Ep 110: Index Universal Life Insurance: The Untold Wealth Strategy

Welcome to the Thank Generation of Wealth Podcast. This is the personal finance podcast for the Black community. I am your host, amir Estebo. Thank Generation of Wealth was created to empower the culture to thank wealth, assets and prosperity for future generations. If you are someone who is inspired to lead a legacy and needs actionable steps and I do not know what to do with it this is the podcast we do. Join me every week as we discuss various topics from personal finance, building assets and mindset. Our goal is to leave the planet better than how we found it by enriching our future generations with the right tools for success. Thanks for joining us on this journey. Welcome to the Thank Generation of Wealth Podcast, and this is episode number 110. I am your host, amir Estebo. I'd like to open each podcast up with gratitude and appreciation. I appreciate that you have taken the time to listen to this podcast because you could be doing anything in this world, but the fact that you are listening to this podcast is much appreciated. Also, thank you for subscribing to the podcast. If you are a new subscriber or a new follower, I appreciate that. In general. Let's dive into today's topic. Today's topic is going to be about becoming your own bank. I've talked about this topic in previous episodes. You can check out episode number 1, 1974, 82, and 87. This is basically about life insurance. What I come to find out is life insurance is a topic a lot of us do not like to talk about because obviously, when you talk about life insurance, that's intertwined with death. These people are thinking about death, which is another problem we are making here. We are just passing by. We are here to have a good time out of all time. Especially, all of us are going to need to serve. It depends on what happens afterwards In a lot of business I used to be in and I actually want to get back into this, probably within the next few months or a year, depending on what I have going on is that you hear all these horror stories of people that passed away, whether it's a male, female or whoever. The bread winner of the family passes away. Guess what? They leave the family, or even the other sibling, with a lot of death, which becomes crippling. Now we talk about this is the personal finance podcast. This is the generational podcast, if that's what this show is about. Of course, life insurance is going to be a topic we are going to talk about. The reason I say that is because, again, when your love won't pass away, what happens Then? They get let's say, you leave home with that $100,000 of debt, etc. Now that goes to your siblings or that goes to your children, or that even goes to your other partner. That becomes tough. It's a very tough life to live afterwards. That's why a lot of people that passed away the money has to take on that burden of this person's debt. What I'm going to specifically talk about is this policy, this life insurance policy called the index universal life. If you don't know, this is what the wealthy are doing. The wealthy, what they're doing is they're taking their life and they're taking it to the very end. It's not about how much money you make. It's how much money you keep. There was a year Amazon I think it was either before the pandemic, back in 2018 or so Amazon pay zero in taxes that year. We'll look it up. I may be born in a state of federal order, but Amazon didn't pay any taxes, right, because the wealthy knows about all the loopholes, all these they know all these policies, loopholes that they can't yield that they don't have to pay any taxes, right, whereas the poor middle class, which probably eventually just only come poor and rich, the middle class. They're looking to get rich right, and If you don't wise them up and see what the wealthy instead of Instead of us just sitting there complaining about what the wealth you're doing, the higher network See what they're doing and follow that Okay. So these high-ranking worth people are doing is they're buying up these life insurance policies, these permit life insurance policies right, and what they're doing is there's stuff in it Money, and obviously there's a there's a limit that they can. I'm gonna talk about this in a while. There is a limit that they can put into this and Guess what. The high-network Evades these tax. Oj Simpson, if you guys go look about researching, was a OJ Simpson. Any of you guys remember when did he beat the murder trial? But he lost the signature right and then he ended up going to jail for 10 years from the robbery. But here's what people don't realize when OJ got out of jail he was still in vain. What OJ did was he took some of that money and put into a permit life insurance policy. So the daily, but Basically the IRS, can't go after that. Your creditors can't go after you. If you were to sue. Let's say, you got an accident, hit someone and and kill whatever they cannot see and they cannot see you for that life insurance policy. Okay, because this is a protection. So this is what the high-network is doing, and I'm not saying, I'm not telling anybody information that I don't know about. This is actually fact. Oj Simpson was still in nowhere when he got jail. Reason is it because he used the stain called the IUL, or thinking about whole life. That's a different topic and I'll talk about that at the time. Okay, so what I'm gonna share with you is Go, and first of all, I am not a financial advisor. So this, this is only for educational purposes. I'm not basically doing anything. What I'm advising you to do is sit down on the device, someone that you can trust that can inform you of this and how to set this up properly if you decide to go this route. Ok, so what is that? How are you? Well, so this is a type of health insurance policy. It has a cash-riding component, along with death benefit. So, for the whole point of this policy, is you really, in a sense, definitely need the death benefit? It's most of the cash value that you're focusing on. So let's say, for example, you have a $100,000 death benefit, but you were to. Then, let's say, you have $300,000 of cash value that you have accumulated in this policy Upon your passing, you're fine with whoever your error is, whoever the person who received your contingent, however, they would receive $400,000. $400,000. So that means you get not only the death benefit but you get the cash value too. Ok. So keep that in mind. So again, if something has never happened to you, you get the death benefit and you get the cash value. Ok. Now, something tricky about this are you all the indexing person. Life, as you can see, index right. This money. This policy actually tracks the stock market, but it does not invest in the stock market, so it tracks. So if the stock market was to swing right, which means if you walk you would get, so, let's say, if it was going 12%, so it would make it to the stock market. So that means that policy would go 12% right. But the beauty of the IUL is there's a fore in the ceiling. So let me get into this. The fore will be, for example, let's say, the stock market. Again, this tracks the stock market right. So this is based off how the insurer has it set up. So it could be something where it falls in the NASDAQ 100 or the standard, the S&P 500. Let's say the S&P 500 swings left, which means it was negative and it loses 10%. The IUL usually has a fore the company but it usually has a fore at 0%. That means you are mitigating your losses and you lose absolutely no money in this policy. However, though, let's say the stock market swings right and it goes 30%, your fore could be 15%. So there's that 15% that you are missing out of. So again, keep that in mind. It's when it comes to the IUL policy. This does not invest in the stock market, so it tracks the stock market. So, based off how the policy can be interest rate fluctuate, but how do we have that fore which will protect you from losses? So, if we go back to 2008, if you have the money in a 401k let's say you had $100,000, but if the market swings left, boom, you can lose all that money easily. That's why it's important to look into something like the IUL, because what it would do then is, if you were to have that type of money, you step it into an IUL. Guess what? You won't lose any money. So again, folks, this is educational purposes. Please sit down with someone that's professional, that's going to educate you and make sure you understand, and ask questions. So how does this work? Well, the IUL you can underpay it or you can skip premiums. So let's debate with that. So underpay with me. Let's say your attorney can put into this policy and I give a year. There is two valid models. Let's say you really can't afford it and you can only do $50 a month, something to that nature. You can underpay the policy. But keep in mind, before you actually start building cash value in this policy is you have a surrender charge which means that if you, let's say you put $2,000, your surrender charge is $2,002,000. Okay, that means you, you have to put in more money. Pass your cylinder charge. So that means you have to put two thousand, three hundred. So they. That means if you say you know I don't want this policy, no more, you'd only get a hundred bucks. You lose the other two thousand, two hundred dollars. Okay, so this is the thing about the IRL they don't tell you and that's why it's imperative that if you sit down with a professional, you sit there and ask questions, okay. So keep that in mind until you hit that surrender charge. Even if you were putting two thousand dollars, you would not get that money. You basically lose it. Okay, so that's why it's imperative, if you do something like this, get educated folks. And and I said, had anything above that you would get. Okay, so you put in five thousand dollars, your surrender charge, between 800, you get members pay 200, right, your Surrender charge. What do you put? Five thousand, that's what you've built in cash value. So that means you get twenty eight dollars. Okay. Also, the thing about the IRL Going back to the max. Going back to that two thousand dollars, you have a limit that you can put in given. So, going back to the two thousand dollars, let's say, for example, you're only able to put in two thousand dollars for that, that should max fun component To protect yourself from that amount turn into a taxable for the IRS if you put a dollar more In the two thousand dollars. Let's say, two thousand and one dollar. Guess what? Now? This account, this is my account this policy now becomes something with the iris can tax. You look up the cold seven, seven, zero, two on this, the iris. Well, regarding life and shelf policy. So that's why, wherever you work with, make sure they explain this to you, because if you put anything more, then that what's the allowable maximum max fund is for that given year. You, the object of this is not to pay taxes, right, you would start paying taxes, okay, but to keep to get the full benefit of the IRL and that's your personal life is. You won't be with a max fund because if you don't, because of the cost of insurance, of this policy and then Fees, it can get extremely expensive. I mean, I can't admit you guys, because this is this is something I'm doing right now, and you won't see the full benefit of it, because if you are paying, you're not. You, let's say you put that $50 in and that's $50 is taking care of the cost of insurance, because that's what it's it's costing this company let's say it could be trans America nation or whatever to ensure you. So the cost of showings could be 30 bucks or, let's say, 20 bucks, right? And then fees could be like a number 10, 15 dollars, right, maybe four or five bucks later, and I feel like they might end up 22 dollars. That's plus the interest and that's what's going to go in your cash ride. That's what goes through cash, right? So that's why the thing about the I will go is, if you don't max fund is, you will truly see the value of this, and I would say the I will is is really used for people who just I let, worse people, who are trying to decrease the taxable income. They put this, they open a I will. So it's not to. Again, you're not looting taxes, it's just that you are mitigating how much money is your reason, because it's not much money you make, but how much money you keep. Okay. However, though, you're giving value. Well, let's say, for example, going back to what I was saying earlier 100,000. That both fit 300,000 cash. Right, guess what? You can now become your own bank. You can borrow against that policy to go buy a real estate, to start business, put your kids to school. I just wouldn't take money out of the cash volume to go pay out debt, okay. Or let's say you took money out to the buy brand. You can't even do that. It's your money. You are now your own bank, and when you pay yourself back, guess what? You're paying yourself back with interest. You don't get that from the bank. You don't get that from any bank. However, though, if you let's say you pass away, I'll forget you pass away. If you have a loan let's say 100,000 or 50,000 dollars out and about, that money now will be taken out of your cash value. So that means if you had 300,000, you took 50,000 out. They would take that money would be taken out. But, however, you can take money out tax-free, but that money would be taken out of your cash value. So keep that in mind. So, if it's something you really trying to do, this is the beauty of it. I want is because you cannot become your own bank. You're not going to get a high interest rate, more than maybe 1%, from a bank, not even that these days. Right, this is how you account. So if anybody guys are not focusing on that, putting money into a high-earning account, even though the interest rate is variable, but it's based on how the market is performing. So the market is performing very well. Guess what your interest rate is 4%, 3%, 2%. It's better than it beats 1%, 0.0001% or something like that. Okay, however, like I said, if you are not someone that's going to max fund this account, I would highly I would not suggest it, because you're not going to see the true value and a lot of people what happens is when they get this permanent life insurance, they get upset and they're like, wow, because they don't do their first way, you educate yourself. Second of all, you're not max funding this account, so you're not really seeing the true value of this account. So if you're not max funding, I wouldn't suggest this account. This is not for you. But if you're someone that has money laying around and you have money in a bank account, instead of just leaving that 100,000 dollars in a bank account, take that money, half of it, 90% of it, and put it into a permanent life insurance policy. Okay. Now is this policy better than 401k? Okay, maybe, to to each of them, right to each of them. So someone else may say, no, this is not a 401k, is statements for retirement. This is something that you are using to save on your taxes, right and value. The IUL does come with high fees and premiums, so the drawback is the high fees and premiums, okay. And then the cap amount, which is your ceiling of what you can actually earn. Okay. And another thing, too, when I keep in mind is, if the market swings to the left, you don't. You have that flow. So that's the good thing about it, right, so you don't lose. When you get your assets, you don't lose any money. That's the reason why people like Donald Trump Disney World. What Disney started, he started Disney World based off having life insurance. He bought against his life insurance policy to start Disney, and that's what I said. If you're not starting a business of a sewer, I would dongle, take money like that and go pay off credit card bills and stuff like that. Let's reach out. Put your case to college, maybe buy something you always wanted a new car or cash. Or let's say, for example, you wanted to get into real estate. This is a smart thing for you to do, okay. So the bottom line is, I would say, is the drawbacks, the advantages of this is you have the flexible premiums. You have the cash value accumulation. We have the vestibular flex flexibility, so you get to control how much money Putting in. You get to control your interest rate, how much we can actually even have your interest rate fixed, okay. Then you have the death benefit. So even if you're pulling money out of your policy, that's, you're doing a tax free, so it's less risk and it's only a contribution. Right Now, this is the cap. Obviously, this is better for larger face amounts. Now you do have that variable equity index so that market can go up and down. So when you you can put 2% next year, you can put 8% next year, you can put 12, which is your cap. So keep that down with a disadvantage. And this does not include stock dividends. So because it does not invest in the stock market, which hence why I say life insurance is not Vessels, it's a protection Okay. And then you have the management fees. So something like a Stop, even in stocks you have management fees. You're gonna make sure fun, you have magic, okay. So this is good for someone. So if you're trying to Cut down on your taxes and how much taxes is being taken out, or your money's just sitting at bank accounts doing absolutely nothing, this would be something that's good, okay. So thank you for turning into this episode. Hopefully you stayed to this end and Hopefully you learned something. Share this with someone and you find this. If you find this podcast, value this episode. Thank you for listening to the 10th generation of Wolf podcast. If you enjoy this podcast, here's three ways you can help the podcast world. One subscribe to the podcast where you get your content. To Leave a rating and review the podcast again wherever you get your content so others can find it. And and three, share this content with someone that you think will find this a value. Thank you for listening again to the 10th generation of Wolf podcast. Peace and much love.