All Forum Posts by: Matt Ruttenberg

Yeah there are a lot of under informed bloggers and content that don't look at the full picture of how it fits in unfortunately.  It definitely doesn't replace traditional investing, it's a means to other investments honestly.

I dont suggest it if you NEED life insurance, that's what term is for.  Simply because the design doesn't promote death benefit, it promotes cash value growth.

@Sage Weiss

I would consider infinite banking. You’re building up an asset that you can use for buying other assets.

I use this strategy with business owners quite a bit who’ve maxed out their retirement accounts.

Leverage, leverage, leverage!

 Nice work on funding the deal with life insurance!  Such a powerful tool when used right.

Feel free to reach out, I have expertise in the infinite banking and self-directed 401k side of things.  Curious what you're thinking.

Are you referring to the loan from the policy, or the loan to the investor?  The loan from the policy is tax free unless you've MEC'd the policy. 

It all comes in the form of the death benefit as @Thomas Rutkowski explained, but is mostly comprised of the cash value. You'd need to look the numbers to get a better idea of how that works. In a properly formed policy, you're maintaining a ratio between cash value vs. death benefit, which is at the most minimal level.

The concept is that you want to "squash" the death benefit to keep the costs of the insurance down so you are building the cash value to it's full potential.  Thats how you manage the costs, by using the cash value to offset their risk.  We want the cash value to be close to the death benefit.

There are designs that's don't do this, but it's not intended for the purpose of maximizing cash value growth.

As Thomas also mentioned, people with large audiences push the wrong narrative here due to a lack of understanding. 

Yes, I am more of an IUL kind of guy, and there are a few that have either a net 0% loan rate, or a "working loan" where it's still invested, but that has some risks to it as well if there is a down market.

Regarding your other question, you there are some carrier options available where you can roll over the entire amount into a new policy via 1035 exchange and have a waived surrender charge so you have immediate access.  Sometimes the numbers work out, and sometimes it doesn't.  It's a case by case basis honestly.

 Hey @Sean Winchell,

Understanding the loan provisions is pretty important when starting these.  Ideally, having a net 0% loan or wash loan is best.  But it looks like that's not on the table for you, unfortunately.

With that, obviously your still in a net +% on that transaction without any underwriting.  However, it definitely minimizing the attractiveness of using your own money to invest... totally get it.

What I would probably do is look at it as a cheaper "private money" solution for shorter term funding. Similar to private or hard money with BRRRR, and pay it off relatively quickly (12-18 months) with a longer term 30 year loan option just like if it were private or hard money.

Having a net -% loan on your policy will definitely hurt it in the long term.  You probably don't want that loan sitting on the policy too long.

(It could be a good idea to do an analysis on the policy with projected loan amounts (any payoffs) to see how the policy reacts in the long term.  It's called an in-force illustration with the carrier.) 

Does that all make sense?

@David M.

It really does matter on the agent how they were trained. But everything has a net benefit, just need to see it it makes sense for you.

If you want to run any numbers, just let me know. Sometimes just seeing how it works helps to understand it.

IBC doesnt tell the full story in my opinion.  The Power of Zero by David McKnight, although he pushes it a little far and thinks everyone should get one, is where the main benefit falls.  Lending against is just one part of the overall strategy.  Leverage is the main story here...