Why Millionaires Use Life Insurance to Build Wealth

So folks, today, this is real important because when we look at life insurance, people often refer to it as a Swiss army knife, and there's going to be four reasons the rich use life insurance to build wealth. And it's not just, hey, build up your cash value, go use it and buy real estate, or build up your cash value and finance your debt. There's a lot of different nuances that we could get into today. And as we get into these nuances and break them down into bite-sized information, it's once again, us bringing forth as much education as we can. And as we bring forth this education, the goal and the outcome at all times is to make sure that you become more and more informed so you can ask the right questions and put yourself in the right position. All right, so folks, the first point, and this is where it's really important to understand the difference between a term policy or an IUL or a whole life policy. How can you guarantee your policy for life is one of the first reasons. And what that really means is, I'm not saying an IUL isn't a guarantee, which is a index universal life policy, but what happens in those policies, just like a variable policy, as time goes on, the cost of insurance increases. If you have a term policy, there's a 10, 20, 30 year term. When that term expires, what begins to happen is that if you want to keep it, it becomes very expensive for you to keep that term policy, right? So when we talk about whole life, the reason why they say, not only is there guarantees within the policy, but you're guaranteed a death benefit and you're guaranteed that'll be paid up, whether it's at 10 years, whether it's 20 years, an L65 or an L99. So it's important to understand those distinctions because when you're building wealth, you want to make sure that you have a death benefit that doesn't expire as you get older, so that death benefit can replace everything that you spend in life. And when we look at number two, how can you protect against long-term care? So when you think of long-term care, there's statistics that are out there. And some of the statistics are, what does it look like when you tie it into social security or your other assets? How long do people typically stay in a facility where there is long-term care? There's, you know, some people say 24 months, some people say 18 months, some people say 36 months. But the question is, when you look at the life insurance and if it's inside of a trust, once again, talk with your state attorney, talk with your fiduciary, but this is a way to protect it from maybe some of the funding that you can get from long-term care. Don't take my word for it, just double check everything I'm saying. But just when you're calculating all these different things that you're going to do, not just today, but 10, 20, 30, 40 years later, wealth transfer, wealth accumulation, wealth distribution, it's important that you understand exactly what that looks like. Point number three is, how do you protect your wealth with a death benefit? Okay, I love this one, to be honest with you. Because if you have a policy that's guaranteed, and meaning the death benefit is guaranteed, right? And you don't have to worry that, you know, if you're 75 and you bought a 30-year term, and in order to keep it at age 76, because 30 years just came up, and it's a $2 million death benefit, it's going to cost you, if it's a term policy, a lot of money to keep it. However, if along the way you had a guaranteed whole life, you're not paying any more at that point, typically, and that means your death benefit is guaranteed. So let's say the death benefit's $2 million, and let's say your assets are $2 million. Well, guess what? Those assets, you could spend them down differently or look at them differently, knowing the death benefit is going to replace all or a portion of those assets that you spend down, and the assets could be real estate, it could be money inside the market, it could be money in savings, other things. That's where you become really predictable with your money, safe and financially abundant from a mindset standpoint, because you're not going to outlive your money if you do it the right way. And the fourth reason is, how do you combine your life insurance with real estate, private lending, and auto financing? Okay, freeze, let's look at a bank, physically look at a bank. It's a building on a corner, there's a lot of bricks and there's tellers inside. And if I wanted to buy a bank today, it may take three, five, or 10 years. And the mindset in this capitalistic structure of a bank is for us to give them money, they take the money, they give us less than 1%, and then they loan it out for auto financing, for credit cards, and for real estate. And they loan it out over and over again, and they typically do the research, make 40 cents on every dollar. Well, guess what? If you have a life insurance, whole life policy, that you I dotted T crossed, you looked at your financial underwriting, you looked at where your money is now, what it could look like in the future, how much you could save. And if you begin to overfund this whole life policy, well, guess what? If you overfund it properly, if you've done the right education, if in fact you want to finance your own debt, or if you want to buy rental real estate, or other things with the cash value while it's earning uninterrupted interest inside the policy, well, that's the fourth component of how you can build that wealth over time. 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