Welcome. Thank you. Period. Period. Pierrot. Yes. I don’t know why I struggle with the French names. So that’s. It’s a fairly straightforward name. If it’s, any consolation here, people have struggled with my name all my life. And it’s very simple name, I think. You know, Mario was not a big deal. Liza rago isn’t that big a deal, but people always mess it up.

So, I’m sorry for messing up your name. It’s all right. Yeah. I’ll get better. I’ll take a little time then. Okay. All right. So, you know, thanks for coming in. You know, we’re here today to talk about, you you, you’re a health insurance client of ours. My. With my partner, Norma. And, through that process, you guys found out that, you’re also that your husband is 34 years old as a truck driver.

Yeah. Right. You guys have what? Couple kids, two. Three kids. Three kids. Boy, two girls and one boy. All right, so you’re busy. Very busy, very busy. All under six. All under six. You were very busy. Yeah, but that’s also the best time. My favorite age for three year olds. By far my favorite age, for sure.

Three year olds. Because they’re crazy after terrible twos. After the wet times are after the terrible twos after the passing, the terrible twos. Yeah, yeah, terrible twos was a little. It was cute, but it was a little too terrible for. So, you know, and through that process, you kind of being a parent, you recognize that, that you have something else that you’re, you know, you’re really providing for.

And so apparently brought up to normal that there was kind of a need for some, life insurance just because we never know how life is going to unfold. And and you kind of wanted a quote on life insurance and that provoked another question a little, a little deeper on that we started talking about. Right.

Yes. And that’s what this conversation is going to be about, is just kind of, wanting to pull back the curtain a little bit on life insurance as a whole. You’re from Ronda? Yes. And so, I assume, you know, I just I don’t know how life insurance unfolds throughout the rest of the world. Can you tell me a little bit about your life insurance options in Ronda?

Was there it was easily accessible, not accessible at all. I’m not sure, but I believe it was accessible because I left Ronda when I was pretty young. Just finishing high school was and thinking about life insurance. Sure, for me, life insurance was like, maybe for all the people out there thinking about that. Maybe. Yeah, well, of course it is for older people.

That’s what we think about it. But after having kids, I started thinking like, just in case something happens to me or my husband won’t happen. We need life insurance. Yes, to protect them, to cover them like a little bit of money. Don’t just leave them like that with, you know. Right. And that seems to be where it usually starts for all of us as young parents.

You know, as a young parent I have two girls. And when my, my girls were babies, you know, that’s when I got my first policy because I was concerned about them. And, it’s that’s pretty common, right. And the last thing you want to do is have, one of the parents, heaven forbid, passed away prematurely and and then leave the other parents stuck with a lot of not only the anguish of losing their, their spouse, but also then dealing with the financial stresses that come along with life.

And so most people start off looking to purchase life insurance for the death benefit in mind, which that’s how the whole product even became. Around. It’s been around for ever. It’s by no means new. I forget how old, life insurance is, but they were selling them back in Rome. You know, the Roman period, their life insurance is old.

It’s not a new concept. What is new? Originally it was it was developed for to insure one thing. And that was your life. You know, and it was really originally set up to be a good benefit for your heirs, not for you. Right. So you, the person that’s potentially getting insured or your spouse, there’s no benefit for you.

You’re protecting the future generations. Yes. That’s evolved. Right. That’s the side that’s really changed. The people aren’t as familiar with. And there’s arguments on both sides of the fence of whether or not that’s good or bad. So what I mean by that is they built in a lot of new, living benefits for people into these, into these policies.

So that way, you’re protecting yourself from not only in, you know, an unfortunate premature passing, but also just has life comes at you for different things. They have a lot of living benefits. Heaven forbid you were diagnosed with a chronic illness where you can tap into your death benefit ahead of time. That’s getting very common in these products.

They have access to cash value. So you can use it as a, bank account on steroids, as I like to call it. A lot of different bells and whistles that we’re not going to dive too deeply into. But there’s a lot of living benefits that they’ve addressed because they recognize that a lot of people didn’t really care about the death benefit, even though you might want to set up your kids for whatever reason.

A lot of people don’t, you know, they’re just like, oh, my kid can fend for themselves. It’s really interesting. The psychology that we all individually have about how we want to set up future generations, some do, some don’t. Right? Wrong. I’m not here to discuss that. It’s just difference of opinion. Right. So what I’d like to do, is just kind of explain some of these, some how these permanent policies work.

So really the conversation we’re going to have, that I always like to start with is, you know, the big question, you know, do you rent or buy and and that’s really the question, because when we originally talk to people, when they don’t know much about life insurance, they’ll they all say the same thing. Like, just how much is it?

I just want the cheapest amount possible, you know, you know, the problem here in this point is that, your husband is in a volatile. He’s in a kind of a riskier job because of, driving around a lot. And so the question stemmed out that you wanted to first get him insured. Yes. Correct. Yes. But also when I, when I came to you or know more about insurance, I didn’t know a lot.

I don’t know a lot still. So my question, my first question will be, what’s the difference between renting and buying an insurance? What’s that like? What does what’s the benefit of buying an insurance when you can rent it? What does it do for me in the long term? Like yes. And those are great questions. And hopefully I’m going to kind of help mud answer some of those questions for you.

So just like, you know, when it comes to life insurance, it’s I look at it is very similar to buying a house or renting a house, either one. Typically when you’re young, you’re renting an apartment, you’re renting a house, and ultimately you usually have, some sort of aspirations of, of buying a house at some point in time.

Right? Yes. And in, in people are buying for a few different reasons. One reason might be control. They don’t want to have to be worried about being evicted or having somebody say they’ve sold the complex and now you got to move or raising rent or so a lot of, a lot of the reasons that people want to buy is they want to be in control of their life.

Other people see it as a, you know, when you’re buying a home that they see it as a potential, asset that’s going to appreciate. And they’re going to as they stand to make money off of that asset and they’re going to ultimately pay it off and they don’t want to pay, have a monthly payment, right. Like they’re paying rent every single month.

They want to have it paid off and they don’t have to worry about making that monthly payment. So there’s a variety of different reasons. And I would argue that life insurance is very similar. Okay. So rental insurance would be what’s called term insurance okay. And you know, in term insurance being I think I even have that. Yeah. Here we go for next one.

So term insurance versus permanent insurance a term would be the equivalent of a rental meaning we can get. And we’re going to look at these numbers. The cheapest insurance out there is when the insurance company has to make a educated guess. There’s actuaries that have, mortality tables out there that create these tables that say, okay, for a healthy 34 year old male, right.

The statistics, the odds of this male passing away in the next ten years are very unlikely. And therefore, we’re going to offer him insurance for next ten years. Heaven forbid he passes away. Right. We’ll payout whatever that number is. $100,000, 500,000, a million, whatever the number may be. And and you, the consumer, it’s kind of like you’re saying I want a one bedroom house versus a three bedroom house versus a five bedroom house.

Bigger the house, more money. Yeah. Same thing on life insurance. In this case, the bigger the death benefit, the more it’s going to cost you. In this case, when it comes to term insurance, insurance company is saying, hey, we’re going to offer you that $500,000 payout for ten years. And at the end basically after after they’ve offered that to you and you have you have accepted, basically what happens at that point is you’re going to go through life in ten years is going to unfold and bam, guess what?

You’re kicked out of your house. Yeah. Or they say, no, you can keep your house. You can keep this policy. But we’re going to charge you a fortune more, right? We’re not going to it’s not not going to be near as cheap as it was. And because the insurance company has capped their liability in the form of risk because they know, statistically speaking, a 34 year old male is very, it’s very unlikely that he’s going to pass away by 44.

They keep all that money, just like rent. You have zero equity in the deal. Every monthly payment you made it’s gone shredded. Right. Versus a permanent product which is you’re actually buying equity just like you’re buying a home. So you’re purchasing your contract and you’re now in control of when you choose to exit the contract or not.

Okay. So the so that’s the main thing is now you’re actually getting equity just like you’re buying a home. And depending on how you build your home in this case a permanent chassis is going to drive. A lot of the costs, just as if you’re buying a home, you know, if you’re buying a if you build a smaller one level home, it’s going to be much, much more affordable than a massive two storey with a basement and all these cool six bedroom homes and beautiful finishes.

Same kind of concept. You can choose to add in a lot of bells and whistles, or you can choose to minimize those bells and whistles and make a smaller policy. And so it’s my job to listen to what your desires are and figure out what makes sense for you. What can you actually afford? Right. What? Not only and what do you want to afford?

And then and then we also need to get through the process of determining, well, what are your long term desires, right. Where do you see yourself? This is the conversation we’re about to have for term insurance versus permanent insurance is we have to be very forward thinking. We have to be considerate of where do you where are you trying to be?

Where do you see yourself when you’re 75 years old? Right. Which is challenging, right. That’s tough. Yeah. What’s the goal? And so we have to sit there in your short term goals are very different than your long term goals. And so what we find when we sit down and work with our clients is we find that there’s usually a balance we need a little bit.

We need a little bit of term and a little bit of permanent. The goal eventually is to get rid of the term right. We don’t want to have the rental insurance, we want to have the permanent insurance. And I’ll kind of go through and explain a lot more of why you would want the permanent I, arguably I depending on who you talk to, there’s a lot of, financial advisors.

I would say, no, you don’t want to buy permanent insurance because they want you. They want you to put your money in the stock market. They want you to put investor money in real estate or something else. Right? So the reality is now the permanent chases have kind of a I don’t want to say an investment side, but it is an investment side in every conservative area that you have the opportunity to see.

A return on your money. So where it can be like a savings account on steroids. And we’ll talk about that a little bit. So let me see what I have in here. So as we start talking about considering this permanent product again, we have to consider what your partner. So just so you’re looking to build a home, do you want the do you want the best builder in the land to build your home.

Or do you want the guy who’s new, right? Chances are you probably want the expert. The expert. Yeah, right. Ideally. But the problem with the expert, what do they do? They usually charge a little more. Yes. Right. And it’s kind of and I would argue it’s it’s kind of similar. It’s you know on the permanent insurance market there are a lot there’s hundreds of companies out there.

So when you start narrowing down to the top companies out there, you’re going to get into, a variety of different conversations of why one is better than the other. Reality is, there are so many great insurance companies out there. These companies are very strong financially, majority, especially the top ones, they have ratings that you can look up and you can see a variety of rating factors of who’s rating what.

And there’s very few insurance companies that have A+ ratings and A ratings across the board. What the for the major, companies who do the ratings. But there’s a handful. And so you really have to look to somebody, an advisor like myself or Norma or, you know, to vet these companies who are going to advise you, hey, period.

Consider your permanent chassis being one of these companies for a variety of reasons. One of those reasons might be, some of these companies are, are stockholder health. So meaning that people can buy shares in the company and they buy shares because they’re looking for that company to be profitable. And, and so when you’re when you’re putting your money with an insurance company, we really I personally don’t think that we want to go with a company who is behold it to stockholders to turn a profit.

Right? I don’t like that concept. Right. And so a lot of the these publicly held companies, their insurance companies are publicly held and, and again, they are trying to pay a dividend to their stockholders. So their priority is to turn a profit. To me, it seems like a little bit of a conflict of interest, but that’s just my opinion versus what’s called a mutual company.

Okay. Now a mutual company is not stock based at all. The policy owners are the owners of the company and a mutual company. Now, these mutual companies a lot of times will be more expensive. Okay. They’re they’re they’re a safer company. But the cost of insurance is typically more expensive. They don’t they typically don’t have the volume. And they’re and it’s just they’re just a more expensive product.

But arguably in my mind, it’s just a safer product because they are out there. These these are the the New York lives, the Pacific lives, and Minnesota lives. You’ll hear a lot of these bigger name companies, as you’re here longer and you’ll see the majority of the mutual companies have been around for a long time. Just a very, very long time.

And so it’s important that you get on a long term and we start having a conversation about what permanent company should go with. We want a good builder, right? We want a good company. And that’s because we don’t want to that company to go out of business. Here’s a funny, funny, number for you. What percentage of term policies would you say pay out?

So, meaning that ten year term product that we’re talking about has been 34. What percentage of people do you think actually, see the benefit for their family of that $500,000 payout? Meaning how many people do you think pass away in that time period? 20, 30%. You would think something like that, right. Try 1.5%. Wow. So, so these insurance companies are extremely flush because they sell a lot of term insurance knowing that statistically speaking they’re going to keep a lot of your cash within their company.

It’s amazing. Amazing. Yeah it is crazy. So all that being said these insurance companies are extremely flush. So part of when you’re looking to when you’re when you’re looking at investments out there, a lot of it comes down to risk. Right. Are you going to put your money into real estate or are you going to put it in the stock market or you’re gonna put it in these different areas?

And so one of those areas is, an insurance company, you know, you could put your money with an insurance company and make a return. The risk is them going out of business. Well, these guys are so flush. That’s a very low risk that that’s going to happen. But again, another arguable point of why you want to consider who you’re going into business with.

Okay. You know here this next slide here I’ve got in here choose and build your long term product wisely. And what I mean by that, what people do understand when it gets in the life insurance. The big the worst thing about these permanent contracts is they’re confusing okay. And I’m I could tell by the face expression you’ve made on a few things I’ve said that I’m already confusing you.

I’m saying some things that are like, what does he mean by that? And, and this is kind of a and this is kind of the problem where they take a lot of explanation and they can be a little complex. And not to say that you will you won’t figure it out very quickly. But initially this time it takes time.

And even though and you’re going to look to, you’re looking to have a conversation here now to buy a product that you might have for 30, 40 or 50 years. Well guess what? You’re going to remember this conversation for the next week, six months from now. You can be like, why did I do this? Well, what were all these things that I was told?

Yeah. And that I would say that is the Achilles heel of permanent life insurance is people forget what they bought. Right. And, and so that’s why we’re going to try to do a lot more of these type of things, to continue to educate and teach people about what’s going on. So getting back to choose or build your long term product wisely, there’s a lot of different ways that I can build this product, and we’ll get into that right now.

And a lot of it’s depending on your goals, your objectives, you might have a higher death benefit concern right now than you do, long term accumulation. So some people like to bury a lot of money in these, in these contracts just because they want access to cash. They want to they want a place to still make a decent return on their money.

They yes, they care about the death benefit, but they’re really more caring about more of retirement planning than they are. Death benefit. They’re they they’re focusing on being alive and not focused on dying. You know, in depending on. So you might be independently wealthy and worth millions of dollars right now. And if that were the case and you you’re going to have estate planning issues.

So you’re going to want a lot of death benefit. But assuming you’re you’re you and your husband are not worth over $12.5 million. You don’t have an estate planning issue here in the United States, meaning you’re not going to have a a death tax, right? So a lot of people buy a life insurance again for tax planning purposes.

And I would argue that with where the financial world is now, that the permanent life insurance should be part of your portfolio, just like owning your home should be part of your portfolio. Just like having some stocks, having an IRA, having a 401 K, all of these different, all these different pieces are important part of your portfolio. Life insurance should be there.

A lot of bells and whistles, but depending on how we build them, it’s better for you short term or better free long term. Okay. So the biggest thing, that I can say about permanent life insurance contracts are flexibility. And what I mean by that, getting back to rent versus buy okay. So term insurance as you’re going to see here in a second 34 year old buying $750,000 worth of death benefit, there’ll be a definitive amount, $43 a month, $20 a month, whatever that number is.

And as long as just like rent, as long as you pay your rent, you don’t get kicked out as soon as you miss repayment. Right. Hey, they’re knocking on the door. You’ve got 30 days, right? Or kicking you out. Same thing on the term insurance. It’s got a monthly amount. You pay that amount. You have your policy until the term runs out.

You know, make your payments go out, they drop you permanent surance. That’s not the case. You build equity, okay. So you have value in your policy. And when you get into that value, if you if you don’t have the money to make that payment, they just pull the payment from equity that you have in your policy. So it keeps it alive.

Okay. So like again getting back into flexibility for these long term products availability to cash is big deal. Yeah. You know I have a question. So with the permanent policy, you can’t even put more money down than in like the term. Let’s say you have to pay $34 every month. You do that with the permanent one if, let’s say this month or maybe two.

Use put more money than that. If it’s something that you can, it’s something doable. You can to a limit to a limit either you kids not infinite. So the IRS has guidelines of how much money you can put into a life insurance contract, and that’s based off of your age and how much death benefit you’re buying.

So the more people always ask me, well, how do they like hearing about these permanent products? But the question always comes up next. Well, how much is it? And that’s really not the question. The question is, is how much do you want to put into it? Because depending on how much money you want to put in this vehicle, I typically I’m going to try to buy as little death benefit as possible for my clients because most of my clients are banking on living, not banking on dying.

Right? Yes. So what’s I agree with that statement? I just got done telling you that only 1.5% of these term products pay out, right? So statistically speaking, you’re going to live, right? So if you buy the term product, you’re going to outlive that term product, meaning the insurance company doesn’t have to pay your family anything, right? You buy your home, you buy a permanent product.

Well, we all know eventually at some point we’re going to meet our maker. Yes, right. It’s inevitable. It’s one fact of life, right? Yeah. So again, if you want it, the goal is to eventually have your, have your family end up with your money. You’re going to want a permanent, permanent product, but depending on how much money you’re going to want them to end up with is going to, again, determine how much insurance we set up in the beginning.

So going back to that previous slide of choose and build your long term product wisely, this is where that conversation right there. That’s why it’s so critical. You’re talking with somebody who’s going to really explain the permanent products wisely. Because if you depending on what business path you’re in, we have clients that are putting a couple hundred thousand dollars a year into these, these policies, they’re having to buy a lot more death benefit to do it.

But the reality is you can this is the one product that you can put an infinite amount of money into, but you have to buy the right amount of death benefit. Otherwise the IRS will deem it an annuity. So one of the biggest things, but biggest attributes of putting your money into a life insurance contract is the money grows.

The is there’s tax loopholes, tax advantages that you can trigger by having you running a life insurance contract. So therefore you’re not triggering an income tax event. We all hate taxes, right? Who doesn’t like who hate? Nobody likes tax. So one of that’s one of the big reasons that people put a lot of money into permanent life insurance contracts is because it’s a tax strategy.

Play a lot of loopholes that we’re not going to get into too much today. But that is the primary reason that you see a lot of wealthy people here in the United States putting in money into a life insurance contract, not just for the death benefit. It’s really for a tax strategy, game plan. So if you were to tell me, hey, in the future, I think I might want to put in, you know, $10,000 a year, $20,000 a year.

I would need to know that up front, because I’m going to have to buy more death benefit upfront. And I’ll show you that here in a second. What the numbers, what I’m referring to. Okay. But that’s a great question. And please don’t stop me from any other any other questions you have too. So in addition to flexibility, you’re looking for these looking for this stuff for protection.

Right? In, in in one thing you got to realize about from protection that what protection in a life insurance contract is much more than just protecting you from the event of death. Okay. In this case, you can see there’s I’ve got protection from market risk. So when you start looking at a lot of these products here, these insurance companies, when you put your money with an insurance company, they give you a few different ways that they say, hey, I’m going to pay you interest.

Some of them will just pay your flat rate of interest. So depending on the style of permanent product you buy, whether it’s whole life, universal life, guaranteed universal life, there’s a lot indexed universal life, variable universal life, there’s a lot of diff in each one has its own unique attributes. Okay. And one of the things that most people the argument in the past, well, don’t put your money in the life insurance because you, you take away all the upside of the market.

Right? It’s like because before, for the longest time in a whole life contract, they were only paying a maximum of 3 or 4%. Then they raised it up to five, 6%. You know, and especially once universal life came around, but still 6%. Well, when you’re watching your buddy over on the side who’s got this money in Apple stock and he’s making 15% and he’s like, well, what are you doing?

Only making five, right? Makes it so you don’t really want your money in a life insurance contract. Right? So part of the evolution of these life insurance contracts is they came up with what’s called indexed universal life. And that’s what we’ll be talking about. And and the good thing about that is now all of a sudden you can be you can see some of the upside of the market, but it’s not actually invested in the market.

So it’s a way to hedge from market risk. And so there’s protections in there. That’s why I have that in there. So you have in here protection I have an ear protection from the government. Reality is, any of us who are out there working and just paying taxes, and if we’re putting, our money, the government’s going to incentivize you and they’re going to tell you, hey, put money into your 401 K, put money into this thing called an IRA.

Okay, well, think about this. Our government is incentivizing you. They’re giving you saying, hey, if you do that, you’re not going to have to put we’re going to make it. So we’re going to lower your taxable income today by however much you put in that 401 K. Right. There’s limits obviously. But that’s the incentive. Like because they can because you, they know that the pain for you is you don’t want to pay taxes today.

Right. So they’re giving you this incentive. Hey kick that can down the road. Well, the problem with putting all of your money into vehicles that are taxable in the future is can you tell me who’s going to be president anywhere in the world in 30 years from now? Can you tell me who’s going to be a war? Can you tell me where interest rates are going to be?

No one, no one knows. Yeah. No one knows. Any of this in reality, is the every depending on what? Regardless of your political affiliation, it doesn’t matter. And regardless of what country you go to, depending who the leader is at the time, they’re pulling financial levers in your in our lives. Right. In the United States specifically, they’re playing games with taxes, tax rates, tax brackets.

Every president doesn’t matter which one. And we have charts that. I’ll show you just how crazy it’s been. Our our tax rate. It just it goes all over the place. So protection from that is another real reason that people put money into life insurance contracts. If you go putting money into real estate, well, you’re at market risk right now while real estate is high, it’s great.

But what happens when the tanks. Right. So there’s a lot of different protection things. Another reason that people have put money in these, in these contracts is for because it’s not subject to lawsuits. Okay. So it’s protected. Heaven forbid the heaven forbid you’re, you know, your husband and you end up buying a fleet of trucks, and you got this great business going out there.

And unfortunately, one of your drivers fell asleep at the wheel and killed somebody. Well, guess what? That family is going to come after you and your your assets. Your personal assets. So money you haven’t bank accounts and anything. You have a, you know, a lot of not anything but a lot of things that are subject to lawsuit and lawyers will be after that money.

They can’t touch your money in the life insurance contract. So it’s protected from any of that. So it’s again, it’s a safe conservative place for you, for people put money for a variety of reasons. And protection is definitely one. So that’s a big that’s a big conversation in itself. And then obviously the biggest protection is protection from yourself, your ability to go out there and work and make make money is real, right?

It’s a big deal. You’re 30 years old. Yeah. So you have a lot of earning years, right? So again, having that life insurance there to protect you, your family from yourself prematurely passing away. This is where this product began. Okay. So, you know, I have this next one that safe. I’ve kind of already alluded to this. The safety side of this.

It’s just it’s a very safe asset in a lot of ways. It’s by far it’s it’s right behind, my savings account as far as security, it’s safe. So for those people who are very conservative, like, I’m not very risky. I’m a I’m a business owner. I’m very risky with me. I’ll invest on my abilities. Yeah. Murray, I have a question.

So this, as a mom, when you mentioned that I could use this as a savings account on steroids, the first thing that came into my mind was, can I use this for my kid’s college fund? Now that the little you absolutely can’t know that it. They do a little. So, also, can I have access to the money before they’re 18?
If if something comes up, if, if something comes up, life happens. If something comes up, can I borrow the money or can I, how can I access the money? How would that work? Create questions. Yes. Yes, yes and yes. So you can, you can you can use it for college when you use it for at every want.

Okay. So you have access to the money but doesn’t matter what year you use the policy owner because the child can’t be the policy owner. So if we were to take talk about a policy for your, your child, you would be the policy owner. And the policy owner has the one who has access to borrow money from them, make decisions on the policy.

And one of those decisions is access to the cash. So I have I have these policies on both of my girls. I started them when they were three and seven, okay. And I didn’t I didn’t buy policies, life insurance because I was worried about them passing away. I bought them because I wanted to start their retirement at age three and seven, because compound interest is real.

And when you start talking about 50 years of interest, on interest, on interest, on interest, on interest, it’s big numbers. So you also so I did it for the that the the growth the conservative growth side. But I also did it for a financial tool for my daughters when they get of age, you know, when they’re mature enough to take it over and understand about this thing called retirement and they understand about credit and buying a car, I’ve now given them a tool that we we financially manipulate for college.

Right. And then we’re also whenever, you know, as they get older and they going to need to go get another car or they’re going to be their own bank, they’re not going to go to the bank to pay the bank interest. They’re going to borrow from themselves and pay themselves back. So that way, the interest, the goal is to stay within our family.

So it doesn’t matter what you’re pulling the money out for. There aren’t there aren’t any there’s zero criteria for of that you have to adhere to for why you’re taking the funds out. It’s just like your savings account. You go to your savings account because you want it to. For whatever reason, there was a need, and you needed that five grand out of your savings account.

It’s no different differences. You’re probably going to want to pay it back because as you pull money out, you lose a lot of the interest earning, right? So you don’t have to pay it back. And this is kind of another unique getting back to the flexibility of these products. They’re extremely flexible. You could take out that $5,000 and never put it back if you want it.

And then eventually when you do pass away, that $5,000 will just be taken from the death benefit that would typically go to your family. So people a lot of times people do build these up just so that way when they get to retirement, they want to pull it, pull all the money out is the age, limits. Like what?

From what age can you buy, life insurance? They like one year old. Can you buy for a one year old? You can, you can, you know, you you can. It depends on the company. But typically one years old, one year old is, you know, and then is there like a limit how many times you can borrow from your account or, the only limit the number of times is just if you have money in there.

So one of the things I’m going to show you about is what’s called the surrender, the cash value in the policy. And that’s what that’s what I’ll determine. So it’s kind of actually let’s move into that okay. So again what we’re going to talk about in this case is are you all I mentioned there’s a lot of different styles of life insurance.

So there’s just indexed universal life indexed because it’s indexed against the market. The money’s not in the market. It’s just indexed against the market. So they’re going to pay you a rate of return based off of an indexing strategy. All right. And I’m not gonna get into that too deeply right now in this one. But that’s the main premise of the issue.

Well okay. So what we’re going to go into now, I want to show you a little bit before I show you the illustration, just briefly, when you start looking at numbers, they’re called illustrations. Okay. That’s industry standards. When everybody runs they run, they run illustrations. And basically this is as you see it here, it’s life in a vacuum.

This is if what you’re going to show, what I’m going to show you is this if everything was always the same, you’re always made the same amount of interest. You always made your payments at the same time. It’s all this. These are just. And it’s basically just a mathematical timetable based off of certain plugs that we put in.

Okay. So let’s just talk about when a little bit of how this the costs and how these things are put together. First and foremost it’s based off of the age. And if male or female, the ladies live a lot longer than the men. So, so typically, you know, those mortality tables there, it’s better for the ladies because you, statistically speaking, just outlive us because you’re stronger.

Guys are tough. You’re very careful in what we do. That’s why. Yeah. That’s true. I’m not going to. Yeah. Yeah. There’s a lot of there’s that too. Then you can see underneath the age 34 says preferred nonsmoker. Okay. So whenever you’re buying life insurance they do a health assessment. So based on your, your height and weight, depending on, your blood levels, your urine levels, depending on your occupation, they take a holistic look at everything about you in your life, and they ultimately give you a health rating.

In this case, we all these numbers can be predicated off of a 34 year old male who is a preferred nonsmoker with Pacific Life. Specifically, there are two health ratings that are better than preferred. So good actually, which means in the better, the better you, health you have, the cheaper the cost of insurance. All right. They have a lot of ratings underneath preferred and just the further down you go, the less healthy you are.

The more expensive, the higher risk you are. That’s how they determine your your risk. Next thing you see here in the middle there, it’s, basically the death benefit. So, how we’re going, how we would build this. So depending this is where again, depending on your objectives, like if you’re trying to build more a pile of money for the future for you to live off of, I would do what’s called an increasing death benefit, as you see there, versus what’s called a level benefit, because you might come and say, hey, Mario, I just want $500,000 worth of death benefit.

That’s it. I don’t care about anything else. I just want to know my family’s getting $500,000, okay? And so in that case, I would build that level. So for these numbers here that you’re going to be seeing I did everything in the increasing. And if you notice on the right side over the death benefit, you know where it says where the weight starts off at two.

Well I’m getting a little bit ahead of myself here. But if you see under the death benefit column the far right, it shows 133 538 on the bottom right, bottom right corner over here. Over here. See this? See how it’s going up? It’s notice it’s it’s increasing. Okay. And that’s what that increasing means. It’s increasing your death benefit.

So that’s, that’s one of the ways is so there’s a lot of different levers we can pull when building these things. And so again this is why it’s so important to get with a knowledgeable agent who understands these contracts because most agents do not. So it’s increasing. You can see total face amount on here. So face amount is how much death benefit you’re buying.

So in this case we’re starting this for what we’re looking at here. Says $132,000. And then premium frequency assuming you’re gonna make an annual payment versus monthly. That’s how this is built. But this is explaining the vacuum, okay. This is the vacuum that we chose to build with in, hypothetical interest rate. Sorry. That’s right. Good hypothetical interest rate.

This is real important. This is that vacuum again. This is that the indexing. So all the numbers in this policy are predicated off of this policy averaging 6%. So this is saying every year made 6%, 6%, 6%, 6% on my daughter’s policies. I’ve had I have an extremely conservative dollar cost averaging approach and they’ve been averaging about eight and a half.

I know people who have been averaging more than that, 12, you know, and I just there are ways that you can earn more. And these policies, I typically don’t subscribe to that because I look at this as my conservative claim. There’s a lot of other ways that you can make more money. I’ll never say that you can, that your life insurance is going to outperform, the stock market or your financial advisor.

You don’t know, right? Maybe it will, but maybe it won’t. I’m saying buy this for conservative safe play and you’re going to be very happy. But this these numbers are going to look at today are going to be predicated off of 6%. Okay. So moving on down this illustration. You can see this. So I got a win over it.

But it says year one. So this is what year we have the policy in this case for a 34 year old. So this is if your husband were to start a policy, a permanent policy today, use premium outlay $2,400 a year, 200 a month. Okay. So I built this up and and then next over here. So basically, this other column heading is death benefit.

So this is the amount of death benefit heaven forbid you. So if you were to start this policy, for $200 and heaven forbid, two weeks from now, he got in a car wreck and passed away. Well, guess what? Your family would get $133,000 even though you’ve only paid $200. This is the risk the insurance company takes on.

Okay, let’s look, I want to know that. Okay. Accumulated value. This is important. Okay. Accumulated value. Here is the number. This column. When we get to your numbers, this is the column that you actually that bears the interest. So in this case when I see that 6% number that’s predicated off of the value that have that you have in the contract.

Okay. And again if you remember earlier the flexibility we were talking about could I what if I didn’t pay this one month or, or you know, I want to pay more this accumulated number is what if you don’t make a payment. They’re going to pull money out of the accumulated value to cover the cost of insurance. With cost of insurance.

I mean, how much it cost for a 34 year old to buy $133,000 worth of death benefit, that there’s a number associated with that cash value. And here this slide here, accumulation value which what earns interest is policy premiums minus cost of insurance. So whatever you’ve paid into the whatever you’ve paid into the policy, this is where getting back to your example, if I want to you want to put in more money, you can put in more money.

They’re still going to take the cost of insurance out of that money. And that remainder money left over is the accumulation value that’s going to help earn your interest. Okay. The last column that most people really care about is cash surrender value. So this is how much access. This is how much cash you have access to at any given time.

And so depending on how these are funded and how they’re built, you’re going to have access to cash sooner or later. And there’s pros and cons to both depending on your particular needs and business owners. I always build them where they have access to cash sooner rather than later versus people who they don’t. They’re not concerned about the cash now.

They’re concerned about cash down the road. They’re fine now. They’re concerned for retirement ten, 20, 30 years down the road. It’s better. It’s always better to have access. You’re going to the cost of insurance is going to be less for you, the consumer. If you don’t need access to cash, is early once the insurance, because the insurance company deems you as a higher risk because you’re now your financial risk to them.

All right. So they charge you more. If you want access to cash upfront, certain carriers will give us the ability to build these contracts in such a way that you have access to a lot more cash. I have a carrier that’ll give you access almost 98% of your cash, but cash surrender values what you care about. So on this chart, so the person can access their money on year six and they can only have 1125 under this scenario here.

Yes. Okay. That’s right. And so this wasn’t built up for this. Yes. But in this case that is that is accurate. Under this illustration. But again so what I’m going to caution you on with anybody talking to any insurance agent out there okay. Yes. You got run I have to run a little bit. Okay. All right.

So if that’s the case and let’s get into then you still have five minutes. Yep. Okay. All right. So let’s actually pull up some different illustrations to kind of show you some things. So let me back out of here and then let’s go into I’m actually going to show you some. Let’s look at that. Some actual numbers here can make it a little easier to understand okay.

Since you since need to run here. So basically this right here is the term contract. This is your rental insurance plan okay. And you can see here for a 34 year old male for $750,000 worth of death benefit that the if her ten year term. If he if your husband were to come back at the tip top best health rating, that would basically be a little over $20 a month for him to buy, 20 to buy $750,000 worth of death benefit, preferred nonsmoker $330.

So it’s almost $30 a month and then preferred nonsmoker. If you remember, that’s what I that’s what I did all the permanent quotes off of. If he comes in a preferred and that’s going to be for 96, almost $40 a month, a little over 40 a month. So you can see it’s a verb that’s right there showing you the cost of insurance differences.

And this cost of insurance goes on every single year that you have a contract. So as he gets older, let’s fast forward now. He’s 75. That costs insurance is going to be predicated off of how much death benefit he’s buying and his age. So that there’s always that intrinsic fee within the contract that’s always there. And that’s a big that’s one thing that financial advisors will always say, hey, don’t buy life insurance because you always have to buy death benefit.

Well, yes, you do, but you’re also getting that death benefit back because guess what? We’re going to pass away. All right. What’s going to happen. So this is your this is what you’re looking at for your husband to buy it to buy. Term insurance basically rental insurance. And then we have to do an application so we can find out what what his health rating be.

We don’t know yet until they go through and assess it. So this is what more or less you’re looking at for a 34 year old male now was like, look at a permanent contract. We are we’re already looking at these numbers before. So it says non-compliant because I don’t have anybody’s name on here or any of that. So just but this is what I took the snapshot off of earlier.

Now this wasn’t this was built up just to kind of show you wanting to buy Death Benefit for basically the rest of his life, right? This is more of a death benefit play than it is an accumulation play versus a retirement planning strategy. And this is just locking in some death benefit. Okay, I just asked I basically asked the software, okay, how much for if a 34 year old male who was had a preferred health rating, wanted to pay $200 a month, how much death benefit could he by right, and to to make sure that it lasts?

All right. So to make sure that he’s going to he’s going to pass away with this policy okay. We don’t want it to run out. So you can see goes up to age of 120 which that’s pretty crazy right? Unrealistic. But either way this is basically saying, hey, that this you’re going to have this contract in place. So in this column here, the premium payments, you can say I had I saw that had the premium stop paying in 75.

I just put that in there. Again. Life in a vacuum. If you want to pay between 34 and 75, $200 a month, show me how much death benefit that you could buy upfront and and still in this increasing mode. So you can see it’s starting out. It what was it here starting out at $133,000. Okay. Doesn’t have access to much cash.

This is pretty much this is more of a death benefit play. Okay. So you can see every year it climbs and climbs and climbs and eventually you start seeing access to cash. Okay. And but you’re you’re this again was built to do more of a death benefit option. And so you can see the death benefit still growing. Yes.

You have access to more cash along the way, but even still, you’re 20 years in. You’ve paid 48,000. You only have access to 35,000. This isn’t this isn’t a strong what’s called accumulation play. This is a strong death benefit play. Your death benefits growing. And what ends up happening is your death benefit just continues to grow and grow and grow, you know?

Yes, your your cash eventually looks like in this case in this contract, 72,000. So you can see you’ve paid in 72,000 here, but you have access to 88. So we’ve somewhere along the lines here, we we crossed that line of having access to more money than you actually paid into the contract. So at this point you’ve got all your your insurance for free.

You still have access to cash, buy your cars, but uses money to put your kids through school. Put it back to your choice. Another question. So can somebody have do you need to have the term insurance before I have a permanent one, or can you just go straight and have just a permanent life insurance? You can do you can do straight permanent, okay.

You can. You don’t have to go through the term round. I just I just caution people. And permanent insurance is definitely more costly in, in the only way that you’re going to really get hurt in a life insurance contract is if you get with the wrong company. A who’s going to charge a fortune on the cost of insurance.

And if you can’t afford it, if somebody talks him into buying more product and it makes sense because as soon as times get lean, you know, sometimes you don’t have much money. The first thing that people stop paying is insurance. And the only way you’re going to get hurt in this deal is if you collapse your policy, meaning you don’t.

You don’t pay it for years and you bleed it dry. So, it’s it’s it’s important that you don’t go too heavy. So I always caution people to be careful of when they get into the, the permanent insurance just to make sure that they can really sustain for life. So I recommend people get term just a while. They figure it out until we can really teach you and then education.

And that way you can make a good long term decision. I know you got to go. I see you looking at that, but let me just show you now, here’s another one that’s still on 30, 24 to $200 a month. Okay. So if you now notice on this one, so this one I change, which I did more of a life and term insurance for retirement planning purpose.

If you notice here. Now I basically asked hey if a 34 year old wanted to put $200 a month away, what’s the smallest amount, the smallest amount of death benefit he could buy, right, that the IRS will allow. So it’s still a life insurance contract and it spit back out. We need to buy at least $50,000 okay. That’s our middle when they sell anyways.

But if you notice here now the death benefit is only 50. So if you notice now we have access that’s cash surrender value column. If you notice there’s money in there like a lot sooner. Yeah. It’s because we were buying less death benefit. So there was more money spilling into the investment bucket. Okay. And so it just it gives you access to some more cash early.

So if we fast forward here, let’s just go fast forward 40 years okay. You can see it 40 years into this contract. And there’s access to $281,000 versus let’s go check this other 140 years.

There’s only access to 203.

So and that’s because we the because we’re buying so much more death benefit early. So that’s why again depending on people situation is why when when I would say hey buy only 50,000 worth of permanent because we can always buy 50,000 worth of permanent. And then buy some rental insurance on the side, which is cheap to make sure you maximize your long term gain.

Okay, so so there’s all kinds of little. And this is where again, it this is where it gets really complex and confusing. So I’m happy to continue to have these kind of conversations. I know this is going to be the first of many. And I do know realize you need to get going, but, I appreciate you doing this with starting here with this.

And then we’ll try to, educate you more. I welcome your husband coming in so I can explain it to him as well. Also welcome. We’ll pick it up. I’ll save this scenario and we can pick up where we left off here, and we can ask, and you can just fire a bunch of different questions that hopefully you’re going to have.

And, but for now, we better we better kill this. Yes. Thank you for having me. Okay. All right. Thank you for coming in.