Just for fun. Believe me, we will have fun with the negative people on this forum.
I ran a scenario. I am working with this guy, 39 years old, he owns a bunch of stores in the Bay Area. He wants to know how to leverage his expenses, he doesn’t mind life insurance. He has, for fun, $100K a year at my disposal, which I can help him with, very kindly I will oblige. He loves to go from store to store, he is an excellent human being paying his employees more than minimum wages, that’s his passion. He will sell the stores when he is ready, he said when he is 65.
The $100K will be played like this:
$100K premium a year until age 69.
He can loan $90K but to have a buffer, he will loan out $80K as soon as the insurance company transfer the $100K from his bank to his account policy. 10 days, or so. Not bad, right?
$80K are in his hands, right? Loan to never be paid back. Ever! Death benefit will pay for loans at the end.
There’s an internal fee of 5%, charged to the loans in a monthly basis, simple interests against compounding interests, they are a lose proposition.
Plus, he has another $80K in his policy are earning 7% to 16% since the S&P 500 index is doing so great.
What can you do with $80K? Pay a mortgage? Use if for a down payment for a home?
He will retire at age 70 with $334,861 a year, tax free, until the day he dies or at age 120.
Where can you get that return with $400K “invested” in 20 years. Investment is a word we are not supposed to say, but because on this forum they use it a lot I will for entertainment purposes, the insurance companies do the investing, not us the agents.
So, for $20K (it’s less, trust me, you are leveraging $160K?
I will comeback to this topic tomorrow with illustrations, I have several clients to visit.