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Using Whole Life Insurance for Retirement Income? Case Study | IBC Global, Inc - YouTube
Channel: Insurance Business Concepts (IBC) Global
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All right, using a cash value聽
life insurance policy for income.
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Tax-free retirement income down the road.
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We're going to go through some numbers here.
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So the main point of our last聽
video was, focusing on this
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setting expectations and聽
mostly setting them properly
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as far as looking at different rates
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best numbers, conservative numbers,聽
guarantees we're going to do that here.
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So, what we're going to take聽
a look at, is as follows,
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we've got a 45 year old male.
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And we're going to look at max聽
funding a policy for seven years.
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Funding up to the MEC line, the MEC limit聽
on a policy, 50k per year, 45 year old mail.
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We're going to look at the guaranteed rates.
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Conservative dividend, the company's present聽
dividend rate a moderate dividend rate
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and then also an aggressive dividend rate.
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Now what we're going to聽
focus on here is as follows,
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Growth.
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What does the policy look like聽
from an accumulation standpoint?
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That really has to do with the design.
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We go into this quite a聽
bit, as far as policy design
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premium, PUA writers, MEC limit.
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We're not going to cover all the聽
details or much details at all on that.
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But then income and "how do聽
I set expectations properly?"
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Because, when I look at the, aggressive聽
scenario, as far as the best rates possible.
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I can pull out a whole lot more聽
money than I can based off of the聽聽
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moderate dividend or even guarantees.
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So seeing that all up front聽
helps set expectations properly.
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This way, I don't have buyer's remorse聽
because "I thought I was getting the best!"
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and it doesn't happen.
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Let's take a look.
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So what we will look at is just the growth first
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and if you'd like to see the聽
detailed illustrations on this
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that is in our membership program.
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So anyone subscribed to that,聽聽
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we went through the actual ledgers聽
as to how we designed this and such.
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But what we've got here guaranteed values,
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conservative dividend assumption
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another dividend assumption
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and then aggressive dividend assumption
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$50,000 for 7 years, 45 year old male.
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Let's look at the growth first.
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So on the accumulation phase,
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and this is really due to the policy design,
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solid break-even point.
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Just about year 5, I've paid in $250k.
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I'm at $248k.
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Year 6 I'm positive!
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So, strong performance.
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If I see that in the guarantees, the聽
policy is designed very favorably,
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specifically on the guarantees.
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looking at a conservative dividend rate,
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lower than this company's聽
been since, I think 1970.
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But breaking even between 4 and 5 [Years].
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All of these are designed聽
in the exact same manner.
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And we can see that, actually,聽聽
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in the 1st year, cash values are聽
are all identical across the board.
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Break evens, on the other guys,
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really between years 3 and 4.
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But year 4 I'm positive.
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There, so looks good.
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This is what we look at all the time.
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Right? Just an accumulation over time.
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Quick piece of additional information,聽
when you look at the guarantees,
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why the death benefit does not increase is due to,
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no dividends being paid.
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So a whole life insurance聽
product, is a guaranteed product.
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Based off their guaranteed rate of 4% ,聽
I'm going to have accumulation over time.
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And my death benefit will not appreciate,聽
unless I add more money into PUA's
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or if dividends are paid.
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Okay, so let's take a look at聽
what we've all been waiting for.
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Income!
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That's the name of the game for these videos.
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(Let's fit it all into one page) There we go.
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So whenever looking at income, right first we聽
want to make sure the policies are all the same.
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Which they are.
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We always put them side by side, if聽
you're actually looking at an option
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meaning if I was looking at聽
the basic dividend assumption
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we put the growth and income side by side,
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so I can see the direct impact.
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But here, I want to look at聽
the different assumptions.
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Because that's really what's interesting here.
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(There we go) So the aggressive on the far right.
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let's look at that first.
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Because this is always what's sold.
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And if we were in an IUL, (which we don't聽
use because I haven't seen any proof)
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this would probably look more like $72k.
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IUL's project beautiful values.
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But again, i haven't seen any proof around it.
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Which is why we don't use them.
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Other than "hypothetical" proof (which聽
I don't really believe in that term)
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So what we ran here is from age 65,
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up until 95.
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Last disbursement is at age 94.
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A levelized income stream.
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And what we were solving for here, was,
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really the maximum amount of income聽
I could take out of a policy.
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Based on different assumptions,聽
different rates more or less.
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So, based off of the aggressive assumption,
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which we go into full disclosure聽
in detail on the membership program
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$36,000 per year
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I'm able to pull out,
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versus
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the basic dividend $29,500.
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A conservative dividend $24,000.
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If I was a 45 year old male, knowing what I know聽
and this was my goal to put in $50k for 7 years.
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How I would approach this聽
from a realistic standpoint
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will be somewhere in between here.
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If it produces this, hey that's great.
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Historically it has done between this.
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However, we're not in the same times we were
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when we looked at policies that聽
lived through the 70s and 80s聽
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with double digit dividend rates.
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That would be great, but again,聽
setting expectations properly,
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I would bank on it somewhere in between these two.
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I would not bank off the high numbers.
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That's great, but when I'm聽
actually making the purchase,聽
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look at it more conservative.
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If I want to get up to $36k or a higher number,
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I may need to pay more into it or perhaps聽
the life insurance product is not a fit
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but it's best to know that up front
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as opposed to finding out after the fact.
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and then over here
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on the guarantees
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$21.5k indefinitely
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$21.5k per year.
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And the guarantees assume 2 things聽
with this particular design.
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It assumes (1) the guaranteed rate of 4%.
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And the term rider we have attached
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it assumes (2) the maximum charge for it as well.
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So we stripped it down
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made it worst, worst, worst case scenario.
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Did that on purpose.
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So, here's what I'm interested in.
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So we pulled all this income out, like,
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"What's the end result聽
Steve? How much did I pay in?
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How much did I pull out?"
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Did this make sense, considering聽
it's a life insurance product ?
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Meaning, if I died,
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the net death benefit was聽
paid out to my beneficiaries,
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income tax-free.
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But at its core, the cash value, is a safe,聽
liquid, tax-free area to position money.
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We took withdrawals up to our cost basis
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and then loaned out the rest,
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Keeping the tax benefits intact.
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If I try to pull out $36k
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and It produced closer to the guarantees
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and then I trigger a lapse
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that would be one example of聽
how a taxable event could occur.
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Which of course I'd encourage聽
you to consult with a
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CPA (Certified public accountant) or tax attorney.
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Because I am not one
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[LAUGTER]
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Here's what I was interested in.
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On the guarantees.
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Jere's what we got.
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Guaranteed values
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Total input!
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$350,000
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That's the total amount of money I paid in.
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Then we took policy withdrawals of $350k.
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I paid in $350k, withdrew up to my cost basis
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and then began to loan out the rest.
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Now these loans,
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total of $295k,
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interest had accrued the loan balance accrued
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We assume 0 payments applied to that loan balance.
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Nothing!
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The reason why, is if we're taking income out
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it would be counterproductive to start聽
making payments toward the loan balance
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when I'm taking income.
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It doesn't make sense.
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So, total income during retirement
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(I'm going to make this a little bit smaller.
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Made it too big, there we go)
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Income during retirement $645,000 total.
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Paid in $350,000
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Everything above what I paid聽
in was another $295,000.
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So approximately $300,000
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Now, conservative dividend, what do I got?
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Total $720,00
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You'll find a consistency.
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This is the same company聽
product, all that good stuff.
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Paid in $350,000
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The withdrawals stopped at $350,000.
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Because, if I take a withdrawl
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a transaction withdrawl not a policy loan
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and pull out more than what I've聽
paid in that's when taxes can occur.
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Obviously we don't want that.
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So we withdrew up to our cost basis
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and then the rest came out in loans.
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You'll see that consistent across the board.
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And then just, here, income during retirement
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based off the guarantees $645,000,
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$720,000,
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$885,000
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So realistically
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Somewhere in that neighborhood.
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If you want to go more聽
conservative, lean closer to that.
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Great way to set expectations.
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If you really want to go as聽
conservative as possible,
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bank on this
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because it's always done better than that.
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But that's guaranteed.
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Guaranteed is guaranteed, as long as聽
I made those payments into the policy.
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And then aggressive,
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if things go very well or continue聽
to do what they're doing today.
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I'll see strong results.
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I Know this is a lot of info.
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It's interesting stuff.
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When I look at how I can actually turn around
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and pull money out on the back end
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with a cash value life insurance policy.
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But it's good to look at.
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As always, I hope that this was helpful.
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If you have any questions at all聽
feel free to reach out anytime.
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And we'll talk to you soon.
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Thank you so much!
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Hey guys, Steve Parisi here.
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If you enjoyed the content you just saw,
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please subscribe, like and hit the聽
notification bell for future videos.
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If you'd like more information or to聽
see some custom policies for yourself
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feel free to call or email our offices
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at the contact information below.
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