How Much Money Do You Need To Start An IUL Policy? What Is The Minimum And/Or Maximum?

How much money do you need to start an IUL policy? What's the minimum or maximum? By the end of this video episode, you will understand how you can start an IUL policy with as little as $500 a month or you can design one to accommodate hundreds of thousands or even millions of dollars. So, I'm Doug Andrew. I've been a financial strategist and retirement planning specialist now for north of 48 years. My favorite financial instrument is a max-funded indexed universal life insurance policy. I have many episodes that will help you understand what that is, how they work, what indexing is. But in this episode, I'm going to address the question, well, how much money do I need to put into an IUL policy? These are so flexible. Historically, when they were first introduced in 1980 by E.F. Hutton, who is... I've been credited with being the brainchild behind the emergence of universal life and then later, 17 years later in 1997, the emergence of indexed universal life. They designed it so it could be extremely flexible from one end of the spectrum over to the other end of the spectrum. So, what do I mean by that? If your goal is to primarily accumulate money for living benefits which frankly is the goal for most of my clients throughout my lifetime. Most people did not come to me necessarily wanting or needing life insurance death benefit. Yeah, that was a secondary objective. And maybe the insurance they had wasn't structured correctly to be able to perform the way they wanted to even for death benefit. But most people would come to me because they wanted a safe repository in which to put money so they could accumulate it on a tax-favored basis. And if they could access the money tax-free even without having to wait till they retire to do so, they wanted to do it without triggering penalties or taxes. And then at the end of the day, anything they left behind in that retirement nest egg so to speak would blossom and transfer income tax-free to their heirs, to their spouse, their kids, or grandkids in the form of a tax-free death benefit. But the primary objective was for living benefits. What EF Hutton realized that if you structured an insurance policy with the least amount of insurance That the IRS would let you get away with and put in the most money that the IRS would allow as fast as they allow. It can turn into this tax-free cash cow for living benefits. That if you sock away 500 bucks a month or a lump sum of a hundred thousand or five hundred thousand that money will grow at rates of return averaging probably between six to ten percent Historically, I don't know what the future will hold but historically, I've actually averaged about 9.62 percent. And so, if you understand rule of 72 math, 9.6% average rates of returns will double your money about every seven and a half years. So, if you put money into an IUL policy, you're wanting to get good rates of return that will double your money. Let's say every seven and a half years or in some of the worst periods, people have earned 7.23%. That was during the great recession 2000 to 2010. A lot of our clients averaged 7.23%. Most 10-year periods, you'll have 7 up years in the market compared to 3 down years. That decade, there were 5 down years. So, a lot of our clients did not earn anything 5 of those years but they didn't lose. The other 5 years, they made money and only 2 of those years did they cap out. But they averaged 7.23%. Your money will double about every 10 years when you do that. So, when people say, well, golly, is this only for the wealthy? Nope. This is for anybody. You can be in your 20s, 30s, 40s. Most people that come to me when they finally realize they have painted themselves into a tax corner so to speak. They have money trapped in IRAs or 401ks. They're way too top heavy in yet to be taxed IRAs and 401ks. So, they want me to sort of get them out of that tax trap. So, in that case, I'm working with people that are older maybe between 55 to 75 years old. To get the money out of those IRAs and 401Ks and get the taxes over and done with sooner than later and then reposition it into a portfolio of IUL policies to be tax-free. So, in many of my educational episodes, I will use examples of people squirreling away 100,000 a year or 500,000 a year. Yeah, we have people putting in a million a year and more. No, it's not what you begin with that counts, it's what you end up with. But because a lot of savvy people who understand money when they realize how safe these are and why they are tax-free, they want to hunker down and play it safe and so they're repositioning assets, underperforming or non-performing assets or they want to get their money out of the volatile market. They want to get their money out of banks and credit unions paying them 1% and earn 9%, okay? And so, they're trying to optimize assets. It could be lump sums coming out of IRAs and 401ks and what we call a strategic rollout, not a rollover. A rollout. See, a rollover is like going from the frying pan into the fire so to speak. You're taking money in your 401ks and rolling them over to IRAs and making the mistake of deferring till you're 72 years old and then taking RMDs or required minimum distributions. That's the worst advice I've ever heard for most people in that situation and if you don't understand why be sure and study my books and watch other episodes on this channel. Now, if they came to us, maybe they're wanting to reposition 200,000 or 500,000. We've had people reposition a million, 2 million, 4 million dollars out of their IRAs or 401ks over a 5-year period. And so, yeah, they have a lot of lump sums. It could be 500 grand a year, a million a year. And we had a couple do that and now they have 8 million plus that's earning 10% payouts. And many years they've been earning more than that. They can take 8 million bucks and pull out 800,000 a year without depleting principal and you'll understand why as you watch other episodes here. So, yes, you will hear examples of people who have lump sums and that intimidates some people. Well, I don't have any lump sums of money. Well, that's okay. Well, can you start just socking away a monthly amount? Yes, you could set up an IUL policy to sock away 500 bucks a month, okay? A thousand a month. You could put in you know 8,300 a month. That's 100,000 a year. You can do whatever you want. But see, when you meet with an IUL professional, they'll determine what assets that are underperforming. They're not earning good rates of return. You want to increase their liquidity, safety, and rate of return and the tax benefits. What assets do you have that you want to reposition? And then if you want to still sock away money monthly into this rather than a 401k, Yeah, then they accommodate the amount of monthly deposits on top of any lump sums. But what if you don't have a lump sum? No problem. You can then just set it up to accommodate a periodic input unless you think there's going to be a lump sum from maybe a settlement or an inheritance or you're going to sell a rental property in a few years. So, you can structure your IUL policy to accommodate lump sums down the road which would be wise for many people because If you wait till you have the money in hand, you may not be able to qualify whereas you could start getting the tip for different Tamra tax citations to your advantage by opening one today that will accommodate a lump sum in 3 or 4 or 5 years. Does that make sense? But let's say you just have monthly. You could set up an IUL policy to set aside 500 bucks a month. That's 6,000 a year and you do that and they calculate the minimum amount of insurance required to be able to put in 6,000 a year And they calculate that based upon the first 11 years if you think you're going to put in at least that much the first 11 years. So, that would be a grand total of $66,000 and that is called your bucket size So, you can do monthly amounts no matter what it is. You can have monthly amounts and make room for lump sums. You can reposition assets. In fact, my wife and I, when we had our 6 children, when they were just tiny, sometimes just after they were born, we took out universal life policies at 25 bucks a month. And then we made them bigger to put in 50 and then 100 bucks and then 250 bucks a month. So, the point is this, you can set them up to accommodate whatever amount you want to put in on a periodic basis, monthly, quarterly, annually. And, or lump sums or a combination of both. But that is what's beautiful about an IUL policy. It is so flexible. Again, on the spectrum, you could structure it to accommodate just a minimum amount if you want to maximize what you leave behind when you die. We have many people that put in money and they don't ever intend to take out money while they're alive. They're trying to maximize what is left behind when they die. So, for example, my kids own policies on me. Basically, so that when I eventually die, I said, Hey, take out a million-dollar policy on me and put in 6 or 700 dollars a month. Now, they could put in way more than that. But when I die, they get a million bucks tax-free. That's better than them putting that 6 or 7 or 800 dollars a month into a 401K. Hello? I have owned IUL policies on my mother-in-law, my father-in-law, on my dad. I couldn't on my mother. She had heart disease. But see, you structure it to accommodate the money that you want either as a living benefit to access money on a policy on you or if you want to maximize what you leave behind when you die or if you own one on somebody else when they die. Because you calculate the rate of return, you can minimum fund it. You can maximum fund it or you can do something in between. But in my opinion, it's probably one of the best financial strategies to accumulate your money tax-free and then be able to access the money tax-free if you need it. And then when you die it blossoms and transfers income tax-free. I know of nothing else in the Internal Revenue Code that does that. So, when you meet with an IUL professional which I would recommend you do and as you learn these things be sure and share or post a comment. But make sure you meet with an IUL professional that understands how to structure it correctly and fund it properly. They will show you illustrations based upon your numbers. But make sure that you come prepared with some knowledge by watching this episode and others and also that you refer to this book. This is sort of your textbook 300 pages it's called the Laser Fund which is what I call a max funded IUL policy when it's structured correctly and funded properly. If you do not have your free copy You can go to laserfund.com. Click on the link below, okay? And you contribute a nominal amount towards the shipping and handling. I'll cover the rest of that and I'll fire out a hard copy to you. And there's options there if you would rather listen and learn or watch and learn. But this is about your brighter future. We'll see you on the other side of success.