I started my first WL policy in March 2018 with Mass Mutual. $50K invested the first year with $42,500 Cash Value available. I borrowed against the cash value to fund 2 of the houses I flipped last year. This year, I again contributed another $50,000. Cash value is now around $89,000. Started a 2nd policy with Guardian and funded it with $80,000. Cash Value is around 85% of that number. The break even point is about year 4/5. So in 2022, I'll have contributed $250,000 (to Policy 1) and have a Cash Value slightly higher than that. In those 5 years, I'll have flipped countless properties and invested the profits back into the policies. After year 5, the policy will start earning 5 - 7% per year. I consider the WL not an investment at all. It's a place to park money with solid tax free growth that is safer than a bank. Especially when you consider that banks are designed to be cash poor and loan rich. If the economy tanks and banks go under, you have to run hat in hand to the FDIC, which is also poorly funded. The best Mutual Life Insurance companies have large cash reserves.
The biggest mental hurdle I had to overcome in buying the policy was I have to wait 5 years until I break even??? This is a horrible investment.
Before I purchased, I did 6 months of research. I deconstructed the policies. I read forums, articles and books on the subject. I consulted experts. I talked with multiple insurance agent, some knowledgeable, some not. I researched the naysayers and analyzed why they didn't think the product was right for anyone. Once I understood all of the pros and cons, I went to a number of financial advisors and asked them if they had a financial product that did the following:
1) tax free growth at 3% or higher
2) availability to borrow against the policy at 90% or greater of the value
No one had an answer. The closest I could find was muni bonds. I didn't want my money to just grow in some tax free account. I wanted it to grow in a tax free account AND I wanted to be able to borrow against it so I could continue to grow my asset base. Unfortunately, a WL policy (or IUL), is the only way I found I could do that. So I decided I was willing to put up the 5 year wait to break even to make that happen.
The death benefit is an ancillary benefit that I think is around 5Mil between both policies right now, so that my family would be set if something happened to me. It also provides protection from creditors in the hopefully rare case of a lawsuit.
In 2023, I'll have $650k+ invested. I don't have to put anymore in. It will grow at 5 - 7% tax free compounded. And I have full access to all that cash at a low interest rate whenever I want. No closing costs, no wait time, no qualifications etc. Usually I get my check within 3 or 4 business days with a few clicks of my mouse. It also doesn't affect my credit score in any way, and I can repay on ANY repayment schedule I want, provided I pay at least the interest due at the end of every policy year.
I currently do have plenty of other avenues of low interest financing. Everyone who has lived thru the great recession understands that the banks basically close their doors on lending in a bad economic environment, so I'm not counting on the banks to fund my investing. Cash is king.
Is this product for everyone? NO. I think it works best for individuals who are making far more than the money they need to live off of.
I'm not an insurance agent and I have no vested interest in the product. I know it's right for me. Keep an open mind and you'll see the pros and cons and see if it fits your situation or not.
