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Agent Training The Whole World is Changing

Whole Life

http://www.marketwatch.com/story/scary-1929-market-chart-gains-traction-2014-02-11/print?guid=93670D26-9278-11E3-B214-00212803FAD6

Scary 1929 market chart gains traction

• Opinion: If market follows the same script, trouble lies directly ahead

• There are eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash.

• That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929.

• The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart.

Until You Remove The Risk it’s NOT a Planning

…..It’s Hoping

Whole Life (WL) a 20-Year History

the shocking numbers

Whole Life (WL) a 20-Year History the shocking numbers

WL or Indexed Universal Life Which one Builds More Wealth for Retirement?National Underwriter does a study each year

where it compares the illustrated returns in WL policies vs. the actual returns.

It’s very interesting because the actual rate of return in WL policies going back 20 years is typically 2% LESS than the "illustrated" IRR.

Who are the Whole Lifers? (WLers)

Agents who have the following characteristics:1) They use WL as their primary wealth building tool for clients2) They know nothing or very little about IUL3) They have an uniformed opinion that IUL is a "new type of policy" without a track record (even though

they've been around for over 15 years)4) They don’t know what variable loans are or how beneficial they

can be for clients5) They don’t know about the living benefits offered

by IUL policies (like a FREE LTC benefit)

Who are the Whole Lifers? (WLers)

As a general statement, the following are agents who use the following systems and will typically recommend WL, NOT IUL, as a wealth-building tool: Infinite Banking Concept (IBC) or Become Your Own Bank (BYOB), LEAP system, and agents who are “captive” (or act like they are) at companies that do not offer IUL policies (Northwestern Mutual, New York Life, etc.).

Who are the Whole Lifers? (WLers)

• Why do the these agents typically use WL vs. IUL?—because they don’t know any better. Why?

• Because some are lazy (they don’t want to do research), or too trusting (trusting a company, sales system, or IMO/GA that WL is the best/only way to build wealth with cash value life (CVL) insurance).

The numbers- historical internal rate of return (IRR) of various WL policies using a 20-year look back vs. what they actually returned:

IRR is not the greatest measuring stick because it simply measures cash accumulation.

As you know, the power in using Cash Value Life insurance is in the ability to borrow money tax free from the policy in retirement.

This is where WL (Whole Life) really gets destroyed by IUL.

WL vs. EIUL for tax-free dollars in retirement

Assume our example client is 40 years old, pays a $10,000 premium year for 25 years, and then max borrows from the policy from ages 65-84 (20 years).

The following chart shows some of the WL numbers.

How much tax free income could be removed from an IUL policy over the same time period using the back tested rate of return of 8.78%?

An incredible $90,846 each year.

If I lowered the assumed rate of return in the IUL policy to 7.00% to make a “conservative” example, you’d think the numbers would be terrible, right?

Wrong. The conservative number is $50,365 each year

which still destroys the numbers from the WL policies listed in the NU study.