39:27,359
in it into the investments,

1077
00:39:27,995 --> 00:39:29,347
I would have even more money.

1078
00:39:29,998 --> 00:39:32,627
And doctor Wade Faust is wait a minute.

1079
00:39:33,503 --> 00:39:35,415
That actually is not true because what I

1080
00:39:35,415 --> 00:39:36,871
can teach you now is

1081
00:39:37,486 --> 00:39:38,522
you can actually...

1082
00:39:39,253 --> 00:39:39,753
Do

1083
00:39:40,288 --> 00:39:43,255
more equity or are not a safe of

1084
00:39:43,869 --> 00:39:44,846
of investing

1085
00:39:45,222 --> 00:39:47,370
because your safe investment money is in your

1086
00:39:47,370 --> 00:39:48,086
whole life insurance.

1087
00:39:48,817 --> 00:39:51,126
And that it can actually recover faster that

1088
00:39:51,126 --> 00:39:51,285
way.

1089
00:39:52,081 --> 00:39:54,549
So he had thought of all those different

1090
00:39:54,549 --> 00:39:57,755
variables in his research. And I think that

1091
00:39:57,755 --> 00:40:00,074
is really what comes down to. We're not

1092
00:40:00,074 --> 00:40:02,715
saying buy term and invest the difference can't

1093
00:40:02,715 --> 00:40:02,954
work.

1094
00:40:03,675 --> 00:40:06,400
We're just saying there's... Sequence of return risk

1095
00:40:06,400 --> 00:40:08,171
brings that into

1096
00:40:08,624 --> 00:40:11,643
a reality that it may not work for

1097
00:40:11,643 --> 00:40:13,335
you. And there is an alternative

1098
00:40:13,884 --> 00:40:17,400
to mitigate that sequence of return risk. Mh.

1099
00:40:18,119 --> 00:40:20,276
Bruce, I think there's so much to this,

1100
00:40:20,436 --> 00:40:20,995
and I think...

1101
00:40:21,807 --> 00:40:23,720
As we continue to explore the conversation. I

1102
00:40:23,720 --> 00:40:25,314
mean, clearly, you and I are proponents of

1103
00:40:25,314 --> 00:40:27,785
whole life insurance, but it's not because of

1104
00:40:27,785 --> 00:40:30,352
any other reason, then it is a very

1105
00:40:30,352 --> 00:40:31,730
powerful strategy for

1106
00:40:32,188 --> 00:40:33,944
overcoming a lot of these challenges and really

1107
00:40:33,944 --> 00:40:35,540
being able to put people in a better

1108
00:40:35,540 --> 00:40:38,909
position with more guarantees and more confidence for

1109
00:40:38,909 --> 00:40:41,549
the future. And so I think it is

1110
00:40:41,549 --> 00:40:42,049
challenging

1111
00:40:42,670 --> 00:40:43,170
to

1112
00:40:43,549 --> 00:40:46,840
maybe shift a mindset that you have already

1113
00:40:46,840 --> 00:40:47,956
if you're in a position of saying well,

1114
00:40:48,116 --> 00:40:49,631
whole life insurance just isn't for me or

1115
00:40:49,631 --> 00:40:51,385
it's too expensive or I should, you know,

1116
00:40:51,545 --> 00:40:54,436
just put my money into determines instead, and

1117
00:40:54,908 --> 00:40:57,693
invest the difference. So we're helping you be

1118
00:40:57,693 --> 00:40:59,205
able to think through what that actually means.

1119
00:40:59,444 --> 00:41:00,797
There's 2 other things I want to bring

1120
00:41:00,797 --> 00:41:03,105
in really quickly as we're, coming to a

1121
00:41:03,105 --> 00:41:04,003
close here, but

1122
00:41:04,313 --> 00:41:07,097
Bruce, you mentioned this before that the returns

1123
00:41:07,097 --> 00:41:08,925
in your investments may be taxable.

1124
00:41:09,482 --> 00:41:11,947
So often when you do see a rate

1125
00:41:11,947 --> 00:41:13,617
of return that you're going to get in

1126
00:41:13,617 --> 00:41:14,070
some

1127
00:41:14,429 --> 00:41:17,705
mutual fund or stock portfolio, you're in a

1128
00:41:17,705 --> 00:41:20,421
position where you're seeing, maybe the historical average.

1129
00:41:20,661 --> 00:41:22,587
So we've already showed how that historical average

1130
00:41:22,587 --> 00:41:24,092
can be really misleading. It doesn't mean you're

1131
00:41:24,092 --> 00:41:25,598
gonna get a positive growth of that number

1132
00:41:25,598 --> 00:41:28,133
every year going forward. But also what it

1133
00:41:28,133 --> 00:41:28,371
means,

1134
00:41:29,179 --> 00:41:30,955
in addition to that, that you might have

1135
00:41:31,333 --> 00:41:33,885
low down years in the beginning, which are

1136
00:41:33,885 --> 00:41:34,682
really hard to

1137
00:41:35,320 --> 00:41:37,633
overcome, it also means that you're probably not

1138
00:41:37,633 --> 00:41:40,520
seeing in that number, management fees or the

1139
00:41:40,520 --> 00:41:42,115
impact of those fees that are gonna be

1140
00:41:42,115 --> 00:41:44,588
taken out. And so you're not gonna experience

1141
00:41:44,588 --> 00:41:47,152
that full rate of return, if also isn't

1142
00:41:47,152 --> 00:41:47,652
usually

1143
00:41:48,026 --> 00:41:49,376
showing how that

1144
00:41:49,853 --> 00:41:53,110
investment is taxable. So if it's taxable, you're

1145
00:41:53,110 --> 00:41:54,643
gonna have to reduce again

1146
00:41:54,953 --> 00:41:57,175
what your projected return is. And when you

1147
00:41:57,175 --> 00:41:59,557
look over at whole life insurance. We're not

1148
00:41:59,557 --> 00:42:00,747
gonna get into a lot of the details

1149
00:42:00,747 --> 00:42:03,549
of the taxation, but it's a powerful tax

1150
00:42:03,858 --> 00:42:06,585
tool, there's a lot of tax advantages. As

1151
00:42:06,721 --> 00:42:08,788
this cash value is growing,

1152
00:42:09,344 --> 00:42:09,981
tax deferred.

1153
00:42:10,617 --> 00:42:12,222
You'll pay tax in the end if you

1154
00:42:12,222 --> 00:42:13,576
take out more than what you've put in,

1155
00:42:13,815 --> 00:42:15,725
more than your cost basis. But the point

1156
00:42:15,725 --> 00:42:17,079
over here is that you can look at

1157
00:42:17,079 --> 00:42:19,228
your cash value growth and know that that

1158
00:42:19,228 --> 00:42:19,728
is

1159
00:42:20,278 --> 00:42:20,778
the

1160
00:42:21,235 --> 00:42:23,388
return or the amount of cash that you'll

1161
00:42:23,388 --> 00:42:26,098
have after tax. If you pay tax on

1162
00:42:26,098 --> 00:42:28,545
the seed with whole life insurance, you'll not

1163
00:42:28,664 --> 00:42:31,304
and you use the policy properly. You won't

1164
00:42:31,304 --> 00:42:32,284
pay tax again

1165
00:42:32,585 --> 00:42:35,464
on that money. So what I mean is

1166
00:42:35,464 --> 00:42:37,708
that you... Had it grow tax deferred as

1167
00:42:37,708 --> 00:42:39,455
long as you use it properly, you will

1168
00:42:39,455 --> 00:42:41,441
be able to access that capital tax free,

1169
00:42:41,759 --> 00:42:43,506
and then you also have the death benefit

1170
00:42:43,506 --> 00:42:45,984
payout to your heirs income tax free. So

1171
00:42:45,984 --> 00:42:48,164
you have a tax advantage on the insurance

1172
00:42:48,304 --> 00:42:50,065
side, where if you look at the cash

1173
00:42:50,065 --> 00:42:52,005
value amount that you'll have, that is

1174
00:42:52,545 --> 00:42:55,915
already accounting for... It's a net net net

1175
00:42:55,915 --> 00:42:58,230
of all of the things that the investment

1176
00:42:58,230 --> 00:42:58,730
returns

1177
00:42:59,347 --> 00:43:01,662
have not yet taken out, things like taxes

1178
00:43:01,662 --> 00:43:02,141
and fees.

1179
00:43:03,273 --> 00:43:05,121
The other thing I wanna mention is that

1180
00:43:05,256 --> 00:43:05,756
with

1181
00:43:07,399 --> 00:43:10,256
a whole life policy versus your investments depending

1182
00:43:10,256 --> 00:43:11,526
on where you're putting your investments.

1183
00:43:12,098 --> 00:43:14,590
You may, on the investment side, have to

1184
00:43:14,807 --> 00:43:16,958
pay additional fees if you wanna access your

1185
00:43:16,958 --> 00:43:19,923
capital early. Usually, this is in plans. And

1186
00:43:19,923 --> 00:43:21,761
if you're accessing before the age of 59

1187
00:43:21,761 --> 00:43:22,900
and a half where you're

1188
00:43:23,279 --> 00:43:23,678
withdrawing,

1189
00:43:24,557 --> 00:43:27,441
you have to pay a qualifying early withdrawal

1190
00:43:27,441 --> 00:43:30,216
penalty on that capital. Whereas with cash value

1191
00:43:30,216 --> 00:43:32,222
and a whole life insurance policy, you have

1192
00:43:32,277 --> 00:43:33,625
access to that capital,

1193
00:43:34,434 --> 00:43:36,422
in multiple ways. The ideal way is to

1194
00:43:36,422 --> 00:43:37,536
borrow against your policy.

1195
00:43:38,253 --> 00:43:39,707
Again, we'll leave that for another

1196
00:43:40,082 --> 00:43:41,673
conversation if you're not familiar with that topic.

1197
00:43:41,833 --> 00:43:43,320
We'd love to be able to unpack that

1198
00:43:43,599 --> 00:43:45,119
In future episodes, we've done that in the

1199
00:43:45,119 --> 00:43:47,599
past as well, but you are able to

1200
00:43:47,599 --> 00:43:49,440
look at the cash value dollar amounts and

1201
00:43:49,440 --> 00:43:50,739
recognize that that is

1202
00:43:52,170 --> 00:43:54,876
already accounting for things like taxes and fees.

1203
00:43:55,433 --> 00:43:57,741
You don't have to reduce them out of

1204
00:43:57,741 --> 00:43:59,906
your cash value dollar amount. So that is

1205
00:43:59,906 --> 00:44:01,842
something that gives you a powerful

1206
00:44:02,219 --> 00:44:02,719
advantage

1207
00:44:03,097 --> 00:44:03,814
to then say,

1208
00:44:04,612 --> 00:44:04,851
what...

1209
00:44:05,808 --> 00:44:07,483
If by term invest the difference has all

1210
00:44:07,483 --> 00:44:09,655
these problems and challenges. What is the opposite?

1211
00:44:09,815 --> 00:44:11,735
What can we do instead? And what we

1212
00:44:11,735 --> 00:44:13,434
would suggest is to think

1213
00:44:13,894 --> 00:44:14,855
about insurance,

1214
00:44:15,414 --> 00:44:16,875
not just as

1215
00:44:17,347 --> 00:44:19,734
insurance only. Because the cool thing is or

1216
00:44:19,734 --> 00:44:21,586
maybe it's cool, maybe it's profound

1217
00:44:22,120 --> 00:44:23,473
is that if you use whole life insurance,

1218
00:44:23,632 --> 00:44:24,927
that doesn't mean you are

1219
00:44:26,192 --> 00:44:28,655
prohibited from investing. It doesn't mean you only

1220
00:44:28,655 --> 00:44:30,799
put money into a life insurance policy. You

1221
00:44:30,799 --> 00:44:33,444
have the ability to use that as capital

1222
00:44:33,739 --> 00:44:34,239
to

1223
00:44:34,549 --> 00:44:35,049
fund

1224
00:44:35,427 --> 00:44:37,503
investments. So you're in a position where you

1225
00:44:37,503 --> 00:44:39,738
can use that capital in 2 ways. It's

1226
00:44:39,738 --> 00:44:41,675
an and asset you can put your capital

1227
00:44:41,813 --> 00:44:43,351
into a life insurance policy

1228
00:44:43,663 --> 00:44:45,327
you can borrow against it and use that

1229
00:44:45,327 --> 00:44:48,520
capital in outside investments. And so Nelson Nash

1230
00:44:48,654 --> 00:44:50,318
is really the beginning,

1231
00:44:50,889 --> 00:44:52,807
sought leader on this whole idea called becoming

1232
00:44:52,807 --> 00:44:55,125
your own banker, and I think a better

1233
00:44:55,125 --> 00:44:55,524
mantra,

1234
00:44:56,803 --> 00:44:58,321
rather than by term investor the difference would

1235
00:44:58,321 --> 00:44:59,600
be become your own banker.

1236
00:45:00,412 --> 00:45:02,881
And I'm just gonna give that back to

1237
00:45:02,961 --> 00:45:04,177
Nelson Nash. He

1238
00:45:04,713 --> 00:45:07,580
really made this known and popularized and brought

1239
00:45:07,580 --> 00:45:09,269
it out to the public to say, you

1240
00:45:09,269 --> 00:45:11,427
can put cash into a whole life insurance

1241
00:45:11,427 --> 00:45:13,425
policy and not just think about the insurance

1242
00:45:13,425 --> 00:45:16,062
component, not just think about the fact that

1243
00:45:16,062 --> 00:45:18,220
you'll get a death benefit payout whenever you

1244
00:45:18,220 --> 00:45:20,308
die, during the span of your entire lifetime.

1245
00:45:20,547 --> 00:45:22,142
But the most important thing is that you

1246
00:45:22,142 --> 00:45:24,454
have a need for capital and accessing cash

1247
00:45:24,454 --> 00:45:26,209
all throughout your lifetime for any kind of

1248
00:45:26,209 --> 00:45:26,709
purchases

1249
00:45:27,086 --> 00:45:29,900
and if you have a tool to store

1250
00:45:29,900 --> 00:45:33,420
capital powerfully, this savings tool is more valuable

1251
00:45:33,420 --> 00:45:35,179
to you when you think about your entire

1252
00:45:35,179 --> 00:45:38,149
personal economy. And when you put guarantees around

1253
00:45:38,149 --> 00:45:40,938
that tool of savings. You're in a position

1254
00:45:40,938 --> 00:45:43,408
where you have access to capital, and that

1255
00:45:43,408 --> 00:45:46,117
puts you in a much more advantageous position.

1256
00:45:47,088 --> 00:45:47,588
So

1257
00:45:48,202 --> 00:45:50,751
bruce anything that you want to add to

1258
00:45:50,751 --> 00:45:52,343
that as we wrap up here?

1259
00:45:53,059 --> 00:45:54,572
The last thing just because I...

1260
00:45:55,384 --> 00:45:57,302
I haven't talked about it, and it was

1261
00:45:57,302 --> 00:45:58,021
kind of impressive.

1262
00:45:59,059 --> 00:46:01,456
Death benefit claims with life insurance.

1263
00:46:02,509 --> 00:46:03,328
And annuities

1264
00:46:03,705 --> 00:46:05,619
in 2022

1265
00:46:05,619 --> 00:46:06,518
according to Lim

1266
00:46:06,975 --> 00:46:10,267
were 797700000000.0

1267
00:46:10,405 --> 00:46:11,442
dollars in 1 year.

1268
00:46:12,413 --> 00:46:14,798
So that's a that's a almost 8 tenths

1269
00:46:14,798 --> 00:46:16,071
of a trillion dollars.

1270
00:46:17,343 --> 00:46:17,581
So,

1271
00:46:19,092 --> 00:46:20,938
once again, I think a lot of people

1272
00:46:20,938 --> 00:46:23,648
have this negative attitude about insurance because they

1273
00:46:23,648 --> 00:46:26,359
think all these insurance companies are never gonna

1274
00:46:26,359 --> 00:46:27,736
pay it. I've heard this

1275
00:46:28,193 --> 00:46:30,995
before. A lot, especially during the Covid regime,

1276
00:46:31,075 --> 00:46:32,746
you know all, they're not gonna pay. There's

1277
00:46:32,746 --> 00:46:34,122
only 1 time

1278
00:46:34,657 --> 00:46:34,896
that,

1279
00:46:35,771 --> 00:46:36,726
in the contract,

1280
00:46:37,219 --> 00:46:39,122
that they they say they're going to not

1281
00:46:39,122 --> 00:46:40,970
pay it. It's not even in every state

1282
00:46:41,263 --> 00:46:43,483
is if you commit suicide in the first

1283
00:46:43,483 --> 00:46:44,300
2 years

1284
00:46:45,881 --> 00:46:46,200
And

1285
00:46:46,997 --> 00:46:49,410
any other way you die, whether it's

1286
00:46:50,264 --> 00:46:52,496
a complication, whether it's your fault,

1287
00:46:53,069 --> 00:46:55,459
whether... They pay the death benefit. It's into

1288
00:46:55,459 --> 00:46:56,016
the contract.

1289
00:46:56,813 --> 00:46:57,552
And so...

1290
00:46:58,167 --> 00:47:00,173
I've often heard people say, well, that... You

1291
00:47:00,173 --> 00:47:02,480
know, I'm not... I'm not chan the insurance

1292
00:47:02,480 --> 00:47:04,867
company, not paying me. And I think that

1293
00:47:04,867 --> 00:47:06,378
is in rational way of thinking.

1294
00:47:06,935 --> 00:47:06,989
You

1295
00:47:08,059 --> 00:47:08,456
Absolutely.

1296
00:47:08,931 --> 00:47:10,199
I do wanna bring a few comments in

1297
00:47:10,199 --> 00:47:12,260
here, Fritz. Thank you for joining in. We've

1298
00:47:12,260 --> 00:47:13,686
got Becca Will height as well. So...

1299
00:47:14,574 --> 00:47:17,034
A few here, on Fritz as mutual. Insurance

1300
00:47:17,034 --> 00:47:18,543
company does not see a whole life insurance

1301
00:47:18,543 --> 00:47:20,844
policy to funnel dividends by accident, the mech,

1302
00:47:21,083 --> 00:47:22,432
the mechanics of a whole life.

1303
00:47:23,716 --> 00:47:25,777
Is the reason why the company chooses a

1304
00:47:25,777 --> 00:47:26,570
whole life to do so.

1305
00:47:27,283 --> 00:47:29,661
If you think life insurance is expensive, the

1306
00:47:29,661 --> 00:47:31,897
inflation tax because of reserve banking should wake

1307
00:47:31,897 --> 00:47:33,248
you up. Yes. That's absolutely true.

1308
00:47:34,281 --> 00:47:35,870
Another podcast. I know.

1309
00:47:36,823 --> 00:47:38,889
We'll screenshot this and we'll we'll talk about

1310
00:47:38,889 --> 00:47:40,180
some of these in the in the future

1311
00:47:40,180 --> 00:47:42,660
for fritz. Thank you for your fodder for

1312
00:47:42,660 --> 00:47:43,380
additional conversation.

1313
00:47:44,099 --> 00:47:46,099
He also says you lose time value with

1314
00:47:46,099 --> 00:47:48,114
short term thinking and short term strategies I

1315
00:47:48,114 --> 00:47:49,469
mean Nelson nash always just said,

1316
00:47:50,346 --> 00:47:52,418
think long term. Think long range. Think as

1317
00:47:52,418 --> 00:47:54,251
long as possible. And, yes, of course, if

1318
00:47:54,251 --> 00:47:55,606
you make a decision for what's best for

1319
00:47:55,606 --> 00:47:58,648
you, Right now, this year only, this month

1320
00:47:58,648 --> 00:48:01,277
only this week only, you're not going to

1321
00:48:01,277 --> 00:48:01,777
really

1322
00:48:02,153 --> 00:48:03,085
consider that

1323
00:48:03,604 --> 00:48:05,122
implications of that decision, and whether it was

1324
00:48:05,122 --> 00:48:06,401
really the best decision or not. So if

1325
00:48:06,401 --> 00:48:08,159
you think about what would be the greatest

1326
00:48:08,159 --> 00:48:10,796
benefit to you 75 years from now, whether

1327
00:48:10,796 --> 00:48:12,564
you're living or not. What would be the

1328
00:48:12,564 --> 00:48:14,232
greatest benefit to your family, you're probably gonna

1329
00:48:14,232 --> 00:48:14,891
be thinking

1330
00:48:15,661 --> 00:48:17,726
more proactively and in a better position.

1331
00:48:18,997 --> 00:48:21,380
Fritz also says in an economic downturn capital,

1332
00:48:21,554 --> 00:48:23,463
squeezed out of the economy with insurance cash

1333
00:48:23,463 --> 00:48:24,759
value, you will have capital

1334
00:48:25,134 --> 00:48:28,077
advantage. And then Becca Will says buy whole

1335
00:48:28,077 --> 00:48:30,871
life, and invest the cash value. So there's

1336
00:48:30,871 --> 00:48:32,936
a new mantra, buy whole life and invest

1337
00:48:32,936 --> 00:48:34,445
the cash value because you can do that.

1338
00:48:34,842 --> 00:48:36,588
And you can do it powerfully, and it

1339
00:48:36,588 --> 00:48:37,644
can improve

1340
00:48:38,033 --> 00:48:39,089
all of your

1341
00:48:39,463 --> 00:48:40,971
financial outcomes and make you wealthier,

1342
00:48:41,447 --> 00:48:43,592
make your family wealthier in the future. And

1343
00:48:43,592 --> 00:48:45,894
so you're planting seeds that will reap a

1344
00:48:45,894 --> 00:48:46,688
long term harvest.

1345
00:48:47,338 --> 00:48:49,403
Of wealth in your family. So thank you

1346
00:48:49,403 --> 00:48:50,833
for being with us on the podcast today.

1347
00:48:51,150 --> 00:48:54,168
If you want to apply these strategies and

1348
00:48:54,168 --> 00:48:55,914
be able to think through your own life

1349
00:48:55,914 --> 00:48:57,758
insurance needs Go ahead and book a call

1350
00:48:57,758 --> 00:48:59,588
with our adviser team. You can do that

1351
00:48:59,588 --> 00:49:01,576
at v money advantage dot com, and we

1352
00:49:01,576 --> 00:49:03,619
will talk with you about everything that you

1353
00:49:03,977 --> 00:49:06,122
have on your hopes and dreams and goals,

1354
00:49:06,519 --> 00:49:07,949
what you're working with and come up with

1355
00:49:07,949 --> 00:49:10,014
a strategy to make sure that you are

1356
00:49:10,014 --> 00:49:12,477
equipped for optimizing your finances.

1357
00:49:13,684 --> 00:49:15,676
Going forward on a long term basis.

1358
00:49:16,233 --> 00:49:18,247
So with that, let's close here, Bruce

1359
00:49:19,022 --> 00:49:21,673
in in closing, if you're listening, please remember

1360
00:49:21,731 --> 00:49:25,415
success leaves clues. So model the successful few,

1361
00:49:25,734 --> 00:49:27,411
not the crowd, and build a life in

1362
00:49:27,411 --> 00:49:29,246
business you love. We'll see you next time.

1363
00:49:29,485 --> 00:49:31,561
Thank you for listening to the money advantaged

1364
00:49:31,561 --> 00:49:32,040
podcast.

1365
00:49:32,534 --> 00:49:35,411
Today's show notes and resources are available for

1366
00:49:35,411 --> 00:49:37,968
you on the money advantage dot com. If

1367
00:49:37,968 --> 00:49:40,365
you like this episode, make sure you subscribe

1368
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and leave a review. If you have any

1369
00:49:41,974 --> 00:49:44,462
questions or desire to speak with a qualified

1370
00:49:44,677 --> 00:49:46,903
financial professional after listening to today's podcast,

1371
00:49:47,301 --> 00:49:48,970
we encourage you to reach out to us,

1372
00:49:49,224 --> 00:49:49,724
at

1373
00:49:50,495 --> 00:49:52,799
at the money advantage dot com or check

1374
00:49:52,799 --> 00:49:54,706
us out at the money advantage dot com.

1375
00:49:54,944 --> 00:49:57,431
The opinions and views expressed here are for

1376
00:49:57,487 --> 00:50:00,605
informational purposes only. This material is educational in

1377
00:50:00,605 --> 00:50:02,218
nature and should not be deemed as

1378
00:50:02,594 --> 00:50:05,617
solicitation of any specific product or service. All

1379
00:50:05,617 --> 00:50:08,101
investments involve risk, purposes and a potential loss

1380
00:50:08,101 --> 00:50:10,335
of principal. Cal Capital incorporated,

1381
00:50:10,814 --> 00:50:14,027
Nor Cal Management incorporated offer tax or legal

1382
00:50:14,085 --> 00:50:14,325
advice.

1383
00:50:14,976 --> 00:50:17,386
Please consult with a tax advisor or attorney

1384
00:50:17,523 --> 00:50:20,705
for advice regarding the impact on your portfolio.

1385
00:50:21,183 --> 00:50:23,411
Securities offered through Kay Capital Incorporated.

1386
00:50:23,904 --> 00:50:25,360
Member Finra, Sip,

1387
00:50:26,055 --> 00:50:29,241
msr b, and investment advisory services offered through

1388
00:50:29,400 --> 00:50:30,675
Kay Management Incorporated,

1389
00:50:31,153 --> 00:50:32,985
and registered investment advisor,

1390
00:50:33,557 --> 00:50:35,861
Both located at 11525

1391
00:50:35,941 --> 00:50:39,517
Park Circle, A Georgia. E 3 consultants Group

1392
00:50:39,517 --> 00:50:41,901
is not an affiliate or subsidiary,

1393
00:50:42,313 --> 00:50:45,563
of Kay Capital Incorporated or Ko Management incorporated.